4. We are driven by our Strategy

«Because we are convinced that in order to achieve great things we need to set ambitious targets and work day in and day out to meet them.»

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4.1 Market environment and trends

The automotive sector experienced a year of uncertainty

Europe

The effectiveness of the new emission standards translated into heavily discounted sales in the third quarter and sharp corrections in production and sales in the fourth quarter.

North America

After months of uncertainty, the US, Mexico and Canada reached a status quo agreement that eased the carmakers’ fears.

Brazil

Brazil is making up for some of the ground lost during the crisis, registering production growth of 4% in 2018.

Asia

India is expected to become the world’s fourth-largest vehicle producer, after China, the US and Japan, by 2025.

4.2 2016-2020 Business Plan

Our organic growth will significantly outpace overall market growth

2016-2020 Business Plan

Starting point
2015
2016-2020 Business Plan
Original targets
Current guidance
2020 TARGETS
Growth 2x the market ~ 4x the market
EBITDA margin 15.4% > 17% > 18%
EBIT margin 10.2% ~ 13.0% > 14.0%
NET PROFIT €118 million 2x 2.5x
RONA* 16% > 20% ~ 23%
Net debt/EBITDA** 2.0x ~ 0.7x ~ 1.0x
Operating cash flow generation*** 50% ~ 50% ~ 55%
Annual capex 7.5% ~ 7% ~ 7.5%
*RONA (Return On Net Assets) = EBIT/(fixed assets + net working capital – goodwill not derived from cash flows).
**Net debt = Bank and other borrowings less cash and cash equivalents – Other current and non current financial assets.
***Operating cash flow generation = (EBITDA – finance costs – maintenance capex – tax) / EBITDA.

Foundations of the 2016-2020 business plan

  • Customer, geographical and product/technology diversification.
  • Strategic focus on process efficiency.
  • Decentralisation and simplification of the chain of command. Lean structure.
  • Long-term investment in human capital.
  • Opportunistic M&A strategy without losing sight of the need to carefully select and closely control all types of investments.
  • Industrial vocation with financial mentality.
  • Reputation management.
  • Progress on the digitalisation front towards factories 4.0.

Growth drivers in 2018

  • Strategic commitment to the higher potential regions and to R&D effort
  • Arrangement of new financing to fund growth
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Strategic commitment to the higher potential regions and to R&D effort

  • Mexico: New greenfield project in Puebla.
  • Brazil: Integration of CIE Autometal Minas factory (former Zanini Brazil).
  • India: Acquisition of an additional 5% of Mahindra CIE from its local partner.
  • Europe: The company remains strategically committed to value-added products and its R&D effort.
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Arrangement of new financing to fund growth

  • $150 million loan with the International Finance Corporation (World Bank Group) and EDC (Export Development of Canada) to help finance its burgeoning growth in Mexico.
  • €80 million for R&D in Europe.
  • Commercial paper programme of up to €200 million on the Irish Stock Exchange.

4.3 CSR Strategy

CIE Automotive focused its efforts on formulating and approving a new plan to 2020 with the aim of further systematising and standardising its CSR effort

2019-2020 CSR plan targets

  • Consolidation of the compilation of non-financial information.
  • External assurance for new GRI indicators (goal: full assurance).
  • Establishment of ESG targets for each department.
  • Implementation of a CSR working methodology that can grow with CIE Automotive.
  • Systematisation of communication with stakeholders.