Shortage of semiconductor chips affects Nemak

The shortage of semiconductor chips affected the auto parts company Nemak with an 11.3% year-on-year drop in its EBITDA in the fourth quarter of 2021.

According to Intercam Banco, the effects of lower volume were partially offset by the improvement of the product mix, largely attributable to the integration of new electric vehicle products and structural applications (EV/CE), and the successful closing of business negotiations.

The company’s revenue for all of last year was $3.798 million, a year-over-year growth of 20.5 percent.

Since the beginning of 2021, due to the global shortage of semiconductors, the production of light vehicles among Nemak customers has been affected, which has in turn influenced the demand for the parts that the company produces.

In response, Nemak has implemented a variety of financial flexibility and operational efficiency initiatives, helping to mitigate the effects of this situation. The company continues to monitor its development, responding in a timely manner to changes that arise.

Historically, the first and second quarters of each fiscal year represent a greater proportion of sales; however, in 2020 and 2021 these trends were affected by the global Covid-19 pandemic that caused widespread stoppages in vehicle production in the second quarter of 2020, while throughout 2021 the automotive industry experienced effects of the global semiconductor shortage.

Nemak

In 2021, the company achieved record results thanks in large part to our efforts to take advantage of a better product mix –supported by the continued growth of our EV/CE components business– and the achievement of greater operating efficiencies.

Despite the continuing effects of the global semiconductor shortage on its customers’ light-duty vehicle production, and thus their volumes, the company was able to match its EBITDA for the full year to its all-time high and setting a new record for EBITDA per equivalent unit for a fourth quarter, while exceeding our EBITDA guidance for 2021.

According to Intercam Banco, Nemak’s results reflect the adverse environment in the global automotive sector due to the effect of the shortage of semiconductors.

Intercam Banco foresees a consistent negative effect for the automotive industry in the coming quarters and considers that the supply of semiconductors will tend to normalize in the second half of 2022, but a complete regularization will take longer.