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5. Benteler Group (Benteler Automobiltechnik GmbH) Business Report FY ended Dec. 2018

Benteler Group (Benteler Automobiltechnik GmbH) Business Report FY ended Dec. 2018

Factors
1) Net Sales
-The Company’s net sales increased by 2.7% in the fiscal year ended December 31, 2018 to EUR 8,071.6 million. Sales increased throughout all of the Company’s divisions, with the largest growth occurring in the Steel/Tube division.

2) Automotive Division
-Sales in the Company’s Automotive Division increased by 0.1% in the fiscal year ended December 31, 2018 to EUR 6,304 million. Excluding currency effects, sales in the division increased by 2.7% over the previous year. While the division had increased sales in the first half of the fiscal year, weakening markets during the second half of the year led to a decrease in sales during the second half. Significant factors leading to the overall increase in sales include increased demand in the first half of the year and the launch and start-up of new products and plants. These include plants in Wrzesnia, Poland; Palmela, Portugal; Shenyang, China; Changshu, China; and Klasterec nad Ohri, Czech Republic.

Restructuring

-Chassix Inc. completed the previously announced acquisition of the Company’s Farsund lightweight aluminum low pressure automotive casting business. The Farsund business will operate under the name Chassix Norway AS. The Farsund casting business consists of a highly automated aluminum foundry in Farsund, Norway, designing and producing safety critical, lightweight aluminum structural castings. The decision to sell Benteler Automotive Farsund was the result of an in-depth analysis of the Company’s business portfolio. The Company will continue to develop lightweight solutions for its customers. When necessary, the Company will source aluminum casting products through the cooperation with external partners such as Chassix. (From a press release on March 21, 2018)

Joint Ventures

-The Company opened a new joint venture plant in Chongqing, China, together with Jian’An, a subsidiary company of ChangAn, one of the major car manufacturers in China. The plant is focused on the production of chassis components and press parts. (From a press release on November 29, 2018)

-On June 4, 2018, the Company and Changchun Faway Automobile Components held a ceremony to sign a contract establishing a new joint venture, Faway Benteler Automobile Components (Tianjin) Co., Ltd. The joint venture’s plant lies on a 29,000-square-meter site. The plant is scheduled to start production in June 2018 and will produce stamped parts, thermoformed components, aluminum components and chassis systems to FAW group companies including FAW-Volkswagen, Audi, FAW Toyota, Hongqi and Besturn to meet the needs of the customers in China. The new plant currently has a workforce of over 120 employees and is planning to expand to up to 400 employees in the future. (From press releases on June 6 and June 7, 2018)

Recent Developments

-The Company uses 3D printing in its Southern Europe facilities to produce prototypes and tool spare parts. This benefits customers by enabling the Company to adapt the machines quickly and flexibly based on their wishes. Plants in Burgos, Vigo, Palmela and Valencia are currently using 3D printers. (From a press release on July 6, 2018)

-The Company will implement the Strategy 2022 developed in 2017 for profitable growth trajectory. It is based on the three pillars of consistent development of the core business, targeted growth and a performance-based corporate culture. In the Automotive Division, the Company will focus on the production of thermoformed steel and aluminum components. The Company will also invest in innovative technologies and growth markets. The electromobility segment offers opportunities for the Automotive Division, particularly in China. For example, the Company unveiled a world first in 2017, showcasing the Benteler Electric Drive System - a system solution for electric vehicles - in Asia. By 2022, the Company’s revenues should exceed EUR 11.3 billion. (From a press release on March 16, 2018)

Awards

-The Company’s Benteler Automotive Wuhu subsidiary received the award for “Best Quality Improvement in 2017” from Geely Automobile. Geely recognized the exceptional improvements achieved by the Company during the launch of the Geely CX11 hot forming project. (From a press release on April 25, 2018)

Outlook

-The Company expects its net sales to increase to more than EUR 11.3 billion by 2022.

R&D Structure

-The Company has over 1,200 employees working in research and development in 32 locations over 18 countries.

-The Company’s research and development activities are primarily focused on the lightweight development, design, and production of composite structural parts and aluminum components. In the Company’s Automotive Division, research and development is focused on lightweight construction technology and improving safety and efficiency in both product and process development.

R&D Activities

-As electric vehicles become more prevalent, they create new areas of concern as related to vehicle development, for example, battery thermal management and vehicle crash management are different due to the new batteries used and the presence of different components on electric vehicles. One of the focus areas of the Automotive Division’s research is into considerations of crash safety, costs and thermal management of electric vehicle systems.

Product Development

Technologies showcased at IZB 2018 and EuroCarBody 2018
-The Company was present at the International Suppliers Fair (IZB) 2018 in Wolfsburg, Germany. The Company presented a battery tray for use in electric vehicles, notable for its easy and cost-saving adaptation of production to different vehicle classes. The Company also showcased a chassis specifically for electric vehicles. It features an integrated electric drive unit and an ideal design for improving handling dynamics while avoiding undesired noise while driving. The Company also showcased solutions from its Structures business unit at EuroCarBody 2018 in Bad Nauheim, Hesse. Exhibited products included B-pillars, bumpers and a battery tray, all of which were developed in consideration of light-weight construction and crash safety. (From a press release on October 18, 2018)

Mass-produced forged fuel rails
-The Company mass produces forged fuel rails at its German plant in Warburg. The new fuel rails enable a higher injection pressure of over 350 bar compared to conventional, soldered strips. This reduces emissions of gasoline engines, especially with regard to particulate emissions. The work piece is inserted and fixed for processing in a corresponding cutting machine, which can completely controlled and monitored online. Furthermore, the system enables processing in just one clamping, guaranteeing maximum precision and quality during the process. The Company expects to produce 2.5 million forged fuel rails a year worldwide for leading international automakers. (From a press release on June 20, 2018)

Tubular components curved on multiple planes
-The Company’s Automotive Division is working with other departments to develop tubular components that are curved on multiple planes.

High-strength aluminum sheet solutions and extrusion press solutions
-The Company is researching high-strength aluminum sheet solutions as well as high-strength extrusion press solutions to be used in automotive applications.

-The Company invested EUR 370 million in capital expenditures for the Automotive Division in the fiscal year ended December 31, 2018. Approximately EUR 223 million was invested in project-specific investments, production facilities and equipment. The division’s largest investment projects consisted of an expansion at the Schwandorf, Germany site, an expansion for a new production hall at the Vigo, Spain facility, and investments into infrastructure at the Klasterec nad Ohn, Czech Republic facility. Additional investments were made at the Company’s facilities in Spartanburg, South Carolina, U.S.; Puebla, Mexico; Shenyang, China; Chongqing, China; and Kleinenberg, Germany.

Investments

<Czech Republic>
-The Company’s Automotive Division opened a new component plant in Klasterec nad Ohri, Czech Republic. Representatives of the local government, customers and suppliers attended the opening ceremony together with the Company’s management team and local employees. With the new plant in Klasterec, the Company is increasing its proximity to customers and optimally matching customers’ demands in the region. The fifth plant in the Czech Republic was first put into operation at the end of 2017. Production is focused on the hot-forming of steel parts, blanking, welding and laser-cutting for customers including Volvo, BMW, Skoda Auto and Daimler. The site covers an area of 130,000 square meters, of which 23,000 square meters will be used as the shop floor for the first production phase. The new plant has created an additional 300 jobs so far, which will increase to 400 by the end of 2018. (From a press release on April 12, 2018)

<Germany>
-The Company will implement the EU project BOOST 4.0 at its plant in An der Talle, Paderborn. This project is one of ten pan-European pilot projects for big data. To implement this project, the Company will receive funding from the European Commission to foster the topic of big data with a focus on predictive maintenance. The Company will partner with the Fraunhofer Institute for mechatronics design methods (Fraunhofer IEM). In addition, the cross-company network "It’s OWL“ (Intelligent Technical Systems OstWestfalenLippe) will contribute its experience in technology transfer for this project. (From a press release on March 13, 2018)

-The Company recently held a groundbreaking ceremony for the expansion of its Schwandorf facility. The Company is expanding its production and site area at the Schwandorf location by approximately 50%. More than 600 employees at the Schwandorf will produce battery trays for a well-known car manufacturer. The expansion is set to be completed by the end of 2018, with production expected to begin in 2019. (From a press release on March 5, 2018)