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5. Knorr-Bremse AG Business Report FY ended Dec. 2019

Knorr-Bremse AG Business Report FY ended Dec. 2019

 
Factors
1) Net Sales
-The Company’s net sales for the fiscal year ended December 31, 2019 increased by 4.8% over the previous year to EUR 6,936.5 million. Excluding foreign currency exchange effects, the Company’s sales grew by approximately 3.5%. Both the Rail Vehicle Systems division and the Commercial Vehicle Systems division had revenue growth which exceeded their respective markets. The increase in sales was primarily organic across both divisions and was achieved through strong performances in North and South America, and the Asia-Pacific region.

2) Commercial Vehicle Systems
-In the fiscal year ended December 31, 2019, the Company’s Commercial Vehicle Systems sales increased by 3.8% over the previous year to EUR 3,280.2 million. Despite a decline in global truck production, sales in the division increased with OE sales in North America compensating for declines in Europe. Aftermarket sales also contributed more to the division’s sales. In addition, the acquisition of Hitachi Automotive Systems added EUR 65.8 million in sales.

Acquisitions

-The Company announced that the acquisition of the commercial vehicle steering business (Integral Power Steering (IPS) and Advanced Hybrid Power Steering (AHPS)) of Hitachi Automotive Systems is now completed in Japan. The takeover of the commercial vehicle steering business from Hitachi Automotive will expand the Company’s steering system portfolio and further enhance its future potential as a global supplier for driver assistance and highly automated driving solutions. With this transaction, the Company is setting a milestone to become a global supplier for CVS steering systems for RCB (recirculating ball) and TOS (torque overlay steering). In addition, the Company takes a step towards supplying its customers with highly integrated systems, while adding new functionalities in the field of driver assistance and automated driving. Furthermore, the Company will gain better access to the Japanese and the Southeast Asian markets. (From a press release on April 1, 2019)

Restructuring

-The Company’s Executive Board has decided to discontinue production of steering systems by the Knorr-Bremse Steering Systems GmbH subsidiary at the Wulfrath site by 2020. The decision was based on in-depth analysis of various scenarios and took account of the recent acquisitions in the commercial vehicle steering systems sector. One substantial factor impacting on the decision process was the premature phasing out of a major order for car steering systems. The expertise amassed over recent years in Wulfrath, particularly in the fields of development and project management for commercial vehicle steering systems will be retained at a center of competence. At present, the headcount at the Wulfrath site totals 356, including 66 persons on HR leasing contracts. Concrete details of the job cuts will be finalized in pending negotiations with employee representatives. (From a press release on May 23, 2019)

Contracts

-The Company has won a major order to supply brake actuators to a European customer. The supply agreement underpins the Company’s market-leading position in actuators for the European truck and bus market. By winning a major order worth low three-digit millions of euros, the Company has secured the future of its existing scope of supply to a key customer in Europe. From January 1, 2020 to December 31, 2027, the Company will supply more than three million brake actuators to the customer. Along with NG3 and NG5 spring brake actuators, the order also includes Optimized Brake Chambers (OBC). (From a press release on December 16, 2019)

-The Company is engaging in closer cooperation with one of the world’s leading bus manufacturers. The recently signed supply contract governs the provision of Electronic Brake System (EBS) customized for the manufacturer buses. The electric buses equipped with the Company’s EBS for China’s national public transportation system have been successful. The cooperation will therefore be extended to the manufacturer’s other electric bus models. (From a press release on February 26, 2019)

-Blue Bird Buses announced that the Bendix ESP Electronic Stability Program system and backup cameras are now standard equipment on all of its buses. Blue Bird is the leading independent designer and manufacturer of school buses in the U.S., with more than 550,000 buses sold since its formation in 1927 and more than 180,000 buses currently in operation. In 2014, Blue Bird became the first North American school bus manufacturer to offer full-stability technology when it made Bendix ESP available as an option. Bendix ESP is an antilock braking system-based stability technology that has been equipped on more than 700,000 commercial vehicles in North America since its launch in 2005. Bendix Commercial Vehicle Systems LLC, the North American-based subsidiary of the Company, is a leader in the development and manufacture of active safety, air management, and braking solutions for commercial vehicles. (From a press release on February 25, 2019) 

-Kiepe Electric, a subsidiary of the Company, announced it is to supply the traction systems for an additional 15 trolleybuses in Dayton, Ohio, expanding the Greater Dayton Regional Transit Authority (RTA) electric bus fleet to 45 vehicles. Kiepe Electric will fit the buses with its future-oriented In Motion Charging (IMC) concept. With IMC, the bus charges its batteries from the overhead lines during operation. On sections of route with no overhead lines, it runs on battery power. Final assembly of the buses takes place at the Kiepe Electric plant in Alpharetta, Georgia, where the company manufactures the traction system components, helping it to comply with the high local content requirements of the U.S. vehicle market. Kiepe Electric has developed and manufactured the traction systems for almost 800 electric buses in Alpharetta. (From a press release on January 16, 2019)

 
-The Company aims to have its research and development costs comprise between 6% and 7% of its annual sales.

R&D Facilities

-The Company has five primary research and development centers complemented by 23 local engineering offices.

-The Company’s subsidiary, Bendix Commercial Vehicle Systems, celebrated the opening of its new technical center in Monterrey, Mexico. The 7,800-square-foot center is located at an existing building at the Research and Technological Innovation Park (PIIT) in Monterrey. Projects undertaken at the center will support the entire Bendix product portfolio and emerging commercial vehicle technologies including vehicle electrification, autonomous vehicles, and systems that improve fuel efficiency. While Bendix’s headquarters in Elyria, Ohio will remain the company’s engineering, research and development leadership hub, Bendix also maintains engineering operations in Acuna, Mexico; Irvine, California; Kalamazoo, Michigan; and Vancouver, British Columbia. (From a press release on January 31, 2019)

R&D Structure

-As of December 31, 2019, the Company has approximately 3,600 employees working in research and Development.

R&D Activities

-Research and development in the Company’s Commercial Vehicle Systems division focuses on developing industry trends such as improvements in road safety, reduction in vehicle emissions, electromobility, vehicle connectivity and autonomous driving systems. Specific products being developed include next-generation air disk brakes.

Technological Alliance

-The Company more than 15 research and development partnerships.

Product developments

Jointly developed platooning demonstrator for commercial vehicles
-The Company worked with Continental to develop a manufacturer-neutral platooning demonstrator. The demonstrator is capable of functions including multi-vehicle guidance, emergency braking, individual vehicle disengagement and platoon dissolution. The Company has performed trials and customer demonstrations at its test site. The platooning demonstrator will serve as the basis for the future Highway Pilot autonomous driving application.

Next-generation versions of disk brake systems
-The Company is developing next-generation versions of two disk brake systems. The Synact two-piston brake for towing vehicles and the Nextt single-piston brake for trailers and towing vehicles with a low axle load. The Company aims to make the disk brakes more compact, lighter, more modular and increase their suitability for autonomous driving and electromobility.

Technologies shown at Busworld
-The Company will present strategies, products and services themed around sustainable mass transit concepts such as electric bus fleets at Busworld. A major focus is on new electric drive products including the screw-type compressor with intelligent Air Processing Unit (iAPU). The screw-type compressor offers the ideal solution for vehicles with high demand for compressed air such as city buses, where high output must be combined with low noise and vibration levels. The iAPU can control the electric motor in the screw-type compressor. The Electronic Parking Brake (EPB) is now also available as a separate system for manual activation.  The EPB helps prevent accidents from the vehicle rolling or moving away by automatically applying the brakes. Kiepe Electric will present In Motion Charging 500 (IMC), charging concept for electric buses.  With IMC, buses can charge their batteries from overhead lines while in motion. The innovative Smart Fleet Management (SFM) system from Kiepe Electric is a self-learning AI energy management system that makes scheduled service operations more robust and increases network capacity. In its electric bus kit, Kiepe Electric has translated its systems expertise into a future-proof customer offering. (From a press release on October 18, 2019)

Retrofittable turning assistant developed jointly with Mobileye
-The Company’s TruckServices brand and Mobileye are jointly launching a retrofittable turning assistant with integrated driver assistance systems for heavy commercial vehicles. The jointly offered driver assistance system offers features such as lane departure warning, headway monitoring and warning and forward collision warning, as well as a turning assistant. From 2022 on, new truck and bus models released in the EU need to be equipped with a turning assistant system. This will apply to all new registrations of trucks and buses by 2024. In collaboration with Mobileye, Knorr-Bremse TruckServices will offer the new turning assistant with integrated driver assistance systems ProFleet Assist+ as a retrofit solution starting in fall 2019. In addition, the companies plan to further cooperative measures in the future and provide their customers with additional traffic safety products. (From a press release on June 4, 2019)

Patents

-The Company has more than 12,000 patent and patent applications. Approximately 8,500 patents and applications are from the Commercial Vehicle Systems division.
 

 
-The Commercial Vehicle Systems division’s capital expenditure increased in the fiscal year ended December 31, 2019, primarily due to the expansion of manufacturing capacity of compressed air disk brakes at facilities in Huntington and Bowling Green, U.S. Other investments focused on supplier tools, production plant and equipment upgrades, other expansion projects, and IT projects.

Investment outside Germany

<U.S.>
-Bendix Spicer Foundation Brake LLC (BSFB) announced that it has broken ground on a double-digit million dollar 130,000-square-foot expansion of its wheel-end manufacturing facility in Bowling Green, Kentucky for increased air disc brake production capacity to keep pace with accelerating North American demand. BSFB is expanding its facility on a parcel adjacent to its 302,000-square-foot building that employs over 400 team members across three shifts. The upgraded plant, which will span 432,000 square feet, is expected to be completed by the end of 2020. BSFB is a joint venture between Company subsidiary Bendix Commercial Vehicle Systems LLC, and Dana Commercial Vehicle Products, LLC. The joint venture has been producing the full lineup of Bendix brand foundation drum and air disc brake solutions at the Bowling Green facility. Earlier in 2019, Bendix announced the expansion of its long-standing Huntington, Indiana, footprint with the addition of a sixth location, a 409,000-square-foot facility. (From a press release on October 7, 2019)