Auto seat maker Adient, which has struggled to maintain consistent profitability since its spinoff from Johnson Controls in 2016, suspended its dividend as it reported a fiscal fourth quarter net loss of $1.35 billion.
The suburban Detroit company on Friday said it is focusing on debt reduction and “financial flexibility,” and that its latest quarterly loss was driven by one-time, non-cash charges to write down the value of some assets.
In the same period last year, Adient reported net income of $344 million.
“On-going performance issues on the current programs within the North American and European regions led to an impairment assessment of each region and resulted in the recognition of such impairment charge,” the company said in a statement.
Baird Equity Research analysts, in a report released later Friday, said the dividend suspension should tack on an additional $100 million in cash per year that can be used to reduce debt.
The company also amended its credit agreement, “increasing total net leverage from 4.5x to 3.5x,” analysts wrote.
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Adjusted earnings before interest, taxes, depreciation and amortization slipped 36 percent to $251 million, the supplier said, while revenue during the quarter that ended Sept. 30 increased 4.2 percent to $4.1 billion. Net debt levels fell to $2.74 billion from $2.76 billion as of Sept. 30, 2017.
“I’m confident the challenges that impacted Adient’s FY2018 results are being addressed,” Doug DelGrosso, who was named CEO in September, said in a statement. “The team is focused on executing our transformation plan to drive improved profitability, cash flow, and returns to our shareholders.”
DelGrosso has launched a 100-day review that is prioritizing resources on Adient’s most under-performing manufacturing plants and future product launches, with a focus on its global seat, structures and mechanisms unit, and the company’s seating operations in the Americas.
The company said all operations are under review to identify profit improvement and opportunities to generate cash. The seating business, Adient’s largest unit, was negatively impacted during the latest quarter by launch inefficiencies, a lower net material margin and higher commodity costs, the company said.
For the full fiscal year, Adient reported a net loss of $1.69 billion, compared with a loss of $1.5 billion in 2016 and net income of $877 million last year. Annual revenue rose to $17.4 billion from $16.2 billion.
The supplier did not release a full-year outlook for 2019 but said it expects to issue guidance in January, while warning “the challenges faced in 2018 will continue to have a significant impact in fiscal 2019.”