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  5. PKC Group Oyj Business Report FY ended Dec. 2014

PKC Group Oyj Business Report FY ended Dec. 2014

Financial Overview

(in million EUR)
FY ended Dec. 31, 2014 FY ended Dec. 31, 2013 Rate of change (%) Factors
Overall
Sales 829.2 884.0 (6.2) 1)
Operating profit (6.7) 30.5 - 2)
Wiring Systems
Sales 771.4 820.3 (6.0) 3)
Operating profit (0.7) 34.5 - -
Electronics
Sales 57.8 63.7 (9.3) 4)
Operating profit 2.0 4.1 (51.2) -

Factors

1) Net Sales
-The Company's sales for the fiscal year ended December 31, 2014 decreased by 6.2% from the previous year to EUR 829.2 million. Sales were negatively impacted by a variety of factors including decreased truck production volumes, negative impacts from currency exchange rates, and the conclusion of various model year programs.

2) Operating Profit
-In the fiscal year ended December 31, 2014, the Company had an operating loss of EUR 6.7 million, compared to operating income of EUR 30.5 million in the previous year. Factors leading to this operating loss include lower utilization rates in Europe, and increased losses in the Company's Brazilian unit. Additionally, restructuring and expenditures used for the Company's growth strategy contributed to the loss.

3) Wiring Systems Sales
-Sales for the Company's Wiring Systems business decreased by 6.0% in the fiscal year ended December 31, 2014 to EUR 771.4 million. In North America and Europe, certain light vehicle build outs negatively affected sales. Decreased truck production volumes in Europe and South America also decreased sales. Another factor which hurt sales was a customer's decision to insource a bus wiring harness program in Europe. Finally, currency exchange rates decreased sales by approximately 1%.

4) Electronics Sales
-The Company's Electronics business had sales of EUR 57.8 million in the fiscal year ended December 31, 2014, a decrease of 9.3% from the previous year. The decrease was caused primarily by lower demand for the Company's electronics manufacturing services (EMS).

Restructuring

-In January 2014, the Company decided to close the factory in Nogales, Mexico in order to further adapt and align its manufacturing capacity to the North American customer base. Production from the Nogales shall be transferred to the Company's existing facility in Torreon, Mexico. The Nogales facility employs approximately 700 people. These measures are expected to be completed in 2014. (From a press release on January 7, 2014)

Outlook

-The Company expects that its sales for the fiscal year ending December 31, 2015 will be similar to that of 2014, though it expects its 2015 EBITDA will be higher.

R&D Expenditures

(in million EUR)
FY ended Dec. 31, 2014 FY ended Dec. 31, 2013 FY ended Dec. 31, 2012
Overall 8.2 8.5 8.0
% of sales 1.0 1.0 0.9
Employees in product development 149 156 165

 

Capital Expenditures

(in million EUR)
FY ended Dec. 31, 2014 FY ended Dec. 31, 2013 FY ended Dec. 31, 2012
Overall 19.9 14.6 16.0
% of sales 2.4 1.7 1.7
-Wiring Systems 18.4 13.4 14.3
-Electronics 1.2 1.1 0.8

 

Investments outside Finland

-The Company announced that it is starting a development program as a continuation for the consolidation of the wiring systems business in Europe and South America. The development program shall be completed by the end of the first quarter of 2016 and comprises the following four components:

  • Maximizing the production capacity at its factories in Serbia and Lithuania: By the end of 2016, the Company plans to have more than half of Europe's production capacity in these factories. The production of factories in Sosnowiec (Poland) and Haapsalu (Estonia) will be ramped down by the end of 2014.
  • Improving the production and logistics in South America: The Company plans to develop a new cost-efficient and flexible operating model by the end of 2015. The use of production capacity is improved by ramping down the production in Itajuba factory (Brazil) by the end of 2014.
  • Improving customer operations by centralizing Europe's and South America's NPI (New Product Introduction) functions in Keila factory in Estonia.
  • Streamlining of overlapping sales, R&D, purchasing, administrative and production support functions in Europe and South America. (From a press release on August 7, 2014)


-The Company established a wiring harness factory called PKC Vehicle Technology Co., Ltd. in Suzhou, China in 2014. PKC Vehicle Technology designs, develops, manufactures and sells components such as wiring harnesses, electrical boxes, and cables for commercial vehicles.

Data

Number of Employees

  Dec. 31, 2014 Dec. 31, 2013 Dec. 31, 2012
Overall 19,437 18,644 19,305

 

Sales

 (in million EUR)
  FY ended Dec. 31, 2014 FY ended Dec. 31, 2013 FY ended Dec. 31, 2012 FY ended Dec. 31, 2011 FY ended Dec. 31, 2010
Net sales 829.2 884.0 928.2 550.2 316.1

 

Sales by Segment

 (in million EUR)
  FY ended Dec. 31, 2014 FY ended Dec. 31, 2013 FY ended Dec. 31, 2012
Wiring Systems 771.4 820.3 858.8
Electronics 57.8 63.7 69.4
Total 829.2 884.0 928.2

 

Sales by Geographic Area

 (in million EUR)
  FY ended Dec. 31, 2014 FY ended Dec. 31, 2013 FY ended Dec. 31, 2012
Europe 241.4 282.9 278.8
South America 67.9 87.5 76.1
North America 494.0 491.7 552.0
Other countries 26.0 21.9 21.4
Total 829.2 884.0 928.2

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