1.1 Chairman and CEO statements [102-14]

Dear friends,

We are delighted to introduce this Integrated Report which outlines the key milestones and lines of initiative that enabled us to generate economic and social value in all of our markets, extend our sustainable growth and set new profit records in 2017.

Allow us start with a brief look back at the key business figures.

The CIE Automotive Group reported topline growth of 29.4% in 2017 and an expanded net income of €215.4 million, up 32.7% from 2016.

Thanks to these excellent results, we remain on track to meet the guidance laid down in the 2016-2020 Business Plan, some of which we have already revised. Specifically, we have brought the target for delivering the €260 million profit target forward from 2020 to 2019. What’s more important, we delivered these earnings with a healthy capital structure, keeping operating cash flow at over 50% of EBITDA and reporting a RONA of 19%, putting us on track for reaching our targeted return of 23%.

The key indicators evidence the success of our business model, characterised by flexibility, financial discipline and geographical, technological and customer diversification – against the background of a dynamic sector environment, albeit shaped by complexity and political uncertainty. Above all, however, our performance evidences the hard work and professionalism of the more than 30,000 professionals working at CIE Automotive and the quality and reliability of the over 24,000 suppliers that help us to create a value-added proposition for our customers. Our gratitude to all of them goes without saying.

Thanks to their joint effort, the automotive business, which accounted for 77.4% of Group revenue, registered topline growth of 27.1% in 2017 to €2.88 billion. Profits registered double-digit growth, across all markets, underpinned primarily by overall organic growth of 16.1%.

In parallel, we continued to integrate new companies. In recent years, our M&A strategy has built us into a truly global supplier of components and subassemblies for the automotive industry. Here we would like to highlight one transaction that is going to enable us to expand our technology and product ranges in the US, while fortifying our position with strategic customers: the purchase of Newcor.

“The purchase of Newcor is going to enable us to expand our portfolio in the US.”

The outstanding performance of our automotive business was underpinned by better positioning vis-a-vis our customers and growth in most of our markets. Specifically, our Mexican factories were our most profitable in 2017, while in Europe the normalisation of business operations at the Mahindra CIE plants drove margin recovery. In Asia, we continued to fine-tune the efficiency of our Indian and Chinese factories, posting significant growth in a continent that is currently tremendously dynamic. And in Brazil we reaped the rewards of the operational enhancements and cuts undertaken during the crisis in the first year of recovery in the automotive market, in which Brazil regained the 8th spot in the global vehicle production ranking.

Meanwhile, our Smart Innovation subsidiary, Dominion, registered revenue growth of 37.7% to €843.3 million, which is 22.6% of the Group total, and took an important step in its strategic bid to grow in the smart house arena with the acquisition of The Phone House Spain.

Consistent delivery of our strategic commitments, coupled with our Group’s financial strength and robust business model, continued to garner the confidence of shareholders and investors, who bid CIE Automotive’s share price 30.7% higher in 2017.

“Here we would like to take the opportunity to welcome our new core shareholder,
Corporación Financiera Alba”

The development of our business endeavour is translating into an evolving shareholder structure, one characterised by greater diversity, as the majority shareholders with industrial backgrounds make room for more financially-minded investors with long-term investment horizons. Here we would like to take the opportunity to welcome our new core shareholder, Corporación Financiera Alba, whose investment last December reinforces our ambitious strategy and will shape CIE Automotive over the coming decade.

We face a promising future in which research, development and innovation will be crucial to taking on the key challenges in the automotive sector: the decarbonisation of transportation, connectivity, autonomous driving and electric vehicles. We are certain that in a few years’ time the industry will look nothing like it does today, which is why, with the help of Dominion, we are already working on gradually deploying advanced manufacturing systems across our factories and continue to invest about 2% of our revenue in our R&D effort.

Beyond our efforts to generate value for our shareholders and spearhead development of Industry 4.0 in our sector, we aspire to be a standard-setter in all matters related to Corporate Social Responsibility (CSR).

“In 2017, we organised CIE Automotive’s first CSR Day, which was attended by our division heads and European factory managers”

Today we are already a sustainable company: our corporate culture is oriented towards excellence and long-term viability. Our values permeate our daily interaction with our stakeholders. We apply productive processes that minimise our environmental impact. And our corporate governance system complies with the most stringent international standards.

In 2017, we made further progress in this arena by integrating environmental, social and governance (ESG) criteria into our supply chain management and addressing stakeholder expectations systematically by means of a materiality assessment, among other initiatives.

We additionally sought to reinforce our commitment to best CSR practices by organising CIE Automotive’s first CSR Day, which was attended by our division heads and European factory managers. We leveraged the event to emphasise the importance CIE Automotive attaches to being a socially responsible company, which for us is tantamount to doing things properly.

Thank-you all for helping us to do so,

Antón Pradera
Antón Pradera
Antón Pradera firma
Jesús Mª Herrera
Jesús Mª Herrera

1.2 The year in review

1.2.1 Milestones


JANUARY: CIE Automotive acquires an additional 34.9% of its Brazilian subsidiary CIE Durametal.

MARCH: Acquisition of American group Newcor, specialised in the design and production of high-precision machined parts and subassemblies, powertrains and transmissions.

Organic growth

  • Launch of a second gasoline fuel injection rail manufacturing line at CIE Norma (Spain).
  • New crankshaft line at CIE LT Forge (Lithuania).
  • New stamping presses at CIE Metal CZ (Czech Republic).
  • Start-up of production of stamped parts and assemblies for electric vehicles at the CIE Nugar Tultitlán factory (Mexico).
  • Commencement of construction of a new welding and assembly factory in Puebla (Mexico).
  • New painting line at CIE Autometal Diadema (Brazil).
  • Growth in stamped products for brake systems in Brazil and Mexico.
  • Capacity expansion at Mahindra CIE Gears and Transmissions (India).
  • CIE Automotive's first CSR Day in Bilbao, attended by the divisional heads, European factory managers and the Cross-Group CSR Committee.
  • Performance of the Group's first materiality assessment.
  • 25% reduction in injury frequency rate, 50% reduction in injury severity rate and reduction in the number of accidents by 41 despite headcount growth of 10%.
  • Publication of the Global Supply Chain Manual.
  • JANUARY: Membership of Forética's Climate Change Cluster.
  • Implementation of a new environmental indicator: average environmental cost over revenue.

Creation of a new board committee

Elimination of the Executive Committee, thus revoking the powers originally vested in it, and creation of a new board committee - the Strategy and Operations Committee -, which began to operate in January 2018.

New shareholders

DECEMBER: Corporación Financiera Alba invests in CIE Automotive as part of the process of fine-tuning the shareholder roster to give it greater diversity, with the majority industrial shareholders making room for more financially-minded investors, albeit still with long-term investment horizons.

  • Jesús Mª Herrera, CEO of CIE Automotive, chosen as one of the best executives of 2017 by Forbes magazine.
  • CIE Automotive awarded 'Best stock in the Top 10 on fundamentals' by financial daily elEconomista.
  • Eight OEMs and three Tier 1 suppliers gave CIE Automotive accolades.

1.2.2 Earnings performance [102-7]

CIE Automotive has beaten its historical records again.

2017 RESULTS - CIE Automotive Group

wdt_ID € million 2015 2016 2017 Chg. 2017/2016 (%)
1 Revenue





2 EBITDA (*)





3 EBITDA margin (over revenue)




4 EBIT (*)





5 EBIT margin (over revenue)




6 Net Income (*)





(*) EBITDA: Net Operating Income + Depreciation, EBIT: Net Operating Income, Net Income: Profit attributable to the company´s shareholders.

The CIE Automotive Group once again beat its all-time revenue and profit records in 2017, growing much faster than the overall market and posting widespread margin expansion across all of its operating markets. Specifically, the Group recorded net income of €215.4 million, up 32.7% year-on-year, driven by topline growth of 29.4% to €3.72 billion.

Profits registered double-digit growth, evidencing improved positioning vis-a-vis customers, momentum across all markets and a successful value-generation-focused managerial approach. EBITDA increased by 30.2% year-on-year to €530.4 million, while EBIT amounted to €376.2 million, growth of 34.7%.

With these excellent earnings results, CIE Automotive delivered the guidance set down in its 2016-2020 Business Plan, which it revised upwards in 2017, bringing forward delivery of the €260 million profit target by one year to 2019.

Automotive business

The automotive business, the Group’s biggest contributor, accounted for 77.4% of revenue and 89.1% of EBITDA, while the Smart Innovation business pursued by its subsidiary, Dominion, contributed 22.6% of Group revenue and 10.9% of its EBITDA.

In the automotive business, revenue was 27.1% higher than in 2016, at €2.88 billion, while EBIT came in at €338.1 million (growth of 37.1%) and EBITDA, at €472.7 million (+31.2%). The Group continued to fuel its profitability from both organic growth (greenfield factories) and the integration of new companies, having added America’s Newcor to the fold in 2017.

Newcor, the acquisition of the year at CIE Automotive

CIE Automotive reinforced its presence in the US market with the acquisition of Newcor, a specialist in the design and production of high-precision machined parts and subassemblies, powertrains and transmissions for the automotive industry.

Newcor has three manufacturing facilities in the state of Michigan (Clifford, Corunna and Owosso) and it generates annual revenue of around $150 million. Its top customers include the main vehicle OEMs and tier 1 suppliers and it is mainly exposed to the US market.

The transaction, sized at €102 million, allows CIE Automotive to expand its technology and product portfolios in the US and reinforce its positioning with strategic customers, in line with the Company’s announced strategy of stepping up investment in this strategic market.


Revenue (€ million) Revenue mix, % EBITDA mix, %
Europe 879.6 30.5% 30.5%
Mahindra Europe 498.8 17.3% 14.2%
NAFTA 718.8 24.9% 32.5%
Brazil 304.1 10.6% 9.1%
Asia (India/China) 479.9 16.7% 13.7%



CIE Automotive’s European facilities registered revenue growth of 15.0% thanks to a dynamic order intake and the rollout of new projects. Momentum at the legacy factories continued, as evidenced by EBITDA and EBIT margins of 16.4% and 10.6%, respectively, whereas the Mahindra CIE factories ironed out their operating issues and won back their customers’ confidence, thanks to which they posted significant margin expansion: EBITDA of 13.4% and EBIT of 9.0%.


The NAFTA business sustained double-digit growth (+38.7%) and the highest margins within the Group, driven by excellent traction at new investments: this unit’s EBITDA margin reached 21.4% and its EBIT margin, 17.2%. The acquisition of US player Newcor is expected to contribute to this business’s earnings momentum going forward.


During the first year of recovery in the Brazilian automotive market, CIE Automotive saw its margins widen considerably (EBITDA margin of 14.2%; EBIT margin of 10.7%), thanks to the operational improvements made during the years of crisis and aided by the new-found momentum.


Thanks to the integration of the Bill Forge factories in India and new projects in China (most importantly the forging line in Nanjing), CIE Automotive saw its margins widen further in this market, with its EBITDA margin reaching 13.5% and its EBIT margin touching 9.1%. The Group expects profitability in Asia to continue to grow, fuelled by significant growth in these markets.

Financial situation

The CIE Automotive Group ended 2017 with €2.31 billion of net assets, up 3.5% from year-end 2016. Equity increased by 5.8% year-on-year to €1.34 billion.

BALANCE SHEET – CIE Automotive Group
(at 31 December 2017 €million)

2015 2016 2017
Fixed Assets 1,953.2 2,480.5 2,660.8
Net Working Capital -248.8 -248.9 -350.6
Total Net Assets 1,704.4 2,231.6 2,310.2
Equity 885.0 1,263.3 1,336.9
Net Financial Debt 670.1 816.2 854.8
Others (Net) 149.3 152.1 118.5
Total Equity and Liabilities 1,704.4 2,231.6 2,310.2

Net Financial Debt (NFD) increased by 4.7% from €816.2 million at year-end 2016 to €854.8 million at the close of 2017, broken down as follows:

Structure of the financial debt

Syndicated loan ≈€600m ≈€502m Last repayment date, April 2022 Loan in euros
Rate range based on NFD/EBITDA
€466m automotive business + €36m Dominion.
EIB ≈€95m ≈€86m 7 years with a 2-year grace period Loan in euros
Partially fixed-rate
€61m automotive business + €25m Dominion.
LT loan ≈ €85m ≈ €85m 10 years Loan in euros
Bancomext and other Mexican lenders ≈€73m ≈€162m 7 years with a 1-year grace period Loan in US dollars
Partially swapped to fixed rate
Other ≈€375m ≈€390m Sundry Borrowings comprising bilateral loans (local), credit lines, working capital financing, etc.
Gross Financial Debt ≈€1,231m ≈€1,225m
Cash and cash equivalents ≈€415m ≈€370m
Net Financial Debt ≈€816m ≈€855m

It is worth highlighting the execution, on 6 June 2017, of a fourth amendment to the syndicated loan agreement arranged by the automotive business in July 2014, extending the maturity date to 2022. In the Smart Innovation business, Dominion renegotiated its syndicated loan in December 2017, increasing the principal by $35.6 million and negotiating better terms and conditions, including an extended maturity date. It is important to highlight the reduced use of the syndicated loan in the automotive business.

As shown, Gross Financial Debt was broadly similar year-on-year, albeit shaped by higher use of dollar-denominated debt borrowed in Mexico and reduced reliance on various sources of financing: At year-end, the CIE Automotive had drawn down bank facilities in the amount of €138 million (year-end 2016: €233 million). The total limit on these facilities was €557 million (€501 million at year-end 2016), implying €419 million of undrawn floating-rate credit facilities (€268 million at year-end 2016).

The other balances included within borrowings correspond to bank loans and credit facilities distributed among the Group’s various companies. They carry market rates of interest and do not entail any specific additional guarantees.

The Group’s leverage ratio, expressed as net debt over EBITDA, declined from prior years to 1.6x, driven by EBITDA growth.


CIE Automotive invested €131 million in upgrading and updating its manufacturing facilities. The continued improvement in the returns obtained on the Group’s assets drove the RONA to 19%, up from 16% in 2016.

Maintenance capital expenditure accounted for 85% of depreciation charges, bringing the Group closer to its target of reducing these charges from 5% of revenue to 4%.

1.2.3 Key non-financial indicators [102-7, 102-8, 201-1, 302-3, 403-2]

€ million

2015 2016 2017
Revenue 2,631.5 2,879.0 3,724.5
To shareholders (dividends)* 25.8 42.6 52.8
To employees (employee benefits expense) 600.4 631.7 776.1
To suppliers (consumption of raw materials and auxiliary materials)
1,470.4 1,619.0 2,155.1
To society (income tax paid) 31.9 43.3 55.9
Retained earnings 511.1 647.8 808.6

(*) Dividend paid during the year.


[102-7, 102-8, 403-2]

  2015 2016 2017
 No. of employees 22,812 26,072 30,948
 Job creation (net) -705 3,260 4,876
Diversity Men 83% 86% 84%
Women 17% 14% 16%
AUTOMOTIVE · Europe (*) 5,395 6,034 6,221
· NAFTA 4,258 4,711 6,142
· Brazil 2,748 3,010 3,574
· Asia (India/China) 5,014 7,171 6,962
SMART INNOVATION 5,397 5,146 8,049
Lost-time injuries (**) 532 630 588
 Injury frequency rate (**) 14.4 15.1 11.2
 Injury severity rate (**) 0.6 0.4 0.2

(*) CIE Maroc (Morocco) included.
(**) 2015: global data for the automotive business and Spain-only data for the Smart Innovation business.
2016 and 2017: global data for the automotive business; the data corresponding to the Smart Innovation business is available in Dominion’s standalone annual report.



AUTOMOTIVE 2015 2016 2017
Greenhouse gas emissions (tonnes/€ 000) 0.2 0.2 0.2
Energy/revenue (Kwh/€ 000) 156.4 161.0 192.9
Electricity/revenue (Kwh/€ 000) 369.1 363.5 326.6
Water/revenue (m3/year/€ 000) 0.7 0.7 0.6
Recycled aluminium (tonnes) 48,089 61,437 84,125

1.3 CIE Automotive’s share price performance

The share price gained 30.7% in 2017

The healthy earnings reported by CIE Automotive over the course of 2017 had a positive impact on the share price, which gained 30.7% to end the year at €24.21, putting CIE Automotive’s market capitalisation at a record high: €3.12 billion.

Despite a complicated start to the year, CIE Automotive’s share price found its way back into positive territory and at one point was up by close to 40%, trading at an all-time high.

Investor confidence was bolstered by the strong results generated quarter after quarter, topping expectations and the market consensus forecasts. As a result, the share price hit its high for the year of €26.2 in early November.

During the same timeframe, Spain’s blue chip index, the IBEX-35, gained less than 8%, so that CIE Automotive once again handily outperformed the benchmark index. Indeed, CIE Automotive did better than all the main Spanish stock indices, outperforming the IBEX-35 by 23% and the IBEX Medium Cap index, of which CIE Automotive has been part since 2016, by 27%. The stock was one of the four stocks most bought by the leading Spanish funds in 2017.

(relative to the IBEX 35 and the IBEX Medium Cap)


CIE Automotive’s consistency was reflected in the liquidity of the stock and extension of the rally sustained in recent years: since the end of 2013, the share price has gained a cumulative 203%.

In terms of the outlook, the majority of the main brokerages covering the stock continue to have a Buy recommendation on the stock. At year-end 2017, their average target price stood at €25.30, underpinned by confidence in the Group’s ability to deliver the guidance contained in its 2016-2020 Business Plan, its financial wherewithal and its technological, geographical and customer diversification.

Dividend growth of 24%

In 2017, CIE Automotive paid out €52.8 million in dividends from 2016 profits, which was 24% more than the year before and in line with its policy of maintaining a payout ratio of 33%.

The distribution was made in two payments: an interim dividend charged against estimated 2016 profits of €0.20 per share (before withholdings) on 5 January and a final dividend of €0.21 per share paid out on 5 July 2017, following shareholder approval at the May Annual General Meeting.

In December, the Board of Directors approved the payment of an interim dividend from 2017 profits of €0.28 per share (before withholding tax) carrying dividend rights. This dividend was paid out on 5 January 2018.

CIE Automotive’s share price indicators

2015 2016 2017
Number of shares at year-end 129,000,000 129,000,000 129,000,000
Share price at year-end (€) 15.45 18.52 24.21
High for the year 15.46 18.98 26.2
Low for the year 10.65 11.99 17.15
Market capitalisation at year-end
(€ million)
1,993.1 2,388.4 3,123.1
Average trading volume
60,619 59,065 59,318
Dividend paid during the year
(€ million)
25.8 42.6 52.8
Dividend per share paid (€) 0.20 0.33 0.41
Pay out* (%) 32% 33% 33%
Earnings per share (€) 1.00 1.26 1.67
P/E multiple ** 15.4 14.7 14.5

(*) Payout: percentage of profit paid out to shareholders
(**) P/E multiple: ratio between share price and EPS

Mahindra CIE’s share price performance on the Bombay stock exchange

The shares of Mahindra CIE (MCIE) are traded on India’s main stock exchanges: the National Stock Exchange (NSE) (index: CNX Nifty 50) and the Bombay Stock Exchange (BSE) (index: S&P BSE Sensex).

In 2017, 63,354,199 shares were traded (volume by value: INR12.93 billion); the shares traded within a range marked by a low of INR180.05 and a high of INR271.80 on the NSE during the year. The share price gained 40.5% in 2017, compared to gains of 28.6% in the CNX Nifty 50 and of 27.9% in the S&P BSE Sensex.

India’s stock exchanges were affected by certain specific events towards the end of the year, including demonetization and uncertainty regarding implementation of the new goods and services tax (GST) nationwide.

Despite this uncertainty, the leading brokerage firms reiterated their Buy recommendations while reviewing their target prices, evidencing their confidence in the Group.

MCIE’s share price indicators on the Indian stock exchanges

2015 2016 2017
Number of shares at year-end (millions) 323.3 378.1 378.4
Share price at year-end (INR) on the BSE 254.2 183.5 257.8
Share price at year-end (INR) on the NSE 251.1 183.8 258.2
High for the year (INR) on the BSE 314.1 256.0 270.1
Low for the year (INR) on the BSE 184.0 156.9 181.1
Market capitalisation at year-end (millions of INR) on the BSE 82,208 69,379 97,525
Average trading volume on the BSE*
141,033 35,916 58,273
Average trading volume on the NSE*
547,807 197,948 197,188


The following data correspond to CIE Mahindra’s audited figures for the Indian financial year – which runs from 1 April to 31 March of the following year, the criteria Mahindra CIE used to follow in presenting its earnings results.
However, in 2016 it adapted its reporting framework so that its financial year now coincides with that of its parent, CIE Automotive.

APR. 2015 – DIC. 2015 2016 2017
Earnings per share (INR) 2.37 4.99 9.46
P/E multiple * 107.28 36.77 27.25

(*) P/E multiple: ratio between share price and EPS.