Mexican supplier Nemak reported a 55 percent drop in fourth-quarter net income, as increased volume outside North America and cost-cutting actions weren’t enough to overcome “a combination of incremental taxes and non-cash exchange rate effects on financial results.”
The maker of powertrain and body structure components reported net income of $14 million in the quarter compared with $31 million in the year-earlier period.
Revenue inched up by 0.5 percent to $946 million, while earnings before interest, taxes, depreciation and amortization rose 13 percent to $150 million. Operating income soared 67 percent to $55 million.
Nemak joined several suppliers this week reporting fourth-quarter and full-year earnings as the COVID-19 crisis lingers around the globe. More companies are set to report results over the next few weeks.
For all of 2020, the company swung to a net loss of $34 million compared with net income of $130 million in 2019. Revenue fell 22 percent to $3.15 billion, as the first half of 2020 saw auto production around the world grind to a halt amid the pandemic.
“The fourth quarter and full-year 2020 results reflect Nemak’s ability to recalibrate its operations, as well as its resilience in the face of a global environment that has posed major challenges for the automotive sector,” CEO Armando Tamez said in a statement.
Tamez said initiatives aimed at protecting the health of Nemak employees, long-term business continuity and preservation of Nemak’s financial position allowed the company to capitalize on favorable market trends during the second half of 2020.
In North America, fourth-quarter revenue fell 5.3 percent to $464 million, while EBITDA rose 13 percent to $77 million. European revenue grew 6.2 percent to $360 million, while EBITDA rose 14 percent to $64 million.
The supplier also said it won new contracts during 2020 worth about $700 million in annual revenue. A $110 million chunk will be used to produce e-mobility and structural applications, and $590 million will be used to produce powertrain applications.
Nemak, of Garcia, Mexico, ranks No. 58 on the Automotive News list of the top 100 global suppliers, with worldwide parts sales to automakers of $4.02 billion in 2019.