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5. Grupo Antolin-Irausa, S.A. Business Report FY ended Dec. 2016

Grupo Antolin-Irausa, S.A. Business Report FY ended Dec. 2016

Factors
1) Net Sales
-The Company’s sales in the fiscal year ended December 31, 2016 was EUR 5,247.3 million, an increase of 49.7% over the previous year. The increase in sales was primarily due to the effect of the Company’s previous acquisition of the Magna Interiors Business for a full year, as opposed to a four-month period in the previous year. Excluding the effect of the Magna Interiors Business acquisition, the Company’s sales increased by 7.4%. The Company also had significantly improved sales in Europe and Asia Pacific. These gains were partially offset negative currency exchange effects.

2) EBITDA
-The Company’s EBITDA in the fiscal year ended December 31, 2016 increased by 34.1% over the previous year to EUR 520.7 million. The increase in earnings was almost entirely due to the impact of the acquisition of the Magna Interiors Business, which accounted for an increase of EUR 131.8 million.

3) Overheads & Soft Trim
-Sales for the Overheads & Soft Trim business unit totaled EUR 2,085.9 million in the fiscal year ended December 31, 2016, an increase of 22.8% over the previous year. Improved sales in NAFTA and Europe related to orders from Ford and Jaguar Land Rover contributed to the increase in sales for the business unit.

4) Doors & Hard Trim
-In the fiscal year ended December 31, 2016, the Company’s sales in the Doors & Hard Trim business unit increased by 45.2% over the previous year to EUR 1,461.5 million. One reason for the increased sales in the business unit was increased sales to OEMs including GM, FCA, Tata Motors, and Daimler.

5) Cockpits & Consoles
-The Company’s Cockpits & Consoles business unit had sales of EUR 1,095.7 million in the fiscal year ended December 31, 2016, an increase of EUR 771.5 million. The primary reason for the increase in sales is due to the inclusion of the Magna Interiors Business acquisition for a full year. In addition, the business unit generated additional revenue from improved sales in Europe and Asia Pacific.

6) Lighting
-Sales for the Lighting business unit in the fiscal year ended December 31, 2016 totaled EUR 272.4 million, an increase of 33.0% over the previous year. The increase in sales was due to improved results in Western Europe and China from new projects.

7) Seat & Metal
-The Seat & Metal business unit had sales of EUR 331.9 million in the fiscal year ended December 31, 2016, an increase of 21.7% over the previous year. Improved sales and increased production volumes in response to demand in Western Europe contributed to the business unit’s performance.

Acquisitions

-In January 2016, the Company agreed to acquire the entire stake of Silesia Plastic, a plastics injection molding joint venture located in Poland.

Contracts

-The Company announced that it has been chosen by FCA to manufacture the door panels and modular headliners for the Dodge Ram. The order is the largest order in the Company’s history in terms of revenue. Production is expected to exceed 400,000 vehicles per year. To carry out this project, the Company is planning significant investment in the U.S. (From a press release on September 12, 2016)

R&D Facilities

-As of December 31, 2016, the Company has 29 technical-commercial offices.

-The Andhra Pradesh government announced that a representative of the Company met with Mr. N. Chandrababu Naidu, Chief Minister of the State, to discuss their investment plan in the State. The Company studied various locations in Andhra Pradesh and decided to set up a new engineering design center in Amaravati, at Medha Towers in Gannavaram. The center will initially have 120 employees and eventually increase its workforce to 400 employees. The Company is currently supplying interiors to Audi and Mercedes Benz models. (From Andhra Pradesh government press release on November 24, 2016)

R&D Structure

-As of December 31, 2016, the Company has 1,244 employees working in research and development, with 362 of those employees located in Spain. The number of employees in research and development form approximately 4.9% of the Company’s total workforce.

R&D Activities

-The Company’s research and development activities are focused around the following three central strategies:

• Materials and processes: Weight reduction to reduce CO2 emissions, use of green materials, and cost reduction
• Industrial flexibility: Processes to produce different functions and allow adaptation to meet market demands
• Smart interiors: Supporting customers’ brand strategy to enhance the end user’s experience

-In 2016, the Company started a new project called New Interior which involves the reimagining of future car interiors as a third space. The New Interior focuses on discovering and developing new custom solutions, devices, connectivity systems and other services for the interior. The Company is working with several of its customers to anticipate the needs of the New Interior.

Patents

-As of December 31, 2016, the Company has registered 2,326 patents.

-The Company’s primary investments in property, plant and equipment for the fiscal year ended December 31, 2016 involved the completion of a plant in Tlaxcala, Mexico, as well as investments in the expansion of production plants in France, Austria, Czech Republic, Mexico, and the U.S.

-Investments in intangible assets during the fiscal year ended December 31, 2016 were primarily used on development expenses of new projects for PSA, BMW, VW, Mercedes-Benz, and GM.

-The Company opened a new production facility in Sanand, India. In this new location, the Company will manufacture overhead systems, sunvisors, and interior plastic parts for Ford and Tata Motors. The new factory will employ more than 130 people. (From a press release on May 26, 2016)


-The Company announced that it has opened a new joint venture plant with Dongfeng Visteon in Wuhan, Hubei Province, China to manufacture headliners and door panels. The plant will serve customers including Renault, PSA, Nissan, Infiniti and Honda. To carry out this project, both parties have invested more than EUR 11 million. The investment will expand employment at the plant from its current level of 100 employees to approximately 125 employees at the end of 2016. (From a press release on April 12, 2016)


-The Company announced that it has opened its new plant in Tlaxcala, Mexico. The Company’s eighth plant in the country will manufacture headliners, doors, pillars and seat backs for the new Audi Q5. Furthermore, the plant is also expected to accommodate other projects for Volkswagen Puebla. With this new center, the Company achieves the strategic aim of producing doors in North America. Approximately EUR 35 million (USD 37.6 million) has been invested in the plant, which will provide employment for around 300 people. The new plant can manufacture 4,000 types of doors and is designed to meet the demand for 170,000 vehicles annually. (From a press release on February 29, 2016)

-The Company expects that its capital expenditures in the fiscal year ending December 31, 2017 will increase due to deferred capital expenditures from 2016, as well as investments in the Company’s following production facilities:

• Overheads: Spartanburg, South Carolina, U.S.; Silao, Mexico; Kecskemet, Hungary; Cottondale, Alabama, U.S.
• Doors: Sterling Heights, Michigan, U.S.; Massen, Germany; Saltillo, Mexico
• Lighting: Besancon, France; Guangzhou, China; Bamberg, Germany
• Cockpits: Tianjin, China; Straubing, Germany