Nemak has put the accelerator towards electrification. The orders received to manufacture components for electric and structural vehicles (EV/CE) rose from 1,400 to 1,530 million dollars per year at the end of the second half of the year, in line with its objective that these business lines generate 2,000 million dollars per year by 2025.
Armando Taméz, CEO of Nemak, highlighted in the company’s latest quarterly report that the new trends towards more environmentally friendly mobility schemes will boost the company’s growth and profitability in the future.
“These new businesses will support our efforts to adapt existing capacity and technology to meet customer needs linked to the automotive electrification trend, helping to strengthen our foundation to drive future growth and profitability.” said in the report.
Today the company provides lightening solutions, mainly aluminum components such as engine heads, transmission housings, gearboxes, to the automotive industry. At the end of 2021, 21% of its products were destined for Ford, 16% for Volkswagen Group, 14% for General Motors and 12% for Stellantis.
Nemak explained that among its future challenges is the development and manufacture of new components in the times and costs projected by both Nemak and its customers.
“New programs generally require significant investments to design and develop the tools, as well as purchase the machinery and equipment needed to manufacture the new components,” the firm said.
Higher orders drive Nemak sales
Nemak’s sales increased 25.3%, to 23,991 million pesos, in the second quarter of 2022. According to its latest quarterly report, sent last week to the Mexican Stock Exchange, revenues were mainly driven by higher volumes, after “a partial relaxation of constraints on supply chains” and also due to higher aluminum prices.
Despite the foregoing, the increase in costs derived from high levels of inflation had repercussions on Nemak’s financial indicators. Its operating flow for the second quarter totaled 2,981 million pesos, which meant a slight decline of 1.1% compared to the previous quarter.
The company highlighted that this drop could have been more pronounced had it not been for the formalization of commercial agreements and cost efficiencies, as well as for the exchange conversion effect resulting from the depreciation of the euro against the US dollar.
