Nemak’s net income up 3% in first quarter as it earns new contracts for electric vehicles

19 April, 2018

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Monterrey-based Nemak, S.A.B. de C.V., a manufacturer of aluminum components for the automotive industry, saw its net income increase 3% to US$ 69 million during the first quarter of 2018, up from US$ 67 million in the same period of 2017.

The company’s earnings before interest, taxes, depreciation and amortization (EBITDA) went up 3.7% from US$ 190 million in 1Q17 to US$ 197 million in 1Q18 despite a 4.4% decline in operating income from US$ 113 million to US$ 108 million.

Sales volumes also saw a marginal decrease of 0.8% in the first quarter from 13.2 to 13.1 million equivalent units as higher sales in North America were not enough to offset declines in Europe. North American volumes went up reflecting mainly the continued ramp-up of new programs for V6 engine applications, meanwhile in Europe, Nemak’s volumes declined mainly due to lower sales to diesel vehicles which more than offset higher sales to gasoline vehicles during the period.

However, revenues from those 13.1 million equivalent units totaled US$ 1.23 billion, up 10.0% due to the appreciation of the euro against the US dollar and higher average aluminum prices.

During the quarter, the company won new businesses for US$ 110 million in annual revenues, with US$50 million coming in from structural and electric vehicle components (SC/EV), bringing total order book in this segment to approximately US$ 370 million in annual revenues.

According to the company, these contracts represented several milestones, including a first-ever with a leading Asian battery manufacturer for SC/EV, a first contract for a mass-market German EV platform and a first program to supply pure electric applications in North America.

“We delivered improved results this quarter, thanks to the implementation of cost-reduction initiatives and increased sales of higher value-added products, among other factors. In particular, our North America operation made a positive contribution, as benefits associated with the continued ramp-up of new, high-volume powertrain programs outweighed the impact of lower overall customer demand in the region,” said CEO Armando Tamez Martinez in a statement.

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