Among the accounting charges the company faced in the fourth quarter were a $718 m write-off in its seat structures and mechanisms business. Long-lived assets were written down to their fair value.
The company, which started a joint venture with Yanfeng, a Chinese seat maker in 2015, wrote the value of its share down by $322. It also reduced the amount of tax that it thought it would save around the world by $439m.
The seating division, which Adient said delivers one in three of the world's automotive seats, had a fall in EBITDA of 11% in the year, to $1.4 bn. EBITDA was $1.6bn in 2017. Sales were up 7% year-on-year to $15.7 bn.
The company said that the fall in EBITDA was a result of increased freight and operational waste. Operational waste includes scrap and the cost of rectifying poor quality, the company said. Inefficient operations made it harder to be profitable, and it was impossible for the company to squeeze lower prices out of suppliers to match the lower prices demanded by its customers.
Adient outlined how poor business performance cost the company $82m in the fourth quarter. About $62m was related to freight/operational and performance costs, as Adient managed new products for new automotive launches. The company did manage to reduce the impact of materials cost by $32m in the final quarter. However, customers demanded $52 m of reductions.
Doug Grosso, Adient's CEO, who joined on 1 October 2018, is trying to get a grip on the situation.
He has promised on-site follow-up reviews for the five worst-performing sites in Europe, Mexico and the US. He will visit Asia in November.
By the first week in February, Grosso has pledged to look closely at the company's five most important launches.
In addition, he said, the company's resources will focus on these products and sites.
But he warned, there is a need to ingrain a back-to-basics approach. 'Every business regardless of product, customer or region is expected to earn an acceptable ROI,' he said.
He added that there will be a greater emphasis on performance metrics such as EBITDA and cash flow. The problems, he said,are confined to a handful of plants and future launches, and these can be fixed over time.
|Adient Seating Performance 2017-2018
|Net Sales ($m)
||Adjusted EBITDA ($m)