morgan stanley china summit 2016...majdi abulaban senior vice president and president, delphi...
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Morgan Stanley China Summit 2016
Majdi AbulabanSenior Vice President and President, Delphi Electrical/Electronic Architecture and
President, Delphi Asia Pacific
Forward-looking statements
This presentation, as well as other statements made by Delphi Automotive PLC (the “Company”), contain
forward-looking statements that reflect, when made, the Company’s current views with respect to current
events, certain investments and acquisitions and financial performance. Such forward-looking statements are
subject to many risks, uncertainties and factors relating to the Company’s operations and business environment,
which may cause the actual results of the Company to be materially different from any future results. All
statements that address future operating, financial or business performance or the Company’s strategies or
expectations are forward-looking statements. Factors that could cause actual results to differ materially from
these forward-looking statements are discussed under the captions “Risk Factors” and “Management’s
Discussion and Analysis of Financial Condition and Results of Operations” in the Company’s filings with the
Securities and Exchange Commission. New risks and uncertainties arise from time to time, and it is impossible
for us to predict these events or how they may affect the Company. It should be remembered that the price of
the ordinary shares and any income from them can go down as well as up. The Company disclaims any
intention or obligation to update or revise any forward-looking statements, whether as a result of new
information, future events and/or otherwise, except as may be required by law.
2
Delphi company overview
Global growth business focused on innovation
Delphi at a glance
1 2016 guidance data from DLPH 1Q 2016 earnings call
2 Total shareholder return (TSR) is defined as capital gains plus dividends
2016 revenue1
2016 operating margin1
2016 YTD cash returned
Engineers and scientists
IPO through Q1 ‘16 TSR2
$16.8B
~13.5%
~$450M
20,000
~270%
4
Portfolio focused on relevant megatrends
Safe
Connected
Green
Convergence: The catalyst for growth
2010 2020 20252015
Semiautomated
Assisted automation
ADASexpansion
Fullyautomated
Full cloud connectivity
Brought-in connectivity
Smartphoneintegration
Vehicle as a device
Increasing levels of electrification
Electrical architecture is an enabler
Increasing levels of software and connectivity
More…
US Fuel economy: 54.5 mpg – 2025EU Emissions: 95 CO2 g/km – 2021China Emissions: 117 CO2 g/km – 2020
Delphi integrated solutions uniquely positioned to address trends
5
Increase in
Electrification
– up to 600V
Complexity and content drive growth
6
World-class electrical architectures enable tomorrow’s technology today
2015 2020+
Will exchange
~100,000
different pieces
of data in the
blink of an eye
1.5 miles of
cabling per
vehicle
67% increase
in cabling – up
to 2.5 miles
25%
increase in
connections
– up to 350
233%
increase in
diagnostics –
up to 1000
300 diagnostic
parameters,
monitoring
system
performance
Primarily 12V
powering the
vehicle
systems
Exchanges
~15,000
different pieces
of data in the
blink of an eye
280 connections
to manage power,
diagnostics
and signal
communication
Delphi growth drivers: next 5 years
~$3B
~$2B
~$2B
• Optimized vehicle architectures enabling high-speed connectivity
• Faster digital data demands advanced cabling solutions
• Accelerating demand for electrification and diagnostics
• Emissions regulations demand advanced products
• US fuel economy – 54.5 mpg by 2025
• EU emissions – 95 CO2 g/km by 2021
• Active safety is driving sensor fusion
• Advanced infotainment = more content opportunities
• Automated driving becomes more of a reality
Key growth driversSegmentIncremental
opportunity
Electronics & Safety
Electrical Architecture
Powertrain
Technology and innovation drive growth
7
Delphi China overview
Delphi has built significant presence in China
Note: 2010 revenue includes Thermal, 2015 & 2018 revenues exclude Thermal
China presence Footprint
2010 2015 2018
Revenue $1.7B $2.9B ~$4.4B
Localized product lines 73% 90% 100%
Tech centers 2 3 4
Engineers 1,050 2,900 3,500
Manufacturing facilities 17 22 25
Employees 12,000 28,800 ~31,000
Wuhan
Beijing
Shenyang
Changchun
Baicheng
Yantai
Guangzhou
ChengduChongqing
Shanghai
Suzhou
Wuhu
Nantong
Tianjin
Current manufacturing facility
Future manufacturing facility
Technical center
Planned manufacturing expansions
Leveraging strong presence for continued growth
9
0
10
20
30
40
50
60
2011 2012 2013 20152014
China economy is shifting to ‘New Normal’
Source: National Bureau of Statistics of China
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
2011 2012 2013 2014 2015
0
2
4
6
8
10
12
2012 2013 2014 2015 2016 20162016
Forecast:
5%-7%
Service sector contribution(%)
Private consumption($ trillions)
GDP growth(Quarterly YoY growth, %)
Slower but more sustainable growth ahead
Tertiary
(Service)
Primary
(Agriculture)
Secondary
(Industrial)
10
China still represents largest global growth opportunity
Source: 1. World Bank, IHS Economics; represents 2016 data
2. March 2016 IHS Automotive
Driving significant industry growth
Economic performance1 Vehicle production growth2
Country GDP Growth
USA $17.3T 2.4%
China $10.3T 7.3%
Japan $4.6T -0.1%
India $2.0T 7.3%2015 2020
CO2 regulatory environment
50
100
150
200
250
2005 2010 2015 2020 2025
CO2 g/km
EU 95US 90
CH 117
~27%improvement
‘15 to ‘21
~39% improvement
‘15 to ‘25
~28% improvement
‘15 to ‘20
N. America
China
Europe
S. America
China % of
production:27% ~30%
N. America
China
Europe
S. America
11
Delphi is growing faster than China market
Source: March 2016 IHS Automotive
Positioned to continue outperforming the market
China vehicle production(Millions of units)
Delphi China revenue($ billions)
25
2831
2015 2018 2020
$2.9
$4.4
$5.5
2015 2018 2020
12
Driven by urbanization, growing middle-class
1. In real 2005 purchasing power parity basis
Source: MGI CityScope 3.0; McKinsey
Higher income households >$20k1 disposable income China cities with >1.5M people
USA 2015
40 cities >1.5M
The rise of the consumer through urbanization
Urbanization increasing Middle class growing
3x per capita consumption urban vs. rural
82
107
2015 2025
24%
49%
2015 2025
Shifting to consumption-driven economy
13
Vehicle segment growth(2015 YoY production growth)
Electric vehicles(Millions of units)
Premium/mid class production(Millions of units)
Favorable demand trends to drive content growth
Source: March 2016 IHS Automotive, Barclays (CAAM, Wall Street Research, Frost & Sullivan)
% of China: 27% ~30%
46%
34%
-6%-10%
-24%
SUV MPV Sedan Other CV
% of total: 1% ~6%~3%
Premium, SUV and NEV segments driving higher content vehicles
6.6
7.9
8.8
2015 2018 2020
0.2
0.9
1.7
2015 2018 2020
14
0.0
2.0
4.0
GM VW Hyundai-Kia Renault/Nissan Ford Honda Toyota PSA BMW Daimler
0.0
0.5
1.0
1.5
Chang'an BAIC Dongfeng Great Wall Geely JAC Brilliance Auto Chery BYD FAW
Broad exposure to global, local OEMs
Source: March 2016 IHS Automotive
Note: Global OEM China production volume from JVs
10 out of 10are Delphi customers
10 out of 10are Delphi customers
Global OEMs – 2016E revenue $2.3B(Millions of vehicles produced)
Local OEMs – 2016E revenue $1.0B(Millions of vehicles produced)
Diversified business across top customers, platforms
15
Flexible cost structure and local operationsLocal competencies cover
all Delphi portfolios
Right portfolio, flexible operations further drives growth
Source: internal analysis
Leverage best-in-class local capabilities with global connectivity
• Most flexible cost structure
‒ 80% variable cost in China
• Local design and development capabilities
‒ 3 tech centers growing to 4 by 2018
• Local product portfolio
‒ 90% localized portfolio growing to 100% by 2018
• Material sourcing and manufacturing operations
‒ 95% manufacturing localization
‒ 80% material localization
16
Key takeaways
Leveraging strong presence in China for next wave of growth
“New normal” remains significant growth opportunity
Well positioned in higher growth segments
Flexible operating model to quickly adapt to market dynamics
Right footprint and portfolio for continued profitable growth
Disciplined cost focus translates into more margin expansion