Nemak (NEMAKA) Q1 2025 earnings summary

Executive summary

• EBITDA increased 2.9% year-over-year to $149 million in 1Q25, driven by operating efficiencies and pricing actions, despite a 7.3% decline in volumes to 9.8 million equivalent units.

• Revenue remained stable at $1.2 billion, reflecting product repricing and favorable FX, with strong margin improvement and ongoing deleveraging.

• Capital expenditure was reduced by 38.5% year-over-year to $64 million, prioritizing asset utilization and selective new business.

• Secured $90 million in new annual business, mainly in the ICE powertrain segment, and extended several ICE contracts beyond 2030, reflecting OEMs' continued commitment to traditional engines.

• ESG progress included a 22% reduction in Scope 1 and 2 emissions, 30% renewable electricity usage, and reaffirmed A- CDP climate rating.

Financial highlights

• Revenue was $1.2 billion, up 0.2% year-over-year, supported by product repricing and FX despite lower volumes.

• EBITDA per equivalent unit rose 11% year-over-year to $15.2.

• Operating income was $50 million, down 9.1% year-over-year due to a non-cash impairment.

• Net loss of $16 million, mainly due to non-cash FX effects; adjusted net income would be $18 million excluding FX and impairments.

• Net debt at $1.6 billion, 5% lower year-over-year; net debt/EBITDA ratio at 2.5x, interest coverage at 5.0x.

Outlook and guidance

• Guidance for 2025 remains unchanged, with no major volume changes anticipated despite tariff and geopolitical uncertainties.

• Well positioned to manage volume and cost fluctuations through cost adaptation and expense minimization.

• CapEx expected to be higher in later quarters due to scheduling, but full-year guidance maintained.

• Targeting net debt/EBITDA below 2x in the mid- to long-term, with further deleveraging expected next year.

• Ongoing support for customers adapting to changing preferences.