Autoneum “the Group” is a Swiss automotive supplier and an industrial group headquartered in Winterthur (in Canton of Zurich), Switzerland. Incorporated on December 2, 2010, this Swiss group has been expanding ever since it was registered on the SIX Swiss Exchange in 2011.

One of the most profound strengths of the company is its operational excellence and a wide customer base spread across 50 locations worldwide in 20 countries. The Group defines its strengths as innovation leadership, broad customer base, and a global presence, that makes it one of the top suppliers of automotive components in the world.

Automotive components are just a small part of the products that Autoneum makes. It is also a leading supplier of thermal and acoustic management solutions, continuously striving to achieve its mission of “mastering sound and heat”. In doing so, Autoneum has expanded its customer base and global presence throughout the world with its business groups in Europe (BG Europe), North America (BG North America), Asia (BG Asia), and South America, Middle East and Africa (BG SAMEA). Operating through these business groups have lent Autoneum worldwide acclaim for delivering quality automotive components.

For assessing the company’s performance over the last 3 years, I decided to have a look at Autoneum’s financial statements and reports. Here is what i found:

2015:

2015 was a tough year for Autoneum. The global automotive market was facing a slump and the demand for automotive components was declining sharply.

• Although the net sales of the firm had increased from 2014, it still lagged behind in performance as its material expenses continued to increase, pulling the profits down
• Net profit dropped from 102.8 million CHF to 68.7 million CHF, showing a decline of 3.3%
• an increase in assets was seen in the same year, particularly in tangible assets as a result of investments in production facilities
• the main reasons for the declining profits in 2015 was attributed to th decline in demand of automotive components in BG SAMEA (South America, Middle East and Africa) as well as Russia
• the global automotive industry was facing a decline and growth momentum had slowed down considerably, affecting demand globally. In fact, 2015 was the toughest year for automotive industry after the automotive crisis of 2009.
• although the sales from business groups of Europe, Asia and North America increased, these increases were offset by the decline faced in the BG SAMEA markets.

2016:

The lost earnings in 2015 were recovered in 2016 as the company began to get steadier demand for its components. the main points are:

• the growth in net sales were mainly driven by the increased demand in Asia region while BG Europe also made significant contributions
• Automotive industry picked up pace again in 2016, thanks to the growth in markets of China, one of the most lucrative markets for growth. this growth in demand was estimated to be approximately 7% in 2016.
• the BG SAMEA region remained affected by the automotive crisis, resulting in further year-on-year drop in vehicles production
• Net profit in 2016 increased by 6.2% from last year to 133.8 million CHF
• the sales from European region more or less remained constant while the Asian region showed a gigantic 16.5% increase in demand (mainly because of China)
• 2016 was a year in which Autoneum focused more on expanding utilization capacities to offset its weak regional demand
• it specifically expanded capacities in its growth markets while responding to demands for lightweight noise and heat protection components
• in 2016, Autoneum analyzed that China is the highest growing and potential market and decided to open its 7th plant in Yantai City of China
• Autoneum invested in expanding its capacities of its existing plants, with a focus on vertical integration as well as introduction of new technologies

2017:

2017 was again an year of declining profits for Autoneum. the salient features of this year were:

• the BG SAMEA region had been suffering a setback and declining profits for the past 2 years but 2017 marked a turnaround for this region as it gained its momentum again owing to the restructuring measures
• the global automobile production lost its momentum in 2017. the growth in BG Europe, SAMEA, and Asia region was offset by demand related decline in USA and Canada
• the largest share of revenue for Autoneum comes from the BG North America, but in 2017, significant reductions in production capacities of this region were observed
• net profit of the Group dropped by 5.4%
• liabilities increased as a result of increase in trade payables and borrowings
• in this year, high volume orders were received from Japanese, European and Asian customers
• the growth in Asian market was so high that Autoneum’s revenue from BG Asia surpassed market growth many times during the year
• the increase in SAMEA business group was mainly due to high-volume export business in Turkey and South Africa
• the overall decline in the sales and profits of the company were mainly due to challenging conditions in the automotive markets as well as rising prices of raw materials

Outlook for the Future:

Although Autoneum suffered some major setbacks and declines in the past years, it still had a positive outlook for the future, with a focus on increasing production capacities in its existing facilities while opening new ones in high-growth markets at the same time. The main focus of growth for the future is Chinese market as it is a highly lucrative market with the highest growth potential. In September 2018, Autoneum opened two plants in China as a part of its growth strategy according to the reports.

This growth strategy is one of the top most strategies of Autoneum. In fact, the company was still following this strategy of global expansion during tough times when it was suffering setbacks and a decline in profits in 2017. Other than that, innovation leadership is also the top priority for the company. This can be analyzed from the news of Autoneum opening a new plant in North America and a technical innovation center.

Autoneum–the Automotive Supplier of the Future?

While it is true that Autoneum is one of the largest automotive suppliers of the world, it still faces declines when the global automotive industry gets hit by low demand and cyclical recessions. Perhaps these declines can be attributed to the fact that Autoneum is relies heavy on its automotive components that are subject to recessions and low demands. In addition to that, demands for its components vary across regions where its business groups are located–if demand from one region increases, it is offset by the decline in the other region, making it difficult for the company’s profit position to improve.

Other than the global strategy, Autoneum is increasingly focusing on philanthropy and sustainability measures, taking care to comply with safety standards, particularly after an incident in 2017, when the company’s North American facility was fined for not complying with OSHA standards.

The Last Word:

Autoneum relies heavily on achieving its vision of providing innovative leadership and global presence. Whether it will continue to prosper as the global automotive components supplier remains to be seen. In case it doesn’t live up to the operational demands of the global automotive audience, it faces the risk of acquisition of its production facilities by its competitors, a very real, but potential threat.