Adient plc, the soon to be spun-off automotive seating business of Johnson Controls, has set its sights on achieving $17 billion in revenue during its first year as an independent company.
The company, which is based in Ireland but will be run from a number of global offices including in Milwaukee, will begin trading on the New York Stock Exchange on Oct. 31.
Executives at the new company have said that Johnson Controls’ multi-industry strategy had restrained the potential for the automotive seating business to grow. The company has been able to increase its booking of new business since the spinoff was announced last year.
Adient told analysts at its investor day on Thursday it will book $6 billion worth of business in fiscal 2016, up from $3.55 billion in 2015.
“The automotive business has consistently been a significant growth engine for Johnson Controls over the past 25 years,” said Bruce McDonald, Adient’s incoming chairman and chief executive officer. “Operating as an independent company will enable us to invest in the business to drive profitable growth, ultimately delivering value to our shareholders.”
Adient offered guidance for fiscal year 2017 during its investor day, including revenue of $16.8 billion to $17 billion, adjusted net income of $850 million to $900 million, capital expenditures of $545 million to $575 million and including about $75 million in IT and facility costs associated with starting the new business.
The company also projects it will have an effective tax rate of 10 to 12 percent, benefiting from its Irish domicile and the structure of its joint ventures in China. Adient was to be based in the United States before Johnson Controls announced its merger with Tyco International. The company was then going to be domiciled in London, but ultimately chose Ireland, for simplicity.
Adient, which says it is the largest seating supplier in the industry with about 34 percent of the market, has business around the world. The Americas account for about 29 percent of the company’s business, with China and the Asia Pacific region account for 36 percent and Europe and Africa accounting for 35 percent.
During its investor presentation, the company also detailed the ways in which it expects the rise of electric and autonomous vehicles to change the automotive seating industry.
Detlef Juerss, Adient vice president and general manager of global engineering, said autonomous vehicles could feature swiveling seats, lounge or bed-like functions. If the passenger is laying down or moving, the safety systems have to move as well, he said.
“These things have to be engineered in,” Juerss said.
The electrification of vehicles will require new approaches to heating and cooling, he said, adding those will likely migrate to the seats along with safety functions and controls.
New entrants to the market, like Google or Apple, will also change the relationship between suppliers and original equipment manufacturers. Juerss said Adient has opened a satellite office in Palo Alto, California to connect with the new entrants.
“It’s a totally different tone. It’s a totally different speed,” he said of working with those companies.
