Specialist
Former Managing Director at NBHX Trim GmbH
Agenda
- Volume and pricing outlook in 2021-23 by region, including EV (electric vehicle) shift impacts on content per vehicle
- Manufacturing challenges and capacity utilisation
- Operating margin expansion outlook and cash flow dynamics associated with tooling
- M&A opportunities and sector consolidation expectations
Questions
1.
What is your growth outlook for the premium car interiors sector over the next 1-5 years?
2.
Do you have any percentages in mind when you think about future growth for the premium sector?
3.
Could you outline the primary drivers of the 9-11% market growth?
4.
Which markets, countries or regions do you think are driving growth for the premium segment?
5.
Novem quotes premium penetration levels at around 13% vs the total market. How is the high growth expected in the market likely to change this 13% premium penetration over the next five years?
6.
Are premium sales set to grow relative to the market? If so, by how much?
7.
How is the semiconductor shortage impacting the interiors market?
8.
What do you think could be the full-year impact of the chip shortage on industry-wide volumes?
9.
What is your outlook for sales growth at Novem? How does that compare to the 9-11% expected market growth?
10.
What do you think are the primary growth drivers for Novem?
11.
Could you elaborate on what the optimal project capacity is and what Novem’s project capacity typically might be in relation to that?
12.
How do OEMs [original equipment manufacturers] typically perceive Novem from a project capacity perspective, given that it is the market leader?
13.
There are four surface materials Novem would typically work with, wood being by far the largest, aluminium taking up a fair chunk and very small amounts of sales in carbon and synthetics. Which surfaces are driving growth across those four product surface categories?
14.
What shifts, if any, do you expect in revenue share by product category? I think wood is roughly 75% odd, aluminium is in the low twenties and carbon and synthetics are in the low single digits.
15.
Does the medium-to-long-term shift towards aluminium threaten Novem’s market share, given that it historically has a dominance in wood?
16.
We’re hearing about advancements in hidden and integrated displays, acoustic trims and jester control elements. How are these types of features likely to impact content per vehicle for Novem?
17.
What is your outlook for content per vehicle vs current levels in light of the shift towards hidden integrated displays, acoustic trims or jester control elements?
18.
What would be the typical value per vehicle for an operator such as Novem?
19.
What do you think about the broader impacts of electro-mobility or autonomous driving? How is this likely to impact content per vehicle, beyond the 10-15% impact of electric items?
20.
What are the pricing trends with OEMs? What are the typical price discussions? How do they play out?
21.
What sort of price concessions are provided through the contract life cycle in the premium segment?
22.
What is the average product life cycle?
23.
What discussions take place if there is raw material price inflation? How easy is it for Novem to pass this on to an OEM?
24.
What happens to price pass through in practice?
25.
Novem boasts a 46% market share in its IPO documents. What do you think drives this high market share?
26.
How defensible is Novem’s market share?
27.
What are the barriers to entry? You said it’s difficult for competitors to gain any market share.
28.
Novem’s top three customers are 75% of its total revenue. How big a risk does that present?
29.
Could you outline Novem’s competitive positioning vs NBHX Trim, Faurecia, Mata, Joysonquin and Mono Group? Are there any key differences?
30.
How big a threat is Joysonquin to Novem if the company begins to get its aluminium product up and running?
31.
China is a big growth area. How competitive is Novem in this country vs its five key competitors?
32.
How difficult is it for Novem to win over domestic Chinese OEMs which are premiumising?
33.
You mentioned a difference in China preferring to buy domestically. What is the typical tendering process for a premium interiors company? How does that typically work?
34.
How much early involvement is there from Novem in the design stage before tendering?
35.
The capital markets are slightly critical of Novem on the basis that there is a level of tooling required for clients at the start of any production, sometimes even pre-production. What investments need to be made for OEMs at that stage?
36.
Are there any synergies for tooling across different models or platforms?
37.
Are there some potential benefits for Novem in terms of synergies across platforms within one particular OEM?
38.
We heard a lot about plant optimisation at Novem in 2020 in response to coronavirus. What sort of plant optimisation do you think is still necessary to drive productivity gains?
39.
How are you assessing the productivity improvement opportunity? What could the cost impact be?
40.
Novem has eight plants globally, so what is the optimum plant size, given the expected demand environment?
41.
What are the typical capacity utilisation levels in the sector? Do you have any insight into how Novem compares to that?
42.
How do margins compare across product categories? You mentioned some aluminium growth in relation to wood.
43.
Why do you think Novem wants to go public? Could it be due to any big M&A possibilities, either in this market or adjacent markets?
44.
What are your expectations for any potential big M&A activity including Novem?
