Aptiv implements additional cost-saving measures as EV transition slows (updated)

Magna International

31/10/2024 15:08

(recasts, adds shares in paragraph 2 and CEO comment in
paragraph 7)
       Oct 31 (Reuters) - Aptiv PLC  APTV.N  said on Thursday
that it has taken extra steps to boost profitability, after it
cut its annual sales forecast, as the company adapts to a
difficult market environment.
    Shares of Aptiv fell over 16% in early trade. 
    The auto industry faced a bumpy second half of the year over
competition from Chinese companies and a decline in consumer
demand due to inflation and economic concerns.
    The transition to an EV-first future has presented
challenges for many automakers, who have prioritized production
of higher-margin vehicles, such as affordable crossovers and
hybrid models, over EVs.
     Companies like Aptiv and Magna  MG.TO  which specialize in
manufacturing parts and components for electrified vehicles,
will likely feel the impact of this shift.
    The company is implementing profit improvement actions to
diversify its customer base, consolidate its manufacturing
footprint and reduce direct and indirect labor across regions,
CEO Kevin Clark said on a post-earnings call.
    Dublin-based Aptiv, counts the Detroit Three automakers,as 
well as Volkswagen AG  VOWG.DE  and BMW as key customers and
supplies key electrical components and safety software for
vehicles.
    Aptiv also faces cascading costs associated with expensive
semiconductors, which are essential for powering various
features in modern, connected vehicles, including infotainment
systems and heads-up displays, among other components.
    Auto supplier BorgWarner  BWA.N  also cut its annual sales
guidance to account for lower market production. 
    Aptiv expects its annual revenue to be between $19.6 billion
and $19.9 billion, compared to its prior estimate of between
$20.1 and $20.4 billion. 
    On an adjusted basis, Aptiv earned $1.83 per share during
the quarter ended Sept. 30, compared to analyst estimates of
$1.68, according to data compiled by LSEG.     
    Overall revenue fell 5% to $4.9 billion compared with
analysts estimates of $5.2 billion.    

 (Reporting by Nathan Gomes in Bengaluru; Editing by Tasim
Zahid)
 ((Nathan.Gomes@thomsonreuters.com;))