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5. Magneti Marelli S.p.A. Business Report FY ended Dec. 2015

Magneti Marelli S.p.A. Business Report FY ended Dec. 2015

Factors
1) Net Sales
-For the fiscal year ended December 31, 2015, the Company’s net sales increased by 11.7% over the previous year to EUR 7,262 million. The increase in sales was caused by improved performances in the Company’s lighting and electronic systems businesses.

2) EBIT
-The Company’s EBIT in the fiscal year ended December 31, 2015 was EUR 321 million, a 40.2% increase from the previous year. Factors leading to this increase include higher sales volumes, and improved cost containment actions and efficiencies.

Joint Ventures

-The Company’s Automotive Lighting division and Changchun Fudi Equipment Technology Development Co. Ltd. (FUDI), a Chinese investment company active in the automotive components industry, have signed an agreement to establish a joint venture (JV) aimed at the production and sale of automotive lighting systems. According to the agreement, Automotive Lighting Reutlingen GmbH will own 60% of the share capital of the new company, Changchun Magneti Marelli Automotive Lighting System Co., Ltd., while FUDI will hold the remaining 40%. The industrial facilities of the JV will be located in the Economic and Technological Development Zone of Changchun, Jilin Province and will be aimed at supplying carmakers in Northeast China. The JV will produce headlamps and rear lamps based on halogen, xenon and LED technologies. The plant will be set up within the first quarter of 2016, and production is expected to start in the first quarter of 2017. At peak volume, the 23,300-square-meter plant will employ a workforce of about 800 employees. (From a press release on December 21, 2015)

-The Company’s Magneti Marelli Powertrain India Private Ltd. joint venture with Maruti Suzuki and Suzuki Motor Company recently inaugurated a new industrial site for the production of robotized gearboxes for automobiles, also known as AMT (Automated Manual Transmission). The plant is located in Manesar, India and covers a total surface area of 7,500 square meters. When fully operational, the plant will employ approximately 115 people and have an annual production capacity of 280,000 robotized gearbox kits. (From a press release on October 19, 2015)

-The Company and Faurecia S.A. announced the start of production of their joint venture which delivers interior and exterior parts for vehicles assembled at the new FCA plant in Goiana, Pernambuco, Brazil. Ownership of the joint venture, FMM Pernambuco Componentes Automotivos Limitada, is divided such that the Company owns 65% of the joint venture, while Faurecia owns 35%. The joint venture targets annual sales of above EUR 200 million in the long run. The joint venture manufactures interior parts such as instrument panels, cockpits, center consoles and door panels, and exterior parts such as bumpers and spoilers. The new plant is located in the strategic supplier park located in close proximity to the FCA Goiana plant, and has started delivering parts for the Jeep Renegade. (From a press release on May 7, 2015)

Major Contracts

-Examples of models currently equipped with the Company’s AMT gearbox in India include the Maruti Celerio, Maruti Alto, Tata Nano and Tata Zest. (From a press release on October 19, 2015)

-The Company announced that the new Alfa Romeo Giulia Quadrifoglio features distinctive technologies designed in collaboration with the automaker. The Company is making an important contribution in the area of electronic systems. At the forefront is a CDC (Chassis Domain Control) electronic control unit and a new infotainment system equipped with an 8.8-inch "black panel" TFT (Thin Film Transistor) display. The Company worked with Alfa Romeo to produce the headlamps and rear lamps of the Giulia. The 510 hp 6-cylinder petrol 3.0 engine with twin turbocharger features a motorized throttle and intake manifold manufactured by the Company. In addition, the Company produces the components of the front and rear suspensions, the exhaust system, the pedal board and other plastic parts. (From a press release on September 15, 2015)

-The Company’s Automotive Lighting division and Audi AG have jointly developed a full LED smart headlamp for the Audi TT3. The Audi Matrix headlamp is characterized by the glare-free high-beam light composed of 12 LEDs individually controlled by a camera positioned behind the windscreen. The LEDs combine with an ECU to automatically switch on and off based on opposing or proceeding traffic. (From a press release on April 1, 2015)

R&D Activities

-The Company announced that it has joined the Open Automotive Alliance (OAA), an alliance of technology and auto industry leaders committed to making Android solutions available into the car. The Company will deliver in-vehicle infotainment systems equipped with this function as a product for an automobile manufacturer by the end of 2016. (From a press release on May 29, 2015)

-At Expo Milano 2015, FCA Group delivered a fleet of fuel-efficient, low-emission vehicles. Out of a fleet of 105 vehicles, 50 methane-fueled 500L models are equipped with the Company’s T-BOX telematics system. The cars will be used for the car sharing service exclusively available to the numerous international delegations that will be present in Milan. The telematics box allows communications with the service center to locate the vehicle. T-BOX also enables functions such as remote door operation, remote ignition by authorized parties via smartphone app, and the collection of on-board system data, thus providing real-time information about the car’s status. (From a press release on March 30, 2015)

Investment Outside Italy

-The Company signed a contract with the Jilin Economic & Technological Development Zone to establish an automotive lighting plant in the zone with a CNY 1,100 million investment. The plant will be constructed on a 100,000-square-meter plot, and will manufacture lighting products for FAW-VW, Audi and other automakers. Construction will begin in the second half of 2015, with production scheduled to begin in 2017. The plant aims to produce products worth CNY 2,000 million by 2020, and is planning to manufacture other vehicle parts in the future. (From news releases issued by multiple sources on July 13, 2015)

-The Company announced the further enlargement of its Chinese footprint with a new manufacturing plant in Xiaogan, Hubei for lighting systems and an expanded production facility in Guangzhou, Guangdong for electronic systems. The Company inaugurated the new plant in Xiaogan, which is a joint venture with China South Industries Group Corporation and called Hubei Huazhong Magneti Marelli Automotive Lighting Co. Ltd. The initial manufacturing capacity will be 500,000 headlamps, made for the Ford Taurus. Annual manufacturing capacity is expected to reach 2.5 million headlamps and 2.5 million rear lamps in 2019. The new plant is located close to facilities belonging to the Changan Group, Dongfeng Peugeot Citroen and Dongfeng Honda. The initial total investment for the plant is worth EUR 14 million, with a plan of nearly tripling the investment over the next five years. The Company has also invested EUR 22 million in the expanded Electronics Systems plant in Guangzhou. The Guangzhou plant’s current manufacturing capacity is 3.5 million automotive electronic modules, which will reach 10 million in 2019. (From a press release on April 15, 2015)


-The Company announced that it would expand its Automotive Lighting facility in Pulaski, Tennessee, U.S. The expansion will add approximately 80,000 square feet to the current facility and create 450 new jobs. The expansion is expected to be completed by the end of 2015. (From a press release on April 14, 2015)