In 2014, Nemak outpaced the average growth of the automotive industry by taking full advantage of the expansion of the U.S. market, the incipient recovery in Europe, and the launching of new production programs.
One ongoing trend in the automotive industry is the growing penetration of aluminum blocks into the market. According to industry experts, the light-weighting efforts pursued by all OEMs will increase aluminum penetration in multiple components, primarily engine blocks and structurals. This represents a significant short and medium-term growth opportunity for Nemak. In 2014, Nemak signed the first five contracts to produce structurals, which is a major step forward in entering this new high-potential market.
In North America, light vehicle production continued to expand, totaling 17.0 million units in the year, a 5% increase over 2013. Higher credit availability and improvement in consumer confidence were the main drivers for growth, and auto companies responded by installing new production facilities. In this region, Nemak’s sales volume grew 6%.
Engine block line, Nemak´s facility, García, N.L., Mexico
In Europe, vehicle production increased 3%, while Nemak’s sales volume rose at a similar rate. Nemak continues to launch new programs in the Eurozone, to serve the needs of the major European OEMs.
Nemak invested U.S. $393 million during the year. It continued to expand its production capacity in North America, Europe and China, in order to meet increased demand from its customers. A new Product Development Center was built in Poland to support the development of structural components and the launching of global programs. Additionally, Nemak expanded its machining capabilities in all regions. At the end of the year, the construction of a new HPDC plant in Mexico was announced, which will produce engine blocks, transmission and structural components. These investments are key elements in Nemak’s strategy to strengthen its participation in high-growth markets.
Total sales volume at Nemak reached 49.4 million equivalent units in 2014, a 4% increase over 2013. Revenues totaled U.S. $4.6 billion and EBITDA was U.S. $714 million, increases of 6% and 17%, respectively.
During the year, Nemak was awarded an unprecedented amount of new contracts to produce engine heads, blocks, structural and transmission components for the major OEMs in all regions. Those contracts represent annual sales of U.S. $1.7 billion, of which U.S. $600 million are incremental revenue.
In the coming years, Nemak expects to continue to capitalize on its competitive advantages to further strengthen its leadership position in the industry. The company’s competencies include the speed with which it can develop and launch new programs; its patented state-of-the-art technologies to make high-quality products; the diversity of its technical capabilities; and its competitive costs, reputation for service and global presence.