Nemak, S.A.B. de C.V.

Overview Key strengths Key risks Revenue from the electric vehicle (EV)/structural components production. Rising inflation, semiconductor shortages and volatile exchange rates. Strong and long-term relationship with original equipment manufacturers (OEMs). Smaller scale and greater customer concentration than those of industry peers. Proven strategies to maintain steady profitability. The company?s strong and long-term relationships with OEMs have enabled it to secure contracts to date to produce EV/structural components that generate $1.53 billion in annual revenue. This has, in turn, reduced the replacement risk sharply amid the auto industry's transition toward EVs as Nemak increases its participation in this segment. Our base-case scenario assumes that the company will generate about 20% of total revenue from the production of EV/structural components by 2022,

...Nemak S.A.B. de C.V. has turned its EV/structural components production into a revenue generator. The company's strong and long-term relationships with OEMs have enabled it to secure contracts to date to produce EV/structural components that generate $1.53 billion in annual revenue. This has, in turn, reduced the replacement risk sharply amid the auto industry's transition toward EVs as Nemak increases its participation in this segment. Our base-case scenario assumes that the company will generate about 20% of total revenue from the production of EV/structural components by 2022, compared with about 10% in 2021 and 5% in 2020. Thanks to cost efficiencies and internal controls, cash flows are resilient to economic and industry strains. Nemak is grappling with higher inflation, volatile exchange rates, and semiconductor shortages in order to keep profitability steady. The company has...

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