[Gen-AI Analysis] Linamar Corp. Business Report FY2010 - MarkLines Automotive Information & Gen-AI Platform

Linamar Corp. Business Report FY2010

Business Highlights

Financial Overview

(in million Canadian dollars)

	FY2010	FY2009	Rate of change (%)	Factors
Overall Corporate Results
Sales	2,229.2	1,675.9	33.0	-
Operating Earnings	131.1	(50.5)	-	-
Powertrain/Driveline
Sales	2,076.0	1,514.6	37.1	1)
Operating Earnings	159.5	(10.1)	-	2)

Factors
1) Sales for the Powertrain/Driveline segment increased by $121.3 million, or 27.7% in Q4 2010 compared with Q4 2009.

The sales increase in Q4 2010 was impacted by:
-significant levels of maturing volumes and newly launched programs from the company’s substantial book of launch business;
and
-higher sales driven by moderately increased consumer demand in the US and Asia.

The sales for Powertrain/Driveline increased by $561.4 million, or 37.1% in 2010 compared with 2009. The same factors that impacted Q4 2010 also impacted the annual results, noting global vehicle volume growth was a more substantial factor in the annual comparison than in the quarterly comparison.

2) Q4 2010 operating earnings for Powertrain/Driveline were higher by $9.3 million or 32.3% over Q4 2009. The Powertrain/Driveline segment experienced the following in Q4 2010:
-improved margins as production volumes increased on mature and launching new programs;
-increase in inventory provisions for slow moving inventory and for inventory where the cost was in excess of the net realizable value.
-weakening US dollar against the Canadian dollar in the quarter resulted in a foreign exchange gain on the translation of the US $130 million of private placement senior unsecured notes that were announced on July 23, 2010.

Acquisitions

-The Company has agreed to acquire three automotive components business from Famer Group of France, consisting of Famer Industrie (St Romain en Gier), Famer Transmissions (Montfaucon) and Famer Rivoire (St Etienne). The Famer Group manufactures cylinder heads, engine blocks, gears and other engine and transmission parts, with a total annual revenue of approximately 50 million euros. The transaction is expected to be closed in February 2011. (From a press release on February 1, 2011)

-The Company has acquired the additional shares of its subsidiary Linamar Hungary Nyrt, increasing its stake in Linamar Hungary from about 70.3% to approximately 99.0%. (From a press release on July 2, 2010)

Restructuring

-The Company announced its plan to close Linamar Automotive Systems Swansea Company Limited (LASSCO), a powertrain plant based in Swansea, Southern Wales, UK. The production will be transferred to elsewhere. (From a press release on July 7, 2010)

R&D

R&D Structure

-The Company's Product Development encompasses a wide range of competencies that are organized under the umbrella of McLaren Performance Technologies. With 3 locations in Livonia, MI, Guelph, ON and Crimmitschau Germany, the Company is able to serve a broader range of customers on a more global basis.

Investment Activities

-The Company is investing in approximately 200 projects worldwide to install and add new equipment. (From an interview on Nov. 2011)

Investment Outside Canada

<China>
-The Company is establishing a second plant in Wuxi, because its first plant has become unable to meet growing local demand. The new facility is scheduled to begin operation in the autumn of 2012. (From an interview on Nov. 2011)