Nemak inks new deals worth US$50 million in annual revenue

19 November, 2018

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Nemak, S.A.B. de C.V., a Monterrey-based manufacturer of aluminum parts for the automotive industry, announced that it has won new contracts to supply light-weighting structural and electric vehicles components worth US$50 million in annual revenues.

With the addition of the new programs, the company has now secured contracts in these segments representing to date approximately US$450 million in revenues on an annualized basis, revealed the company in a filing to stock market regulators.

“This new business will enable us to further leverage our expertise and global footprint, combining casting and robotic welding, gluing, and riveting technologies to provide complex assemblies for vehicle structures of European OEMs,” said Armando Tamez, CEO of Nemak.

“As our customers accelerate their vehicle light-weighting and electrification plans, our track record in structural and electric vehicle components is helping us to build up an attractive quotation pipeline, which is worth today approximately US$1.2 billion in annual revenues in the segment,” the official added.

Although the company hinted that the new contracts were signed with European automakers, the subsidiary of Grupo Alfa did not provide further details. However, it is worth noting that European automakers still represent a small part of Nemak's revenues, since its main customers are Ford, GM and FCA, who provide 28%, 16% and 11% of its income, respectively.

Meanwhile, the consortium formed by VW, Porsche and Audi generates 8% of its revenues, followed by BMW with 6% and Renault with 3%.

In the third quarter of 2018, Nemak reported earnings (EBITDA) of US$160 million, which meant an increase of 5%; while revenues totaled US$ 1.15 billion, 5% more than a year ago, due to higher sales volumes.

During the quarter, Nemak invested US$72 million in new program launches and boost operational efficiencies in all regions. Net debt at the end of the third quarter was US$1.3 billion, a 6% reduction compared to the same period last year, reflecting the generation of cash in the quarter.

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