Aptiv, Tenneco, Adient post quarterly gains as recovery gains steam

Several suppliers reported first-quarter earnings this week as the semiconductor shortage continued to halt automaker production lines and send shock waves throughout the industry.

Aptiv said net income fell 82 percent to $279 million in the first quarter amid the ongoing chip crisis and other constraints that have suppliers struggling across the globe. The first-quarter 2020 results included a one-time gain of $1.4 billion from the creation of Aptiv's autonomous driving joint venture with Hyundai.

When backing out one-time 2020 gains, the autonomous driving technologies and driver-assist systems supplier said adjusted operating income in the first quarter skyrocketed 89 percent to $437 million.

The company said Thursday that revenue grew 25 percent to $4.02 billion in the quarter, a sign of better-than-anticipated results despite the many challenges the supply chain is navigating.

The supplier reported adjusted earnings before interest, taxes, depreciation and amortization of $630 million. Aptiv said that was partially offset by $25 million in COVID-related operating costs and $45 million in supply chain disruption costs.

By region, Aptiv's revenue grew 5 percent in North America, 11 percent in Europe and 64 percent in Asia, which includes 94 percent growth in China. Revenue also jumped 28 percent in South America.

"We had a strong start to the year, delivering better than expected revenues, earnings and cash flow, underscoring our ability to outperform despite tightening supply chains globally," CEO Kevin Clark said in a statement.

The company said severe weather and further supply chain disruptions extended its customers' shutdowns. Elevated freight, resin and copper costs have also been supply constraints.

The company also announced its commitment to net carbon neutrality by 2040.

Aptiv declined to provide guidance for the second quarter given the volatility of the supply chain.

It ranks No. 18 on the Automotive News list of the top 100 global suppliers, with estimated worldwide parts sales to automakers of $12.81 billion in 2019.

Meanwhile, Tenneco Inc. reported little impact from supply chain disruptions and said it saw first-quarter net income of $65 million, compared with a net loss of $839 million in the same period last year. The 2020 results included $867 million in restructuring and impairment charges.

The ride-control and emissions systems supplier said Thursday that first-quarter revenue jumped 23 percent to $4.73 billion.

Adjusted earnings before interest, taxes, depreciation and amortization rose 62 percent to $388 million.

The company projected revenue of $4.35 billion to $4.55 billion in the second quarter despite the chip shortage.

Tenneco also raised its full-year financial outlook, now anticipating revenue of $17.6 billion to $18.1 billion.

Tenneco, of suburban Chicago, ranks No. 23 on the Automotive News list of the top 100 global suppliers, with worldwide parts sales to automakers of $11 billion in 2019.

Seating supplier Adient said Thursday it is poised for a strong recovery in 2021 after reporting higher net income and revenue in its second fiscal quarter despite auto production stoppages and other headwinds.

The company, domiciled in Dublin, Ireland, said it swung to net income of $69 million in the recent quarter from a $19 million loss last year. Revenue increased 8.7 percent to $3.8 billion.

"Simply put, Adient delivered solid results despite turbulent production environment," Adient CEO Douglas DelGrosso said Thursday in a call with investors. "Adient's business performance enabled the company to partly offset a variety of macro industry-related headwinds."

It marks a second consecutive profitable quarter for Adient as it looks to rebound from a tumultuous past year and improve financial issues that predate the COVID-19 pandemic.

Adient said it expects business improvements in the second half of the year to more than offset headwinds, including a worldwide computer chip shortage that has kinked new car production and petrochemical supply chain disruptions.

In the Americas, Adient said adjusted earnings before interest, taxes and other adjustments fell 40 percent to $64 million. The decline was attributed to supply chain disruptions. Adjusted earnings in the Europe, Middle East and Africa segment more than doubled to $141 million due in part to lower launch costs and improved operations efficiency. Its Asia segment nearly doubled to $121 million in adjusted earnings due to lower launch costs and reduced freight.

Adient, based in suburban Detroit, ranks No. 12 on the Automotive News list of the top 100 global suppliers with worldwide sales to automakers of $16.5 billion in 2019.

Kurt Nagl of Crain's Detroit Business, an affiliate of Automotive News, contributed to this story.