Grupo Antolin-Irausa, S.A. Business Report FY ended Dec. 2019

Financial Overview

 (in million EUR)
  FY ended Dec. 31, 2019 FY ended Dec. 31, 2018 Rate of change (%) Factors
Net Sales 5,214.2 5,424.6 (3.9) 1)
EBITDA 434.9 355.9 22.2 2)
Sales by business unit
Headliners 1,921.2 2,060.5 (6.8) 3)
Doors  1,975.8 1,886.5 4.7 4)
Cockpits  974.7 1,125.5 (13.4) 5)
Lighting 334.1 349.1 (4.3) 6)


Factors
1) Net Sales
-The Company’s sales in the fiscal year ended December 31, 2019 was EUR 5,214.2 million, a decrease of 3.9% from the previous year. Sales declines in the Asia-Pacific and Europe regions were the main cause for the overall decline across the Company. The increase in sales from positive currency exchange effects only partially offset the overall decrease in sales. In terms of business units, the Doors segment was the only one to have increased sales during the fiscal year. Gains from the Doors segment were offset by declines from the Headliners, Cockpits and Lighting segments.

2) EBITDA
-The Company’s EBITDA in the fiscal year ended December 31, 2019 increased by 22.2% over the previous year to EUR 434.9 million. Excluding the effect of the application of IFRS 16, the Company’s EBITDA increased from EUR 356.0 million in the previous year to EUR 362.0 million. The increase in earnings was due to increased sales and product ramp-ups in the U.S., Germany and Czech Republic, which offset declines in China, Mexico and the UK.

3) Headliners
-Sales for the Headliners business unit totaled EUR 1,921.2 million in the fiscal year ended December 31, 2019, a decrease of 6.8% from the previous year. Sales decline from operations in Kentucky, Hungary, UK and Germany offset gains made by the segment’s operations in Alabama, Wayne, Spartanburg in the U.S., as well as Mexico and Slovakia.

4) Doors
-In the fiscal year ended December 31, 2019, the Company’s sales in the Doors business unit increased by 4.7% over the previous year to EUR 1,975.8 million.  The increase in net turnover was primarily attributable to the development of the NAFTA market, specifically with the launch of the Dodge Ram in Shelby, Kentucky and the ramp up of BMW production in Spartanburg, South Carolina. Sales for the Audi Q3 in Turnov, Czech Republic also continued to grow. Positive currency exchange effects contributed an increase of EUR 40.7 million in sales.

5) Cockpits
-The Company’s Cockpits business unit had sales of EUR 974.7 million in the fiscal year ended December 31, 2019, a decrease of 13.4% from the previous year. The decrease in the business unit’s sales was due to decreased sales in Changshu, China and Redditch, UK associated with Jaguar Land Rover models. The sale of the Company’s Tianjin facility also negatively impacted sales. Increased revenue in Straubing, Germany and Liban, Czech Republic, combined with positive currency exchange effects, only partially offset the aforementioned losses.

6) Lighting
-Sales for the Lighting business unit in the fiscal year ended December 31, 2019 totaled EUR 334.1 million, a decrease of 4.3% from the previous year. Decreased sales in Besancon, France and Suzhou, China were the main contributors to the business unit’s losses.

Recent Developments

-The Company is working on a new strategic plan from 2020 onwards which will include, structure and continue many of the lines of work initiated in 2018. With the plan, the Company wants to strengthen its presence among the largest manufacturers of vehicle interiors, lead new mobility trends and continue to be a key partner for OEMs by supporting them in the development of their future vehicles. The new plan will continue progress in the Smart Integrator strategy. This strategy is based on the development of more complex and higher value-added systems, which provide further functions including more technology, electronic and lighting solutions. The Company is increasing its capabilities in electronics and looking for key technology partners that provide added value to its products, such as the partnership with the Chinese group Hi-Rain in lighting solutions or with Walter Pack in decorative parts for automotive interiors. (From a press release on November 28, 2019)

-The Company is investing in new lighting solutions with an emphasis on electronics which can then be combined with decorative items. The lighting business is key to the Company’s strategy to develop integrated products, which include more technology and electronics to offer new functions. This year the Lighting Business Unit will launch nearly 30 new projects around the world. In 2018, the Company unveiled its new Guangzhou plant specializing in lighting for the Chinese market, and secured an agreement with the Chinese HiRain group to develop new and innovative lighting solutions for the world’s largest car market. (From a press release on October 21, 2019)

Contracts

-In 2019, the Company had 413 live projects across its product portfolio, including 120 new projects.

-The Company has begun to supply components for the new Volkswagen ID.3, Volkswagen’s first model on its new electric car platform. In addition, the Company produces instrument panels, interior ambient lighting, decorative films and door panels for the Audi e-tron. The Company also supplies parts to Chinese models including the Byton M-Byte, Aiways U5 and Nevs 9-3. The Company produces a new storage system, located under the hood of the vehicle, among other components for the Volvo XC40 electric. In total, the Company has approximately 420 ongoing projects across all business units. (From a press release on November 28, 2019)

-The Company is carrying out the biggest series of launches in its history with 419 ongoing projects. The Company is also focused on improving its competitive position by taking advantage of the commercial opportunities offered by the mobility of the future. It has projects to equip 67 electric models. These consist of 37 fully electric vehicles, of which more than half have not yet been launched, and 30 electric versions of ICE vehicles. In order to take advantage of future mobility, which will be characterized by electric, self-driving connected cars, the Company’s strategy is focused on developing integrated products, which include advanced technology and electronics, offering further functions and lighting solutions. (From a press release on September 12, 2019)

-The Company has decided to enter Vietnam as part of its growth strategy in Asia. It will supply components to VinFast, a new carmaker that will launch this summer its first two models. The Company will supply overheads and sunvisors to VinFast vehicles. (From a press release on May 29, 2019)

R&D Expenditure

 (in million EUR)
  FY ended Dec. 31, 2019 FY ended Dec. 31, 2018 FY ended Dec. 31, 2017
Expense in projects 159.5 150.7 148.9
% of Sales 3.1 2.8 2.8

 

R&D Facilities

-As of December 31, 2019, the Company has 24 technical-commercial offices, distributed as follows:

  • Western Europe: 12
  • Eastern Europe: 1
  • Asia Pacific: 7
  • North America: 2
  • Other: 2


-In addition to the new production plant, Bamberg, Germany features a new state-of-the-art Technical Center with world class experts who will focus on technological developments in the ambient lighting business such as the new generation of dynamic ambient lighting products. The technical center supports the Company’s teams in Mexico, the U.S., China, India, and Europe. (From a press release on May 16, 2019)

R&D Structure

-As of December 31, 2019, the Company has more than 1,750 employees working in research and development.

R&D Activities

-The Company is starting to focus on development programs to enhance its products through the integration of new functionalities and technologies and development processes to improve efficiency and competitiveness. These programs include the following:

  • Smart surfaces which integrate capacitive sensors and backlighting solutions to enhance appearance and aesthetics
  • Interior surfaces with improved properties suited for intensive use, enabling easy cleaning and high antimicrobial performance
  • Dynamic ambient and functional interior lighting solutions to improve comfort and safety
  • Heated surfaces as related to the impact on passengers and the effect of energy management in electric vehicles
  • Functional printing processes and new conductive inks to develop new electrical circuits to replace conventional wiring in some components
  • Solutions for the modularization of components and new electronic control techniques to improve mechanism performance


-The Company continued its involvement in the e-SPACE mixed research unit, partnering with Centro Tecnologico de Automocion de Galicia (CTAG) and other organizations. The e-SPACE research alliance allows the Company to receive support in the area of electronics for the development of several projects.

ANTOLIN i.JUMP open innovation program
-The Company launched the second set of challenges of the ANTOLIN i.JUMP open innovation program. With this program, the Company aims to develop innovative solutions to lead the transformation of the automotive industry, following the trends of the electric and connected vehicle and digitalization. The first challenge revolves around finding cooling solutions that improve the thermal comfort of the passengers inside the vehicle. The second challenge is related to product traceability. The goal is to find reliable and low-cost sensorization and data-collecting solutions to monitor a product’s status at any given stage of a high-pressure and high-temperature manufacturing process. The third challenge focuses on a complete car interior lighting system with all possible functions, including design, control and operating technology, that meets the needs of the new types of mobility. (From a press release on November 4, 2019)

-The Company and ennomotive launched the first three technological challenges of the ANTOLIN i.JUMP open innovation program. With this program, the Company aims to develop innovative solutions to lead the transformation of the automotive industry, following the trends of the electric and connected vehicle and digitalization. The first challenge focuses on finding new functions based on intelligent systems to improve life in the vehicle that can be operated without user intervention. Systems must combine monitoring actions by sensors with control actions by actuators. The second challenge focuses on air quality. The goal is to find systems that manage and ensure good air quality in the vehicle. This can be done by measuring and controlling characteristics such as temperature, carbon dioxide and humidity. Finally, the third challenge focuses on solutions for cooling electronics integrated in the vehicle. More specifically, the solutions must be easy to integrate and ensure good thermal conditions without excessive power consumption or user interaction. (From a press release on May 6, 2019)

-The Company announced that it will launch ANTOLIN i.JUMP, an open innovation initiative allowing it to work with the crowdsourcing environment to reinforce and accelerate the research and technological development of the company. The Company wishes to create an open ecosystem for the exchange of ideas and knowledge in which everyone can take part, including engineers and other STEM professionals, as well as startups, SMEs, technology centers and universities. The Company will launch a series of challenges for this innovation ecosystem to find solutions. The launch of the challenges will be carried out in partnership with ennomotive, the leading open innovation platform for resolving technological challenges, involving more than 15,000 engineers from across the world. The first challenges will be launched next week and will seek technical solutions that improve quality-of-life in vehicles, related to new functions such as smart systems, interior lighting, electronics, thermal comfort and air quality. (From a press release on April 29, 2019)

Technological Alliances

-In 2019, the Company formed several collaborations and agreements with other companies and organizations, including the following:

  • Walter Pack: Agreement to improve business development of interior decorative surfaces and development of products with advanced integrated technologies
  • Eyesight Technologies: Agreement to develop vision systems based on AI for advanced driver and passenger monitoring solutions

Beijing Jingwei HiRain Technologies (Hi-Rain)
-On February 20, 2019, the Company announced that it signed a strategic partnership agreement with Beijing Jingwei HiRain Technologies Co., Ltd., in Shanghai, China. The two companies will work together in developing innovative lighting system solutions for both exterior and interior purposes. The Company is pursuing a smart integrator strategy which aims at creating smart automobile interior parts by integrating automobile lighting, electronic components, sensors, cameras, and monitors. Beijing Jingwei HiRain Technologies is one of the largest Chinese automotive electronics car parts manufacturers and is headquartered in Beijing. The two companies have already launched joint development of dynamic ambient lighting solutions and are planning to introduce the latest version that incorporates an all-new interior lighting function which meets the requirements of Chinese end users in 2019. (From media reports on February 20, 2019)

Product Developments

Technologies shown Automotive Interiors Expo in collaboration with Walter Pack
-The Company will be exhibiting at the next Automotive Interiors Expo with its strategic partner Walter Pack. They will present a door capacitive pad incorporating flexible electronics and haptic feedback which facilitates user interaction and reduces costs. The different finishes of the backlit film provide a pleasant look and feel. It will also display a premium overhead console, which incorporates capacitive touch with haptic feedback, gesture recognition by both capacitive field and time of flight technologies, environmental sensors, matrix illumination, A2B microphone, dynamic lighting. The lighting is adapted to passenger needs, providing different lighting effects. The Company will also showcase natural decorative inserts, distinctive material choices from cork, leather or natural stones that enhance a surface. (From a press release on October 21, 2019)

Capital Expenditure

 (in million EUR)
  FY ended Dec. 31, 2019 FY ended Dec. 31, 2018 FY ended Dec. 31, 2017
Overall 301.4 320.4 333.4


-The Company’s capital expenditures for the fiscal year ended December 31, 2019 focused on its facilities in the following locations:

  • Besancon, France
  • Silesia, Poland
  • Bamberg, Germany
  • Turnov, Czech Republic
  • Liban, Czech Republic
  • Kentucky, U.S.
  • Toluca, Mexico
  • Cuautitlan, Mexico


-The Company expects that its capital expenditure for the fiscal year ending December 31, 2020 will decrease compared to the previous fiscal year. It expects to invest in a new facility in Cuautitlan, Mexico to support production of door systems for Ford’s new electric model (Ford Mustang Mach-e) beginning in the middle of 2020. In addition, due to the Covid-19 pandemic, the Company has postponed 20% of its first quarter investments as well as its planned investments for the second and third quarter of 2020.

Investments outside Spain

<Vietnam>
-As part of its growth strategy in Asia, the Company opened a Just in Time center within the VinFast industrial park in Haiphong, Vietnam to provide service to VinFast, a new automaker in the country. The Company has ongoing projects to supply components to 14 electric vehicles in China, mainly from local brands. (From a press release on May 29, 2019)

<Germany>
-The Company opened new facilities in Bamberg, Germany specialized in the lighting business. The Bamberg facilities employ approximately 400 people and can produce over 2,500 different items for premium carmakers. In total, EUR 11.5 million has been invested in building the facilities, which replace the old plant, and the industrial launch of new lighting projects. (From a press release on May 16, 2019)

<Mexico>
-As part of its continuing effort to increase the number of its projects, the Company will open a new factory in Cuautitlan, Mexico, which will supply doors panels and instrument panels to Ford. The new Cuautitlan factory will employ more than 100 people and incorporate state-of-the-art technology and processes. The Company’s Arteaga and Toluca factories are also involved in the Ford project. (From a press release on April 4, 2019)