Tokyo (SCCIJ) – The largest automotive supplier of Switzerland, Autoneum based in Winterthur, has increased the stake in its Japanese partner Nihon Tokushu Toryo, or Nittoku, from 8.7 to 13.2 percent since the end of March. The partnership between Autoneum (and its predecessors) and Nittoku started already fifty years ago. Mainly, the two partners provide Japanese car manufacturers globally with innovative lightweight solutions for noise reduction and thermal management. Together, the two companies operate eight joint ventures in North America and Asia with this purpose. Those ventures contribute significantly to the operating profit of the Swiss automotive supplier.
Supplying Japanese automotive producers
For access to Japanese customers, Nittoku is an indispensable door opener for Autoneum. The increase of the Swiss stake in Nittoku became public as the result of declarations at the Tokyo Stock Exchange which are compulsory for every change of ownership of at least 1 percent. The financial service provider Bloomberg referred to them first, the financial paper Finanz und Wirtschaft reported them in Switzerland.
“The long-term cooperation with Nittoku is very important for us,” explained Autoneum Chief Financial Officer Martin Zwyssig about the participation in Nittoku and its increase. “With the occasional purchase of shares, we ensure that the strategic partnership remains constant.” The opportunity for the acquisition of a share package had recently emerged and had been used accordingly, he added.
Nittoku has annual sales of approximately CHF 400 million and a stock market capitalization of around CHF 350 million. Trading in the shares is considered to be little liquid despite a free flow of 55 percent (Bloomberg figure). The largest shareholders of Nittoku after Autoneum are Kansai Paint as well as Nittoku itself (with 7.9 and 6 percent respectively).
Cooperation started 50 years ago
The cooperation between Nittoku and Rieter from Switzerland, a predecessor of Autoneum, started in 1967 with license agreements. In 1986, a subsidiary of Globe Industries (later acquired by Rieter Automotive Systems) formed a joint venture with Nittoku named UGN. It manufactures automotive soundproof material to Japan headquartered original equipment manufacturers (OEMs) in the U.S. and Canada.
In 2003, Rieter Automotive Systems entered the Chinese market by forming another joint venture with Nittoku. Its purpose was to manufacture and sell products to Japanese headquartered OEMs in China. Subsequently, Rieter Automotive Systems and Nittoku expanded their partnership to include joint ventures for purposes of serving Japanese headquartered OEMs in all other Asian markets (except Japan). Except UGN, there are now three joint ventures in China, two in Thailand, one in India and one in Indonesia, with Autoneum holding 50 or 51 percent each.
In August 2012, Autoneum and Nittoku signed a Memorandum of Understanding with Toyota Boshoku for strategic joint development of lightweight interior systems to provide best-in-class vehicle acoustics, particularly for hybrid cars that offer attractive growth potential. They aim to leverage their competences in car interior, acoustics and thermal management, applying a full systems approach.
Outlook of Autoneum
For 2017, Autoneum anticipates net sales growth in local currencies of 4 percent to 5 percent in line with its mid-term financial targets. This growth looks set to vary by region. While Business Group Europe is likely to exceed the mid-term target, net sales of Business Group North America should remain at the previous year’s level due to softening demand.
In line with the strategy, double-digit net sales growth at the high level of 2016 is expected for Business Group Asia, thus being well above the market. The continuation of the restructuring measures in South America should lead to a further improvement in earnings of Business Group SAMEA. Despite the challenging market environment, Autoneum expects to maintain the EBIT margin achieved in 2016.
Text: Martin Fritz for SCCIJ; Photo: Automatic production of heat shields in Switzerland (Autoneum)