American Axle & Manufacturing Holdings, Inc. Business Report FY ended Dec. 2019
Financial Overview |
(in million USD) |
| FY ended Dec. 31, 2019 | FY ended Dec. 31, 2018 | Rate of change (%) | Factors | |
| Net Sales | 6,530.9 | 7,270.4 | (10.2) | 1) |
| Operating Income | (301.6) | 106.4 | N/A | 2) |
| Sales by Segment | ||||
| Driveline | 4,449.7 | 4,911.4 | (9.4) | 3) |
| Metal Forming | 1,453.5 | 1,617.7 | (10.2) | 4) |
| Casting | 627.7 | 741.3 | (15.3) | 5) |
Factors
1) Net Sales
-The Company’s net sales in the fiscal year ended December 31, 2019 decreased by 10.2% from the previous year to USD 6,530.9 million. The decrease in sales is due to the lower full-sized truck sales due to the in-sourcing from a customer for a program in the second half of 2018, combined with the a USD 243 million reduction from the GM strike in the second half of 2019. Other factors contributing to the decrease in sales include customer downtime from program changeovers, lower volumes from specific crossover vehicles and a decrease of USD 142 million from metal market pass-through effects and negative foreign currency effects. These losses were partially offset by new program launches from the Company’s backlog.
2) Operating Income
-The Company had an operating income loss of USD 301.6 million in the fiscal year ended December 31, 2019, compared to an operating income in the previous fiscal year of USD 106.4 million. The operating loss was due to decreased net sales, a significant goodwill impairment charge from the Company’s sales of its Casting segment, a loss from the sale of the Casting segment, and finally, slightly lowered selling, general and administrative expenses from the Company’s restructuring initiatives.
3) Driveline sales
-The Driveline segment had sales of USD 4,449.7 million in the fiscal year ended December 31, 2019, a decrease of 9.4% from the previous year. The decrease in sales was primarily due to lower full-size truck sales and the GM strike. Other contributing factors include customer downtime, lower crossover volumes, and decreased sales from metal market pass-through effects and negative foreign currency exchange effects. The decline was partially offset new business launches.
4) Metal Forming sales
-The Company’s Metal Forming segment’s sales in the fiscal year ended December 31, 2019 decreased by 10.2% to USD 1,453.5 million. Lower global automotive production volumes and a reduction in intersegment sales to the Driveline segment contributed to the decrease in sales. The segment was also negatively impacted by metal market pass-through effects and negative foreign currency exchange effects.
5) Casting sales
-The Company’s sales in the Casting segment totaled USD 627.7 million in the fiscal year ended December 31, 2019, a decrease of 15.3% over the previous year. The segment was negatively affected by lower production volumes in the automotive, commercial and industrial markets. Furthermore, the Company’s sale of the segment on December 16, 2019 created another negative impact. The GM strike also decreased sales by USD 9 million.
Restructuring
-The Company completed the sales of Grede, its U.S. iron casting operations, to funds managed by Gamut Capital Management. The Company had acquired Grede through its acquisition of the Metaldyne Performance Group in 2017. The Company received net cash proceeds of approximately USD 141.2 million from the divestiture and a USD 60.0 million deferred payment obligation. (From a press release on December 16, 2019)
-The Company has entered into a definitive agreement to sell its U.S. iron casting operations, Grede, to funds managed by Gamut Capital Management for an aggregate purchase price of USD 245 million. The transaction is expected to close in the fourth quarter of 2019. Grede develops, manufactures, assembles and supplies ductile, gray, and specialty iron castings and machined components for automotive, commercial vehicle and industrial markets across 10 manufacturing facilities. The Company will retain its El Carmen, Mexico iron casting operations. (From a press release on September 18, 2019)
Contracts
-The Company has expanded its driveline system production for Ram Heavy Duty trucks, now supplying both front and rear axles and driveshafts for the 2019 Ram 2500 Heavy Duty, Ram 3500 Heavy Duty, Ram 3500 Chassis Cab, Ram 4500 Chassis Cab and Ram 5500 Chassis Cab trucks. The all-new, larger 12-inch rear axle and either a 9.25-inch or 10.5-inch front axle are designed to enable higher gross combined axle weight and payload ratings up to 35,100 pounds of towing capacity and 7,680 pounds of payload. (From a press release on December 5, 2019)
-The Company announced that Jaguar’s first all-electric production vehicle, the I-PACE, features its all-wheel-drive front and rear e-Drive units. The Company designed and engineered the I-PACE e-AAM system at its Trollhattan Technical Center in Sweden. The system is built in Poland at its Swidnica Manufacturing Facility. The e-AAM Hybrid and Electric Driveline BEV system delivers 400 hp., 516 lb. ft. of torque and high-performance all-wheel-drive via two electric drive units. The Company worked with Jaguar to design, develop and build the e-AAM electric drive units for the I-PACE, which includes two power dense electric drive units that are designed to maximize power but minimize system space and help contribute to the vehicle’s low center of gravity. Using Jaguar-designed permanent magnet motors, the independently controlled drive units provide immediate torque and all-wheel drive for optimal control and maximum safety. (From a press release on August 8, 2019)
Awards
-In 2019, the Company won the 2018 GM Supplier of the Year Award, marking the third consecutive year in which the Company had won the award.
-The Company received Ford’s World Excellence Award for Sustainability in 2019.
-In 2019, a number of the Company’s individual facilities won awards from automakers, including:
- The GM Supplier Quality Excellence Award was awarded to 11 facilities, including the Changshu Manufacturing Facility in China. This marks the fifth consecutive year in which the Changshu Manufacturing Facility has won this award.
- The Company’s facility in Ramos, Mexico received the FCA Outstanding Quality Award for its performance in 2018.
-The Company was nominated as a finalist for the 2020 Automotive News PACE award for its e-AAM front and rear eDrive units on the Jaguar I-Pace AWD Crossover.
Outlook
-The Company expects that its net sales in the fiscal year ending December 31, 2020 to be between USD 5.8 billion and USD 6.0 billion.
R&D Expenditure |
(in million USD) |
| FY ended Dec. 31, 2019 | FY ended Dec. 31, 2018 | FY ended Dec. 31, 2017 | |
| Overall | 144.7 | 146.2 | 161.5 |
R&D Facilities
-As of December 31, 2019, the Company has 16 engineering centers.
Capital Expenditure |
(in million USD) |
| FY ended Dec. 31, 2019 | FY ended Dec. 31, 2018 | FY ended Dec. 31, 2017 | |
| Overall | 433.3 | 524.7 | 477.7 |
-The Company expects that its capital expenditures in the fiscal year ending December 31, 2020 will be approximately 5.5% of sales.
Investments outside U.S.
<Spain>
-The Company announced the grand opening of a new manufacturing facility in the industrial area of Viladecans, Spain, located 20 kilometers southwest of Barcelona. The new 15,600-square-meter facility consolidates two smaller facilities in nearby Gava, and will employ nearly 300 associates at full capacity. The new facility will support demand and growth from new and current European customers including Renault, BMW, Daimler, Porsche, Audi and Ford. The Company will produce damped gears for Ford, BMW, Miba and PSA, PV bonded dampers for Audi, Mercedes and FCA, isolation pulleys for Renault and in-mold bonded dampers for Mercedes, Ford and Porsche. (From a press release on October 17, 2019)