TRW Automotive's New Plant in Mexico

TRW Automotive Holdings Corp. (TRW - Analyst Report) recently announced that it will set up a new facility in Queretaro, Mexico, for producing a wide range of advanced brake systems. This new facility is expected to complement the manufacturing activities in the existing Queretaro facility and will enhance the company’s expertise in advanced braking technologies and manufacturing processes.

The facility, encompassing about 150,000 square feet, will primarily manufacture hydraulic control units for electronic stability control systems and brake actuation units, including boosters and cylinders. The company expects production from this facility to commence by the first quarter of 2012 and generate employment for almost 450 workers.

The plan for a new plant in Mexico was already announced in early September this year when TRW also revealed a host of investment plans in order to supplement its long-term business growth. The company plans to open 11 new plants by the end of 2012 and launch a number of new products across each of its key markets.

In order to support the new growth plans, TRW expects to increase its research and development expenditure by $80 million in 2011. The company has also recruited an additional 500 engineers at its technical centers worldwide.

In the last reported quarter, TRW realized adjusted earnings of $177 million or $1.37 per share, down 6% from the year-ago quarter adjusted earnings of $189 million or $1.47, due to increased raw material costs, higher legal fees and planned increases in costs to bolster the company’s future growth.

Revenues in the quarter grew 14% year over year to $3.9 billion on higher vehicle production volumes, strong demand for the company’s active and passive safety products as well as positive currency fluctuations.

TRW Automotive is a leading manufacturer of advanced technology products and services for the automotive markets. Headquartered in Michigan, U.S., the company operates in 27 countries through its subsidiaries. These operations primarily involve the design, manufacture and sale of active and passive safety related products.

We have reiterated our “Neutral” recommendation on the shares of the company for the long term (more than 6 months).

Read the full analyst report on TRW