Morgan Stanley. Phil Martens President, Light Vehicle Systems. Jim Donlon Senior Vice President and CFO. Global Automotive Conference

Transcription

1 Morgan Stanley Global Automotive Conference Phil Martens President, Light Vehicle Systems Jim Donlon Senior Vice President and CFO 1

2 Forward-Looking Statements 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 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 herein and from time to time in other 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. 2

3 Agenda Light Vehicle Systems Overview Performance Plus Enhancing Revenue Engineering, Research & Development Product Strategy & Growth 3

4 LVS Overview Today s Portfolio of Businesses Margins Above Average Below Average Roof Systems Wheels Door Systems Chassis Systems Low Growth High 4

5 LVS Overview Customer Base Before ET Divestiture 2006 Sales Commercial Vehicle Customers Ford 1% Volkswagen 1% General Motors 1% Fiat 2% Other CVS 15% Light Vehicle Customers DaimlerChrysler 10% Volkswagen 10% 53% Light Vehicle PACCAR 2% International 3% General Motors 9% Asian Based OEMs 3% DaimlerChrysler 8% 47% Commercial Vehicle Volvo 11% Other LVS 9% Fiat 3% BMW 2% Ford 7% Asian Based OEMs 3% 5

6 LVS Overview Customer Base After ET Divestiture 2006 Sales Commercial Vehicle Customers Ford 1% Volkswagen 1% General Motors 1% Fiat 2% PACCAR 2% Asian Based OEMs 4% Other CVS 22% Light Vehicle Customers DaimlerChrysler 8% Volkswagen 7% Asian Based OEMs 4% General Motors 3% Ford 3% BMW 1% Other LVS 7% 33% Light Vehicle 67% Commercial Vehicle 6 International 5% DaimlerChrysler 12% Volvo 17%

7 LVS Overview Top 10 Light Vehicle Platforms After ET Divestiture Platform VW PQ34/35 Hyundai NF/CM Renault C Dodge DR-DE VW PQ24/25 Ford C1 GMT 380/390 Honda CYR2/UM VW 7L Key Vehicles Golf, Touran, Audi A1, Skoda Octavia Santa Fe, Sonata Megane, Scenic Ram Peugeot PF1 207 Polo, Ibiza, Audi A2, Skoda Fabia Focus, C-MAX, Volvo S40/V50 TrailBlazer Accord, Odyssey, Pilot Audi Q7 7

8 LVS Overview Door Systems 25 Million Automotive Latches 25 Million Window Regulators 15 Million Electric Motors Electronic Door Control Module (EDCM) 4 Million Door Modules 8

9 LVS Overview Complete Range of Roof Systems Large Roof-Opening Systems Near-convertible sensation without sacrificing acoustics, styling or comfort Multiple glass panels and side-guided roller blind Electric anti-squeeze technology Integrated beam for energy absorption Low-cost Asian sunroof Competitive solution for global OEM programs 9

10 LVS Overview Steel Wheels Available up to 24.5 inches Attractive alternative to aluminum Safer, stronger and more durable Less costly 10

11 LVS Overview LVS EBITDA Margins Improving Continuing Operations Before Special Items Q1 Full Year FY07 3.2% FY06 2.6% FY07 B/(W) FY06 0.6% 1.0% 11

12 LVS Overview Source of YOY Improvement EBITDA Margins Before Special Items FY07 FY08-FY09 (per year) 2005 Restructuring Benefits 0.5% - Cost Reductions and Benefits of Performance Plus, Net of Price Downs Customer Disruption 1.8% (TBD) % Risks/Other (1.0)% (1.0) - (1.5)% Total 1.0% 1.0% 12

13 LVS Overview Revamped Global Contender Reconstruction of operations Competitive footprint Global sourcing strategies Achieving labor efficiency gains through lean manufacturing Acceleration of improvements with Performance Plus 13

14 Performance Plus Goal Top Quartile Financial Performance Among Peer Companies Steering Committee J. Craig J. Donlon P. Martens R. Ostrov C. Reinhardt R. Sachdev Approach Operational Excellence Cost Improvements Materials Mfg. Overhead Commercial Excellence Revenue Enhancement ER&D Product Strategy & Growth Aftermarket Sponsors C. Reinhardt C. Reinhardt J. Craig P. Martens P. Martens J. Craig Foundation Talent Excellence Sponsor: R. Ostrov Program Office Sponsors: J. Craig and J. Donlon 14

15 Engineering, Research & Development ArvinMeritor Product Development System Align dispersed resources and fragmented practices Reduce operating and product warranty costs Produce more engineering output for the same expense Increase customer satisfaction and new business acquisition Establish central program management office Accelerate implementation of common processes Generate five Gotta Have products Create value for customers through innovative, cost-effective solutions 126 patents received in

16 Engineering, Research & Development LVS Smart Systems Emphasize delivery of solutions through systems integration and electronic controls Shift from high-volume mechanical products to high-margin electronic products Electronics and Controls that Enhance Vehicle Performance 16

17 LER - Low Energy Release Latch Engineering, Research & Development Integrated Features Design Highlights Figures of Merit Software controlled actuator Power release Power lock Power double lock Power child safety Low effort manual release Fast, low-cost keyless entry Easy door opening after crash Compact packaging Up to 30% reduction in package size Up to 65% reduction in components Up to 30% reduction in weight Small Latch Package Maximum Functional Content 17

18 Plastic Door Module Engineering, Research & Development Vision Evolution per Customer Strategy Integrated Features Partial glass guidance Drum housing / motor attachment Pulley / ramp mounting Locating pins Wiring harness attachments Speaker base Pull handle / trim attachments I/S handle base Glass support channel Design Highlights Pin Less I/S Handle Pulley Attachments Rail Less Guide A Figures of Merit Up to 30% reduction in weight** Reduction of up to 50 components due to high integration** Design flexibility ** Compared to steel module. 18

19 Engineering, Research & Development New Offerings in Chassis Systems Advanced Engineering Programs Development Programs Integrated Air Strut Active Roll Control Modular Corner System Adaptive Damping Multilink Independent Rear Suspension Active Air Suspension 19

20 Engineering, Research & Development Chassis Systems Integration 1 Air Suspension Systems System integration for standard air suspension and innovative products such as Active Air Suspension and Package Constrained systems 1 2 Active Roll Control Systems Hydraulically controlled stabilizer bar systems provide increased safety and improved ride and handling Self contained system reduces complexity and allows for easier packaging Adaptive Damping Systems Computer-controlled damping system uses unique, modular and continuously-variable piston to improve ride and handling 20

21 Engineering, Research & Development Expanding Engineering, Research and Development Establish Technical Center in China Expand Technical Center in India 21

22 Product Strategy & Growth ArvinMeritor Global Growth Strategy Triple sales in Asia and with Asian OEMs within five years $1 billion+ added sales in Asia Pacific $1 billion in sourcing Healthy mix of local OEMs and global OEMs in region Generate compelling new products that create exceptional value for customers Increase systems, controls and electronics capabilities 22

23 Product Strategy & Growth New Business Wins with Asian Customers First Auto Works 23

24 Product Strategy & Growth Transforming ArvinMeritor Asia Pacific Strategy Aggressively pursue and manage growth with focus on higher margin product lines Optimize sourcing Local design and engineering Global R&D and shared services One regional office for Asia Pacific Rakesh Sachdev, named President, Asia Pacific 24

25 25 Q & A