Adient says the fourth-quarter results were significantly impacted by “continued headwinds “ and the results have been primarily explained by a decline in business performance. Sales and adjusted EBITDA for the fourth quarter of 2018 totalled US$4.1 billion and US$251 million, respectively. Operational and commercial challenges were a primary contributor to the US$139 million year-over-year decline in EBITDA, said Jeffrey M. Stafeil, CEO and Executive Vice President, Adient, during the analysts call on November 9. The Company recorded an impairment charge of US$358 million, which has been recorded in equity income. The after-tax net loss impact is US$322 million. Adjusted earnings in the quarter fell to US$1.30 as “a lower level of operating profit dropped right to the bottom line”. Net debt leverage totalled US$2.7 billion.

Unconsolidated Seating and SS&M revenue in the quarter, driven primarily through Adient’s strategic JV network in China, grew about +1% year-over-year. Adjusting for FX, sales were up approximately 3%, “a very good outcome as production was down roughly -4% in the quarter”, said Stafeil. Strong mix, driven by continued growth with BMW, Volvo, and with SAIC, are said to have helped drive Adient’s outperformance versus the market. Sales for unconsolidated interior, recognised through the Company’s 30% ownership stake in Yanfeng Automotive Interiors, was down -8% year-on-year. When adjusted for currency fluctuations and low-margin cockpit sales, revenue was relatively flat versus the previous.

However, for the full year, Stafeil said the performance of Adients’s unconsolidated Seating and SS&M business remains strong, as equity income was up about US$2 million against the same period last year, with interiors weighing on the fourth-quarter results as operational challenges outside China combined with lower volumes had a significant impact on the year-over-year results. In Seating, adjusted EBITDA decreased to US$301 million, down US$102 million compared to the same period a year ago due to the positive benefits associated with the Futuris acquisition, but which were “more than offset by a variety of factors”; most significantly, the business incurred just over US$80 million in business performance headwinds during the quarter, many of which were launch-related, according to the Company.

Based on the results, the Company’s quarterly cash dividend is suspended beginning in the second quarter of fiscal 2019. “This action should be viewed as part of a focused effort to de-risk the company’s capital structure, essentially increasing our financial flexibility”, said Douglas G. DelGrosso, President and CEO, Adient.

Looking forward, Adient says it is prioritising resources on most severe underperforming manufacturing sites and future launches. The manufacturer is to focus on SS&M and Seating in the Americas, while all facets of the business are under review to identify profit improvement and cash generation opportunities.