Specialist
Former VP and Director at Standard Profil AS
Agenda
- Volume outlook amid semiconductor shortage – 2021-22 sales impact
- Key OEM (original equipment manufacturer) decision-making criteria and Standard Profil’s customer portfolio expansion and competitive positioning
- Content per value tailwinds, highlighting growth opportunities in SUVs (sport utility vehicles) and BEVs (battery electric vehicles)
- CAPEX requirements and raw material price inflation, including the ability to pass on to OEMs and margin impact
Questions
1.
The semiconductor shortage continues to be a challenge for the automotive sector and for players within
the supply chain such as Standard Profil. What is your outlook for Standard Profil’s Q4 2021 volumes vs 2020
given supply chain shortages?
2.
How might Q4 2021 revenue be impacted by volume difficulties? Q4 2020 earnings were just above EUR 90m. Revenues dropped substantially over Q1, Q2 and Q3 2021, with Q3 at around EUR 67.5m.
3.
To what extent could the new launches you highlighted offset the expectations for a YoY 20% downside for
Q4 2021 revenues in Europe?
4.
How long might it take for semiconductor capacity to normalise?
5.
What’s a realistic timeline for Standard Profil’s volumes stabilisation? Is it 9-12 months in line with
semiconductor capacity, or might there be a lag effect there on volumes?
6.
We’re hearing about Standard Profil’s ability to expand the customer portfolio to reduce reliance on a few
OEMs [original equipment manufacturers]. How realistic is the success of this shift towards a broader base?
7.
How much of a competitive disadvantage is Standard Profil’s limited geographical coverage vs a player
such as Cooper-Standard? Are OEMs less likely to partner with Standard Profil due to its geographical
coverage?
8.
What other criteria are important for OEMs in the contract decision-making process? You highlighted
global coverage.
9.
How important is price for OEMs?
10.
How do you expect Standard Profil’s geographical mix to shift? What sales mix shift are you expecting over the next 1-2 years?
11.
How easy or difficult is it for OEMs to switch volumes from Standard Profil to a competitor?
12.
How confident are you in Standard Profil’s contract book? Are you worried about contract loss at renewal?
13.
There’s potential positive growth for Standard Profil in BEV’s [battery electric vehicles] and HEVs [hybrid electric vehicles]. How might the sealing content per vehicle improve as these vehicle-types are rolled out?
14.
Could you estimate the difference in total value of sealing content per vehicle in an ICE [internal combustion engine] vs a BEV?
15.
The roll-out of BEVs means exposure to start-up brands such as Rivian, Zoox and Canoo. Does that create additional vulnerabilities around order book realisation?
16.
How successful do you think Standard Profil will be or has been around passing on raw material cost
increases?
17.
Could you estimate the average pain sharing with OEMs for raw material cost increases? Would it be 50/50 on average?
18.
Is that across all contracts or what proportion of contracts do you think will have this cost pass-through
element?
19.
Do you think that Standard Profil is in a worse position to pass on cost increases to OEMs vs peers given
the scale?
20.
What could be the margin impact from the current raw material cost environment?
21.
We’re also hearing about cost reductions. What are the non-raw material cost reduction opportunities for
the business given a large portion of the facilities are already in low-cost jurisdictions?
22.
What do you think is the necessary CAPEX to run this business? We’ve heard below EUR 50m. What’s your outlook for CAPEX?
23.
What are the typical CAPEX requirements for new business wins? What does Standard Profil typically have to put up vs what support it gets from customers?
24.
Based on the EBITDA profile, the high CAPEX and the interest expense on top of that, Standard Profil is
cash flow negative. At what point could the business become cash flow generative?
25.
How willing might the sponsor be around injecting cash into the business in the event of a liquidity crisis?
26.
Standard Profil is a small player in a heavily competitive market. What big auto parts players do you think could be interested in the company, or any potential competitors in the market?
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