DETROIT -- Despite the COVID-19 outbreak impacting worldwide auto sales, seating supplier Adient plc managed to reduce its losses in its second fiscal quarter of 2020.
The company reported a net loss of $19 million on revenue of $3.5 billion in the quarter that ended March 31, compared with a net loss of $149 million on revenue of $4.2 billion during the same quarter in 2019.
Adient attributed $530 million of its $717 million decline in revenue during the quarter to the COVID-19 outbreak's impact on sales, primarily from lower vehicle production across Asia, where the coronavirus erupted earlier in the quarter than in the U.S., according to the financial report it filed with the U.S. Securities and Exchange Commission.
Offsetting the lost sales, the company cut expenses during the quarter by 18 percent, or $757 million, down to $3.3 billion. Restructuring and impairment costs also dropped by 54 percent down to $52 million during the recent quarter.
To improve its cash position, on March 31 Adient initiated a $600 million private offering, using its assets as collateral via a secured note.
On March 23, Adient cut employee salaries by 20 percent in an effort to remain solvent during the ongoing COVID-19 crisis. The company did not respond to inquiries concerning how many employees face the cut. The company employed about 1,300 non-plant salaried employees in the U.S. in November.
The cuts include the salary of CEO Doug Del Grosso and the company's board of directors. Del Grosso earned a salary of $1.15 million with an $800,000 bonus in 2019. His total compensation package was worth approximately $15 million, but a bulk of that value was linked to stock awards that likely plummeted in value.
"Adient has taken proactive measures to bolster its cash position," Jeff Stafeil, executive vice president and CFO, said in the SEC report. "These actions, combined with cash conservation initiatives and previously announced strategic transactions, provide the company with strong liquidity and flexibility to manage through the COVID-19 crisis."
At the end of the fiscal quarter, Adient's total debt increased to $4.6 billion from $3.7 billion during the same quarter last year.
Wall Street viewed Adient's performance favorably. Shares of Adient closed Tuesday's trading up 2.8 percent to $15.23. The shares remain down more than 28 percent year-to-date.
"Adient is likely the only supplier to report (year-over-year earnings per share) growth in calendar Q1, as operational performance improvements more than offset the impact of weaker global light vehicle production volumes," David Leiker, senior research analyst for Robert W. Baird & Co. Inc., said in an analyst note Tuesday.
Adient does business with most of the world's automakers. Fiat Chrysler was Adient's biggest customer during the 2019 fiscal year, generating about 11 percent of its sales while Volkswagen Group accounted for another 9 percent of sales.
