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Adient PLC (NYSE:ADNT) has put forward restructuring plans in Europe to reduce operating, administrative and engineering costs.
The plan primarily consists of workforce reductions and the transfer of work to countries with lower labor costs.
This move is in response to the changes in the European automotive market and to ensure the company's competitive cost structure by slashing labor costs and increasing efficiencies.
Adient expects a restructuring charge of approximately $125 million in the second quarter of fiscal year 2024, entirely related to termination benefits in Europe.
The restructuring actions mentioned will occur in fiscal 2025 and 2026 and are expected to be completed by fiscal 2027.
The restructuring activity is expected to result in the annual operating cost reduction of $60 million.
As of September 2023, Adient had 70,000 employees worldwide, with about 42% of them working in the Europe, Middle East and Africa (EMEA) region, reported Reuters.
Strikes by the United Automotive Workers (UAW) affected production volumes, affecting sales in the December quarter.
Adient supplies seats to automotive majors, including Ford Motor Co (NYSE:F), General Motors Co (NYSE:GM), Stellantis N.V. (NYSE:STLA), Volkswagen AG (OTC:VWAGY) and Renault SA (OTC:RNSDF).
Price Action: ADNT shares closed higher by 0.55% at $28.99 on Monday.
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