[Gen-AI Analysis] Linamar Corporation Business Report FY ended 2012 - MarkLines Automotive Information & Gen-AI Platform

Linamar Corporation Business Report FY ended Dec. 2012

Business Highlights

Financial Overview

(in million CAD)

	FY ended Dec. 31, 2012	FY ended Dec. 31, 2011	Rate of change (%)	Factors
Overall
Net Sales	3,221.9	2,861.4	12.6	-
Operating Income	218.5	157.0	39.2	-
Powertrain/Driveline Segment
Net Sales	2,741.2	2,534.8	8.1	1)
Operating Income	195.8	163.8	19.5	2)

Factors
1) Net Sales of Powertrain/Driveline Segment
-2012 sales for the Powertrain/Driveline segment increased by CAD 206.4 million, or 8.1% compared with 2011. The sales increase in 2012 was impacted by:

significant levels of newly launched programs from the Company's substantial book of launch business;
higher volumes on increased consumer demand in the US and Asia; partially offset by:
decreased demand in the on and off highway commercial vehicles markets primarily in Europe;
decreased demand in other European markets for mature programs.

2) Operating Income of Powertrain/Driveline Segment
-The 2012 operating earnings for the Powertrain/Driveline segment increased by CAD 32.0 million or 19.5% compared with 2011. Factors impacting operating income in 2012 include:

improved margins as production volumes increased on launching and mature programs; partially offset by:
investment in fixed labour and overhead costs to support the future growth of the market;
decreases due to the reduced volumes in the on and off highway commercial markets;
the weakening of the US dollar and euro against other currencies.

Acquisitions

-In 2011, the Company 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 EUR 50 million. The transaction was closed in February 2011. (From a press release on February 1, 2011)

R&D

R&D Structure

-The Company has four development centers – one in Ontario and one each in Michigan, Germany and Hungary. McLaren Performance, acquired by the Company in 2003, provides much needed capabilities in terms of product design, development, testing and analysis. McLaren Performance is historically known for its expertise in the engine area but has gained extensive knowledge in Transmission and Driveline systems within the last several years.

-As of December 31, 2012, McLaren Performance, plus the engineering and design staff consisted of approximately 1,065 people in all Company plants.

Investment Activities

Capital Expenditure

(in million CAD)

	FY ended Dec. 31, 2012	FY ended Dec. 31, 2011
Overall	366.9	348.5

Investment Outside Canada

<China>
-In 2012, the Company began expanding its presence in China by building another facility in Wuxi and securing another manufacturing facility in Tianjin, China. Start of production for both facilities is anticipated sometime in 2013 and 2014.

-In 2011, the Company said that it is establishing a second plant in Wuxi, because its first plant has become unable to meet growing local demand. The new facility was scheduled to begin operation in the autumn of 2012. (From an interview in November 2011)

<Germany>
-In 2012, the Company opened a new plant in Germany which will primarily be manufacturing driveline systems for European OEMs.