Looking at the automotive market: Bosch, Delphi, Faurecia

The August issue of the column "Looking at the markets" is concentrating on automotive suppliers: a huge industry involving hundreds of worldwide operating companies. This market is obviously affected by the fluctuations of motor vehicles sales, but also by the current and future trends of the automotive industry (To deepen the issue, read Automotive aluminum is entering its most unprecedented growth phase).

The article analyses the performances of three stock companies which are particularly prominent in this industry with current information on their business activities.

The three companies are:

Bosch, based in Stuttgart, Germany
Delphi, based in Gillingham, UK
Faurecia, headquartered in Nanterre, France

We invite you also to read the final part of the article called "Latest trends" which considers newly published market surveys and other studies concerning directly or indirectly the mentioned industry, constituting an additional source of information.


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Bosch Group

The Bosch Group, Stuttgart/Germany (04/05/2017): The supplier of technology and services to the automotive and other industries with about 390,000 employees worldwide generated sales of €73.1 billion in 2016. Earnings from operations before interest and taxes (EBIT from operations) came to €4.3 billion, and the EBIT margin from operations to 5.8%. The company raised its research and development spending €7 billion.
In Europe, the Bosch Group generated sales of €38.6 billion in 2016. Year on year, revenue increased 3.4% (4.8% after adjusting for exchange-rate effects). Bosch Group sales in North America declined 2.2% to €12.3 billion last year (or by 1.8% adjusted for exchange-rate effects). After years of declining Bosch Group sales in South America, the exchange rate-adjusted figures disclosed a 2.4% rise. In Asia Pacific, Bosch recorded an 8.3% increase in sales to €20.8 billion (exchange rate-adjusted 12%). Bosch invested around €660 million in its Chinese locations in 2016 and generates now nearly 30% of its sales in Asia Pacific.

Projects
The Bosch Group is further extending its manufacturing capacity in China and investing €100 million in a new plant in the south-eastern Chinese city of Nanjing. Starting in 2019, the plant with a surface of about 20,000 m² will manufacture a vacuum-independent electromechanical brake booster which is suitable for all powertrain concepts, in particular hybrid and electric vehicles. The new plant will also be equipped with Industry 4.0 solutions.
Bosch has been present in China since 1909. All four of its business sectors (Mobility Solutions, Industrial Technology, Consumer Goods Energy, and Building Technology) now operate at more than 60 locations in the country. With some 59,000 employees, China is home to the largest Bosch workforce outside Germany.
Outlook
For 2017, in light of a subdued economic outlook and geopolitical uncertainty, Bosch aims to achieve sales growth of between 3 and 5%.
https://www.bosch.com/explore-and-experience/annual-report-2016/
Sources
http://www.bosch-presse.de/pressportal/de/en/good-start-to-the-year-bosch-improves-sales-in-all-business-sectors-and-regions-102784.html
http://www.bosch-presse.de/pressportal/de/en/annual-press-conference-2017-100160.html
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Delphi Automotive PLC

Delphi Automotive plc, Gillingham, Kent/UK (02/08/2017): The manufacturer of automotive parts with approximately 166,000 employees reported its second quarter 2017 financial results. The company, which consists of the business segments Electrical / Electronic Architecture, Powertrain Systems, and Electronics & Safety, reported second quarter 2017 revenue of USD4.3 billion, an increase of 3% from the prior year period. Adjusted for currency exchange, commodity movements and the divestiture of the Company's Mechatronics businesses, revenue increased by 5% in the second quarter. Adjusted operating income was USD587 million, up 1% (USD580 million in the prior year period). The data reflect growth of 3% in Europe, 16% in Asia, 15% in South America and consistent performance in North America. The Company generated net cash flow from operating activities of USD599 million in the second quarter (USD575 million in the prior year period).

Projects
The Company continued its progress toward the planned spin-off of its Powertrain Systems segment into a new, independent publicly traded company, and remains on track to complete the transaction by March 2018.
In May 2017, the BMW Group, Intel and Mobileye announced their intention to onboard Delphi as a development partner and system integrator for their state-of-the-art autonomous driving platform. The four partners intend to jointly deploy a cooperation model to deliver and scale the developed solutions to the broader OEM automotive industry and potentially other industries.
Delphi has already provided a prototype compute platform to the BMW Group and is working together with Intel and Mobileye in the areas of perception, sensor fusion and high performance automated driving computing.
https://newsroom.intel.com/news-releases/bmw-group-intel-and-mobileye-announce-delphi-as-a-development-partner-and-system-integrator-for-their-autonomous-driving-platform/
Outlook
The Company's full year 2017 financial guidance is as follows:
Net sales: USD16,850 million – USD17,050 million
Adjusted operating income: USD2,240 million – USD2,300 million
Adjusted operating income margin: ~13.4% – 13.5%
Company presentation/annual report
https://www.delphi.com/docs/default-source/financial-documents/delphi-annual-report-2016520d8deae62f660c92f7ff14007238af.pdf?sfvrsn=5322eb49_2
Sources
https://investor.delphi.com/investors/press-releases/press-release-details/2017/Delphi-Reports-Second-Quarter-2017-Financial-Results-Raises-Full-Year-Outlook/default.aspx
http://www.prnewswire.com/news-releases/delphi-reports-second-quarter-2017-financial-results-raises-full-year-outlook-300497807.html
https://markets.ft.com/data/equities/tearsheet/forecasts?s=DLPH:NYQ
https://www.automotiveworld.com/news-releases/delphi-reports-second-quarter-2017-financial-results-raises-full-year-outlook/
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Faurecia

Faurecia, Nanterre/France (21/07/2017): The manufacturer of automotive parts with nearly 100,000 employes worldwide recorded a growth of 20% in operating income to €587 million for the first half year 2017 (compared with H1 2016). Net income was up 28% to €314.4 million (€245.0 million in H1 2016). Sales of parts and components delivered to manufacturers reached €7,811.0 million compared to €7,294.7 million in the first half of 2016. This represented an increase in product sales of 7.1% on a reported basis and an organic growth of 7.3%. Sales of tooling, R&D, prototypes and other services in the first half of 2017 totaled €773.7 million versus €627.0 million in the first half of 2016. This represented an increase of 23.4% on a reported basis and an organic growth of 21.9%. Faurecia consists of the business groups Seating, Interiors, and Clean Mobility.
Projects
In July 2017 Faurecia announced several outstanding business activities in China. The company established a joint-venture with Liuzhou Wuling Industry Co.Ltd. Located in Liuzhou, Guangzhou province. The joint venture company will manufacture and sell complete seats, frames and other seat components initially to SGM Wuling from three existing plants and one additional plant to be built. Faurecia signed also a joint venture agreement for its Clean Mobility business with Dongfeng Motor Parts & Components Group CO., Ltd in Wuhan. The new company aims to provide advanced clean mobility solutions to Dongfeng affiliated OEM brands, for passenger cars and commercial vehicles. Located in Xiangyang, the new joint venture will begin operations in 2018. Faurecia had taken a majority share in the Chinese company Jiangxi Coagent Electronics for a total investment of 1.45 billion RMB (€193 million). Jiangxi Coagent Electronics is specialized in infotainment and interior electronic solutions, including the integration of digital displays and HMI technologies. The company employs 1,300 people including more than 300 engineers. Jiangxi Coagent Electronics is based in Foshan for its Research and Development activities and in Jiangxi Province for its industrial production. The company is a supplier to leading Chinese automotive manufacturers and is seeing a strong growth in sales, which reached €148 million in 2016 and will rise to €270 million by 2019. Furthermore, Faurecia opened a new seating plant in Morocco.
Faurecia has invested 170 million dirhams (more than €15.3 million) in the new 12,800 m² site, leading to the creation of 1,300 jobs with a potential 500 additional employees in the future. The plant has a daily production output of 10,000 leather and fabric seat covers, in particular for the Peugeot 3008 and 5008. The level of employee training, their established expertise in textiles, and the site's state-of-the-art digital production system make Salé a benchmark for the industry.
With the Kenitra and Salé sites in Morocco, and the Ben Arous site in Tunisia, Faurecia is the leading manufacturer of automotive seat covers in North Africa.
Outlook
For the financial year 2017 an operating margin between 6.6% and 7.0% of value-added sales is expected (previous guidance dated Feb. 9, 2017 was “between 6.4% and 6.8% of value-added sales”) with a net cash flow above €350m (unchanged vs. guidance dated Feb. 9, 2017). The company is fully on track to achieve 2018 ambitions.
Company presentation/annual report
http://www.faurecia.com/files/corporate/news/file/rfs_hy1_2017_eng_0.pdf
Sources
http://www.faurecia.com/files/corporate/news/file/faurecia_h1_2017_press_release.pdf
http://www.faurecia.com/files/corporate/publication/file/h1_2017_results_vdef.pdf
http://www.faurecia.com/en/about-us
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Latest trends – Market Research Reports Automotive suppliers
2017 Automotive Trends
https://www.strategyand.pwc.com/trend/2017-automotive-industry-trends
http://www.pwc.com/gx/en/industries/automotive/publications/m-and-a-insights-2016.html?_ga=2.5842224.2021735234.1501768030-974037715.1501768030

The road to 2020 and beyond: What’s driving the global automotive industry?
https://www.google.de/search?hl=de&q=market+survey+automotive+suppliers+2017&oq=market+survey+automotive+suppliers+2017&gs_l=psy-ab.3...2924.12901.0.13500.39.39.0.0.0.0.168.4726.3j35.38.0....0...1.1.64.psy-ab..1.37.4545...0j0i131k1j0i67k1j0i22i30k1j0i19k1j0i22i30i19k1j33i22i29i30k1.nDEOzCJtVfw
Global Automotive Report
http://www.eulerhermes.com/economic-research/sector-risks/Global-Automotive-Report/Pages/default.aspx
Automotive Market Research Reports & Industry Analysis
Reports on several countries
https://www.marketresearch.com/Heavy-Industry-c1595/Transportation-Shipping-c95/Automotive-c242/
Global Automotive Consumer Study. Consumer trends on advanced vehicle technology
https://www2.deloitte.com/us/en/pages/manufacturing/articles/automotive-trends-millennials-consumer-study.html
Global Auto Sales Set to Reach 93.5 Million in 2017, but Risk is Greater than Ever, IHS Markit Says
http://news.ihsmarkit.com/press-release/global-auto-sales-set-reach-935-million-2017-risk-greater-ever-ihs-markit-says
7 trends in automotive supply to watch in 2017
http://rsmus.com/what-we-do/industries/industrial-products/automotive/7-trends-in-automotive-supply-to-watch-in-2017.html
Top 5 Trends in the Automotive Industry for 2017
https://www.infinitiresearch.com/thoughts/top-5-trends-automotive-industry-2017
Auto Parts Manufacturing in Canada: Market Research Report
https://www.ibisworld.ca/industry/auto-parts-manufacturing.html
Further information:
http://www.euromonitor.com/automotive
http://www.automotiveresearch.com/



Previous issues of the column:

Looking at the markets: Borealis, DuPont, PolyOne >>
Looking at the markets: Benteler, Vallourec, Webco Industries >>
Looking at the markets: Bossard, Norma Group, SFS >>
Looking at the markets: Bekaert, Salzgitter, Voestalpine >>
Looking at the markets: Aurubis, Huber+Suhner, Leoni >>

The information has been compiled by Dipl.-Ing. Konrad Dengler, a technical journalist specialised in industrial activities.


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