The Automotive industry is grappling with the coronavirus outbreak in China, and Adient plc (ADNT - Free Report) isn’t immune to this. Panic surrounding the viral disease has triggered the company to limit business travels in and out of China as well as the Asia-Pacific (APAC) region. In fact, the outbreak has persuaded management to trim its 2020 guidance.
Per management, the company anticipates 2020 adjusted EBITDA to be dented by the Coronavirus outbreak and is expected to track toward the lower end of the outlook range of $870-$910 million. Equity income is anticipated between $175 million and $185 million compared with the prior guidance of $235-$245 million. Meanwhile, operational improvements in Americas and Europe, the Middle East and Africa (EMEA) are likely to continue this year, partially negating the $70-million headwind in China.
Apart from Adient, COVID-19 is posing concerns for various other global auto biggies, including Groupe PSA, General Motors (GM - Free Report) , Ford (F - Free Report) , Fiat Chrysler (FCAU - Free Report) , Honda Motor, Nissan and Renault, all of which have manufacturing plants in Wuhan — China’s motor city.
Adient currently carries a Zacks Rank #2 (Buy). Shares of the company have gained 26% in the past year, as against the industry’s decline of 4.1%. You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.
Meanwhile, consumer spending in China is also weak amid economic slowdown concerns and trade tensions. Furthermore, passenger-vehicle sales and demand for Adient’s products are bleak in China. Economic headwinds and industry-specific factors, including GV6 emission standards, are marring passenger-vehicle sales in the region. Lower income from Adient's joint ventures with Chinese suppliers is another concern. Therefore, the company is expected to witness a decline in deliveries in the markets served in China, in the days to come.
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