Plymouth-based Adient plc reported a 60 percent decline in adjusted earnings and 23 percent slide in revenue for the fourth quarter due to a supply chain choke it expects to continue indefinitely.
The automotive seating supplier had adjusted EBITDA of $118 million, down $169 million from the same period a year prior, on sales of $2.77 billion compared with $3.6 billion the same time last year, according to its Wednesday earnings report for the fourth quarter of FY2021.
The company had a net income gain of $960 million for the quarter, primarily a result of Adient ending its Yanfeng Automotive joint venture in China. Adient announced in March that it would sell its interest in the JV in a deal valued at $1.4 billion. It used a chunk of proceeds from the transaction, which closed Sept. 30, to pay down $840 million of debt.
Adient pinned its fourth-quarter financial struggles mainly to increased commodity costs and production suspensions due to the global microchip shortage, both of which have afflicted most suppliers in the second half of 2021 and will continue to be challenges into next year. Adient's competitor Lear Corp. took a $27 million net income loss on a 13 percent sales decline in its third quarter, citing the same issues.
"Persistent macro headwinds (primarily supply chain disruptions and inflationary pressures such as commodities, freight, energy, etc.) are expected to have a significant impact on the industry and Adient in FY22," the company said in its earnings presentation.
Adient said benefits from improved operational performance were more than offset by production disruptions and commodity costs, which led to $65 million in losses for the quarter.
The company had been grappling with operational issues before the COVID-19 pandemic. Douglas Del Grosso took the reins in 2018 to help right the ship when it faltered after a 2016 spinoff from Milwaukee-based Johnson Controls Inc.
In the first half of 2021, it appeared poised for a recovery, posting profits in the first two quarters despite tumultuous times for the auto industry. Its brief turnaround streak snapped in the third quarter when it took a net income loss of $71 million.
The company's full-year consolidated revenue was $13.68 billion, below its third quarter outlook of $14.3 billion-$14.5 billion. Executives said market uncertainties are preventing them from making financial predictions for the year to come.
"Given the backdrop of the current operating environment (i.e., persistent and widespread supply chain disruptions, limited visibility of customer production schedules, volatility of input costs) providing full year fiscal 2022 guidance for (adjusted) EBITDA, equity income and free cash flow with reasonable confidence is not possible at this time," the company said.