Linamar Corporation Business Report FY ended Dec. 2016
Financial Overview |
(in million CAD) |
| FY ended Dec. 31, 2016 | FY ended Dec. 31, 2015 | Rate of change (%) | Factors | |
| Overall | ||||
| -Net Sales | 6,005.6 | 5,162.5 | 16.3 | - |
| -Operating Income | 696.8 | 597.0 | 16.7 | - |
| Powertrain/Driveline Segment | ||||
| -Net Sales | 5,139.2 | 4,310.2 | 19.2 | 1) |
| -Operating Income | 551.6 | 440.8 | 25.1 | 2) |
Factors
1) Powertrain/Driveline segment sales
-In the fiscal year ended December 31, 2016, sales in the Company’s Powertrain/Driveline segment increased by 19.2% over the previous year to CAD 5,139.2 million. Factors leading to the increase in sales include the acquisition of Montupet S.A., increased number of programs launched in Europe and Asia, and positive currency effects during the first three quarters of the year. These gains were partially offset by lower production volumes on certain programs and lower commercial vehicle sales in North America and Europe.
2) Powertrain/Driveline segment operating income
-The Powertrain/Driveline segment had operating income of CAD 551.6 million in the fiscal year ended December 31, 2016, an increase of 25.1% over the previous year. Increased earnings were attributed to the acquisition of Montupet S.A., increased production volumes on launched programs, improved margins from productivity and efficiency improvements, and positive currency exchange effects. Lower production volumes on certain passenger car programs and commercial vehicles partially offset the gains in income.
Acquisitions
-The French market authority, Autorite des marches financiers (AMF) has published the final results of the reopened public tender offer on the shares of Montupet S.A. As of February 16, 2016, a total of 10,442,924 shares of Montupet S.A have been tendered. At the date of the settlement and delivery of the Offer, the Company should hold 96.85% of the share capital and 96.41% of voting rights of Montupet S.A. The Company then purchased the remaining shares of Montupet on February 25, 2016, owning 100% of Montupet’s shares at a total purchase price of CAD 1,187.3 million. (From a press release on February 16, 2016)
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. The Company is also developing components for ICE vehicles to improve fuel efficiency and lower emissions.
R&D Structure
-As of December 31, 2016, the Company has 1,528 employees working in research, development and engineering at McLaren Performance. The Company aims to have 25% of its total workforce or approximately 6,250 employees as technical and engineering staff.
R&D Facilities
-The Company has five development centers, with two located in Ontario, Canada; and one each in 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.
-In May 2016, the Company announced a new McLaren Performance Center, combining it with its sales office in Southfield, Michigan, U.S. at a new facility in Livonia, Michigan, U.S.
Capital Expenditure |
(in million CAD) |
| FY ended Dec. 31, 2016 | FY ended Dec. 31, 2015 | FY ended Dec. 31, 2014 | |
| Overall | 343.3 | 341.6 | 263.5 |
| -Powertrain/Driveline | 337.4 | 328.2 | 235.2 |
Investments outside Canada
-The Company and GF Automotive, a division of Georg Fischer AG, announced that they have selected Henderson County, North Carolina, U.S. as the location for GF Linamar LLC’s new jointly owned aluminum die casting plant. The new entity, named GF Linamar LLC will provide large light metal high-pressure die castings for powertrain, driveline, and structural components to the NAFTA automotive market. GF Linamar LLC will invest more than USD 200 million in a new facility in two phases over the next seven years. The plant is scheduled to begin production mid-2017. It is expected to create 350 manufacturing jobs in Henderson County over the coming five years. (From a press release on February 22, 2016)
-The Company continued the construction of its fourth plant in China in 2016. The addition of the fourth plant in China was based on increased demand in the country.