Nemak S.A. Business Report FY ended Dec. 2014

Financial Overview

(in million MXN)
FY ended Dec. 31, 2014 FY ended Dec. 31, 2013 Rate of Change
Net Sales 61,665 56,299 9.6 1)
Adjusted EBITDA 9,479 7,823 17.3 -

-FY ended Dec. 2014, sales increased by 9.5% year-on-year. The growth outpaced the average growth of the automotive industry by taking full advantage of the expansion of the U.S. market, the incipient recovery in Europe, and the launching of new production programs. One ongoing trend in the automotive industry is the growing penetration of aluminum blocks into the market. In 2014, the Company signed the first 5 contracts to produce structural components, which is a major step forward in entering this new high-potential market.

-The increase in sales was based on a sales volume of 49.4 million of comparable cylinder heads in the year, 4% more than in 2013.

-Export ratio in the Sales is 87%.


-In 2014, the Company was honored as Best Supplier at the "Volkswagen Group Award 2014" from Volkswagen Group among the 8 global suppliers honored. The Company is the main supplier of cylinder heads and engine blocks for the Volkswagen Group. Award recognizes innovative capabilities, product quality, and development expertise and project management. In addition, the Company is building a new plant in Russia to support the operations of Volkswagen group in Russia, fact strengthens the strategic relationship with Volkswagen.

R&D Expenditure

(in million MXN)
FY ended Dec. 31, 2014 FY ended Dec. 31, 2013 FY ended Dec. 31, 2012
Overall - 3,221 3,693
% of Sales - 5.7 7.2

R&D Structure

-The Company has seven Product Development Centers, strategically located in Austria, Canada, Germany, Mexico and Poland.

Technological Development

Alloy Systems
-High performance alloys for high powered engines
-Mechanical properties and microstructural predictions
-Body structural casting technologies
-Thin walls in cylinder heads

Complex Geometries
-3D printing for advanced powertrain prototypes
-Inorganic binders

Powertrain Component Integration
-Turbo housing integration to cylinder heads
-Range extender and aluminium electric motor components

Surface Treatment Technologies
-Bore coating
-Surface treatment for thermal efficiency
-Body structural casting technologies

-The Semi-Permanent Molding (SPM) for cylinder heads, and the the Low-Pressure Precision Sand (LPPS) and the High Pressure Die Casting (HPDC) for cylinder blocks, paved the way for a more efficient operation as well as higher quality products at the Company.

Capital Expenditure

(in million MXN)
FY ended Dec. 31, 2014 FY ended Dec. 31, 2013 FY ended Dec. 31, 2012
Overall 5,254 4,336 4,171

Investments in Mexico

-The Company announced that it will build a new plant in Garcia, Nuevo Leon in Mexico. The plant will require the investment of approximately USD 125 million. The new facility will produce structural components and complex powertrain components for the Mexican and U.S. markets. It will incorporate state-of-the-art High Pressure Die Casting (HPDC) technology for the production of 2.2 million parts per year. It will create more than 500 new direct jobs. (From a press release on December 8, 2014)

Investments Outside Mexico

-During May 2014, the Company started the construction of an aluminum auto parts plant for engines in Ulyanovsk, Russia.The investment will amount to approximately USD 70 million. The plant will supply engine heads and aluminum blocks for a new engine for group Volkswagen in Russia. The initial capacity of the plant will be 600,000 equivalent units a year and it will start production in 2015. (From a press release on May 14, 2014)