PKC Group Oyj Business Report up until FY ended Dec. 31, 2011
Business Highlights
Recent Years
Factors
1)
-Wiring Systems sales in FY2011 increased by 96.9% year-on-year.
-Wiring Systems operating profit in FY2011 increased by 44.9%. The improvement of operating profit is mainly due to increased sales as a result of business acquisitions.
2)
-Electronics sales in FY2011 decreased by 0.9% year-on-year.
-Electronics operating profit in FY2011 decreased by 68.8% year-on-year. The decline of operating profit is due to decreased demand of design and manufacturing services (ODM) of production and service devices for telecommunication devices.
-In 2011, the Company announced that it has signed an agreement for the purchase of all shares in Segu Systemelektrik GmbH (Germany), Segu Polska Sp. z o.o. (Poland) and TZOV HBM Kabel Corp (Ukraine). The Segu companies in Germany, Poland and Ukraine manufacture and develop wiring harnesses for the automotive and construction equipment sectors. In 2010, the Segu companies generated consolidated net sales of approximately 38 million euros and had approximately 1,000 employees at the end of the year. The purchase price of the Segu companies is 20 million euros. The intention of the Parties is to close the acquisition by April 30, 2011. (From a press release on February 28, 2011)
-In 2008, the Company announced the acquisition of MAN Nutzfahrzeuge AG's cable harness production business from MAN Star Trucks & Buses Sp. z.o.o. in Poland. The purchase price is about EUR 22 million. The business had net sales of about EUR 70 million in 2008. The Company's Polish subsidiary, PKC Group Poland Sp. z.o.o. will continue the operations. (From a press release on Dec 31, 2008)
-On 1 August 2006, the Company purchased the business of Electro Canada Limited, which is a private company with over 40 years' experience in the manufacture of wiring harnesses for vehicles and electro technical equipment. The acquisition included a head office in Toronto, Canada, a wiring harnesses factory in Nogales, Mexico, and a sales office in Nogales, USA. Electro Canada's operations in Canada are continued by PKC Group Canada, Inc., a new subsidiary that has already been incorporated. The combined net sales of the acquired companies totaled about 22million Euros in 2005.
-In 2010, the Company plans to commence negotiations which concern all personnel of its subsidiary PKC Wiring Systems Oy in Finland. The talks may lead to termination of employment of a maximum of 50 persons. The Company already announced its decision to end wiring harnesses production in Kempele. (From a press release on June 3, 2010)
-In 2009, the Company announced that its subsidiary PKC Electronics Oy will start negotiations in Raahe, Finland, for its planned lay-offs for an indefinite period. Durations and timing of the lay-offs may vary and shall be specified during the negotiations. (From a press release on Jun 17, 2009)
-In 2009, the Company announced it will start negotiations at its wiring harness unit in Kempele, Finland, for its planned lay-offs for an indefinite period. The talks concern all personnel at the location. (From a press release on May 13, 2009)
-In 2008, the Company reorganized production at its facilities and made personnel cuts at various units to match lower volumes. In Brazil, the Company opened a new facility in order to bolster the operations at its Curitiba unit. To cut costs and enhance operational efficiency, the Company moved its Canadian operations, excluding sales, to Mexico. In connection with this reorganization, the Company concentrated the main responsibility for its North American business operations in the US unit. In late 2008, the Company took the decision to close down wiring harness production in the Pskov unit in Russia and to concentrate its operations in Suzhou, China, in its Electronics factory. These adaptation measures will be implemented during 2009.
Financial Overview |
(in million EUR) |
| FY2011 | FY2010 | Rate of change(%) | Factors | |
| Overall | ||||
| Sales | 550.2 | 316.1 | 74.1 | - |
| Operating profit | 34.5 | 29.7 | 16.2 | - |
| Wiring Systems | ||||
| Sales | 477.2 | 242.4 | 96.9 | 1) |
| Operating profit | 35.5 | 24.5 | 44.9 | |
| Electronics | ||||
| Sales | 73.0 | 73.7 | (0.9) | 2) |
| Operating profit | 2.4 | 7.7 | (68.8) | |
Factors
1)
-Wiring Systems sales in FY2011 increased by 96.9% year-on-year.
-Wiring Systems operating profit in FY2011 increased by 44.9%. The improvement of operating profit is mainly due to increased sales as a result of business acquisitions.
2)
-Electronics sales in FY2011 decreased by 0.9% year-on-year.
-Electronics operating profit in FY2011 decreased by 68.8% year-on-year. The decline of operating profit is due to decreased demand of design and manufacturing services (ODM) of production and service devices for telecommunication devices.
Acquisition
-In 2011, the Company announced that it has signed an agreement for the purchase of AEES companies (AEES) from funds controlled by Platinum Equity. AEES is a North American wiring harness manufacturers for heavy and medium duty trucks and light vehicles. AEES' largest customer accounts within the truck industry are e.g. Daimler Trucks North America, Navistar and PACCAR. Major customer accounts relating to the light vehicle industry include i.a. Continental, Ford, General Motors and Lear. In 2010, AEES generated net sales of 454 million euros. AEES has operations in U.S., Mexico, Brazil and Ireland and had about 13,800 employees at the end of June 2011. The purchase price of AEES is approximately 110 million euros. The intention of the parties is to close the acquisition by 1 October 2011. (From a press release on August 9, 2011)-In 2011, the Company announced that it has signed an agreement for the purchase of all shares in Segu Systemelektrik GmbH (Germany), Segu Polska Sp. z o.o. (Poland) and TZOV HBM Kabel Corp (Ukraine). The Segu companies in Germany, Poland and Ukraine manufacture and develop wiring harnesses for the automotive and construction equipment sectors. In 2010, the Segu companies generated consolidated net sales of approximately 38 million euros and had approximately 1,000 employees at the end of the year. The purchase price of the Segu companies is 20 million euros. The intention of the Parties is to close the acquisition by April 30, 2011. (From a press release on February 28, 2011)
-In 2008, the Company announced the acquisition of MAN Nutzfahrzeuge AG's cable harness production business from MAN Star Trucks & Buses Sp. z.o.o. in Poland. The purchase price is about EUR 22 million. The business had net sales of about EUR 70 million in 2008. The Company's Polish subsidiary, PKC Group Poland Sp. z.o.o. will continue the operations. (From a press release on Dec 31, 2008)
-On 1 August 2006, the Company purchased the business of Electro Canada Limited, which is a private company with over 40 years' experience in the manufacture of wiring harnesses for vehicles and electro technical equipment. The acquisition included a head office in Toronto, Canada, a wiring harnesses factory in Nogales, Mexico, and a sales office in Nogales, USA. Electro Canada's operations in Canada are continued by PKC Group Canada, Inc., a new subsidiary that has already been incorporated. The combined net sales of the acquired companies totaled about 22million Euros in 2005.
Restructuring
-In 2011, the Company's subsidiary, PKC Electronics Oy, has finalised the co-determination negotiations in Finland. Negotiations were conducted on the basis of employer's initiative made on 17 August 2011, according to which the estimated need for personnel cuts totaled 80. As a result of the negotiations the need for personnel cuts was specified to 77 persons. (From a press release on October 3, 2011)-In 2010, the Company plans to commence negotiations which concern all personnel of its subsidiary PKC Wiring Systems Oy in Finland. The talks may lead to termination of employment of a maximum of 50 persons. The Company already announced its decision to end wiring harnesses production in Kempele. (From a press release on June 3, 2010)
-In 2009, the Company announced that its subsidiary PKC Electronics Oy will start negotiations in Raahe, Finland, for its planned lay-offs for an indefinite period. Durations and timing of the lay-offs may vary and shall be specified during the negotiations. (From a press release on Jun 17, 2009)
-In 2009, the Company announced it will start negotiations at its wiring harness unit in Kempele, Finland, for its planned lay-offs for an indefinite period. The talks concern all personnel at the location. (From a press release on May 13, 2009)
-In 2008, the Company reorganized production at its facilities and made personnel cuts at various units to match lower volumes. In Brazil, the Company opened a new facility in order to bolster the operations at its Curitiba unit. To cut costs and enhance operational efficiency, the Company moved its Canadian operations, excluding sales, to Mexico. In connection with this reorganization, the Company concentrated the main responsibility for its North American business operations in the US unit. In late 2008, the Company took the decision to close down wiring harness production in the Pskov unit in Russia and to concentrate its operations in Suzhou, China, in its Electronics factory. These adaptation measures will be implemented during 2009.
Certification
-In 2011, the Company announced that all of the Group's factories are certified in accordance with requirements of the ISO/TS16949 quality standard for the automotive industry. All of the Group's factories, except factories in Sosnowiec (Poland) and Mukachevo (Ukraine) are certified in accordance with the ISO9001 quality standard and with the ISO14001 environmental standard. The Sosnowiec and Mukachevo factories have started to build a system in accordance with ISO14001 environmental standard with the aim to certify it in the first quarter of 2012. (From a press release on August 4, 2011)R&D
R&D Expenditures |
(in million EUR) |
| FY2011 | FY2010 | FY2009 | FY2008 | |
| Overall | 6.9 | 5.7 | 5.5 | 5.8 |
| % of sales | 1.3% | 1.8% | 2.7% | 1.9% |
| Employees in product development | 143 | 120 | 114 | 101 |
Product Development
-During FY2004, the Company developed the ability to use bus technology in accordance with the LIN protocol for the electrical systems of commercial vehicles.LIN (Local Interconnect Network) Bus System
-LIN technology is a single-wire system in which sensors and actuators can be distributed along a single communication bus. LIN technology helps to reduce the weight and number of wiring harnesses. Cabling and harnesses design is simplified due to modularization and less wires. A modular LIN system is easily expanded and the system's functions can later be modified by reprogramming the modules.
-LIN technology was introduced in 2000 by the LIN consortium that was formed by Audi, BMW, DaimlerChrysler, Motorola, Volcano Communications Technologies (VCT), Volkswagen and Volvo. The Company has been an associate member of the LIN consortium since the beginning of 2004.
Typical Applications for a LIN Bus System in Commercial Vehicles
-Interior and exterior lights
-Headlamp direction control
-Seat and door functions
-Small motors
-Magnetic valves
-Fluid level sensors
-Flow sensors
-Voltage and current measurement of the battery system
Investment Activities
Capital Expenditures |
(in thousand euros) |
| FY2011 | FY2010 | FY2009 | FY2008 | |
| Overall | 101,532 | 8,575 | 8,226 | 27,426 |
-The Capital expenditure in FY2011 consisted, in addition to the acquisition of Segu and AEES companies, mostly of acquisition of production machinery and equipment.
Investments Outside Finland
<Russia>-In May 2006, the Company established a new wiring harnesses factory in Pskov, Russia. The new factory will meet the increased demand for production capacity, and is intended to serve the central European and Russian markets. Production was started at the end of 2006. The total capital expenditure by the end of 2007 is estimated to be about EUR 2.3 million.
<China>
-In early summer of 2006, the manufacture of products for the electronics industry was started at the factory in Suzhou, China. In the future, the unit will also serve the Group's international automotive industry customers on the Asian markets.