Linamar Corporation Business Report FY ended Dec. 2015
Financial Overview |
(in million CAD) |
| FY ended Dec. 31, 2015 | FY ended Dec. 31, 2014 | Rate of change (%) | Factors | |
| Overall | ||||
| -Net Sales | 5,162.5 | 4,171.6 | 23.8 | - |
| -Operating Income | 597.0 | 447.4 | 33.4 | - |
| Powertrain/Driveline Segment | ||||
| -Net Sales | 4,310.2 | 3,479.3 | 23.9 | 1) |
| -Operating Income | 440.8 | 337.7 | 30.5 | 2) |
Factors
1) Powertrain/Driveline segment sales
-In the fiscal year ended December 31, 2015, sales for the Company’s Powertrain/Driveline segment increased by 23.9% over the previous year to CAD 4,310.2 million. The increase in sales was due to favorable currency exchange rates, the acquisitions of forging businesses in Europe in the first quarter of 2015, and a number of newly launched programs in North America and Europe.
2) Powertrain/Driveline segment operating income
-The Company’s Powertrain/Driveline segment had operating income of CAD 440.8 million in the fiscal year ended December 31, 2015, an increase of 30.5% over the previous year. The increase in operating income was caused by improved earnings from increased production volumes, positive impacts from favorable currency exchange rates, and increased earnings from the acquisition of forging businesses. These were partially offset by increased management and sales costs.
Acquisitions
-The Company announced its intention to file a tender offer for 100% of the outstanding shares and voting rights of Montupet S.A. The implied transaction value for 100% of Montupet is approximately EUR 771 million. The tender offer is expected to open to the public in early December 2015 and is expected to close in February 2016. Montupet is a global leader in the design and manufacture of complex aluminum castings for the global automotive industry with sales and production facilities across Europe, North America and Asia. (From a press release on October 15, 2015)
Joint Ventures
-The Company has agreed to cooperate with GF Automotive, a division of Georg Fischer AG, in North America, Europe, and Asia to provide integrated casting and machining solutions to automotive, industrial, and commercial customers. The two companies plan to build a new jointly owned light metal foundry in the southeastern U.S. The 50-50 joint venture, GF Linamar LLC, will provide light metal high-pressure die castings for powertrain, driveline and structural components to the NAFTA market. The foundry is scheduled to begin production in mid-2017. The overall investment over the next five years will amount to approximately USD 100 million. (From a press release on July 16, 2015)
Recent Developments
-The Company would like to confirm that it does not expect any material impact to its operations or financial performance as a result of the EPA's accusations against Volkswagen AG. VW is a strategic customer but is not considered a material customer for the Company as sales to VW represents less than 5% of the Company consolidated sales for the first six months of 2015. As a result, any decline in sales as a result of the VW emission allegations is not expected to have a material impact to the Company's net earnings. (From a press release on September 24, 2015)
Growth Strategy
-The Company’s strategy is to focus on “Diversified Manufactured Products to Power Vehicles, Motion, Work and Lives”. In relation to the automotive industry, the Company has focused on developing products for a variety of vehicle powertrains including ICE, hybrid, electric, and fuel cell vehicles. For example, the Company’s E-Axle is suited for hybrid and electric vehicles. Also, the Company is developing components for ICE vehicles to improve fuel efficiency and lower emissions.
R&D Structure
-As of December 31, 2015, the Company has approximately 1,246 employees working in research, development and design, including employees working at McLaren Performance.
R&D Facilities
-The Company has five development centers, located in Ontario, Canada; Detroit, Michigan, U.S; Saxony, Germany; and Bekes, Hungary. The McLaren Performance facility in Detroit provides capabilities for product design, development, testing and analysis for engine, transmission, and driveline systems.
-The Company’s McLaren Performance center recently underwent a renovation to transform it into a sales & engineering center. The renovations are expected to add 75 new jobs at the facility.
R&D Activities
-The Company is currently engaged in two projects in both Canada and the U.S. to help electrify light commercial delivery van fleets for its customers.
Capital Expenditure |
(in million CAD) |
| FY ended Dec. 31, 2015 | FY ended Dec. 31, 2014 | FY ended Dec. 31, 2013 | |
| Overall | 341.6 | 263.5 | 244.9 |
| -Powertrain/Driveline | 328.2 | 235.2 | 224.6 |
-The Company’s capital expenditures during the fiscal year ended December 31, 2015 were primarily focused on the production ramp up of current programs.
Investments outside Canada
-In 2015, the Company completed construction on its third plant in China. In addition, the Company is planning to begin construction on its fourth plant in China based on additional business that it has won in the country.