Shares of Adient (NYSE:ADNT), a vehicle seating and interior company, took a hit on Friday. The stock finished the trading day down 25.4%.
The stock's decline followed the company's fiscal fourth-quarter earnings release. The stock's sudden selloff was likely primarily due to Adient's decision to suspend its dividend.
For its fiscal fourth quarter, revenue increased by $166 million from the year-ago quarter to $4.1 billion. But the company's bottom line swung from a net profit of $344 million in the year-ago quarter to a loss of $1.36 billion. Adjusted earnings per share declined from $2.32 in the year-ago period to $1.30.
But most surprising was Adient's announcement to suspend its dividend. The dividend will cease beginning the second quarter of fiscal 2019.
In Adient's fiscal fourth-quarter earnings call, management said its decision to suspend its dividend reflects its efforts to boost financial flexibility and pay down debt.
Asked during the call what criteria the company will need to achieve in order to reinstate its dividend, Adient CFO Jeffrey Stafeil responded:
We felt that it was prudent given the performance, given the current market we think we're entering into, to suspend it. We don't have a specific mark of when we'd reinstate it, but clearly, one of the criteria is to get our footing back operationally as [CEO Doug DelGrosso] executes his plan.