GRUPO KUO, S.A.B. de C.V. (Formerly DESC, SA. De CV) Business Report FY ended Dec. 2018

Financial Overview

 (in million MXN)
  FY ended Dec. 31, 2018 FY ended Dec. 31, 2017 Rate of Change
Net Sales 27,282.2 24,473.3 11.5 1)
Operating Income 3,639.0 3,721.2 (2.2) -
-Transmissions SBU sales 4,131.7 4,248.9 (2.8) 2)
-Aftermarket (Auto parts)SBU sales 3,083.2 3,008.4 2.5 3)
Sector Sales 7,214.9 7,257.3 (0.6) -

1) Net Sales
-The Company’s net sales for the fiscal year ended December 31, 2018 increased by 11.5% over the previous year to MXN 27,282.2 million. The increased sales came from primarily from strong growth in the Company’s Consumer and Chemical sectors.

2) Transmissions SBU sales
-Sales for the Company’s Transmissions SBU decreased by 2.8% to MXN 4,131.7 million in the fiscal year ended December 31, 2018. The decrease in sales was primarily due to a decrease in demand for manual transmissions.

3) Aftermarket SBU sales
-The Aftermarket SBU had sales of MXN 3,083.2 million in the fiscal year ended December 31, 2018, an increase of 2.5% from the previous year. An increase in demand of main brake and powertrain lines, specifically in Mexico, was the main driver for the business unit’s increased sales.


-In April 2018, Chevrolet introduced the refreshed 2019 Camaro, featuring a distinctive design and new technologies. The Turbo 1LE version of the Camaro features the Company’s Tremec six-speed manual transmission, as well as a tailored chassis package to provide track-capable performance. (From a press release on April 9, 2018)

R&D Facilities

-The Company’s Transmissions Strategic Business Unit has research and development facilities in Belgium and Mexico.

R&D Activities

-The Company is in the process of designing and prototyping next-generation dual clutch transmission technology due to the signing of a new contract for the delivery of the technology.

-With the strengthening of the Company’s Dynasol joint venture through the contribution of the Company’s emulsion rubber and nitrile businesses in Mexico and China, respectively, the Company has begun to place a larger focus on the development of high-performance tires.

Product Development

Next-generation dual-clutch transmissions
-The Company is investing USD 150 million from 2016 through 2020 for the development of next-generation dual-clutch transmissions. The development process is currently in the testing phase. Testing and subsequent commercialization for the next-generation transmissions are both expected to take place in 2019.

Capital Expenditures

 (in million MXN)
  FY ended Dec. 31, 2018 FY ended Dec. 31, 2017 FY ended Dec. 31, 2016
Automotive 1,126.5 990.1 364.6
Chemical 386.2 389.3 227.3
Consumer 2,001.4 1,919.6 871.1
Others 23.5 1.3 1.4
Excluding Joint Ventures (415.3) (304.2) (268.8)
Total 3,122.2 2,996.2 1,195.5


Investment Activities

-Investments made related to the Company’s automotive sector include integration of the Company’s engine product lines, improvements in its brakes and pistons facilities, and development of its high performance tire segment.

-During 2017, the Company continued with the investment for the DCT ("Dual Clutch Transmission") infrastructure, with the first unit to be launched in 2019.

Investments in Mexico

-In 2018, the Company expanded its Aftermarket SBU plant in Celaya, Mexico, aiming to improve both productivity and product quality. The expansion spans an area of 8,000 square meters and will be used primarily to expand manufacturing of braking segment products.

Investments outside Mexico 

-In 2018, the Company expanded its facility in Novi, Michigan, U.S. The expansion would be used for the design, development and manufacturing of high-performance transmissions and transmission components. The facility would also provide services and capabilities including engineering, business development, testing and assembly operations.