In This Article:
Release Date: February 20, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
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Nemak SAB de CV (NMAKF) successfully generated free cash flow and improved its leverage position despite a year-over-year volume decline.
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EBITDA increased by 9% compared to the previous year, driven by operating efficiencies, cost reduction initiatives, and successful commercial negotiations.
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The company secured commercial agreements that compensated for investments and contributed to accelerating debt reduction.
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Nemak SAB de CV (NMAKF) was awarded contracts worth approximately $460 million, with 80% in the internal combustion engine powertrain segment.
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The company achieved inclusion in the Dow Jones Sustainability Indexes for the sixth consecutive year and made strides in the Aluminum Stewardship Initiative.
Negative Points
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Nemak SAB de CV (NMAKF) faced a 6% decline in volume, impacting overall revenue.
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The company wrote off fixed and intangible assets amounting to $80 million due to strategic decisions to adjust capacity for EV components.
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Net loss for the quarter was $51 million, compared to a $26 million loss in the same period of the previous year.
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The company anticipates challenges in volume for 2025 due to market volatility and evolving OEM electrification plans.
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Revenue for the full year 2024 was down 2% year-over-year, partially offset by higher aluminum prices and commercial negotiations.
Q & A Highlights
Q: How much of your committed credit lines are still available, and can you update us on the reduction of scope 1 and scope 2 emissions? A: We have close to $400 million of committed credit lines, all fully available. Regarding emissions, we are on track to meet our commitments for 2026 and 2030, with further details to be provided in our upcoming report. Alberto Sada, CFO
Q: Can you provide insights on the potential impact of tariffs on your operations and competitive position? A: All parts sold in Mexico to U.S. customers are sold free on board, meaning customers handle exportation. We don't foresee a direct impact from potential U.S. tariffs. We have capacity in the U.S. and can move production if economically viable. Armando Tamez, CEO
Q: What is your financial strategy regarding leverage and debt reduction? A: We aim to improve profitability and generate positive cash flow, reducing capital expenditures to enhance cash flow for debt reduction. Our target is a net debt-to-EBITDA ratio of around 2.0 times. Alberto Sada, CFO