HANOVER, Germany—Despite a decline in the automotive hose sector and heavy investments to significantly expand its operation, Tristone Flowtech Group GmbH's sales continued to head upward in the first nine months of 2019.
It recorded revenue growth of 6 percent to $248.3 million in the period although "the changed market environment and the costs for new plants in the U.S. and India as well as the high number of program start-ups caused a drop in the group's EBIT possibility below prior years," said Sonja Rissteuscher-Schuetze, chief financial officer of the company.
For the full year, Guenter Froelich, CEO and president of Tristone, said the company anticipates that sales will increase by 7 percent to about $347 million.
Tristone made major investments earlier in 2019 when it launched new production facilities in Mooresville, N.C., and India, and began expanding its giant factory in Walbrzych, Poland. It also is currently in the midst of adding to the firm's technology and product base at the U.S. plant.
However, because of the problems in the market, Froelich said, the company is reducing its future internal investments to about $24.5 million rather than the estimated $28 million it expected to make at the beginning of the year based on expected growth, "which is still a high figure in relation to a sales gain in 2019 of 7 percent."
Tristone's sales growth "is again a strong signal (for the company) in declining markets, where most of our original equipment manufacturing customers and other market participants are faced with declining sales," he said. The improvement has been driven by Tristone's broad OEM customer portfolio in different regional markets "and our strong market position in our business fields," he added.
Looking ahead, Froelich said, "we are highly satisfied with very high (booked) business awards of close to $103 million annual sales with a share of more than 42 percent for battery or hybrid passenger cars."
At the same time, he noted the company recognizes that the challenging overall market situation continues to impact all players in the market. Related to that, he added, "we are seeing the first example of an OEM trying to use their market position to ignore contractual obligations toward our group."
He did not share the identity of the OEM.
According to Froelich, the overall passenger car market dipped in 2019 because of the lower production volume of cars "and therefore the automotive hose market is declining. We expect a reduction of 2-3 percent overall worldwide in passenger car production."
Passenger car markets in China, which has experienced a decline of roughly 3-5 percent compared to 2018, and a struggling European sector, with a 1-2 percent dip, have been the prime factors in the decrease, he said.
On the other hand, Froelich said that while the company has seen a slide in the NAFTA market, overall the sector has been stable compared to the previous year.
Tristone has been extremely busy in 2019 as it launched an extensive, and costly, expansion program. Its new facility in Mooresville began serial production of hose in August, he said, "and we are expecting only about $3.3 million in sales in 2019."
Froelich said the plant has been well received by OEM customers. Because of currently booked business the firm expects 2020 sales of almost $16 million at the site and revenues in 2021 to reach $28 million, he said, adding that staffing at the factory should reach 90 at the end of the year.
By year end 2020, the work force at the site is expected to grow to 150 employees and by the end of 2021 to roughly 250. Worldwide, the firm employs about 3,444 employees.
More products will be added to the plant's menu in the upcoming year and the preparations for the start ups are well underway, Froelich said.
In terms of the facility that is being expanded in Poland, the company is looking to double its hose capacity in the next few years. The factory serves a broad range of customers, including Ford, Volvo, RSA, Nissan, FCA, PSA, Daimler, Suzuki, JLR, Ferrari and others.
Tristone—which specializes in hoses to handle fluid applications in the areas of motor and battery cooling as well as air change systems—has been benefiting from the trend toward the reduction of space and fuel consumption with its polyamide materials and new power train concepts for hybrid and electrical cars and the integration of fluid motor and battery cooling systems.
The company also has production plants in Germany, the Czech Republic, Slovakia, Turkey, Spain, France Italy, Mexico and China.
A turnaround in the passenger car market is difficult to predict, Froelich said, "but market research companies are expecting small overall growth in 2020."