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Coronavirus Hits Auto Industry With Supply Chain Disruptions

AlphaSense Staff

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The automotive industry has been heavily impacted by Coronavirus in Q1. This is on top of already tough trends squeezing global volumes, such as robust emissions standards.

Due to COVID-19, Wall Street lowered global automotive volume sales by 2.5% in 2020, a revision of the previous projection of .09%. These disruptions are especially evident in China, as the virus response prompted workforce shortages and supply chain disruptions. Chinese 2020 automotive sales forecasts were reduced by 2.9% in 2020 due to Coronavirus, a major swing from the previous projection of 1% growth. These trends are likely to continue into Q2 and beyond, but analysts do expect volumes to improve in 2021.

Takeaways:

  • Global decline in automotive sales will continue through 2020 and will impact almost every level of the automotive supply chain and global economy. 
  • In the US, these pains will be felt by further disruptions and supply chain problems at the southern border, delays in manufacturing and shipments from China, and increased hostility towards global trade. All these factors will raise automotive prices and hurt revenue forecasts 

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Here are the highlights. [Note: We are updating this post  to reflect the most recent commentary. Last updated 3/20.]

 

Adient PLC (8k - 3/20)

Plymouth, Mich. March 20, 2020 – Adient, a global leader in automotive seating, today announced that it is suspending its FY2020 outlook due to the unprecedented global economic uncertainty caused by the COVID-19 pandemic.

Adient will provide a business update on its second quarter earnings call, scheduled for May 1, 2020.

The coronavirus pandemic is dramatically affecting all industries around the world, including the automotive industry where vehicle production has been temporarily suspended across Europe and North America. Adient is taking aggressive steps to safeguard the health of our employees as well as protect our business,” said Doug Del Grosso, president and CEO of Adient.

 

Cummins (8k - 3/20)

Columbus, Indiana - Cummins Inc. (NYSE: CMI) provided a business update in light of recent changes in customer demand and a weaker outlook for the global economy. Today, the Company suspended production at its Midrange Engine Plant in Walesboro, IN, for two weeks in response to the decision by its customer Fiat Chrysler Automobiles to shutdown pickup truck assembly until at least the end of March, as a consequence of the coronavirus pandemic. This news follows recent communication of lower commercial truck production rates by some of its customers in North America and other plant shutdowns by various OEMs in Europe over the past few days. While the Company is not announcing any other production suspensions or plant shutdowns at this time, the Company cannot predict if and when further suspensions or shutdowns may arise. 

Possible causes for further shutdowns include changes in customer demand, shortfalls in supplier deliveries and the impact of government regulations or mandates.

Cummins’ financial results for the first quarter will be impacted by these changes in customer production plans, but a more significant concern is the growing uncertainty about demand for the remainder of 2020. As a result, the Company has withdrawn its guidance for full year 2020 results, which did not factor in the effects of the coronavirus pandemic. The Company will comment on its 2020 outlook during its First Quarter 2020 earnings call scheduled for April 28, 2020.

“Cummins is in a strong financial position, we have experienced leaders who have managed through several challenging situations in the past and we will successfully navigate through this difficult period,” said Chairman and CEO Tom Linebarger. As of December 31, 2019, the company held cash, cash equivalents and marketable securities of $1.5 billion and committed borrowing capacity of $2.8 billion under existing revolving credit facilities.

 

Fiat Chrysler (6K - 3/19)

Working with the UAW and listening to the concerns of our people, we have agreed to cease production at our plants across North America, starting progressively from today through the end of March. While production is paused, the Company will put actions into place to facilitate the steps agreed through the joint task-force set up between the UAW and the automakers. Through this period, which we will reevaluate at the end of this month, FCA will work to enhance its manufacturing operations to facilitate the changes agreed with the UAW including shift timings, structures and enhanced cleaning protocols.

 Commenting on this action, FCA CEO, Mike Manley said: “ Working with the UAW, and having visited many of our plants yesterday, we need to ensure employees feel safe at work and that we are taking every step possible to protect them. We will continue to do what is right for our people through this period of uncertainty .”

With our priority towards the health and safety of our workforce we are also evaluating the impact of all steps being taken inside the company and on macro-economic conditions related to the Coronavirus emergency on our current financial guidance. We will provide an update on our financial guidance when that evaluation is complete and we have sufficient visibility on market conditions.

 

Ford (8K - 3/19)

Ford this week announced plans to temporarily at its plants in North America and Europe starting today. The actions were taken to protect the health and safety of employees and respond to issues with supply chain and other constraints. The company will work with labor representatives to safely and effectively restart production in the weeks to come.

 

Tesla (Gizmodo - 3/18)

According to the Los Angeles Times, Tesla CEO Elon Musk—who is not a doctor or public health expert, but has fought claims of unsafe conditions at Tesla facilities for years—downplayed concerns about the virus in a Monday email to staff. Musk wrote “My frank opinion is that the harm from the coronavirus panic far exceeds that of the virus itself” and stated his belief that covid-19 cases “will not exceed 0.1% of the population.”

“I will personally be at work, but that’s just me,” Musk wrote. “I’d rather you were at home and not stressed, than at work and worried.”

Sgt. Ray Kelly, a spokesman for the Alamedia sheriff, told CNBC that “Our directive was clear” and trying to prevent a slump in production does not constitute an essential service. Many other automakers including General Motors, Ford, and Fiat Chrysler have temporarily suspended U.S. car production on a rotating basis.

According to Bloomberg, an Alameda County spokesperson said that Tesla is preparing to reduce staffing at the facility by 75 percent, though the company didn’t reply to their request for comment.

 

GM (PR - 3/18)

"GM and the UAW have always put the health and safety of the people entering GM plants first, and we have agreed to a systematic, orderly suspension of production to aid in fighting COVID-19/coronavirus," said GM Chairman and CEO Mary Barra. "We have been taking extraordinary precautions around the world to keep our plant environments safe and recent developments in North America make it clear this is the right thing to do now. I appreciate the teamwork of UAW President Rory Gamble, UAW Vice President Terry Dittes and local leadership as we take this unprecedented step."

"UAW members, their families and our communities will benefit from today's announcement with the certainty that we are doing all that we can to protect our health and safety during this pandemic," said UAW President Rory Gamble. "This will give us time to review best practices and to prevent the spread of this disease. We appreciate General Motors' actions today and will continue to work with them on health and safety plans to be implemented when we resume production."

To ensure that production stops in a safe and orderly fashion, plants will suspend operations in a cadence, with each facility receiving specific instructions from manufacturing leadership.

 

Peugeot (PR - 3/16)

Due to the acceleration observed in recent days of serious COVID-19 cases close to certain production sites, supply disruptions from major suppliers, as well as the sudden decline in the automobile markets, the Chairman of the Executive Board with the members of the crisis unit, decided the principle of the closure of the vehicle production sites, according to the following schedule and until March 27.

 

Fiat Chrysler (PR - 3/16)

FCA Responds to COVID-19 Emergency in Europe

Fiat Chrysler Automobiles N.V. (NYSE: FCAU / MTA: FCA) (“FCA”) announced today that its subsidiaries FCA Italy and Maserati will temporarily suspend production across the majority of their European manufacturing plants.

 

Toyota - Prospectus 3/11

It is possible that the continued spread of COVID-19 could cause an economic slowdown or recession (which could adversely affect the demand for vehicles and the demand for our financing and insurance products and increase our delinquencies, credit losses and dealer defaults), cause disruption in the supply chains of the vehicles we finance, or cause other unpredictable events, each of which could adversely affect our business, results of operations or financial condition. 

 

Fiat Chrysler (PR - 3/11)

Fiat Chrysler Automobiles is implementing new measures across its facilities in Italy to support the nationwide campaign addressing the COVID-19 crisis. As a result of taking these actions the company will, where necessary, make temporary closures of its plants across Italy.

 

Localiza Rent a Car SA (Earnings Call - 3/11)

About the car prices for 2020. If we consider ex coronavirus or COVID-19, we had a positive evolution of car prices that 2019 didn't follow inflation, and that it would at least follow inflation, go up new car prices, then Seminovos, your used cars and then depreciation would lower. With the impact of COVID-19 to the sales of the used cars, there's some uncertainty. People might say that there's a lower demand, but there's also a scenario that could be less supply, as a result of lack of parts at the automakers and less working hours in automakers, and there's the exchange rate, so Seminovos or used cars would be -- cars, so the price would go up, and then we would reduce depreciation faster.

So to summarize, if you ex COVID-19, we don't see depreciation going up. But even with COVID-19, we don't see this hypotheses in all the scenarios that we simulate. The depreciation would still drop.

 

Cadillac (PR - 3/11)

Cadillac, a subsidiary of General Motors Corporation (NYSE: GM), has withdrawn plans to launch its Lyriq on April 2, 2020 due to the continued threat at large gatherings from the spread of the Covid-19 virus.

The vehicle is to be based on General Motors' newly unveiled EV platform

 

Workhorse Group (8K - 3/10)

“We also made meaningful progress in our transition from a development-stage company to a production-focused enterprise. We have now begun production and have obtained the needed certifications that will allow us to deliver a limited number of vehicles to our customers starting in April. While our intent had been to deliver initial vehicles in the first quarter of 2020, we were impeded by material supply disruptions related to the global outbreak of the novel coronavirus. Despite these near-term headwinds, we are setting a 2020 production target of 300-400 vehicles and are looking forward to delivering our state-of-the-art truck to our customers.”

 

Schaeffler AG (Earnings Call - 3/10)

Answer – Klaus Rosenfeld: Sure. No, happy to share some thoughts on this. Don't get the auto business is clearly more impacted directly by the corona environment because it's a customer business. And while there is no immediate sort of connection between sales and products, so that if sales go down, production goes also equally down at the same moment in time, it's obvious that if the car market sales dropped dramatically, then somehow production has to follow. So I think that is one part of the equation. On the contrary, the Industrial business is more balanced. It's more short cyclical, and it has this large element of wind into that because the wind business is continuing. And also, the rail business is continuing and so it's a different profile. And clearly, also it's a different operating leverage that stands behind that. While Automotive is maybe the third element has a a transformation that you all know in terms of powertrain, but also in terms of Chassis that is undergoing in Industrial that is different. So maybe that explains why we have a little bit of a different view on the 2 businesses, and why I think that this guidance is logical and plausible.

 

US Auto Parts Network (10K - 3/10)

Our financial condition and results of operations for fiscal year 2020 may be adversely affected by the recent COVID-19 (also known as coronavirus) outbreak. The ongoing coronavirus outbreak emanating from China at the beginning of 2020 has resulted in increased travel restrictions and extended shutdowns of certain businesses in the region. We acquire a majority of our products from manufacturers and distributors located in Taiwan and China, and we maintain international business operations in the Philippines.  Consequently, we are susceptible to factors adversely affecting this region. The effects could include restrictions on our ability to travel to support our suppliers located in Asia, disruptions in our ability to distribute our products in the Asia region, and/or temporary closures of the facilities of our manufacturers and distributors. Disruption to the operations of our manufacturers and distributors would likely impact our sales and operating results.  The extent to which the coronavirus impacts our results will depend on future developments, which are highly uncertain and cannot be predicted, including new information which may emerge concerning the severity of the coronavirus and the actions to contain the coronavirus or treat its impact, among others.

 

Continental AG - (Earnings Call - 3/5)

In replacement tire sales for passenger vehicles, we expect slightly negative volumes in Europe, stable demand in North America and negative growth in China due to COVID-19. For commercial vehicles, we anticipate significant production declines in all regions. Truck tire replacement volumes are expected to decline marginally.

Also not shown on the slide, we also expect that weaker macroeconomic conditions in Europe, North America and China will result in a year-on-year decline in demand from industrial and aftermarket customers. The headwind will restrain that 50% of Continental sales that are tied to these markets.

The expectations for PLT replacement tires, commercial vehicles and -- commercial vehicle tires as well as industrial and aftermarket do not account for currently, obviously, unforeseeable impact from COVID-19, as mentioned before.

 

Ballard Power Systems (Earnings Call 3/5)

Question Craig Edward Irwin: Okay, excellent. Thank you for clarifying that. The second thing is COVID-19 is a difficult subject, right? Our hearts and prayers go out to the people of China as they deal with this. And now we're all dealing with it globally. Can you maybe walk us through the logic of not including an impact from COVID-19 in the guidance? Those of us that follow the Chinese market know that February auto sales were down 80% year-over-year. Is there anything that allows you the visibility where you're not going to see that kind of weight impact you over the next couple of months and also in February as the Chinese are working through the challenges of this epidemic?

Answer – R. Randall MacEwen: Craig, it's Randy. Thanks for the question. So I think there's a couple of points to keep in mind is, one is that where our joint venture is in its development, right? So we're not actually in production. So production of the joint venture isn't being disrupted. Where we have had a couple of week delay or actually 2-month delay really is in completing the construction. And so -- but Weichai is in Shandong province, the joint venture is in Shandong province. It's not had the same impact from an operational perspective, we'll get to supply chain in a minute, as have had some other provinces like Hubei province, obviously.

So what we've seen is that Weichai and the joint venture are actually at very high staffing levels and have been for a couple of weeks now. So from a joint venture perspective and a staffing perspective, I think activity levels have resumed. There's been temporary disruption as a result of COVID-19 activities in China.

 

Methode Electronics (Earnings Call - 3/5)

Question – Ryan Ronald Sigdahl: Congrats on the really strong quarter and being able to maintain the guidance in this challenging environment. Maybe to start just on the guidance. I mean, it seems like global auto production forecasts have been weakening almost by the day, plus you have coronavirus impacts. So I guess, it seems like several material negatives versus the last quarter when you gave guidance. So what are the -- can you please explain the positive surprise, I guess, over the last couple of months and what the offset to those negatives are?

Answer – Donald W. Duda: Well, as I was talking about with Chris, we've had very good success. We're taking cost out the Grakon factory, which I would say, exceeded our expectations maybe in 6 months ago. Class 8 decline, not as great as they think as some forecasted. And yes, volumes are down in auto, but our new launches which we pointed to, I think all year, the majority of those would start to ramp in the third and fourth quarters, and we've seen that. Ron is it (inaudible)

Answer – Ronald L.G. Tsoumas: Yes. I have a couple of things to the margin expansion as well. Compared to last year, consolidated margins are up year-to-date, almost 1%. Auto margins are -- have maintained well in spite of the challenges in auto. Our industrial group margins have gone up quite a bit. So all of those things together, and then a couple of the other things is, obviously, with our EPS and all that, we -- our tax rate is a little lower than we thought it might have been when we came out last June. We've done a nice job mitigating tariffs and you start adding all of those things together, increased sensor sales, that product has increased year-over-year pretty significantly at higher margin, a lot of know-how a lot of IP. So you add all those things together and they make a cumulative impact that has been very favorable to the company, operating in a difficult environment.

 

Martinrea (Earnings Call - 3/5)

For Q1, our adjusted EPS is projected to be between $0.60 and $0.65, reflective of some volume softness in certain areas of Europe and including the impact the coronavirus is having on China vehicle production. Actually, given some of the headwinds, a good projection from an earnings perspective to kick off 2020. Q1 guidance also includes one month of results from our just closed acquisition of Metalsa Structural Components business, which I will discuss in more detail momentarily.

 

Autozone Inc (UBS Global Consumer and Retail Conference - 3/5) 

Yes, we're seeing some slowness coming from Asia, but the product -- there is product flowing. Obviously, it isn't flowing at the level that it needs to be. And it's our understanding the factories are coming online and are progressing online, and the government is going through a certification process with each of the factories. And they're ramping up, specifically the factories that are supplying us are ramping up. So we think that it will be, as we said on the call or Bill said on the call, it's -- the next few weeks will be critical as we kind of watch them continue to ramp up. To your point, you're right. Our inventory turns relatively slow. We have X amount of weeks of supply in the system. We also have the ability to buy from ourselves, if we are able to rebalance out some of that inventory. So for now, we seem to be okay. And for what we can see in front of us, we don't see a significant disruption. If things change, then we'll have to address that when it happens. But at the moment, it feels as though we have inventory available. There's inventory coming and will be coming based on our understanding. And so we don't see this as being, at the moment, disruption of any great magnitude. I'm sure that there will be a little bit of a flow for the -- our distribution folks as it will be for any company, who is getting very low volume right now and will get ramped up pretty significantly.

 

Umicore (IR Presentation - 3/5)

As communicated in April 2019, Umicore expects to grow revenues and earnings in 2020 despite a deterioration in the global macro-economic environment since then, particularly in the automotive sector. This growth outlook assumes that the recent coronavirus outbreak will not result in a protracted or material effect on the economy in 2020.

While there are no signs of an imminent recovery in the automotive market, the business group Catalysis is expected to continue to benefit from its strong market position in gasoline catalyst applications and a further penetration of higher value gasoline particulate filters in Europe and China

 

Progressive (Earnings Call - 3/4)

Question – Michael David Zaremski: My first question is on any potential impact from the current situation with the coronavirus. The New York Times has come out and said that they're seeing just recently ad spend fall fairly materially across the brand with (inaudible) to 25%. And I'm curious if you think Progressive should in the near term -- or is part of that? And also, are you seeing any impact maybe from your [call medics] drivers on the work frequencies if people are maybe working from home?

Answer – Susan Patricia Griffith: Mike, that's a great question. So I'll start with the ad spend. Right now, we're going to continue to spend. This is a prime time of the year when people are buying insurance, we're getting into that season. We'll continue to spend. That we have some flexibility in. But again, whether you drive a little bit or a lot, you still are required to have auto insurance. And so our intentions will be to spend as long as we feel sufficient. So again, we'll have to be nimble because all of this, as you know, is ever-changing.

The great question on the UBI. So with the recent deaths in Washington, we asked the UBI team, just to take a look at UBI vehicle miles driven or traveled by week in January and February this year compared to the prior 2 years. And we are not quite seeing a difference. And again, that's very little data, but that tells us we haven't seen it yet. Again, now that we'll look at it weekly, we can start to see that. We'll look at it across the country where we can. So we'll be able to understand pretty quickly. If you go back to something like the financial crisis, I was running claims at the time and we saw frequency drop really quickly. And so we'll have some good insight. We get our frequency data on a daily basis. So we'll understand very quickly where we're at.

From a vendor perspective, we always think of the concerns around auto parts that are possibly made in China. So we had our property process team talk to all of our OE vendors, the percentage of OE that we use on our vehicles, the percentage they get from China, et cetera. For the most part, with the exception of one OE, we feel like there's low risk at this time. And even with that partner, they have an inventory. Again, it's always those like first and second order effects. So it could be that more cars are told, because you can't get parts and then there's used car parts. So it's -- we're going to keep watching that.

So right now, we aren't seeing any effect. But again, this is such a moving target that we have a lot of data points that we're going to be looking at literally on a daily basis to understand how it will affect possibly our frequency.

 

Quaker Chemical (Earnings Call - 3/3)

Answer – Jonathan E. Tanwanteng: Okay. Got it. And just a quick one, what amount of global steel and auto production are you assuming this year in your EBITDA outlook?

Answer – Michael F. Barry: The -- I would say the latest forecast that we've seen, certainly before the coronavirus, still was 1.5% to 2%, in that kind of range. And now what I've seen lately is global steel is maybe closer to 1% growth. And then from an automotive perspective, some of the forecast I saw before the coronavirus is negative 1%. And now it's certainly going to be knocked down another 1% or 2% from that, but who knows exactly? But that is a negative, even was negative before coronavirus.

 

Jason Industries (Earnings Call - 3/3)

Automotive markets continued to decline and channel inventories remain at healthy levels. Our Osborn polishing business is faring better than this core market, however, due to diverse sources of revenue and intense commercial focus as part of our acquisition integration activity. Construction and heavy equipment manufacturers are forecasting declines in the range of 5% to 10%, directly impacting our Milsco business.

Additionally, residential riding mower production is down in the mid-teens as reported by the Outdoor Power Equipment Industry Association. Many of our customers are taking a wait-and-see approach to the spring season. Finally, while it is too early to predict the full impact of the coronavirus, Jason's current perspective is balanced. Osborn's China JV is feeling the effects of the China automotive slowdown but overall, our supply chain has only pockets of direct China exposure and where we do have links to the region, we maintain alternatives that can be substituted. Our primary concern relates to our customers as they may encounter issues that further curtail build schedules or other activity. I guess we can sum up our served markets with one word, challenge. Fortunately, our team consists of fighters that relish challenges, and there are many reasons we continue to be energetic.

 

Cummins (Evercore ISI Conference - 3/3)

So I think as you're aware, when we gave our guidance back at the beginning of February, we didn't include any impact of the coronavirus at the time. Things were still moving pretty rapidly, a pretty fluid situation.

What we've seen right now, we have about 10 facilities in the Hubei province in China, many more dotted throughout the rest of the country. In general, our facilities open 1 to 4 weeks after the Lunar New Year. So a delay on opening there. And our total China exposure on consolidated sales is about $40 million to $50 million a week. In addition to that, our JV income is about $200 million a year in China. So definitely had some negative impacts on domestic China consumption given the delays in start-up of our facilities. Almost all of the facilities now are up and running to some degree. Some of them 100%, some less than that. And I'd say the ones that are running a little less than that, it's really driven at this point by OEM partners whose facilities aren't up and running 100%.

So we'll know a little bit more about what the full year impact is, the demand, I think, by the time we get to Q1 earnings. Just need to see to what extent potentially the government does some stimulus and whether the demand that we did lose in the first quarter comes back in the second half of the year.

So from a finished Cummins product perspective, we do not export a significant amount of material outside of China. We generally produce and sell in country. The area that we're paying very close attention to is more some of our Tier 2 and Tier 3 suppliers that have some of their facilities out in China that export some of those to our global facilities.

So at this point, we've had no disruption, 20 of our facilities related to that. But certainly a very concerted effort by our supply chain organization tracking individual part numbers and understanding where the risks could be in the supply chain related to some of the delays of those Tier 2 or 3 suppliers that have been ramping up production.

 

Autozone Inc - (Earnings Call - 3/3)

At this point, I'd like to talk about any disruption we may be seeing from the ongoing coronavirus epidemic. While we have not incurred disruption thus far, we must and are being diligent. We have created a contingency plan for each merchandise category sourced from China. Our teams have done a wonderful job planning for potential scenarios. At this point, we have nothing substantial to report. But the longer this outbreak lasts, the more it will impact ourselves in both our and the overall retail industry. It is currently a very fluid situation as many of the factories have just begun to reopen after an extended Chinese Lunar New Year holiday. Some are coming back online quickly while others quite slowly, and certain of them haven't come back online yet. The next few weeks will be critical.

As you would expect, over the last month or so, we have been very focused on the supply chain aspects of coronavirus and, in the last week or 2, more and more focused on what's happening here in the United States and, ultimately, Mexico and Brazil. We see no indications at this point in time of any demand destruction as a result to coronavirus. But just like we said with the supply chain, it's an incredibly, incredibly fluid situation. I think the next couple of weeks to a month, are going to be critical to see what actually happens. We don't have good insights into that.

 

Tata Motors (6K - 3/2)

According to Mr. Mayank Pareek, President, Passenger Vehicles Business Unit, Tata Motors Ltd.,,”Our new Altroz received an overwhelming response. Our NEW FOREVER product portfolio has built a strong order book since its launch end of January. However, the outbreak of COVID-19 in China and a recent fire incident at one of our strategic vendors affected the vehicle production and wholesale volume. Multiple actions are being taken to reduce the impact, staying close to our customers by providing transparency of the delivery situation. On a positive note our BSIV vehicle stock is well below the targeted level, we are well placed for the BSIV-BSVI transition and with the strong customer interest in the NEW FOREVER portfolio and a step up in market activation, we are confident of improving our market competitiveness and volume growth in the coming months”

 

CIE Automotive (Earnings Call - 2/28)

And we'd like to conclude by talking about China. In spite of the very chaotic situation, it has had the best performance in Q4 with a growth of plus 1%. But that's not been, by far sufficient to recover the drop over the year. A slight improvement in the fourth quarter vis-à-vis the previous quarters due to other factors and -- because the transition standard has been overcome, and the rest will come in July. But 2020 has brought us coronavirus and with it, all the measures by the -- implemented by the government to contain the spread, which has meant closing factories and very significant logistical restrictions, like to hold 14-day quarantines to workers that travel to work or to quarantine situations for lorry drivers after delivery.

So this has meant the extension of the production shutdowns beyond the Chinese year, and the factories are resuming certain activities -- certain degree of activity, except for Hubei where they're still close. And although these shutdowns will have an impact in production for 2020, we also expect the recovery over the rest of the quarters of a part of the lost volumes since the existing idle capacity in the country and demand peaks that have existed in previous health crisis.

The last focus for the Chinese market in 2020 considers a loss of approximately 1 million vehicles produced by the coronavirus impact, and it's a drop of minus 4%, reaching 23.6 million vehicles.

 

Shawcor Limited (Earnings Call - 2/28)

Answer – Keith MacKey: And just on the Automotive and Industrial segment, the last few questions maybe just to play off of that, is just what do you kind of see as the breakdown of revenue between automotive things that may be more affected by this potential long-term negative scenario of coronavirus versus the industrial, which may not be as exposed?

Answer – Stephen M. Orr: First of all, I'll point you to the name change. So the company has moved. Historically Petrochemical was a good way to capture this segment because it participated a lot in the -- a lot around Western Canada on the heavy oil extraction and processing, our value-add component. The segment is now called Automotive and Industrial and it's the Canusa DSG, Canusa (inaudible) heat shrink and cold shrink is heavily weighted to automotive. And so ShawFlex, which is a cable business, I think will be quite positive this year because of not only does it participate in the high-run cable business, it is nicely positioned for the rebuild of nuclears, which are our nuclear work, which is right in its niche of high specialized cable.

So I think a good way to look at the business is just have a look at 2008, our Petrochemical and Industrial, and see the magnitude of what a global slowdown can do to a GDP-focused business. But to answer your question, a large percentage of Automotive and Industrial is based on direct supplying wire harnessing and wire components and protection of wiring components into automotive, a high percentage. Greater than 50%.

 

Superior Industries (Earnings Call - 2/28)

Answer – Richard Phelan: I had 3 questions. First is, wasn't clear to me the status of the Fayetteville restructuring. If you could just update us in terms of -- are all the workers gone? What's the plan with the real estate there as we head into 2020? Second question was around the working capital. If you could just update us with the accounts receivable factoring outstanding at year-end? And lastly, I'd love to get any comments you have. You mentioned in the guidance that there's no adverse impact from coronavirus. But perversely, your business is one of the few in the auto space, which is a potential beneficiary, if I can say that because so much of your competition has manufacturing in China. And so I'm wondering if -- any color you can provide in terms of problems that your competitors may be facing either starting up plants or otherwise.

Answer – Matti M. Masanovich: I'll take the first part, and then Majdi can add to the question. So first part of the question was on Fayetteville. We have no production in Fayetteville after Q4. So December, we -- the workforce was rationalized. The production workforce rationalized. So what we're doing now is cleaning up the facility, moving some equipment to various facilities around the globe where we had equipment that we wanted to utilize, which should help offset some of the CapEx needs of the company on a go-forward basis. So we're -- we have a -- I don't want to give you the exact number, but there's a very small workforce left. We do have an engineering center, which we will maintain in Fayetteville. And we have no chance -- no plans to change or modify the engineering center that's there where we have R&D and technical capabilities and test capabilities. So we'll continue with our engineering center in Fayetteville.

As far as the building goes, we haven't made any announcements. We have a lot of work to do to clean it up and clean up the equipment. So -- but I would say that there's not a significant amount of proceeds coming that would change the cash flow if that what's you're getting at.

As far as AR factoring goes, we ended the year $10 million lower than the prior year for AR factoring. So we've got about, Troy, $45 million in AR -- total AR factoring?

Answer – Troy Ford: That's right.

Answer – Matti M. Masanovich: About $45 million of total AR factoring at the end of the year. So we were able to lower the water level from a factoring perspective.

And then specifically on your China question, we have received calls over the course of the last 2 weeks from various OEMs inquiring on our capacity and where we have open pockets of capacity. So we believe that potentially, it could be a tailwind. If nothing else, it could be neutral to us, but there could be a tailwind coming. So from a supply chain standpoint, I don't want to comment on where the competitors are at and if they're having difficulty, but we have had inquiries over the last 2 weeks.

 

Garrett Motion (Earnings Call - 2/27)

In addition to the impacts we just discussed, the coronavirus has altered our industry outlook as well for 2020 as follows: we currently expect global light vehicles auto production to be down between 5% and 7% for the year or minus 2% versus -- minus 2% before the coronavirus impact. Global commercial vehicle production is expected to decrease between 7% and 10% compared to minus 4% pre-coronavirus. As of today, we expect 2020 net sales to be down between minus 4% to minus 1% at constant currency. The estimated impacts from the coronavirus on our annual net sales is approximately minus 6% to minus 7%. Nevertheless, we expect to outperform global light vehicle auto production by 300 to 400 basis points in 2020.

 

Aston Martin (Earnings Call - 2/27)

Question – Sanjay Jha: Americas. I'm just trying to understand how many of these orders are canceled, given what's happening in Asia Pac. The -- what I'm saying is can they just be canceled.

Answer – Mark Gerrard Wilson: Well, yes. I mean they have a contract with the dealer, and the dealer places the order with us in the same way they do for any cars. If you're getting to coronavirus impact, then clearly, the thing we'd say about coronavirus impact is no -- everybody is taking it very, very seriously. We've said in the presentation earlier that we are, helpfully, not affected at this point in time. And those areas that we are affected by, we're managing adequately.

I'd also say this, just another point, in terms of DBX when it delivers, of course, it delivers in Half 2, there's a greater distance between delivering a DBX to China than there is taking it out of gate and bring it to London. And of course, they will naturally be a later market anyway. So there is a level of protection in there for this year in that respect. And if you look at what people like the Agios said yesterday on how they expect the coronavirus to develop, clearly, by that part of the year, our expectation is that things may well be returned to normal.

Answer – Andrew C. Palmer: I think there's some -- let me reiterate the last region to launch DBX is China, not because of the coronavirus at all, because of plan, because the homologation cycle to launch a car in China is longer than any other market. So it's later this year, and one hopes and prays that the coronavirus is passed by then. To the earlier question, we have announced the Roadster price. It's GBP 126,950. So GBP 127,000.

 

Georg Fischer AG (Earnings Call - 2/26)

We do not expect that March is fully recovering since we are also going to see a slowdown in the businesses. And since we don't know whether this impact of the coronavirus is ending at that point of time, we're also going to assume that Q2 will be required to fully recover and to get back to normal operations.

But also, as you correctly said, we do not have a crystal ball, and therefore we can only be pretty vague on whatever has to be expected. We trust know that in case that full demand comes back, our companies are now ready to deliver at the level as it was expected. First, it is important that our people have, especially in that regions where we have the high outbreaks of the coronavirus, that our people stay safe.

It is -- which kind of scenarios? It is a good question. Otherwise, if we would have the answer to that, we would have given an answer in our outlook.

Which of our divisions are impacted? For us, China is a very important market, approximately 1/5 of our business is being realized in China. And all 3 divisions are present there. And for all 3 divisions, it is one of the largest markets as a single country. So therefore, all 3 businesses have been affected in the month of February.

Question – Martin Flueckiger: Okay. Coronavirus and car market is sort of interconnected these days with the China situation. But just leaving corona aside for a while, it's not just the China car market, which was in the doldrums, at least as far as I've been reading. But also the European market has been quite difficult. My understanding is German car production was also quite challenging to say the least.

 

Visteon (Earnings Call - 2/20)

I would like to discuss our outlook for vehicle volume production from 2020 through 2023, which is updated from the prior outlook communicated in January of 2019. Due to the rising uncertainty in the global automotive market, we feel it is prudent at this time to not extend the outlook beyond the previously communicated years. It should also be noted that the outlook does not reflect the impact of the coronavirus as the situation is still very dynamic and uncertain.

From a regional perspective, we expect 2020 vehicle production in North America to remain flat over last year due to relatively stable macroeconomic environment. We expect Europe to be down again in 2020 due to the impact of emissions regulations, Brexit and the general slowdown in the Eurozone economies. Prior to the coronavirus, China was expected to have lower production in 2020 due to weak consumer demand, which will only get further stress now with the outbreak of the virus. And the rest of Asia is expected to be down as well, with lower production, mainly in Japan and India.

 

Tenneco (Earnings Call - 2/20)

We continue to monitor the effects of the coronavirus on the automotive industry. The uncertainty of its full impact results in a wider outlook range for revenue and EBITDA than is customary. Included in our outlook is our current estimate that the equivalent of 4 full weeks of production will be lost in China in the first quarter, which would have an estimated negative impact of approximately $150 million on revenue and $50 million on EBITDA.

 

Cognex (8K - 2/13)

Revenue for Q1-20 is expected to be between $155 million and $170 million. This range represents a decline from both Q4-19 and Q1-19 primarily due to continued weakness in automotive and the estimated impact of the coronavirus outbreak. The decrease is expected to be partially offset by growth in logistics.

 

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