Adient Earnings: Europe Holds Back What Was Otherwise a Good Start to Fiscal 2025

Adient’s fiscal 2025 first quarter saw good execution in North America and Asia held back by poor customer production in Europe. We see no reason to change our fair value estimate. Adjusted diluted earnings per share fell 12.9% year over year to $0.27, beating the $0.19 LSEG consensus. Management lowered fiscal 2025 revenue guidance to about $13.9 billion, down from $14.1 billion-$14.4 billion, and adjusted EBITDA is now about $850 million, down from a midpoint of $875 million. The change reflects less customer production expected in China and Europe due to continued macroeconomic challenges in each region. European automakers are under pressure from low-cost Chinese competition, while in China, government subsidies boosting demand tend to favor low-cost vehicles that Adient has little or no content on. A strong dollar is now expected to cut about $15 million more from EBITDA. Fiscal second quarter should be similar to first quarter.