Nexteer Automotive Group (1316) H1 2024 earnings summary

Executive summary

• Achieved record 38 program launches in H1 2024, with 32 new/conquest awards and 18 for BEV/EV models, driving above-market growth in Asia Pacific, especially with China OEMs, despite North America declines.

• Secured $2.1 billion in new business bookings, with 43% from Chinese NEV customers, nearly tripling year-over-year.

• Adjusted EBITDA rose 6% to $197.3 million, driven by cost efficiencies and improved profitability, despite adverse FX and supply chain headwinds.

• Net profit attributable to equity holders dropped to $15.7–16 million, mainly due to higher tax expense and intangible asset impairments.

• Maintained strong net cash position and liquidity, with $186 million net cash and $279.8 million cash balance as of June 2024.

Financial highlights

• H1 2024 revenue was $2.1 billion, flat year-over-year (down 0.1%), with gross profit up 10.5% to $210.9 million and gross margin improving to 10.0%.

• Adjusted EBITDA margin expanded by 50 bps to 9.4% in H1 2024.

• Net profit was $15.7–16 million, down $18.3 million YoY, impacted by $14 million in impairment charges and higher tax expense.

• Free cash flow was a $2 million outflow, down from a $60 million inflow in H1 2023, due to lower operating cash and working capital timing.

• Cash balance at June 30, 2024: $279.8 million, down $31.9 million from December 31, 2023.

Outlook and guidance

• On track to achieve $6 billion in new bookings for 2024, with more sourcing decisions expected in H2.

• Revenue expected to grow 300 basis points above a global auto production decline of 2% for 2024.

• EBITDA margin expected to finish above 10% for the full year, with stronger H2 performance.

• Full-year effective tax rate expected at ~35%, with normalization to mid-high teens after 2026.

• Restructuring and cost-saving initiatives underway to improve profit margins and manufacturing performance.