Modine Manufacturing Company Business Report FY ended Mar. 2014

Business Highlights

Financial Overview

(in million USD)
  FY ended Mar. 31, 2014 FY ended Mar. 31, 2013 Rate of
change (%)
Net Sales 1,477.6 1,376.0 7.4 1)
Operating Income 37.2 (0.6) - 2)
Sales by segment
Europe 584.4 498.0 17.3 3)
North America 568.7 564.5 0.7 4)
South America 122.7 133.8 (8.3) 5)
Asia 71.5 59.5 20.2 6)

1) Net Sales
-The Company's net sales in the FY ended March 31, 2014 increased by 7.4% over the previous year to USD 1,477.6 million. The increase in sales was driven by increases in sales volumes for both the commercial vehicle and automotive markets and was slightly offset by unfavorable foreign currency exchange rates in South America.

2) Operating Income
-In the FY ended March 31, 2014, the Company's operating income increased by USD 37.8 million from the previous year to USD 37.2 million. Factors leading to the increased income include higher gross profits on increased sales volumes, favorable material costs and lower impairment charges compared to the previous year.

3) Europe
-Net sales for the Company's European operations increased by 17.3% to USD 584.4 million in the FY ended March 31, 2014. Sales increased due to increased sales volumes to commercial vehicle customers, higher tooling sales and favorable foreign currency exchange rate changes.

4) North America
-The Company's sales in North America increased 0.7% in the FY ended March 31, 2014 to USD 568.7 million. Higher sales to automotive and commercial vehicle customers were partially offset by decreased sales to off-highway customers due to a relatively weak market.

5) South America
-In the FY ended March 31, 2014, sales in South America dropped 8.3% to USD 122.7 million. Despite increased sales volumes of commercial vehicles, sales in the region decreased due to a USD 14 million unfavorable impact in foreign currency exchange rate changes.

6) Asia
-Net sales in Asia increased 20.2% to USD 71.5 million in the FY ended March 31, 2014 due to increased sales in the automotive and off-highway markets.


-The Company announced its intention to close its manufacturing facility in McHenry, Illinois, USA. The closure is expected to impact approximately 135 full-time employees. The Company plans to transfer McHenry production to other facilities in North America, including those in Nuevo Laredo, Mexico, Lawrenceburg, Tennessee and Jefferson City, Missouri. The McHenry plant makes parallel flow and serpentine condensers, oil coolers and radiators for the automotive, commercial vehicle, off-highway and building HVAC markets. Plans call for the plant to close over an 18 month period. (From a press release on April 23, 2014)

Recent Development outside US

-In the FY ended March 31, 2014, 66% of the Company's sales were generated from customers outside of the US, 56% of which was generated from the Company's foreign operations and 10% from exports from the US.

-The Company continued its restructuring program across Europe during the FY ended March 31, 2014. Several facilities were closed and the Company began to consolidate two manufacturing facilities in Germany into a single plant.

Outlook for FY ended March 31, 2015

-In the FY ending March 31, 2015, the Company expects an increase of 3% to 8% in net sales. The Company also anticipates its operating income to be between USD 65 million and 73 million.


R&D Expenditure

(in million USD)
  FY ended Mar. 31, 2014 FY ended Mar. 31, 2013 FY ended Mar. 31, 2012
Overall 61.7 68.4 70.2

-Over the last three years, the Company's R&D expenditures have been between 4 and 5 percent of sales.

R&D Structure

-The Company's primary research facilities are located in Racine, Wisconsin, US and Bonlanden, Germany. Additional technical centers are located in Sao Paulo, Brazil; Leeds, UK; and Changzhou, China.

-To achieve efficiencies and lower developmental costs, the Company's research and engineering groups work closely with its customers on special projects and systems designs.

R&D Activities

-The Company's current R&D activities are focused primarily on the areas of powertrain cooling, engine products and commercial HVAC products.

-Recently, the Company has worked with the US Department of Energy to develop waste heat recovery systems for US-based engine and truck manufacturers. These systems would help manufacturers meet demands for emissions reduction while improving powertrain efficiency and thus fuel economy.

-The Company has been developing next-generation aluminum radiators for commercial vehicle, agricultural, and construction markets, as well as exhaust gas recirculation technology to enable customers to meet stricter emission standards.

Product Development

-The Company is developing a series of compact heat exchangers designed to capture waste heat from the exhaust stream of a diesel engine and convert this heat into useful power to improve engine efficiency and reduce CO2 emissions. As part of this development effort, the Company has been involved in a Department of Energy-sponsored program called SuperTruck and has provided these heat exchangers to a Cummins-Peterbilt concept vehicle for comprehensive road testing. During testing, the vehicle achieved a fuel economy of 10.7 miles per gallon. The truck also demonstrated a 75 percent increase in fuel economy in head-to-head testing over a 24-hour time period compared with a baseline 2009 truck. (From a press release on February 21, 2014)


-The Company has acquired or been granted over 2,000 patents worldwide over its history.

Investment Activities

Capital Expenditure

(in million USD)
  FY ended Mar. 31, 2014 FY ended Mar. 31, 2013 FY ended Mar. 31, 2012
Europe 22.9 16.5 29.8
North America 18.9 19.0 15.2
South America 5.7 3.4 5.2
Asia 4.6 7.8 12.5
Commercial Products 1.0 3.1 1.7
Total capital expenditure 53.1 49.8 64.4

-The Company's capital expenditures in the FY ended March 31, 2014 primarily went towards tooling and equipment purchases in conjunction with various program launches.