How Is Adient Expected To Perform In The Next Year?
Adient is a global leader in automotive seating and interiors, providing its products to all major automobile manufacturers. It is expected to begin operating as an independent company, and trade on the New York Stock Exchange under the symbol ADNT on October 31, 2016, when the spin-off from Johnson Controls (NYSE:JCI) is to be completed. At its recent analyst day, the company provided an outlook for FY 2017 (year ended September 2017), which has been summarized below:
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Alex Molinaroli, CEO of Johnson Controls, cited two reasons for the spin-off. The cyclical nature of the auto industry wreaked havoc on the company’s cash flows. Furthermore, the enormous capital investment needed by the seating business was not something JCI was willing to make. Dedicated capital and cash flow will ensure flexibility for the company to come up with a targeted capital allocation strategy, and to deliver smarter reinvestment opportunities, including for M&A. This will, in turn, increase the value for shareholders and customers. In the future, Adient will aim to attain a leaner cost structure, as it will only be focused on automotive seating. As a result, the company expects 200 basis points of margin improvement, along with double-digit EPS growth over the medium-term. The company’s leading market position, together with a well-diversified revenue base, will ensure growth in the future. The company also has an industry leading position in China, unarguably one of the fastest growing markets in this industry. This region is considered a key growth driver, with the company leveraging its position in the country, to outpace the overall market growth. Adient has 17 seating joint ventures in China, operating 60 manufacturing locations in 32 cities. This results in high profitability and strong cash flow generation, with 65%-70% of the annual JV equity income paid as cash dividends in prior years.
As an independent company, Adient also plans to increase its investments into innovative products and technology, including the company’s seating development work to meet emerging trends, such as autonomous driving, electrification, slim and lightweight seating, and consumer personalization. Furthermore, the company will also look into opportunities in new markets, outside of its traditional auto markets, such as in commercial vehicle, passenger train, and aircraft seating.
Have more questions on Johnson Controls? See the links below:
- Why Has Johnson Controls’ Stock Price Appreciated 29% This Year?
- What Drivers Will Ensure Growth For Adient In The Future?
- What Is Adient’s Position In The Global Automotive Seating Market?
- How Has Adient Performed For Johnson Controls?
- How Can Increasing Interest In Energy Efficiency Help Johnson Controls?
- How Did Johnson Controls Fare In Q3 2016?
- How Will Johnson Controls Perform In Q3 2016?
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- Why Is Johnson Controls Increasing The Production Of Its Absorbent Glass Mat (AGM) Batteries?
- What Are The Prospects For Johnson Controls’ Power Solutions Business?
- What Will Be The Effect On The Segment Operating Margin As A Result Of The Johnson Controls-Tyco Merger?
- What Are The Benefits Johnson Controls Will Attain From The Tyco Merger?
- Will The U.S. Treasury Department Rules, That Killed The Pfizer-Allergan Deal, Affect Johnson Controls-Tyco Merger?
- Johnson Controls’ Earnings Beats Expectations
- Will Johnson Controls Miss Estimates Again?
- How Has Johnson Controls’ Net Sales Changed By Geographic Areas?
- How Does The Adient Spin-Off And Tyco Merger Create Value For Johnson Controls’ and Tyco’s Shareholders?
- Q4’23 Earnings Preview: Down 21% YTD Will Johnson Controls Stock Continue To Underperform?
- What’s Next For Johnson Controls Stock After An 8% Fall Yesterday?
- Margin Expansion To Drive Johnson Controls’ Q3?
- What’s Next For Johnson Controls Stock After An Upbeat Q2?
- Here’s What To Expect From Johnson Controls’ Q2
- Here’s What To Expect From Johnson Controls’ Q1
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