Nemak’s revenue fell nearly 18 percent in the first quarter and adjusted profit was down as a result of the COVID-19 pandemic that has shocked the global auto industry, the Mexican auto supplier said Thursday.
Nemak was the first major auto supplier in North America to report earnings amid the crisis. Several more auto suppliers are expected to post their results in the next few weeks.
The powertrain and body structure components supplier said revenue for the quarter was down to $907 million, largely because of the crisis’s impact on the industry and supply chain, in addition to lower volumes and aluminum pricing.
First-quarter earnings before interest, taxes and other adjustments dropped nearly 19 percent to $142 million because of lower volumes. Nemak posted a net loss of $14 million from net income of $58 million in the same period last year, the company said in a statement.
In North America, revenue was down 17 percent to $508 million, and EBITDA declined nearly 17 percent to $91 million.
Europe saw a revenue decrease of 19 percent to $323 million, and EBITDA declined 31 percent to $46 million, the company said.
Revenue for the rest of the company’s markets decreased more than 13 percent to $76 million. EBITDA for the rest of the world rose to $5 million from a loss of $1 million in the first quarter last year, as an improved mix in Brazil and efficiency initiatives compensated for the impact of lower volume in China, the company said.
CEO Armando Tamez said in the statement that the company has implemented cost-reduction and efficiency measures to tackle the industry downturn related to the pandemic.
“Our experience at our operation in China, where we managed a temporary shutdown followed by a gradual relaunch of production starting in February, has proven instrumental to our efforts to respond to the spread of the virus in other regions,” Tamez said.
This month, Nemak said it temporarily ceased production at certain plants and production lines and took steps to reduce costs and expenses, including reduced hours for salaried employees.
Nemak has also withdrawn its 2020 financial guidance. Most major suppliers have withdrawn their full-year financial projections because of the pandemic.
The supplier also reported in the first quarter that it won contracts of about $190 million to produce e-mobility and powertrain applications.
Before the pandemic struck, Nemak was just starting to overcome the challenges it faced in North America at the end of last year as a result of the UAW strike at General Motors.
Nemak, of Garcia, Mexico, ranks No. 52 on the Automotive News list of the top 100 global suppliers, with worldwide parts sales to automakers of $4.7 billion in its 2018 fiscal year.
