Visteon Corporation Business Report FY ended Dec. 2012

Business Highlights

Financial Overview

(in million dollars)
  FY ended Dec. 31, 2012 FY ended Dec. 31, 2011 Rate of change
(%)
Factors
Overall
Sales 6,857 7,532 (9.0) -Decrease by the deconsolidation of Duckyang Industry Co., Ltd.
-Unfavorable currency translation
-Increase by the higher production volumes in Asia and North America.
Climate
Sales 4,286 4,053 5.7 -Higher production volumes in Asia, North America and Europe
-Unfavorable currency translation
Electronics
Sales 1,250 1,367 (8.6) -Volume declines due to the weakened economic conditions in Europe
-Unfavorable currency translation
-Higher production volumes in North America and Asia
Interiors
Sales 1,412 2,285 (38.2) -Decrease by the deconsolidation of Duckyang Industry Co., Ltd.
-Unfavorable product mix
-Weakened economic conditions in Europe
-Unfavorable currency translation

Divestitures

<Interiors>
-In December 2013, the Company sold all of its interest in Yanfeng Visteon Automotive Trim Systems Co., Ltd. to its Chinese joint venture partner Huayu Automotive.

-In 2012, Kasai Kogyo Co., Ltd. will acquire a whole stake in R-TEK Limited, a fifty-fifty joint venture subsidiary headquartered in Tyne & Wear, the U.K., which is engaged in manufacture and sales of automobile interior components, the company announced on July 26. The joint venture partner Reydel Ltd., which is currently Visteon Corporation and owns fifty percent of shares in R-TEK, has offered to sell the stocks it holds. The deal is expected to be completed by the end of August. Kasai expects the fully-owned subsidiary will contribute to enhancing its foothold in the U.K. in supporting growth strategy of automakers and an increase in their automobile production in the European market. (From an article in the Nikkan Jidosha Shimbun on July 27, 2012)

<Climate>
-In Jan. 2013, the Company and Halla Climate Control Corp. (HCC), a Korea-based affiliate, announced that they have signed a definitive agreement to sell most of the Company's automotive climate business to HCC for a purchase price of 410 million dollars. HCC, to be renamed Halla Visteon Climate Control Corp., will be the world's second largest global supplier of automotive climate components and systems. The transaction is expected to be completed in the first quarter of 2013. (From a press release on January 11, 2013)

-The companies HCC acquire from Visteon are as follows:
Company Name Location Major Function
Visteon Climate Control System (Chongqing) Co., Ltd. China Manufacturing
Visteon Visteon Climate Control System (Nanchang) Co., Ltd. China Manufacturing
FAWER Visteon Climate Control System (Changchun) Company Limited China Manufacturing
Halla Climate Control (Dalian) Co., Ltd. China Manufacturing
Japan Climate Systems Corporation Japan Manufacturing
Visteon Japan Climate Ltd. Japan R&D
Visteon Climate Systems India Ltd. India Manufacturing
Visteon Halla Climate Systems LLC USA R&D
Coclisa S.A. de C.V. Mexico Manufacturing
Climate Systems Mexicana S.A. de C.V. Mexico Sales
Visteon Hungary Kft Hungary Manufacturing
Visteon Autopal Services s.r.o. Czech Republic R&D
Visteon Autopal, s.r.o. Czech Republic Manufacturing
Visteon Climate Portugal, S.A. Portugal Manufacturing
Visteon Ardennes Industries SAS France Manufacturing
Visteon Climate Engineering Services Ltd. UK R&D
Visteon Climate Engineering Services Deutschland GmbH Germany R&D
Halla Visteon Netherlands Cooperatief U.A. Netherlands Sales

<Lighting>
-In 2012, the Company announced that it has completed the sale of its automotive lighting business to Varroc Group, an India-based provider of automotive parts, for 72 million USD. The two companies announced plans for the sale on March 12, 2012. The business sold to Varroc had 2011 revenue of 531 million dollars and encompasses a wide range of exterior lighting products, including front and rear lighting systems, auxiliary lamps and key subcomponents such as projectors and electronic modules. It includes manufacturing and engineering facilities in Novy Jicin and Rychvald, Czech Republic; Monterrey, Mexico; and Pune, India. In total, about 4,200 employees are part of the business sold to Varroc. As announced March 12, the two companies also have an agreement for Varroc to acquire Visteon's equity interest in a China-based lighting joint venture, Visteon TYC Corporation, for 20 million dollars. (From a press release on August 2, 2012)

Acquisition

-In November 2013, the Company acquired majority interests in Yanfeng Visteon Automotive Electronics Co., Ltd.

Joint Venture
-
Yanfeng Visteon Automotive Trim Systems Co., Ltd. and Yanfeng Plastic Omnium Automotive Exterior Systems Co., Ltd. are currently constructing a new plant at the Fenggang Bihu Industrial Zone in Dongguan City, Guangdong Province. The total investment in this construction project, which was launched in June 2012, is expected to reach 650 million yuan. Based on a plan to start commercial production in June 2013, the two companies are planning to spend 160 million yuan in the first phase by the end of this year, of which more than 50 percent has been already invested. The plant will increase its production in steps, targeting the volume worth 3.2 billion yuan in the first three to five years. It will produce products for 300,000 vehicles assembled by Changan PSA, which is only 10 kilometers away. Visteon is expecting it will be able to deliver its products to Changan PSA within three hours after receiving an order. (From news releases issued by multiple sources on December 7, 2012)


Contracts

-The Company recently launched its first-to-market reconfigurable instrument cluster with illuminated mechanical gauge rings on the 2013 "Lincoln MKZ" in North America. The "MKZ" is expected to reach Lincoln dealers later this year. The new instrument cluster incorporates a 10.1-inch thin-film transistor (TFT) display. Compared with a typical instrument cluster, the Company's reconfigurable product uses significantly fewer parts and contains all circuitry on a single printed wire board. The Company is manufacturing the cluster at its Carolinas Plant in Mexico. (From a press release on November 5, 2012)

-The Company is supplying its climate system for the New Ford "Ecosport" sports utility vehicle, which has been launched recently in Brazil and will be sold in other global markets. Climate products supplied by the Company on the "Ecosport" include a compact HVAC system; compressor; condenser with integrated receiver dryer; and air conditioning lines with "zero leak" metal seal fittings. (From a press release on October 16, 2012)

-The Company announced that the Mahindra & Mahindra "XUV500" sport utility vehicle features a range of electronics, lighting and climate systems and components from Visteon. The Company supplies the "XUV500" with an audio infotainment system features a 5.8-inch touch screen as a standard original equipment manufacturer (OEM)-fitted feature. The "XUV500" also features the Company's poly-ellipsoid system (PES) headlamp with light-emitting diode (LED) styling accents as an optional feature. In addition, the rear and front heating, ventilation and air conditioning (HVAC) system uses Visteon's compact heat exchangers. (From a press release on January 23, 2012)

Restructuring

-In Sep. 2012, the Company mentioned its Interiors business in Value creation plan. While the Company views Interiors as a non-core business, it continues to make commitments to this business and intends to divest in the future only under acceptable terms and conditions.

-In Feb. 2012, the Company closed Cadiz Electronics plant in Spain.

Recent Development in USA

-The Company, in collaboration with Cohda Wireless, is providing vehicle-to-vehicle (V2V) communications equipment for the U.S. Department of Transportation Safety Pilot program, which launched in late August. The project potentially offers significant improvements in driver awareness including collision, hazardous road and curve speed warnings and traffic flow information. The Safety Pilot program is led by the University of Michigan Transportation Research Institute and will integrate 5.9 GHz dedicated short range communication devices in more than 2,800 vehicles to test their ability to wirelessly communicate from vehicle-to-vehicle (V2V) and vehicle-to-infrastructure (V2I). Test vehicles will continuously receive location and status information from nearby test vehicles along with their speed and projected path. (From a press release on October 3, 2012)

Outlook for FY ending Dec. 31, 2013

-The Company expect 2013 sales to be in the range of 7.3 billion- to 7.5 billion dollars, as well as Adjusted EBITDA to be in the range of 620 million- to 660 million dollars.

Awards

-Major awards in 2012 are as follow:
Received Company Awarding Company Award
Yanfeng Visteon, Beijing Beijing Auto Best Partner award
Yanfeng Visteon Geely Excellent Supplier award
The Company, Novy Jicin facility, the Czech Republic Jaguar Land Rover Quality award
Halla Climate Control, Jinan facility, China Geely Excellent Supplier award
Visteon Automotive Systems India, Channai facility, India Mobis India Ltd. National Best Partner for Business Development award
Halla Climate Control, Thailand GM Thailand Quality System Basic certificate
Japan Climate Systems Mazda Excellence award of the year
Continuous Excellence award
Craftmanship Improvement award
Visteon Automotive Systems India, Pune facility, India Tata Motors Quality award
Visteon Automotive Systems India Maruti Suzuki Overall Excellence - Silver award
Visteon Climate Control Beijing Hyundai Quality Five Star certification
The Company, Hluk facility, the Czech Republic Jaguar Land Rover Quality award
Visteon Automotive Systems India Mahindra & Mahindra Business Partner of the year
Award of Excellence for Product Development (Co-awarded with Nippon Audiotronix Ltd.)
Visteon Automotive Systems India, Chennai facility, India Renault-Nissan New Product Development Support award
Visteon Automotive Systems India, Chennai facility, India Hyundai Best Contribution award
The Company, Rayon facility, Thailand Auto Alliance Thailand 2011 Top 10 Supplier award
FAWER Visteon Climate Control System FAW Group 2011 Core Supplier award

R&D

R&D Expenditure

(in million dollars)
  FY ended Dec. 31, 2012 FY ended Dec. 31, 2011 FY ended Dec. 31, 2010
Overall 299 326 353

R&D Facilities

-In 2012, the Company has opened its first innovation and design center in Pune, India. Housed within the Visteon Engineering Center, the innovation and design center focuses on creating ideas, developing concepts and commercializing products across the Company's portfolio to support vehicle manufactures throughout India. The Company has four manufacturing plants, three engineering centers, a joint venture in the country, and also owns innovation and design centers in Germany, the U.S. and China. (From a press release on October 24, 2012)

-In 2011, the Company expanded automotive component testing capabilities at its engineering test center in Brazil. The Visteon Tech Center, located at the Company's Arbor manufacturing facility in Sao Paulo, will now start performing thermal cycle tests on internal and external components for vehicles. With the expansion, vehicle manufacturers will be able to perform thermal tests locally, reducing the cost and time of performing certain tests outside of Brazil. In addition to performing technical measurements for electronic, climate and audio systems, the Tech Center features a laboratory with an engine dynamometer. This lab carries out tests for performance (torque/power), fuel economy and mapping of the injection/ignition system.

R&D Activities

-The Company and BAE Systems, a UK-based defense and security business, are developing a new head-up display. Bringing BAE's aerospace technology to the automotive market, the Company is applying its expertise in electronics, mechanical design and packaging, software, display integration, thermal and electromagnetic compatibility (EMC) management. Initial development projects include both combiner and windshield head-up display systems using a thin-film transistor (TFT) image source. (From a press release on November 13, 2012)

Patents

<Halla Visteon Climate Control>
-As of Dec. 2012, the Company has 1,508 registration and 6,290 patent application.

Technical Alliance

-The Company has collaborated with Japan Display Inc. (JDI) on development of a new reconfigurable instrument cluster. The Company's third-generation reconfigurable instrument cluster platform and JDI's high-definition thin film transistor (TFT) display deliver superior graphics and animation. This technology supports 3-D graphics and video features such as driver awareness and camera inputs. The Company's latest platform allows the 12.3-inch display resolution to deliver 1920 x 720 pixels. (From a press release on November 13, 2012)

Product Development

Reconfigurable instrument cluster
-The Company recently launched its first-to-market reconfigurable instrument cluster with illuminated mechanical gauge rings on the 2013 "Lincoln MKZ" in North America. The MKZ is expected to reach Lincoln dealers later this year. The new instrument cluster incorporates a 10.1-inch thin-film transistor (TFT) display. Compared with a typical instrument cluster, Visteon's reconfigurable product uses significantly fewer parts and contains all circuitry on a single printed wire board. The Company is manufacturing the cluster at its Carolinas Plant in Mexico. (From a press release on November 5, 2012)

Vehicle control system
-The Company is demonstrating to auto manufacturers its advancements for vehicle controls – including features and functionality to which consumers have grown accustomed in their handheld devices. Visteon's Ideal Occupant Interface has three features:
  • Hidden Touch Lens – When the vehicle is off, the display is invisible behind the seamless touch-sensitive surface.
  • Smart Panel – This feature detects the presence of the user's finger, but does not activate until a small amount of pressure is applied. It is enhanced with visual and audible feedback and will be expanded to include tactile feedback.
  • Multi-Modal HMI – This feature enables standard touch mode and the next advancement in vehicle interfaces - spatial gesture control, which doesn't require the controls to be physically handled by the user.
(From a press release on October 29, 2012)

Heat pump system for hybrid and electric vehicles
-The Company has developed a heat pump system that utilizes ambient air and ancillary heat to improve cabin conditioning for hybrid and electric vehicles. By drawing less power from the lithium-ion battery, vehicles equipped with the heat pump system can operate longer on a single charge. This heat pump system consumes about 50 percent less power and can extend the number of miles driven on a battery charge by 30 percent. This electric vehicle data compares the Company's heat pump system to an electric heater during a New York City drive cycle at minus 10 degrees Celsius. (From a press release on September 28, 2012)

Battery contact heat exchanger/Battery chiller
-The Company recently launched products featuring different approaches to battery thermal management on a number of new electric and hybrid vehicles. These new architectures include products such as battery contact heat exchangers and battery chillers. One architecture uses coolant-based contact heat exchangers, while a second employs a refrigerant-based battery cooling and heating approach. In both systems, the Company's battery contact heat exchanger is connected with the air conditioning system to reject heat from the battery into the coolant or refrigerant. (From a press release on September 26, 2012)

Air conditioning fitting to eliminate refrigerant leakage
-The Company developed a "zero leak" air conditioning fitting to eliminate refrigerant leakage stemming from air conditioning connections in vehicles. The metal seal fitting is a part of several vehicles launching in North America, South America, Europe and Asia in 2012. Over the next two years, the Company expects to provide approximately 15 million metal seal fitting assemblies on more than 3.5 million vehicles annually. (From a press release on September 5 2012)

Investment Activities

Capital Expenditure

(in million dollars)
  FY ended Dec. 31, 2012 FY ended Dec. 31, 2011 FY ended Dec. 31, 2010
Climate 152 168 116
Electronics 26 26 23
Interiors 31 38 34
Lighting - 18 24
Corporate 9 8 12
Total 218 258 209

Investments Outside USA

<China>
-The Company celebrated the expansion of its Yanfeng Visteon Automotive Electronics (YFVE) manufacturing facility in Shanghai, China. The expansion more than doubles the size of the plant to approximately 30,000 square meters (323,000 square feet); the facility now can accommodate up to 1,300 employees. The plant produces automotive electronics, including driver information, audio and infotainment, and center stack controls. The expansion boosts the plant's yearly capacity by almost 50 percent. (From a press release on June 5, 2012)

-The Company announced that its automotive climate joint venture in China, FAWER Visteon Climate Control System (Changchun) Co., Ltd. (FVCC), has opened a plant in Chengdu, Sichuan province, China to produce aluminum radiators. The new plant is a wholly owned subsidiary of FVCC, a joint venture of Visteon Corporation and FAWER Automotive Parts Company Ltd. The facility will support the FAW-Volkswagen manufacturing base in Chengdu, as well as other automakers in southwest China. The 3,700-square meter (39,800-square foot) plant is expected to have an annual production capacity of 500,000 units by 2013. (From a press release on April 9, 2012)