Automotive components

Transcription

1 Operational review / Diversified industrial Automotive components accessories sold per annum Revenue increased by 26% tonnes of offcut material recycled back into products employees 26.9 million components produced annually tonnes of foam produced 36 KAP Integrated Report 2017

2 Manufacture of components used in new vehicle assembly and retail vehicle accessories The automotive components division is well placed through its economy of scale and international technology agreements and partnerships to benefit from continued new model introductions in South Africa. Revenue split by division Pretoria Johannesburg Port Elizabeth Durban East London 76% Feltex 24% Autovest Manufacturing plants 17 KAP Integrated Report

3 Operational review / Diversified industrial Automotive components Business environment Products With world-class quality and manufacturing capabilities, South Africa remains an attractive production destination for international original equipment manufacturers (OEMs) as a strategic gateway to the African continent. Annual vehicle production by international OEMs in South Africa remained flat at units compared to units in the prior year. The industry s objective is to reach units produced per annum by South Africa s vehicle build is spread over seven OEMs that build 15 models, with approximately 55% of all vehicles produced being exported. The Automotive Production and Development Programme (APDP), which currently runs to 2020, provides an element of certainty to the business environment. As a result of this, replacement models are being secured by the South African OEMs as the current models reach the end of their production periods. It is anticipated that this programme will be replaced with a similar programme after Feltex Automotive Trim Textile-based automotive acoustic Feltex Fehrer Polyurethane flexible foam, moulded seats, conventional and pourin-place headrests, foam pads, side bolsters and armrests Autoneum Feltex Underfloor systems for thermal and impact protection and aluminium heatshields Feltex Foam Polyester and polyether flexible, semi-rigid and rigid thermoformable foams for use in vehicles and high-tech industrial products Caravelle Overlay carpets/looselay vehicle mats IAC Feltex Acoustically engineered tufted automotive carpet and A, B and C pillars The trend of centrally manufacturing stripped down model configurations for global distribution, with the fitment of accessories taking place in-country according to regional requirements, provides a sound base for the sale of aftermarket automotive accessories like those manufactured by Autovest and Maxe. Autovest 118 franchise fitment centres for automotive accessories Auto Armor Supplier of a range of vehicle protection products that include window and paint protection film, as well as paint and interior surface treatments Kilber Products Steel products to the independent aftermarket, including towbars, bullbars, rollbars and sidesteps The increased demand for SUVs*and LCVs is also encouraging as these vehicles provide greater scope for accessorising. Maxe Premium automotive accessories made from mild and stainless steel, supplying the LCV, SUV* and truck markets Rhino Linings Supplier of locally developed spray-on bin linings for LCV and selected industrial applications SA Canopy Supplier of locally manufactured and imported fibreglass canopies * Sport utility vehicle Light commercial vehicle 38 KAP Integrated Report 2017

4 Our aim is to be the supplier of choice with leading technology and globally competitive manufacturing capabilities. Ugo Frigerio, CEO: Automotive components division Group strategy Key facts Market leadership Feltex Automotive commands high market share throughout the sector in terms of the products that it produces, while Autovest, with its leading brands, has a national network of 118 franchised fitment centres serving as an execution platform. R22.4 million investment in training 102 learnerships/apprenticeships during the year High barriers to entry International technology partnerships, OEM-approvals, the five to ten-year model life cycles and economies of scale facilitate a globally competitive cost base. Acquisition and integration of Autovest Limited R167.2 million investment in new technology to facilitate new models Industry diversification The automotive components division is balanced between components for new vehicle build across all seven OEMs and aftermarket accessories across a broad range of products. R8.1 million investment in technology systems during the year Adding value through specialisation Based on its balance across all seven OEMs the division is highly skilled at implementing new model introductions and extending the technology benefits thereof throughout its operations. Just-in-time and just-in-sequence supply to all OEM fitment centres in close proximity to dealerships Close relationship with local OEMs and dealerships, expanding African footprint Leveraging our African base The division is competitively placed to take advantage of export opportunities as vehicle assembly is initiated in African countries. Rebranded 17 franchises to Autovest KAP Integrated Report

5 Operational review / Diversified industrial Automotive components Commentary The automotive components division reported a 26% increase in revenue and a 68% increase in operating profit for the year. This was primarily as a result of the acquisition of Autovest in April 2016, increased parts penetration, and continued automation initiatives and technology upgrades following recent new model introductions. Operating margin was further enhanced by improved product mix. The Autovest operation performed to expectation for the year in spite of lower industry new vehicle sales and received strong support from the launch of the new Toyota Hilux in January Significant progress was made in the rationalisation of the Autovest business model, with increased focus and investment in the sales and marketing function, improved efficiency in the franchised fitment network as an execution platform, and improved information systems during the year. The automotive components division reported a 26% increase in revenue and a 68% increase in operating profit for the year. 40 KAP Integrated Report 2017

6 Outlook The automotive components division is well placed to benefit from the success of recently introduced models such as the Mercedes Benz C Class and Toyota Hilux, and anticipated new model introductions like the Volkswagen Polo and BMW X3. New model introductions provide Feltex with the ability to increase its parts penetration (market share) and to employ new technology. Focus on localisation of component manufacturing, in line with the APDP incentive scheme, remains a priority for the business, as does continuous improvement through training and development, technology investments, and research and development. KAP Integrated Report

7 Diversified industrial / Automotive components Case study Together Feltex and Autovest own a bigger share per vehicle High barriers to entry The acquisition of the Autovest group of brands added scale to the automotive components division, positioning it to become a market leader in providing OEMs, automotive dealerships and individual customers with high-quality vehicle accessories. In addition to the components produced by Feltex, which are used in the assembly of vehicles, aftermarket accessories, which include towbars, bullbars, rollbars, canopies, vehicle protection products and spray-on bin linings, increase the division s total share per vehicle. For both new vehicle component and aftermarket products, the automotive components division can build on its reputation of supplying world-class OEM-approved products. Feltex brings years of experience and intellectual property at improving manufacturing efficiencies and quality, which is also beneficial to the manufacture of products for Autovest s aftermarket sales. With increased expertise in manufacturing and processes adding to the quality of products, it is geared to grow its market penetration. As part of the process to integrate Autovest into the KAP automotive components division and to streamline its offering to the market, Autovest consolidated five stand-alone businesses into two. Instead of operating independently branded outlets, Autovest franchise outlets are being rolled out nationally where all product brands can be bought and installed as part of the aftermarket service to customers. The integration includes benefits for: KAP Automotive There is a clear focus to service the automotive industry by providing assembly components and aftermarket accessories. It provides the opportunity to service OEMs with component parts for locally manufactured vehicles and aftermarket accessories for locally produced and imported vehicles. Autovest A consolidated, one brand approach translates into a coordinated growth plan, which improves manufacturing, logistics, administrative, sourcing and sales efficiencies. The focus is to build one brand and to improve the customer experience. The franchisee More than 118 franchisees nationwide are serviced by one team providing a basket of products and with a co-ordinated marketing, training and network expansion plan. The strategy is to grow the franchisee network to offer an inclusive basket of products to OEMs and dealerships. The customer Dealerships and OEMs are provided with a broad range of approved quality products from a single supplier. This reduces the risk for dealership customers and improves their ability to service their customers, ensuring quality and OEM-approved products fitted through a highly skilled franchisee network. Accessories can be fitted on-site at the dealership or through the Autovest network. 42 KAP Integrated Report 2017

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