Release Date: October 29, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- CIE Automotive SA (CUOTF, Financial) reported a significant outperformance in turnover at a constant exchange rate, rising by almost 2%, which is around six points above market expectations.
- The company achieved significant improvements in EBIT and EBITDA, growing by 2% and 3% respectively, with margins reaching 18.6% and 13.8%.
- CIE Automotive SA (CUOTF) has successfully managed its net financial debt, reducing it by EUR15 million in the third quarter, resulting in a historically low leveraging ratio of 1.43 times net financial debt over EBITDA.
- The company has seen strong growth in key markets such as Mexico, Brazil, and India, with Mexico showing a 7% growth in vehicle production and Brazil experiencing a 17% growth in the third quarter.
- CIE Automotive SA (CUOTF) has maintained a high EBITDA to operating cash conversion rate of close to 66%, demonstrating strong cash flow management.
Negative Points
- The European market has been challenging, with a 7% drop in the third quarter and an expected 11% decline in the fourth quarter, impacting overall performance.
- The United States market has faced a 5% decline in vehicle production in the third quarter, influenced by the Stellantis destocking strategy and political uncertainties.
- China's market remains difficult despite subsidies, with a 3% fall in production in the third quarter and ongoing fierce price competition affecting performance.
- The company has faced increased financial expenses in the third quarter, partly due to negative contributions from derivatives and foreign exchange impacts.
- CIE Automotive SA (CUOTF) has experienced a slowdown in improvements in the Chinese market, with ongoing underperformance due to customer mix and market conditions.
Q & A Highlights
Q: Is the increase in combustion engine vehicle parts in India also happening in other markets?
A: Lorea Aristizabal Abasolo, Director - Corporate Development and Investor Relations, explained that while electric vehicle penetration has decreased in Europe, internal combustion engines have shown better figures in most geographies except China, where electric vehicle production and sales have increased.
Q: Can you explain the evolution in margins, particularly the improvement in Brazil and the slowdown in China?
A: Lorea Aristizabal Abasolo stated that there are no extraordinary factors affecting margins. Improvements in North America are due to better product mixes in Mexico, while Brazil benefits from the integration of Iber Olive. The overall margin trends are stable and recurrent.
Q: Are there plans for more profound restructuring measures in Europe due to sales drops in China?
A: Lorea Aristizabal Abasolo mentioned that CIE Automotive is gaining market share in Europe and does not see the need for major restructuring. The company is not facing commercial success problems like some other suppliers.
Q: How might Volkswagen's potential shutdown of capacities and strikes in Europe affect CIE Automotive?
A: Lorea Aristizabal Abasolo noted that while Volkswagen's measures could lead to strikes, the impact on CIE Automotive would be minimal, as only about 1% of their sales are linked to Volkswagen plants in Germany.
Q: With the 2025 goals nearly attained, will there be a new short-term guidance?
A: Lorea Aristizabal Abasolo emphasized the merit in reaching current guidance and suggested that new guidance would be considered after achieving the existing targets.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
