Mazda Media Presentation English


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Mazda Media Presentation English

  1. 1. May 17, 2006 Chip McClure Chairman, CEO and President Shanghai, China
  2. 2. ArvinMeritor Executives <ul><li>Chip McClure </li></ul><ul><ul><li>Chairman, CEO and President </li></ul></ul><ul><li>Lin Cummins </li></ul><ul><ul><li>Senior Vice President, Communications </li></ul></ul><ul><li>Aziz Aghili </li></ul><ul><ul><li>Vice President, Purchasing, Light Vehicle Systems </li></ul></ul><ul><li>Frank Herr </li></ul><ul><ul><li>Managing Director, Commercial Vehicle Systems, China </li></ul></ul><ul><li>Jacqueline Gu </li></ul><ul><ul><li>Chief Financial Officer, China </li></ul></ul>
  3. 3. <ul><li>This presentation contains statements relating to future results of the company (including certain projections and business trends) that are “forward-looking statements” as defined in the Private Securities Litigation Reform Act of 1995. Forward-looking statements are typically identified by words or phrases such as “believe,” “expect,” “anticipate,” “estimate,” “should,” “are likely to be,” “will” and similar expressions. Actual results may differ materially from those projected as a result of certain risks and uncertainties, including but not limited to global economic and market cycles and conditions; the demand for commercial, specialty and light vehicles for which the company supplies products; risks inherent in operating abroad (including foreign currency exchange rates and potential disruption of production and supply due to terrorist attacks or acts of aggression); availability and cost of raw materials, including steel; OEM program delays; demand for and market acceptance of new and existing products; successful development of new products; reliance on major OEM customers; labor relations of the company, its suppliers and customers, including potential disruptions in supply of parts to our facilities or demand for our products due to work stoppages; the financial condition of the company’s suppliers and customers, including potential bankruptcies; possible adverse effects of any future suspension of normal trade credit terms by our suppliers; potential difficulties competing with companies that have avoided their existing contracts in bankruptcy and reorganization proceedings; successful integration of acquired or merged businesses; the ability to achieve the expected annual savings and synergies from past and future business combinations and the ability to achieve the expected benefits of restructuring actions; success and timing of potential divestitures; potential impairment of long-lived assets, including goodwill; competitive product and pricing pressures; the amount of the company’s debt; the ability of the company to continue to comply with covenants in its financing agreements; the ability of the company to access capital markets; credit ratings of the company’s debt; the outcome of existing and any future legal proceedings, including any litigation with respect to environmental or asbestos-related matters; rising costs of pension and other post-retirement benefits and possible changes in pension and other accounting rules; as well as other risks and uncertainties, including but not limited to those detailed from time to time in filings of the company with the SEC. These forward-looking statements are made only as of the date hereof, and the company undertakes no obligation to update or revise the forward-looking statements, whether as a result of new information, future events or otherwise, except as otherwise required by law. </li></ul>Forward-Looking Statements
  4. 4. Fact Sheet <ul><li>$8.8 billion global supplier to the motor vehicle industry </li></ul><ul><li>12 th largest automotive company in America </li></ul><ul><li>Ranked 242 on Fortune 500 list* </li></ul><ul><li>Nearly a century of heritage </li></ul><ul><li>Serves light vehicle, commercial truck, trailer and specialty OEMs and related aftermarkets </li></ul><ul><li>Headquarters in Troy, Mich. </li></ul><ul><li>New York Stock Exchange symbol: ARM </li></ul>* Source: Fortune, April 17, 2006
  5. 5. Heritage of Trust and Responsiveness Rockwell Automotive Meritor Automotive ArvinMeritor Arvin Industries Rockwell Automotive Meritor Automotive Nearly a 100-Year Heritage 1997 2000 1914 1919 ArvinMeritor
  6. 6. Broad Product Portfolio CVS Total Sales of $4.1 billion = 46% LVS Total Sales of $4.7 billion = 54% Sales from Continuing Operations $8.8 Billion in FY05 #1 or #2 in most major markets
  7. 7. Strong Global Presence <ul><li>North America – 51% </li></ul><ul><li>FY05 sales $4.5B </li></ul><ul><ul><li>LVS – $2.0B </li></ul></ul><ul><ul><li>CVS – $2.5B </li></ul></ul><ul><li>46 manufacturing facilities </li></ul><ul><li>7 joint ventures* </li></ul><ul><li>6 technical centers </li></ul><ul><li>Europe – 38% </li></ul><ul><li>FY05 sales $3.3B </li></ul><ul><ul><li>LVS – $2.2B </li></ul></ul><ul><ul><li>CVS – $1.1B </li></ul></ul><ul><li>43 manufacturing facilities </li></ul><ul><li>8 joint ventures* </li></ul><ul><li>12 technical centers </li></ul><ul><li>South America – 5% </li></ul><ul><li>FY05 sales $0.5B </li></ul><ul><ul><li>LVS – $240M </li></ul></ul><ul><ul><li>CVS – $217M </li></ul></ul><ul><li>12 manufacturing facilities </li></ul><ul><li>2 joint ventures* </li></ul><ul><li>2 technical centers </li></ul><ul><li>Asia Pacific & ROW – 6% </li></ul><ul><li>FY05 sales $0.5B </li></ul><ul><ul><li>LVS – $276M </li></ul></ul><ul><ul><li>CVS – $256M </li></ul></ul><ul><li>20 manufacturing facilities </li></ul><ul><li>9 joint ventures* </li></ul><ul><li>1 technical center </li></ul>* Includes consolidated and non-consolidated joint ventures 121 Manufacturing Facilities 26 Joint Ventures 21 Technical Centers
  8. 8. Diverse Customer Base Minimizes Reliance on Any Single Customer CVS Customer Base LVS Customer Base DaimlerChrysler (Chrysler and Mercedes) 13% General Motors 9% Volkswagen 9% Ford 7% Asian Based OEMs 3% BMW 3% PSA 2% Fiat 2% Other LVS 6% Other CVS 16% Fiat 1% Asian Based OEMs 1% Ford 1% Volkswagen 1% General Motors 1% PACCAR 2% Renault 3% International 3% Volvo 8% DaimlerChrysler 9%
  9. 9. Vision and Values <ul><li>Build Supplier Relationships </li></ul><ul><li>Enhance Social Responsibility </li></ul><ul><li>Create Shareowner Value </li></ul><ul><li>Exceed Customer Expectations </li></ul><ul><li>Develop an Employee-Valued Culture </li></ul>Strategies: <ul><li>Core Purpose: </li></ul><ul><li>Delivering innovative solutions </li></ul><ul><li>that move the world </li></ul><ul><li>Values: </li></ul><ul><li>Pursuit of Excellence </li></ul><ul><li>Integrity </li></ul><ul><li>Teamwork and Respect for </li></ul><ul><li>Each Other </li></ul>Vision: To be a leading global provider of innovative customer solutions that enhance mobility, safety and the environment
  10. 10. Building Social Responsibility Into Our Culture Employee Involvement Local Strategies/Plan Trust Committee Corporate Officers Board of Directors <ul><li>Annual Reviews </li></ul><ul><li>Environment and Social Responsibility Committee </li></ul><ul><li>Volunteerism </li></ul><ul><li>C 2 EO </li></ul><ul><li>Trust Committee Meeting </li></ul><ul><li>Monthly Status Report </li></ul><ul><li>Contribution Data Sheet </li></ul><ul><li>Local Strategies and Budgets </li></ul>
  11. 11. <ul><li>Charitable donations </li></ul><ul><ul><li>Together with our joint venture partner, Anand Group, contributed more than $50k toward Tsunami relief </li></ul></ul><ul><li>Leadership and employee volunteerism </li></ul><ul><li>Global plant community initiatives </li></ul><ul><li>Education initiatives and scholarship programs </li></ul>Giving Back to the Community Aftermath of 2005 Tsunami in Thailand
  12. 12. Recent Accomplishments: Expanding Customer Base Awarded two new emissions contracts with Chinese manufacturer Awarded exhaust aftertreatment device packaging for Daimler-Chrysler’s heavy-duty engines Signed multi-year contract to supply door module to the Chinese market Entered into joint venture with DongWon Precision Industrial Co. to supply diesel particulate filters to the Korean market Entered into joint venture with First Auto Works (FAW) to produce foundation brakes Opened Customer Value Center in Alabama to supply door modules for Hyundai’s Sonata and Sante Fe Selected as standard equipment supplier for hub and brake drums by Wabash National Corp.
  13. 13. Recent Accomplishments: Divestitures of Non-Core Business In process <ul><ul><li>Europe </li></ul></ul>In process <ul><ul><ul><li>Ride Control </li></ul></ul></ul><ul><ul><li>South Africa </li></ul></ul>In process <ul><ul><ul><li>Motion control </li></ul></ul></ul>In process <ul><ul><ul><li>Ride control </li></ul></ul></ul>Not disclosed Sold <ul><ul><ul><li>Exhaust </li></ul></ul></ul>$170 million Sale completed <ul><ul><ul><li>Purolator filters </li></ul></ul></ul>North America $9 million Sold Equity Share in Purolator India India Light Vehicle Aftermarket $39 million Sold Off-Highway Brakes Commercial Vehicle Systems Proceeds Status
  14. 14. Second-Quarter FY06 Highlights <ul><li>Generated strong sales from continuing operations </li></ul><ul><ul><li>$2.3 billion (up 3 percent over same period last year) </li></ul></ul><ul><li>Achieved net income of $45 million – up $78 million </li></ul><ul><li>Delivered top-end guidance of $0.40 EPS </li></ul><ul><li>($0.35 - $0.40) </li></ul><ul><ul><li>Updated EPS* guidance range $1.60 - $1.70 ($1.50 - $1.70) </li></ul></ul><ul><li>Completed sale of several LVA businesses </li></ul><ul><li>($194 million) </li></ul><ul><li>Took action to refinance debt </li></ul><ul><ul><li>Unique within our industry in a challenging environment </li></ul></ul><ul><li>Appointed two new officers </li></ul><ul><ul><li>Jay Craig, Vice President and Controller </li></ul></ul><ul><ul><li>Mary Lehmann, Vice President and Treasurer </li></ul></ul>* Before special items
  15. 15. Recent Accomplishments: Improving the Balance Sheet <ul><li>Net term debt reduction of </li></ul><ul><li>$300 million </li></ul><ul><ul><li>From $1.4 billion to $1.1 billion </li></ul></ul><ul><li>Extended $553 million of </li></ul><ul><li>term debt </li></ul><ul><ul><li>Now due in 10 to 20 years </li></ul></ul>No Major Debt Maturities Until 2012
  16. 16. Commercial Vehicle Systems Highlights <ul><li>Stronger volumes in North America and Western Europe </li></ul><ul><li>Revitalization of Meritor brand </li></ul><ul><li>Emissions business continues to grow </li></ul><ul><ul><li>Awarded 100 percent of DaimlerChrysler exhaust aftertreatment device packaging for U.S. 2007 heavy-duty engines </li></ul></ul><ul><ul><li>Selected by AM General as aftertreatment provider </li></ul></ul><ul><li>Hubs and brake drums selected as standard equipment for Wabash National Corp. ($20M annually) </li></ul>
  17. 17. Light Vehicle Systems Highlights <ul><li>Winning new business </li></ul><ul><ul><li>Two new emissions contracts with a new OE in China </li></ul></ul><ul><ul><ul><li>Exhaust systems and catalytic converters </li></ul></ul></ul><ul><ul><ul><li>Domestic and export </li></ul></ul></ul><ul><ul><li>Japanese OEM wheels award </li></ul></ul><ul><ul><ul><li>Produced in Mexico beginning Summer 2006 </li></ul></ul></ul><ul><li>Sales growth with Asian OEMs (FY05 vs. FY07) </li></ul><ul><ul><li>LVS = 30 percent </li></ul></ul><ul><ul><li>LVS + JVs = 40 percent </li></ul></ul><ul><li>Earning customer confidence </li></ul><ul><ul><li>Chrysler Group Gold Award (Wheels) </li></ul></ul><ul><ul><li>Honda Quality (Zero Defects) Award (MSSC) </li></ul></ul>Toyota Honda Nissan Hyundai Chery ArvinSango Sejong Sales Growth with Asian OEMs
  18. 18. Focusing on Core Growth Drivers <ul><li>Vehicle Performance </li></ul><ul><li>Ride Comfort </li></ul><ul><li>Vehicle Stability </li></ul><ul><li>Collision Avoidance </li></ul><ul><li>Fuel Efficiency </li></ul><ul><li>Emissions Reduction </li></ul>Mobility Safety Environment
  19. 19. Pursuing Profitable Business Expansion “ Activate” existing mechanical products Increase presence in emerging markets Grow Commercial Vehicle Emissions and Aftermarket businesses
  20. 20. North America 50% Europe 39% Asia and Other 11% North America Europe Asia and Other Where we are… Where we are going…
  21. 21. Focus on China: Market Drivers <ul><li>Increasing vehicle population </li></ul><ul><li>Prolonged service life of vehicles </li></ul><ul><li>Rising auto production is increasing OEM sales </li></ul><ul><li>Continued increase of vehicle exports to emerging markets </li></ul>Source: Frost & Sullivan, UMTRI “Inside China: The Chinese view their Automotive Future”
  22. 22. Significant Opportunity for Long-Term Growth in the Automotive Sector Information Based Only on Cars and Light Trucks; Excluding 2-Wheeler Market Source: Keystone India: The World’s Top Automotive Markets in 2030 % Share of Top 10 Markets Vehicles Registered (2005) % Share of Top 10 Markets Vehicles Registered (2030) China Expected to Grow from No. 6 to No. 2 in the World
  23. 23. Gross Domestic Product (GDP) Forecasts Source: Goldman Sachs “Dreaming with BRICs” (US$ Billions) The China market is unique due to its large population , economic growth reforms and the speed at which it is transforming to a full-market economy
  24. 24. Passenger Car Sales Production Forecast Vehicle Production (Units) Source: CSM Worldwide, DRI Global Insights
  25. 25. Estimated On-Road Vehicle Market Source: Frost & Sullivan, Business Monitor International, Team Analysis Personal Transportation Used for Personal and Recreational Transportation of People (Includes Passenger Cars and Two Wheelers) Goods Transportation Used for the Commercial Transportation of Goods (Includes Light, Medium and Heavy Trucks) Mass Transportation Used for the Commercial Transportation of People Includes Light, Medium and Heavy Buses Vehicles in Millions Strong Growth Anticipated in all Segments ArvinMeritor Supplies
  26. 26. Current Operations in China – Wholly Owned Operations <ul><li>Pudong </li></ul><ul><ul><li>Axle assembly </li></ul></ul><ul><li>PuDong (CVC), Yantai (CVC), Anting, Chongqing (CVC) and Nanjing </li></ul><ul><ul><li>Emissions technologies </li></ul></ul><ul><ul><li>Customers include VW, SAIC, GM, Ford, Jeep, SEA </li></ul></ul><ul><li>Zhenjiang </li></ul><ul><ul><li>Window regulators and door latches </li></ul></ul><ul><ul><li>Customers include Mazda Japan, FAW-VW, Volkswagen Shanghai </li></ul></ul><ul><li>Changchun </li></ul><ul><ul><li>Door modules, CVC beginning in October 2006 </li></ul></ul><ul><li>Shanghai </li></ul><ul><ul><li>Corporate office </li></ul></ul>Operating in China Since Late 1980’s Doubled Presence in Past Three Years Twelve Manufacturing Facilities
  27. 27. Current Operations in China – Joint Ventures <ul><li>Shanghai ArvinMeritor Automotive Parts Co. Ltd. </li></ul><ul><ul><li>Sunroofs </li></ul></ul><ul><ul><li>Customers include Shanghai VW </li></ul></ul><ul><li>ArvinMeritor FAW Sihuan (Changchun) Vehicle Brake Co. Ltd. </li></ul><ul><ul><li>Brakes </li></ul></ul><ul><ul><li>Customers include FAW </li></ul></ul><ul><li>Xuzhou Meritor Axle Co. Ltd. </li></ul><ul><ul><li>Axles for off-highway vehicles, brakes </li></ul></ul><ul><ul><li>Customers include FAW, FOTON, Puyuan, Taian </li></ul></ul><ul><li>Meritor Huayang Braking Co. Ltd. </li></ul><ul><ul><li>Brakes </li></ul></ul><ul><ul><li>Customers include Golden Dragon, Ankai Bus, Volvo Sunwin </li></ul></ul>
  28. 28. Building A Strong Presence in China <ul><li>Asia/Pacific Supplier Development Workshop Training </li></ul>China LVS Team Receives GM Best Supplier Award LVS Group Hosts Tech Fair in China
  29. 29. ArvinMeritor Forms Joint Venture with FAW First ASA Assembly in Changchun The joint venture (JV) launch team recently celebrated its first automatic slack adjuster (ASA) assembled at the Commercial Vehicle Systems facility in Changchun, China. The launch customer is CIMC at Shenzen.
  30. 30. ArvinMeritor and FAW Joint Venture <ul><li>Markets: </li></ul><ul><li>Heavy-duty truck, trailer and high-grade bus and coach </li></ul><ul><li>Products: </li></ul><ul><li>Manual slack adjuster (MSA) and automatic slack adjuster (ASA) </li></ul><ul><li>Air disc brake (ADB) </li></ul><ul><li>S-cam drum brake assembly </li></ul><ul><li>Customers: </li></ul><ul><li>FAW JieFang Truck, Coach and Export to Russia </li></ul><ul><li>China International Marine Containers Group (CIMC) </li></ul><ul><li>Worldwide trailer customers </li></ul><ul><li>Beijing Public Transportation Authority </li></ul><ul><li>Don Feng Motors </li></ul><ul><li>YuTong Bus </li></ul><ul><li>AnKai Bus </li></ul>
  31. 31. ArvinMeritor and FAW Joint Venture <ul><li>Sales Projection: </li></ul>(US$ Millions)
  32. 32. Growing through Joint Ventures <ul><li>Global supply partners for key components </li></ul><ul><li>In-market conduit to customers </li></ul><ul><ul><li>Continuing operations are involved in 26 joint ventures in 13 countries </li></ul></ul><ul><ul><li>Sales of unconsolidated joint ventures in 2005 were $1.5 billion </li></ul></ul><ul><ul><li>Equity earnings from joint ventures in fiscal year 2005 were $28 million </li></ul></ul><ul><ul><ul><li>Increase of 47 percent over the prior year </li></ul></ul></ul>Vital Element of Global Expansion and Technology Strategy
  33. 33. Sales Growth from Unconsolidated Joint Ventures 2005 2004 2003 $1.5B $1.1B $843M
  34. 34. Forming Joint Ventures to Grow in Emerging Markets 2005 Consolidated Sales Including All Joint Ventures North America 51% Europe 38% Rest of World 11% North America 49% Europe 32% Rest of World 19% Geographic Diversity Aided by Joint Ventures
  35. 35. Seizing Procurement Opportunities <ul><li>Comprehensive strategy to double LCCC spend by 2008 </li></ul><ul><li>Substantial cost reductions of raw materials and components </li></ul><ul><li>Localize supply base in Asia/Pacific </li></ul><ul><li>Focused in BRIC countries (Brazil, Russia, India and China) </li></ul><ul><li>Procurement leadership based in Shanghai </li></ul>Leading Cost-Competitive Country (LCCC) Spend 60% 43% 22% 2010 2008 2005
  36. 36. Capturing Our Share of Rapidly Growing Global Diesel Emissions Market <ul><li>Addressable market of $750 million in 2005 grows to $4.2 billion by 2010 </li></ul><ul><ul><li>$2.7 billion in CVS </li></ul></ul><ul><ul><li>$1.5 billion in LVS </li></ul></ul><ul><li>Significant business awards </li></ul><ul><ul><li>Nine Commercial Vehicle Emissions (CVE) contracts with seven different customers </li></ul></ul><ul><ul><ul><li>Exhaust aftertreatment device packaging for DaimlerChrysler </li></ul></ul></ul><ul><ul><ul><li>ActiveClean  Atomizer Technology for General Engine Products </li></ul></ul></ul><ul><ul><li>1.4 million LV diesel particulate filters </li></ul></ul>Diesel Emissions Addressable Market
  37. 37. China Heavy Duty Emissions Guidelines <ul><li>China will adopt Euro limits and test cycle standards </li></ul><ul><li>Entire CVE product portfolio can be immediately used to meet Euro IV and Euro V limits </li></ul><ul><li>Significant retrofit opportunities for Beijing, Shanghai and other metropolitan areas </li></ul><ul><ul><li>2008 Olympics drive Beijing retrofits </li></ul></ul><ul><li>By 2012, markets in China and Europe will be fully aligned </li></ul><ul><li>Selective catalytic reduction (SCR) lead technology candidate to meet Euro IV </li></ul>01 Jan 2012 Euro V Beijing: End of 2008 (TBC) Rest of China: 01 Jan 2010 Euro IV 01 Jan 2007 Euro III 01 Sept 2003 Euro II Introduction Dates Emissions Limit
  38. 38. <ul><li>Talented and experienced people </li></ul><ul><li>Global presence </li></ul><ul><li>Diversified customer base </li></ul><ul><li>Global leader </li></ul><ul><li>Resilient business model </li></ul><ul><li>Best-in-class processes </li></ul><ul><li>Continuous Improvement culture </li></ul><ul><li>Technology focus </li></ul><ul><ul><li>Problem-solving expertise </li></ul></ul><ul><ul><li>Innovative solutions </li></ul></ul>Strong Foundation
  39. 39.