(Reuters) -Aptiv PLC 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 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 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 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)