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Steel Prices and the Chip Shortage Wreak Havoc on Adient's Fiscal Q3

Analyst Note

| David Whiston, CFA, CPA, CFE |

Higher commodity costs and lost automaker production from the semiconductor shortage badly hurt Adient’s fiscal 2021 third-quarter results, causing management to lower fiscal 2021 guidance. Adjusted diluted EPS of negative $0.53 missed the Refinitiv consensus of $0.17, but we leave our fair value estimate in place as the time value of money offsets the lower guidance. We still see the firm’s operational and balance sheet turnarounds on track, and we believe the stock will go higher long term as Adient reduces debt.

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Company Profile

Business Description

Adient began trading Oct. 31, 2016, when Johnson Controls spun off its automotive experience segment into this new company. Adient is the leading seating supplier to the industry with about one third of the global market as well as a dominant share in China of about 45% which should decline after Adient sells its main Chinese joint venture in calendar 2021. Operations in China are for now accounted for under the equity method so most revenue there is unconsolidated. Unconsolidated seating revenue from joint ventures totaled $9.5 billion in fiscal 2020. The company is headquartered in Ireland but has corporate offices in the Detroit area. Fiscal 2020 consolidated revenue, excluding joint venture sales, was $12.7 billion.

25-28 North Wall Quay, IFSC, Dublin 1
Dublin, D01 H104, Ireland
T +1 734 254-5000
Sector Consumer Cyclical
Industry Auto Parts
Most Recent Earnings Jun 30, 2021
Fiscal Year End Sep 30, 2021
Stock Type
Employees 77,000