Wabco Holdings Adds Nearly $1 Billion in Incremental New Business

Commercial vehicle supplier Wabco Holdings Inc. said that from the second quarter of 2015 to the first quarter of 2016 it entered into contracts in local currencies with customers across the globe that total $918 million of “expected cumulative incremental business.” The awards include $612 million in new business to be realized this year through 2020.

The contracts represent new incremental business that is separate from replacement and renewal of existing contracts, the company said.

Stifel, Nicolaus & Co. analyst Michael Baudendistel wrote in an investors note that this year’s total is “below last year’s record level of $1.1 billion in new business wins [$810 million within five years], but we believe that was anticipated as global truck and bus markets have deteriorated significantly over that period.”

Baudendistel said he anticipated the five-year number would be in the $550 million to $650 million range, “roughly in line with the level reported in 2014."

"But, we believe the $612 million reported, while near the midpoint of our expectation, may actually be better than many feared due to recent deterioration and low order activity in several markets,” he added.

 

Wabco said the contracts are for products that improve vehicle safety and efficiency, mostly in vehicle dynamics systems, air management and vehicle electronic systems, transmission automation technologies, and electronic suspension and braking technologies on commercial vehicles as well as car components and systems. They also cover fleet management solutions that enhance connectivity among the truck, trailer, driver and fleet hub.

“These new contracts underline Wabco’s continuing ability to generate sales growth that outperforms the commercial vehicle market relative to global truck and bus production,” Wabco CEO Jacques Esculier said in a statement. “Indeed, two-thirds of this new business is anchored in high-growth emerging economies such as China, India and Brazil, where Wabco is solidly the market leader and increasingly augmenting Wabco content per vehicle.”

Baudendistel added, “When considering the location of bookings and adjusting for changes in currency and end-market production from a year ago, we believe the level of incoming orders is roughly unchanged versus last year’s record level.”

Esculier said the company expects that its sales will be on average 8% better through 2020 than “global market expansion of new truck and bus builds.”