Aptiv's first-quarter net profit dropped 22 percent to $240 million on lower revenue, weaker China output, unfavorable currency exchange rates and ongoing r&d outlays, and the electronics supplier lowered its outlook for 2019 sales and adjusted earnings.
The company said its first-quarter adjusted operating margin declined to 9.7 percent from 11.8 percent due to the unfavorable impact of foreign currency exchange rates, lower light-vehicle production in China and ongoing business and r&d investments, which were slightly offset by what it called "above-market sales growth."
Revenue decreased 2 percent to $3.58 billion during the latest period.
Aptiv shares fell 5.4 percent to $79.09 during afternoon trading on Thursday.
Revenue in the company's biggest business, signal and power solutions, fell 2 percent to $2.56 billion during the quarter, while sales of advanced safety and user experience components fell 1 percent to $1.02 billion.
"Our signal and power solutions segment is focused on next-generation vehicle architectures, including high-speed data and high-power electric distribution that enable the advanced technologies that will shape the future of mobility," Aptiv CEO Kevin Clark said in a statement. "Revenues increased 3 percent during the first quarter, up 7 basis points over market, despite the weakening macros, driven by 65 percent in sales growth for our high voltage electrification products and 39 percent growth in commercial vehicle and industrial revenues."
Clark said Aptiv has also been awarded a contract to supply a high-voltage electric architecture for the Fiat 500.
Aptiv's portfolio winnings
First-quarter new business bookings — what the company calls gross revenues over the life of a program — totaled $4.3 billion, Clark said.
During the first quarter, Aptiv landed contracts to supply VW Group's Porsche and Audi brands with smart charging interface controllers, he said.
"Our investments in scalable vehicle architecture are seeing our next wave of growth, helping to drive the democratization of new mobility solutions globally," Clark said. "Aptiv is uniquely positioned to benefit today from our smart vehicle architecture in automated driving investments, as the demand for active safety solutions increases."
Clark said the supplier also expanded its autonomous vehicle operations in China. Shanghai is now the fifth city that Aptiv has localized autonomous driving r&d.
"Our plans to bring autonomous driving to China by partnering with a transportation network company and others in the mobility ecosystem brings us one step closer to the broadened option of automated mobility in the region," Clark said.
Facing an increasingly challenging and uncertain macroeconomic landscape, Aptiv lowered its 2019 full-year guidance for adjusted earnings per share, net sales and adjusted earnings — excluding interest, taxes and one-time costs.
China's new light-vehicle market is expected to be flat or down in 2019, and U.S. light-vehicle sales are on track to drop below 17 million in 2019 for the first time since 2014.
Clark said the company is cutting overhead costs, in addition to new manufacturing and supply chain initiatives to lower costs and better fund investments for growth.
Due to lower vehicle production and program delays in Europe and China, Aptiv now expects global vehicle output to fall 3.5 percent in 2019 vs. a previous forecast for a 2.5 percent decline, Clark said.
The supplier said it expects 2019 adjusted earnings of $4.90 to $5.10 per share while net sales are estimated to total $14.4 billion to $14.8 billion.
"We're focused on taking actions that increase the flexibility of our business model and position the company for better recycled performance," Clark said. "Despite our revised outlook for lower vehicle production resulting from the current weaker macro trends, we remain confident in our ability to outperform."
Aptiv said it returned $283 million to shareholders through share repurchases and dividends in the first quarter. The company repurchased 2.84 million shares for $226 million and paid $57 million in dividends.
Aptiv expects share repurchases to total $450 million in 2019.