Automotive tech supplier Aptiv reported double-digit revenue growth and a surge in net income for the fourth quarter as the company continued to mitigate supply chain uncertainty.
"Proactive initiatives and risk mitigation actions related to our supply chain have contributed to our ability to keep customers connected through significant disruptions," CEO Kevin Clark said in a statement Thursday.
Fourth-quarter net income soared to $233 million from $15 million a year earlier, when one-time special costs and a decline in revenue hurt results.
Aptiv's profit boost in a "weak production environment" was driven by awareness of worsening macroeconomic conditions in Europe and supply chain disruptions impacting production levels, Aptiv CFO Joe Massaro told analysts Thursday.
Revenue improved 12 percent to $4.6 billion, the company said in the statement. Revenue was up in North America, China and Europe, despite macroeconomic uncertainty, supply disruptions and inflationary cost impacts. Aptiv expects those challenges to persist this year and forecasts a 1 percent decrease in global production for 2023 to combat the constraints in each region.
Challenges stemming from the company's employee base in China was a common theme throughout a call with analysts Thursday. Aptiv was less efficient in the fourth quarter, as roughly 90 percent of those employees suffered from COVID-19, Clark said.
Aptiv completed its acquisition of California software company Wind River Systems Inc. in December. Aptiv expects the acquisition to accelerate long-term growth and contribute to a software-defined automotive industry, Clark said. In November, Aptiv acquired an 85 percent stake in Intercable Automotive Solutions, which specializes in high-voltage power distribution and interconnect technology. Aptiv expects the stake to enhance its position in vehicle architecture systems, the company said in the statement.
"It's clear that we strengthened our competitive moat and accelerated our commercial momentum supported by a highly differentiated portfolio of safe, green and connected technologies," Clark told analysts. "Together with our strong track record of operating execution, Aptiv has never been better positioned to provide our customers with full system solutions and advance the industry's vision of the software-defined vehicle."
Sam Abuelsamid, principal research analyst at Guidehouse Insights, said Aptiv's strategy to focus on growth areas, such as smart vehicle architectures, advanced driver-assistance systems and connectivity will pay off.
"Over the years of continuously reorganizing the company ... I think they have got themselves in a good place," he said.