Adient Targets FY27 EBITDA Growth Despite Lower Revenue

Adient (ADNT) expects adjusted EBITDA to increase in fiscal 2027 even as lower global vehicle production weighs on revenue, with productivity, restructuring and commercial execution projected to more than offset volume and foreign-exchange headwinds. The outlook follows a fiscal 2026 in which sales rose 4% but adjusted EBITDA remained broadly flat as unfavorable regional mix and Middle East-related disruption constrained margins.

For FY27, the automotive seating supplier forecast consolidated revenue of $14.8 billion to $15.0 billion, compared with $15.17 billion in FY26. Adjusted EBITDA is expected to reach $900 million to $925 million, up from $884 million, as management targets margin expansion in a declining sales environment.

Adient based its outlook on a 1% decline in global light-vehicle production to 91.5 million units. The assumptions include production declines of 1% in North America, 2% in Europe and 3% in China, with output in the rest of Asia unchanged. Lower production across the regions is expected to pressure revenue, partly offset by continued outgrowth in Asia.

FY26 sales grow while margins narrow

Full-year consolidated sales increased 4% to $15.17 billion, or 2% excluding foreign-exchange effects. Adjusted EBITDA edged up to $884 million from $881 million, while the adjusted EBITDA margin narrowed to 5.8% from 6.1%.

Adient said favorable business performance contributed $58 million to adjusted EBITDA, reflecting commercial discipline, although that figure included $41 million of costs related to the Middle East conflict. Equity income increased by $11 million because of favorable performance at certain China joint ventures. Those benefits were largely offset by a $70 million volume-and-mix headwind tied to lower customer production in Europe and customer-mix pressure in Asia, partly balanced by favorable Americas volumes.

On a GAAP basis, Adient reported a full-year net loss of $17 million, or $0.22 per diluted share, compared with a loss of $281 million, or $3.39 per share, in FY25. Adjusted net income declined to $147 million from $161 million, while adjusted diluted earnings per share fell to $1.87 from $1.93.

Fourth-quarter sales rose 1% to $3.73 billion. Adjusted EBITDA increased to $229 million from $226 million, with the margin unchanged at 6.1%, despite approximately $22 million of temporary Middle East-related headwinds. Favorable material margins, commercial discipline and stronger China joint-venture income offset adverse currency movements and weaker volume and mix in EMEA and Asia.

The company recorded a fourth-quarter GAAP net loss of $47 million, or $0.62 per diluted share, compared with net income of $18 million, or $0.22 per share, a year earlier. Adjusted net income was $40 million, down from $42 million, while adjusted diluted earnings per share was unchanged at $0.52.

Asia offsets weaker Americas profitability

Asia was the strongest contributor to fourth-quarter earnings. Segment adjusted EBITDA rose by $30 million to $136 million, supported by commercial actions, favorable material margins, operational execution and higher equity income from China joint ventures. These gains outweighed portfolio-mix pressure and near-term softness associated with the Middle East conflict. Full-year Asia adjusted EBITDA increased to $450 million from $440 million.

Americas adjusted EBITDA fell to $85 million in the quarter from $111 million. Adient attributed the decline to Middle East-related effects, engineering timing, higher input costs and premium freight connected with weather-related shipping delays from Asia. Full-year Americas adjusted EBITDA slipped to $399 million from $402 million.

EMEA generated fourth-quarter adjusted EBITDA of $32 million, compared with $31 million a year earlier. Pricing and commercial discipline helped counter lower customer volumes and unfavorable customer mix. Full-year adjusted EBITDA was broadly flat at $125 million as restructuring benefits and commercial actions offset a $40 million volume-and-mix headwind.

Adient said consolidated sales in the Americas and China outperformed their respective markets during the fourth quarter. China benefited from new program launches, primarily involving NIO, Leapmotor and Xiaomi. EMEA underperformed because of customer mix, while Asia excluding China was affected by softer Korean volumes and lower exports linked to Middle East disruption.

Cash flow and capital allocation

FY26 free cash flow increased to $222 million from $204 million. The result included about $60 million of timing-related working-capital benefits involving China dividend payments, IEEPA refunds and customer tooling. Those benefits are not expected to repeat in FY27. Capital expenditures rose to $311 million from $245 million, supporting growth and innovation, while cash taxes included a nonrecurring $21 million settlement.

For FY27, Adient expects free cash flow of more than $100 million and capital expenditures of $300 million to $325 million. The cash-flow outlook incorporates the reversal of roughly $60 million of FY26 timing benefits and an additional unfavorable impact of about $35 million from dividend timing. Cash taxes are projected at $105 million to $115 million, while interest expense and cash interest are expected to be approximately $180 million to $185 million. Equity income included in adjusted EBITDA is forecast at $70 million to $75 million.

Adient ended FY26 with $886 million of cash, total debt of $2.35 billion and net debt of $1.47 billion. Total liquidity was approximately $1.7 billion, including about $857 million available under its revolving credit facility. The company repaid $35 million of debt during the fourth quarter and said its trailing-12-month net leverage ratio was 1.7 times, with no near-term maturities.

The company repurchased $100 million of shares in FY26, representing about 6% of shares outstanding, and plans another $100 million of repurchases in FY27, subject to market conditions and valuation. After the quarter, the board increased the repurchase authorization by $400 million and approved a tax-benefits preservation plan intended to protect U.S. net operating-loss carryforwards and other tax attributes.

Adient’s outlook remains subject to vehicle-production levels and mix, currency volatility, tariffs and trade policy, input-cost inflation, supply-chain disruption, restructuring execution and competitive pressure from Chinese automakers. The company also identified geopolitical conflicts, customer concentration, joint-venture exposure, labor costs and its ability to launch new programs at forecast and profitable levels as material uncertainties.