Plymouth, Michigan — Sales at Adient, which makes automotive seating and interior components, rose by 12% in the third quarter of 2017 to $4.5 bn, from $4 bn in the equivalent 2017 quarter, but earnings were down.
Adient sales up, profits down in Q3 2018
EBITDA was $319 m compared with $463m m in Q3 2017. That equates to a fall of 25% year on year.
Fritz Henderson, interim CEO ,said results were 'nowhere near satisfactory', in a conference call.
He added: 'We are moving forward with great urgency to accelerate the pace of our operational improvements.'
The company had difficulties in its seating segment in North America during the earlier part of the year, according to Automotive News, which contributed to this report.
Henderson said that, on a basic level, some Adient factories in the US market and in Europe had ignored their own processes. 'We have good processes … but they're not always followed,' he said. Chinese JV factories had followed best practice more closely, and had far fewer problems, he added.
In the past, Adient took on more business than it could handle efficiently, Henderson said. For now, Adient would be 'more selective' in bidding for new business.
'Setting a goal to reduce business is not a very intelligent goal,' he said. 'But setting a goal to a level you can execute well, is a goal.'
The company said its seating business had sales of $2.4 bn in the third quarter of 2018. This is up 11% year-on-year. Adjusted EBITDA was $344m. This compares with $413 m in the 2017 quarter. Adient blamed 'launch inefficiencies in North America and a lower mix of higher-margin component sales'.
Its seat structures and mechanisms business had third quarter sales of $783m, up $70m or 9% on the 2017 quarter.
However, this generated an EBITDA a loss of $18m in the 2018 quarter, compared with a profit of $31m in the equivalent 2017 period.
Interiors division sales were not reported in the quarter. EBITDA was flat year-on-year at $19m.
Also during the third quarter, the company sold a portion of its accounts receivable to an unnamed third party. This generated $94m free cash flow in the quarter.