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Chip Shortage Drags Adient's Profits Down to End Fiscal 2021

Analyst Note

| David Whiston, CFA, CPA, CFE |

Adient finished fiscal 2021 with a quarter marred by supply chain issues beyond its control. We are leaving our fair value estimate unchanged, but as always, we’ll reassess all modeling inputs once the 10-K is filed. We continue to see more upside potential in the stock than risk of permanent investment loss, but high steel prices and the chip shortage will continue to be problems in fiscal 2022. For full-year fiscal 2021, the semiconductor shortage cost Adient about $1.9 billion in lost sales and around $450 million in adjusted EBITDA.

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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 Sep 30, 2021
Fiscal Year End Sep 30, 2021
Stock Type
Employees 75,000