Aptiv reports $256 million in Q4 net income following Delphi spinoff
Editor's note: The summary text on a previous version of this story contained the incorrect percentage for Aptiv's decline in net income. It declined 8.9 percent.
Aptiv, the autonomous driving and connected services company formerly known as Delphi Automotive, is finding its footing under a new name after the spinoff of the company's powertrain business last year.
The supplier weathered dwindling car production and took advantage of its specialization in mobility technologies in the fourth quarter of 2017 to post $256 million in net income, an 8.9 percent decrease from the same period in 2016. Aptiv reported $3.44 billion in revenue, up from $3.19 billion for the fourth quarter in 2016 as Delphi Automotive, and $12.88 billion in revenue for 2017, up from $12.27 billion in 2016.
"Our investments have strengthened our mobility position," Aptiv CEO Kevin Clark said on a call with analysts. "We believe we have all the necessary competence."
Clark added that automakers' changing product plans, including Fiat Chrysler Automobiles' and General Motors' decisions to discontinue some car nameplates, affected its traditional signal and power solutions business. The supplier said it is watching the market carefully as it decides on future contracts.
Aptiv shares gained 1.2 percent to close at $96.02 on Thursday. Analysts were generally pleased with the numbers.
"With strong EBIT (earnings before interest and taxes) performance in Q4, solid 2018 guidance and strong bookings we believe the path is set for Aptiv to move higher over the next several years," Baird analyst David Leiker wrote in a report Thursday. "We believe the company is well positioned to benefit from the strengthening momentum for next-generation vehicle technologies (in-vehicle user experience, safety/self-driving technologies and electrification)."
The supplier spent $30 million in mobility investments in the fourth quarter, and expects to invest about $140 million in the space in 2018.
In December, Delphi spun off its traditional powertrain business into the separate publicly traded company Delphi Technologies. The company's high-tech autonomous driving business was renamed Aptiv plc.
Before the spinoff, Aptiv announced acquisitions of data marketplace Movimento and self-driving startup NuTonomy, which the supplier said adds new business in data services and scale to autonomous vehicle technologies, respectively. The supplier reported a 66 percent increase in revenue from active safety bookings -- a precursor to self-driving systems -- and a 15 percent increase in infotainment revenue for 2017.
Analysts expect Aptiv's continued departure from traditional automotive services and investment in mobility technologies in the short term will bring long-term profits.
"The upfront spending that is typical in the auto supplier business model is a bit steeper here with the magnitude of the technological change, the dramatic increase in content and the long lead time to launching some of these products in scale," wrote Baird analyst David Leiker in a note to investors, adding that, "Aptiv has the best collection of technology capabilities needed to commercialize 'smart mobility' solutions beyond 2020."
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