Nemak (NEMAKA) Q4 2024 earnings summary

Executive summary

• 2024 saw a strategic shift to prioritize margin recovery and cash flow amid declining volumes, with EBITDA up 9% year-over-year to $633 million and positive free cash flow of $27 million.

• Net income for 2024 was $25 million, up from $4 million in 2023; Q4 saw a net loss of $51 million due to asset write-offs and higher financial expenses.

• Investments were realigned due to slower EV adoption, with two new facilities put on hold and a focus on leveraging existing capacity.

• Commercial negotiations and repricing supported sustainable margins and debt reduction.

• Achieved significant ESG milestones, including Dow Jones Sustainability Indices inclusion and Aluminum Stewardship Initiative certifications.

Financial highlights

• Full-year revenue was $4.9 billion, down 2% year-over-year, with Q4 revenue up 6% to $1.2 billion despite a 7% volume drop.

• EBITDA rose 21% in Q4 and 9% for the year, driven by cost optimization and commercial negotiations.

• Operating income for 2024 was $145 million, down from $177 million, due to an $80 million asset write-off.

• Net debt ended at $1.53 billion, with a net leverage ratio of 2.4x, surpassing the 2.5x target.

• Capital expenditures reduced by 28% year-over-year to $389 million.

Outlook and guidance

• 2025 guidance: volume of 37–38 million equivalent units, revenue of $4.6–$4.8 billion, EBITDA of $580–$600 million, and CapEx of $285–$295 million.

• Margins (EBITDA per unit) expected to return to pre-pandemic levels, but volume is projected to decline due to market volatility and evolving OEM electrification plans.

• Investments will be reduced, with a focus on cash flow generation and further debt reduction.

• Management expects to maintain agility between ICE and EV/SC projects, focusing on sustainable margins and growth.

• Prepared to navigate market volatility in 2025, leveraging advanced casting and global footprint.