Nemak SAB de CV · BMV:NEMAK/A

Nemak SAB de CV — Investor Day (November 2022)

56 slides from Nemak SAB de CV's investor day presentation, November 2022

Slide 2: Forward-Looking Statement
This presentation contains forward-looking information based on numerous variables and assumptions that are inherently uncertain. They FORWARD- involve judgments with respect to, among other LOOKING things, future economic, competitive and financial market conditions and future business decisions, a
Slide 4: Automotive industry in fast-paced transformation
Automotive industry in fast-paced transformation • Stakeholders driving push toward sustainable mobility • Fast-growing total addressable market • Targeting higher value-added solutions ©Nemak | Public 4
Slide 6: Nemak's Transformation
We continue developing our business through three pillars Enhance Profitability Strengthen the Core Capture Long-Term Growth Secure leading position in Best-in-class performance to Cash generation to fund growth E-Mobility and Structural & leverage capabilities Chassis Nemak’s Transformation: 2030 S
Slide 7: Electrification is a fast-growing driver of our current business
Electrification is a fast-growing driver of our current business EV/SC share of Nemak revenue to surpass combined share of PHEVs and BEVs of global light-vehicle sales ©Nemak | Public
Slide 8: Placing Nemak in leading position in the new segment
Placing Nemak in leading position in the new segment ▪ World’s largest independent producer of cast housings for e-motors & PHEV batteries ▪ Largest independent manufacturer in North America of battery housings for BEVs ▪ Supplying components to ~1/4 of EV(1) platforms in North America & Europe by P
Slide 9: EV/SC order book reached ~US$1.57 B annually
EV/SC order book reached ~US$1.57 B annually EV/SC Order Book • EV/SC segment has represented ~80% of Cumulative awarded business US$ M/Yr. total awarded business in 2022 1,570 • Potential business of ~US$2 B annually 720 across a variety of highly engineered 850 applications • We aim to achieve US$
Slide 10: Tapping into growth of global EV market
Tapping into growth of global EV market • Production ramp-up at 12 plants across Europe, North America & Asia • Setting up 3 new plants dedicated to BEV battery housings in Mexico, Germany & Czech. Republic ©Nemak | Public
Slide 11: Innovation driving lightweighting solutions for EVs
Innovation driving lightweighting solutions for EVs • Solutions spanning casting and joining & assembly processes • Alloy development ©Nemak | Public
Slide 12: Committed to making sustainable mobility possible
Committed to making sustainable mobility possible 2030 GHG(1) emission reduction target: - 28% Notes: (1) Absolute reduction in Scope 1 & 2 greenhouse gas emissions against a 2019 baseline ©Nemak | Public
Slide 13: Summary
Summary • Talent, know-how, footprint, customer relationships & technology portfolio Q&A • Transformation journey to retake profitable growth & continue capturing share in EV/SC segment ©Nemak | Public
Slide 15: Electrification landscape
Electrification landscape • By end of decade, BEVs to represent of all vehicles sold: • ~30% in North America, >60% in Europe and in China Europe United States China 14.6 16.5 16.9 14.6 16.4 15.9 23.3 29.3 31.6 2% 4% 100% 4% 15% 4% 26% 62% 32% 31% 61% 4% 9% 8% 5% 8% 91% 65% 33% 98% 81% 63% 95% 60% 3
Slide 16: Focus on higher value-added solutions
Focus on higher value-added solutions ICE Powertrain E-Mobility & Structure & Chassis Cylinder Engine Transmission Structure & E-Drive PHEV Battery BEV Battery Head Block Chassis Housing Housing Complex castings Large and complex components Strong engineering requirements Multi-material / multi-proc
Slide 17: Increasing Nemak's content per vehicle
Increasing Nemak’s content per vehicle Combustion Engine Hybrid Battery Electric US$500 - $650(1) US$700 - $1,000(1) +US$1,400(1) Chassis Other E-Mobility Chassis Hybrid Trans Chassis Structure Structure Battery E-Drive Housings Structure Head, Block & Trans Notes: (1) Nemak estimate for content per
Slide 18: BEV Battery Housings
BEV Battery Housings • Supporting customer efforts to evolve concept and design • Flexible assembly concepts • Production at Electric Mobility Center Assembled battery housing (Ford) ©Nemak | Public
Slide 19: Investment in three new plants
Czech Republic Germany Investment in Mexico three new plants • BEV battery housings • Joining & assembly technologies ©Nemak | Public
Slide 20: Business takeaways
Business takeaways Capabilities to meet increasingly stringent requirements Deliver & co-develop innovative design solutions Knowledge of material behavior in real application ©Nemak | Public
Slide 21: Looking forward
Looking forward • Leading casting & joining & assembly technologies • Cutting-edge design engineering • Tailor-made solutions & multi- material capabilities • Lightweighting for electric vehicles ©Nemak | Public
Slide 23: Sustainability pillars
• Health & Safety • Climate Protection • Responsible Sourcing • Diversity & Inclusion • Circularity • Sustainable Leadership • Well–Being & Talent • Innovation & Products • Business Ethics • Corporate Citizenship ©Nemak | Public
Slide 24: Our commitments driving ESG performance
Our commitments driving ESG performance Roadmap to Net Zero SBTs fully approved SLB successfully launched 2018: D 2019: C 2021: A Rating Supplier Engagement 2020: C 2021: B Member of DJSI Gold status 3rd consecutive time Member ©Nemak | Public
Slide 25: Aluminium Stewardship Initiative (ASI) covering all ESG aspects of our value chain
Aluminium Stewardship Initiative (ASI) covering all ESG aspects of our value chain ASI score model: supports holistic ESG strategy Environment Social Governance Sets internal standards Sets external standards GHG Business emissions Human Rights Integrity along the value chain along the supply chain
Slide 26: Driving D&I agenda
Driving D&I agenda Our strategic concept that will bundle all efforts around D&I We succeed in our D&I journey once we have made out of Nemak a workplace where everyone feels that all individual characteristics are valued and has a strong sense of belonging. ©Nemak | Public
Slide 27: Activating business resource group
Activating business resource group • Launched of first Global Business Resource group focused on female talent • 130+ Members and Allies registered globally during the first month • Leadership team representation from different regions and backgrounds • Focus on engagement and retention initiatives
Slide 28: Nemak as part of UN's Target Gender Equality Program
Nemak as part of UN’s Target Gender Equality Program • Part of UN Global Compact and Target Gender Equality Program • Assessment Gender Gap Analysis Tool • Nemak as signatory company for Women Empowerment principles – UN Women ©Nemak | Public
Slide 29: Aligning our gender equality agenda to UN's Women Empowering Principles
Aligning our gender equality agenda to UN’s Women Empowering Principles 2022 WEPs Action Plans lead by Global Community of D&I Champions Gender-Equal Gender Employee Professional Equality through Corporate Equality in the Health & Safety Development Community Leadership workplace Advocacy • Pipeline
Slide 30: Transition to Net Zero
Transition to Net Zero Min. 28% CO2 footprint reduction by 2030(1) I Carbon neutrality by latest 2050 ©Nemak | Public Notes: (1) Absolute reduction in Scope 1 & 2 greenhouse gas emissions against a 2019 baseline
Slide 31: Nemak's Science-Based Climate Targets
Nemak’s Science- Based Climate Targets Nemak's Scope 1 & 2 Emissions (tCO2e) Green production 1500000 Energy efficiency 2019 actual Technical innovation 1418978 1400000 Green products 28% 1300000 Reduction in CO2e footprint 2021 Low carbon 2026 target in Scope 1 & 2 by 2030 1200000 1216919 materials
Slide 32: Transition to Net Zero – focal points
Transition to Net Zero – focal points Environmental Impact Life Cycle Assessment (LCA) Renewable energy share Renewable Energy Own power production ISO50001 in all plants Energy Efficiency Projects with dedicated capex Secondary material share Scope 3 Reduction footprint per ton Fuel Switch Electrif
Slide 33: Sustainable Supply Chain
We currently use secondary material in close to Sustainable Supply Chain 70% of our products ©Nemak | Public
Slide 37: Auto Industry Development
Auto Industry Development Vehicle SAAR (M Units) 40.0 China (September Sales: 2.5 M vehicles) 35.0 ▪ Stimulus programs pull forward sales in short term ▪ Positive incentives impact capped by limited chip supply 30.0 USA (September Sales: 1.1 M vehicles) 28.3 25.0 ▪ Economic pressures remain present
Slide 38: Full year forecast
Full year forecast Light Vehicle Sales M Vehicles -12.7 (-14%) +3.1 (+4%) -1.4 89.9 (-2%) 80.3 78.8 79.7 79.8 80.2 81.0 81.4 77.2 78.3 25.1 23.1 23.0 24.1 23.2 22.5 20.8 24.2 23.8 27.0 2.7 2.0 2.0 2.0 1.9 2.0 17.1 1.8 1.9 2.0 2.0 15.1 13.9 13.8 14.0 14.6 13.7 13.9 14.0 15.4 20.3 15.2 14.7 15.1 China
Slide 39: 2023 Outlook
2023 Outlook Light Vehicle Sales (M Units) United States Europe China Brazil +4% -5% +2% -20% +3% -15% -9% -8% +4% 24.8 23.7 23.9 24.5 25.4 20.3 16.2 16.2 14.8 15.2 17.1 14.6 15.1 13.9 +4% 14.5 -27% -4% 2.7 2.0 2.0 1.9 2.0 19 20 21 22F 23F 19 20 21 22F 23F 19 20 21 22F 23F 19 20 21 22F 23F Source: N
Slide 41: Volume growth on industry & new product launches
Volume growth on industry & new product launches Volume (M Eq. Units) Comments Quarterly Accumulated +9.4% +29.5% 10.7 30.0 • Further easing of supply chain 10.0 9.9 10.1 27.4 constraints among OEMs 9.0 8.3 5.6 7.8 • Improved customer production 16.2 5.3 5.3 5.6 14.4 12% 4.5 4.3 • Ramp-up of e-mobil
Slide 42: Improved revenue growth
Improved revenue growth Revenue (US$ M) Comments Quarterly Accumulated +24.3% +41.7% 1,197 1,219 3,547 • Revenues benefited by higher volume, 1,131 improved product mix, and higher 1,038 aluminum prices 955 945 2,853 860 1,966 602 663 701 • Euro exchange rate partly affecting 520 36% 462 485 1,446 E
Slide 43: EBITDA development
EBITDA development EBITDA (US$ M) Comments Quarterly Accumulated -3.1% 169 +36.4% 435 • EBITDA supported by improved product 421 157 mix and better volume in North America 150 149 133 82 115 116 212 • Cost inflation pass-through to customers 74 90 242 14% 61 84 56 • Europe results affected by exchan
Slide 44: Investing for the future
Investing for the future Capex (US$ M) Comments 415* 360 • Strategic capex deployed to fund new program wins 269 283 208 • Including recent announcements, EV/SC 144 capex to represent more than 60% of strategic investments in 2022 125 151 132 2020 2021 2022 Strategic Normal * Guidance ©Nemak | Publi
Slide 45: Extended debt maturity & improved cost
Extended debt maturity & improved cost Financial Debt Profile (US$ M, Sep 22) Comments 540 • Average life of 5.7 years 500 0 • US$900M credit lines available to meet future needs • ~US$400 M committed 490 • +US$500 M uncommitted 232 500 31 • Leverage Target: <2.0x 198 64 60 36 47 23 30 34 5 2022 202
Slide 47: Long-term vehicle sales by segment
Long-term vehicle sales by segment By Propulsion (M Vehicles) 93 96 98 99 90 92 92 90 86 1 2 12 15 18 22 27 31 80 80 10 35 BEV 77 3 4 5 7 3 4 1 2 2 2 5 5 5 6 PHEV 88 74 74 74 73 70 ICE & 74 71 67 64 62 59 Hybrids 19 20 21 22 23 24 25 26 27 28 29 30 Pandemic & Semi- Industry Recovery Electrification
Slide 48: Addressable market increases due to electrification
Addressable market increases due to electrification Addressable Market in US$ B +20 (+69%) 48 E-Mobility & 28 Structure & 36 Chassis EV/SC 12 ICE Powertrain 17 ICE Powertrain 12 22 30e Source: Nemak Analysis ©Nemak | Public
Slide 49: Implications for Nemak (Short Term)
Implications for Nemak (Short Term) Short-term (22-23) • Continued easing of industry constraints • Revenue recovery due to volume recovery and ramp-up of EV/SC business • Inflation and energy costs impacts and corresponding commercial negotiations • New business awards in EV/SC segment • Capital ex
Slide 50: Implications for Nemak (Mid Term)
Implications for Nemak (Mid Term) Mid-term (23-26) • Global vehicle sales recovery due to pent-up demand • Vehicle production increase due to sales & OEM inventory rebuilding • Nemak’s top-line improvement due to sales recovery and ramp-up of new business • EV/SC production ramp-up with higher contr
Slide 51: Implications for Nemak (Long Term)
Implications for Nemak (Long Term) Long-term (27-30+) • Electrification accelerating in all regions • EV/SC segment ramp-up continues, surpassing adjustments of ICE powertrain volume • New segment expected to reach close to 60% of consolidated revenue and a higher share of EBITDA • ICE powertrain co
Slide 52: Financial results by business segment
Financial results by business segment Revenues EV/SC Profitability 2022 (US$ Million) (Base 100) Comments +45% +13.2 470 113 100 • Ramp-up of EV/SC segment. 325 • EV/SC products represent ~12% of EBITDA • New segment contribution expected to to continue growing in line with ramp- up of new projects
Slide 53: Financial priorities
Financial priorities • Profitability & returns ➢ Increased production of higher value-added applications supporting margins ➢ Selective approach to new opportunities across business segments • Capital allocation targeting electrification opportunity ➢ Asset reuse & flexible capacity ➢ ~US$600 M inve
Slide 54: Long-term financial plan
Long-term financial plan Revenues 2030e EBITDA (US$ Billion) (US$ Million) Comments 6.5 – 7.9 1,200 – 1,400 • Aim to achieve ~70% growth in top line on the back of EV/SC products 4.3 ▪ EV/SC order book>US$2 B to be 4.0 reached way before 2025 0.5 ▪ Aim to achieve a 15-20% market 502 share 3.6 • New
Slide 56: Nemak Innovative Lightweighting
6 Nemak Innovative Lightweighting

Nemak — Investor Day (November 2022) on 6ix

Nemak SAB de CV — Investor Day (November 2022)

Slide 1: Nemak Analyst Day

Slide 2: Forward-Looking Statement

Slide 3: Welcome

Slide 4: Automotive industry in fast-paced transformation

Slide 5: Transform to Grow

Slide 6: Nemak's Transformation

Slide 7: Electrification is a fast-growing driver of our current business

Slide 8: Placing Nemak in leading position in the new segment

Slide 9: EV/SC order book reached ~US$1.57 B annually

Slide 10: Tapping into growth of global EV market

Slide 11: Innovation driving lightweighting solutions for EVs

Slide 12: Committed to making sustainable mobility possible

Slide 13: Summary

Slide 14: Business Overview

Slide 15: Electrification landscape

Slide 16: Focus on higher value-added solutions

Slide 17: Increasing Nemak's content per vehicle

Slide 18: BEV Battery Housings

Slide 19: Investment in three new plants

Slide 20: Business takeaways

Slide 21: Looking forward

Slide 22: Sustainability & Purchasing

Slide 23: Sustainability pillars

Slide 24: Our commitments driving ESG performance

Slide 25: Aluminium Stewardship Initiative (ASI) covering all ESG aspects of our value chain

Slide 26: Driving D&I agenda

Slide 27: Activating business resource group

Slide 28: Nemak as part of UN's Target Gender Equality Program

Slide 29: Aligning our gender equality agenda to UN's Women Empowering Principles

Slide 30: Transition to Net Zero

Slide 31: Nemak's Science-Based Climate Targets

Slide 32: Transition to Net Zero – focal points

Slide 33: Sustainable Supply Chain

Slide 34: Financial Section

Slide 35: Agenda

Slide 36: Agenda

Slide 37: Auto Industry Development

Slide 38: Full year forecast

Slide 39: 2023 Outlook

Slide 40: Agenda

Slide 41: Volume growth on industry & new product launches

Slide 42: Improved revenue growth

Slide 43: EBITDA development

Slide 44: Investing for the future

Slide 45: Extended debt maturity & improved cost

Slide 46: Agenda

Slide 47: Long-term vehicle sales by segment

Slide 48: Addressable market increases due to electrification

Slide 49: Implications for Nemak (Short Term)

Slide 50: Implications for Nemak (Mid Term)

Slide 51: Implications for Nemak (Long Term)

Slide 52: Financial results by business segment

Slide 53: Financial priorities

Slide 54: Long-term financial plan

Slide 55: Q&A

Slide 56: Nemak Innovative Lightweighting