Global Automotive Supplier Study 2010 - Roland Berger
Global Automotive Supplier Study 2010 - Roland Berger
Global Automotive Supplier Study 2010 - Roland Berger
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<strong>Global</strong> <strong>Automotive</strong> <strong>Supplier</strong> <strong>Study</strong><br />
Short version<br />
September 2011
Management summary<br />
> Driven by booming car sales, the global automotive supplier industry achieved record profitability in <strong>2010</strong><br />
(6.2% EBIT margin on global average)<br />
> However, financial performance of suppliers differs heavily depending on headquarter region, company<br />
size and product focus.<br />
– European suppliers achieved an EBIT margin of almost 7%, while North American and Japanese<br />
suppliers remain below global average<br />
– Small and medium-sized suppliers have significantly improved their profitability compared to precrisis<br />
levels<br />
– Chassis focused suppliers achieved the highest profitability, while Interior and Electric suppliers<br />
remain below average<br />
> Revenue outlooks for 2011 full-year and for 2012 are relatively stable. Also profitability is expected to stay<br />
at a reasonable level, but drop below 6% EBIT margin on a global average<br />
> Besides keeping profitability at a high level and ensuring real global delivery capability, suppliers need to<br />
put an even stronger focus on product innovation. Only suppliers who can differentiate themselves from<br />
competition via superior product functionality will be able to sustainably achieve EBIT margins in the range<br />
of 6% and above. Most other suppliers will get further pushed into the commodity corner, where their profit<br />
will be locked-in at a 3-4% level<br />
Source: <strong>Roland</strong> <strong>Berger</strong>/Lazard<br />
<strong>Global</strong> <strong>Automotive</strong> <strong>Supplier</strong> <strong>Study</strong> 2011_SHORT_final.pptx<br />
2
Driven by booming car sales, the global automotive supplier industry<br />
achieved record profitability in <strong>2010</strong><br />
Key supplier performance indicators 2000-<strong>2010</strong> (n = ~600 suppliers)<br />
Revenue growth [2000=100] EBIT margin 1) [%] ROCE 2) [%]<br />
114<br />
108<br />
103<br />
100<br />
125<br />
136<br />
148<br />
162<br />
154<br />
129<br />
156<br />
5.3<br />
3.1<br />
4.2<br />
4.7<br />
5.2<br />
5.1<br />
4.7<br />
5.7<br />
1.6<br />
1.1<br />
6.2<br />
8.4<br />
5.0<br />
7.2<br />
8.3<br />
9.3<br />
11.1<br />
10.1<br />
8.8<br />
8.1<br />
2.5<br />
2.0<br />
2000 2002 2004 2006 2008 <strong>2010</strong><br />
2000 2002 2004 2006 2008 <strong>2010</strong><br />
2000 2002 2004 2006 2008 <strong>2010</strong><br />
1) EBIT after restructuring items 2) EBIT after restructuring items/capital employed<br />
Source: Company information; <strong>Roland</strong> <strong>Berger</strong>/Lazard<br />
<strong>Global</strong> <strong>Automotive</strong> <strong>Supplier</strong> <strong>Study</strong> 2011_SHORT_final.pptx<br />
3
However, financial performance of suppliers differs heavily<br />
depending on region, company size and product focus<br />
Profitability trends in the global automotive supplier industry<br />
REGION COMPANY SIZE PRODUCT FOCUS<br />
1 2 3<br />
> European suppliers improved<br />
average EBIT margin to ~7%<br />
> Chinese and Korean suppliers<br />
achieved double-digit EBIT<br />
margins<br />
> Nafta suppliers improved, but<br />
still have the lowest profitability<br />
> Japanese suppliers also below<br />
average<br />
> Small/mid-sized suppliers<br />
(below 1bn EUR revenues)<br />
achieved highest profitability<br />
> <strong>Supplier</strong>s with >10 bn EUR<br />
revenues show lowest<br />
profitability levels<br />
> Chassis and Exterior focused<br />
suppliers with strongest margin<br />
improvements<br />
> Powertrain and Tire suppliers<br />
still above average<br />
> Interior and Electric/<br />
Infotainment suppliers<br />
significantly below average<br />
around the world<br />
Source: <strong>Roland</strong> <strong>Berger</strong>/Lazard<br />
<strong>Global</strong> <strong>Automotive</strong> <strong>Supplier</strong> <strong>Study</strong> 2011_SHORT_final.pptx<br />
4
1 REGION<br />
European suppliers achieved an EBIT margin of almost 7%, while<br />
North American and Japanese suppliers remain below global average<br />
<strong>Supplier</strong> EBIT profitability by headquarter region <strong>2010</strong> vs. 2007<br />
Europe NAFTA Japan China Korea Rest of Asia WORLD<br />
Change <strong>2010</strong> vs.<br />
2007 [%-pts.]<br />
+0.4 +1.0<br />
-0.4 +2.4<br />
+3.0 +0.4 +0.5<br />
9.1<br />
11.5<br />
8.8<br />
9.5<br />
9.9<br />
EBIT 1)<br />
margin<br />
[%]<br />
6.5<br />
6.9<br />
3.3<br />
4.3<br />
6.0<br />
5.6<br />
5.8<br />
5.7<br />
6.2<br />
2007 <strong>2010</strong><br />
2007 <strong>2010</strong><br />
2007 <strong>2010</strong><br />
2007 <strong>2010</strong><br />
2007 <strong>2010</strong><br />
2007 <strong>2010</strong><br />
2007 <strong>2010</strong><br />
1) EBIT after restructuring items<br />
Source: Company information; <strong>Roland</strong> <strong>Berger</strong>/Lazard<br />
<strong>Global</strong> <strong>Automotive</strong> <strong>Supplier</strong> <strong>Study</strong> 2011_SHORT_final.pptx<br />
5
2 SIZE<br />
Small and medium-sized suppliers have significantly improved their<br />
profitability compared to pre-crisis levels<br />
<strong>Supplier</strong> EBIT profitability by company size <strong>2010</strong> vs. 2007<br />
10.0 bn ALL<br />
Change <strong>2010</strong> vs.<br />
2007 [%-pts.]<br />
+1.1 +2.2<br />
+0.6 +0.6<br />
+1.2 0.0 +0.5<br />
5.1<br />
6.2<br />
5.1<br />
7.3<br />
6.5<br />
5.9 6.1<br />
5.5<br />
5.5<br />
6.7<br />
5.9<br />
5.9<br />
5.7<br />
6.2<br />
EBIT 1)<br />
margin<br />
[%]<br />
2007 <strong>2010</strong> 2007 <strong>2010</strong> 2007 <strong>2010</strong> 2007 <strong>2010</strong> 2007 <strong>2010</strong> 2007 <strong>2010</strong> 2007 <strong>2010</strong><br />
1) EBIT after restructuring items<br />
Source: Company information; <strong>Roland</strong> <strong>Berger</strong>/Lazard<br />
<strong>Global</strong> <strong>Automotive</strong> <strong>Supplier</strong> <strong>Study</strong> 2011_SHORT_final.pptx<br />
6
3 PRODUCT FOCUS<br />
Chassis focused suppliers achieved the highest profitability, while<br />
Interior and Electric suppliers remain below average<br />
<strong>Supplier</strong> EBIT profitability by product focus <strong>2010</strong> vs. 2007<br />
Powertrain Chassis Exterior Tires Interior Electric/info. ALL<br />
Change <strong>2010</strong> vs.<br />
2007 [%-pts.]<br />
-0.3<br />
+1.1 +2.3 -0.1 +0.6 -0.5<br />
+0.5<br />
EBIT 1)<br />
margin<br />
[%]<br />
6.9<br />
6.6<br />
6.7<br />
7.8<br />
5.1<br />
7.4<br />
6.7<br />
6.6<br />
4.4<br />
5.0<br />
5.3<br />
4.8<br />
5.7<br />
6.2<br />
2007 <strong>2010</strong> 2007 <strong>2010</strong> 2007 <strong>2010</strong> 2007 <strong>2010</strong> 2007 <strong>2010</strong> 2007 <strong>2010</strong> 2007 <strong>2010</strong><br />
1) EBIT after restructuring items<br />
Source: Company information; <strong>Roland</strong> <strong>Berger</strong>/Lazard<br />
<strong>Global</strong> <strong>Automotive</strong> <strong>Supplier</strong> <strong>Study</strong> 2011_SHORT_final.pptx<br />
7
The 2008/2009 crisis has further broadened the gap between Top<br />
and Low performers in the supplier industry<br />
<strong>Global</strong> supplier performance 2000-<strong>2010</strong> 1)<br />
Revenue growth [2000=100] ROCE [%]<br />
166<br />
193<br />
218<br />
247<br />
239<br />
207<br />
255<br />
TOP<br />
11.7<br />
9.8<br />
13.1<br />
13.6<br />
14.0<br />
13.0<br />
12.9<br />
15.2<br />
8.3<br />
6.3<br />
17.1<br />
TOP<br />
100<br />
136<br />
120<br />
106<br />
LOW<br />
112<br />
99 102 99<br />
104<br />
94 96<br />
99<br />
90<br />
74<br />
6.7<br />
0.8<br />
4.3<br />
4.1<br />
3.7<br />
2.3<br />
-0.2<br />
2.9<br />
-5.6<br />
-1.5<br />
LOW<br />
2.7<br />
2000 2001 2002 2003 2004 2005 2006 2007<br />
2008<br />
2009 <strong>2010</strong><br />
2000<br />
2001 2002 2003 2004 2005 2006 2007 2008 2009 <strong>2010</strong><br />
1) Top = Top quartile, Low = Bottom quartile<br />
Industry average<br />
Source: Company information; <strong>Roland</strong> <strong>Berger</strong>/Lazard<br />
<strong>Global</strong> <strong>Automotive</strong> <strong>Supplier</strong> <strong>Study</strong> 2011_SHORT_final.pptx<br />
8
Our forecast for 2011 full-year financial performance: global average<br />
profitability is expected to drop below 6% EBIT<br />
Key supplier performance indicators 2000-2011e<br />
Revenue growth [2000=100] EBIT margin 1) [%] ROCE 2) [%]<br />
114<br />
108<br />
103<br />
100<br />
125<br />
136<br />
162<br />
154<br />
148<br />
129<br />
~160<br />
156<br />
6.2<br />
5.3<br />
5.7<br />
5.2 5.1<br />
4.7<br />
4.2 4.7 ~5.5<br />
3.1<br />
1.6<br />
1.1<br />
8.4<br />
5.0<br />
8.3<br />
7.2<br />
9.3<br />
8.8<br />
8.1<br />
10.1<br />
2.5<br />
2.0<br />
11.1<br />
~10<br />
00 01 02 03 04 05 06 07 08 09 10 11<br />
00 01 02 03 04 05 06 07 08 09 10 11<br />
00 01 02 03 04<br />
05<br />
06<br />
07<br />
08<br />
09 10 11<br />
Positive<br />
drivers:<br />
> Still very good sales in BRIC markets<br />
> Stable mature markets<br />
Negative<br />
drivers:<br />
> Cool-down in China<br />
> OEM price pressure back to pre-crisis levels<br />
> Increased raw material prices<br />
1) EBIT after restructuring items 2) EBIT after restructuring items/capital employed<br />
Source: Company information; <strong>Roland</strong> <strong>Berger</strong>/Lazard<br />
<strong>Global</strong> <strong>Automotive</strong> <strong>Supplier</strong> <strong>Study</strong> 2011_SHORT_final.pptx<br />
9
The general industry framework for automotive suppliers will remain<br />
challenging<br />
Trends shaping the supplier industry in the future<br />
Car buyers<br />
OEMs<br />
SUPPLIERS<br />
Raw material markets<br />
Regional shift<br />
Price sensitivity<br />
Reduced price level<br />
Legislation<br />
CO 2 reduction<br />
Emission reduction<br />
Safety regulations<br />
Additional cost saving<br />
measures<br />
Localization of<br />
production (to sales<br />
markets)<br />
Overcapacity/<br />
restructuring (triad)<br />
Increased price pressure<br />
Increased technological<br />
complexity<br />
Further<br />
increased<br />
MARGIN<br />
PRESSURE and<br />
stronger need for<br />
differentiation via<br />
INNOVATION<br />
Provider consolidation<br />
Rising demand<br />
(from other industries)<br />
Increasing prices<br />
Capital markets<br />
High volatility of<br />
capital markets<br />
Loss of confidence<br />
of investors<br />
Additional cost<br />
New opportunities<br />
Increasing capital costs<br />
Source: <strong>Roland</strong> <strong>Berger</strong>/Lazard<br />
<strong>Global</strong> <strong>Automotive</strong> <strong>Supplier</strong> <strong>Study</strong> 2011_SHORT_final.pptx<br />
10
This presentation was prepared by Lazard & Co. GmbH ("Lazard") and <strong>Roland</strong> <strong>Berger</strong> Strategy Consultants ("RBSC") exclusively for the<br />
benefit and internal use of our clients and solely as a basis for discussion of certain topics related to the automotive supplier industry<br />
described herein. This presentation is strictly confidential and may not be reproduced, summarized or disclosed, in whole or in part,<br />
without the prior written authorization both of Lazard and RBSC, and by accepting this presentation you hereby agree to be bound by the<br />
restrictions contained herein.<br />
This presentation is based on publicly available information which have not been independently verified by Lazard or RBSC. Any<br />
estimates and projections contained herein involve significant elements of subjective judgment and analysis, which may or may not be<br />
correct. None of Lazard, any of its affiliates, or any of its direct or indirect shareholders, or any of its or their respective members,<br />
employees or agents nor RBSC provide any guarantee or warranty (express or implied) or assumes any responsibility with respect to the<br />
authenticity, origin, validity, accuracy or completeness of the information and data contained herein or assumes any obligation for<br />
damages, losses or costs (including, without limitation, any direct or consequential losses) resulting from any errors or omissions in this<br />
presentation.<br />
The economic valuations contained in this presentation are necessarily based on current market conditions, which may change<br />
significantly over a short period of time. Changes and events occurring after the date hereof may, therefore, affect the validity of the<br />
conclusions contained in this presentation and nor Lazard nor RBSC assume any obligation to update and/or revise this presentation or<br />
the information and data upon which it has been based.