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5. Benteler Deutschland GmbH Business Report FY ended Dec. 2016

Benteler Deutschland GmbH Business Report FY ended Dec. 2016

Factors
1) Net Sales
-The Company’s net sales decreased by 2.3% in the fiscal year ended December 31, 2016 to EUR 7,423.4 million. Excluding currency effects, the Company’s sales decreased by 0.6% from the previous year. While sales increased in the Automotive Division, the Company’s Steel/Tube Division experienced a decrease in sales due to negative developments in oil and gas markets. In addition, the Company’s Distribution Division’s sales decreased due to the sale of the Company’s interest in the strip steel trading business.

2) Automotive Division
-Sales in the Company’s Automotive Division increased by 1.7% in the fiscal year ended December 31, 2016 to EUR 5,880 million. Excluding currency effects, sales in the division increased by 3.7% over the previous year. Increased sales in Eastern Europe from a new module plant in Wrzesnia, Poland, as well as increased sales in the Asia Pacific region from a new module plant in Shenyang, China were both significant factors in the division’s growth. The Company’s Brazilian operations also showed growth due to the recovery in the market as well as the start-up of its Itatiaia module plant for its customer Land Rover. These gains were partially offset by decreased sales in the Company’s operations in Western Europe and North America.

Restructuring

-The Company and Altran, a French engineering service provider, have signed an agreement for the sale of Benteler Engineering to Altran. This includes all corporations that are part of Benteler Engineering, as well as their associated subsidiaries. Benteler Engineering provides services across the entire product development process, including project management, quality management and product data management. Following the divestment, the Company will focus on its core businesses in the automotive, steel/tube and distribution markets. (From a press release on October 18, 2016)

Outlook

-The Company expects its net sales to increase to approximately EUR 11 billion by 2021.

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

-Given the rapid changes in the trends and technology in the automotive market, the Company developed an eMobility project center to analyze the current automotive market situation. During a four-month period, a team formed from employees in all of the Automotive Division’s business units as well as the Company’s Procurement, Global Operation, Communications and Marketing, and Research and Development units studied market developments and technology trends.

-The Company worked with various OEMs, suppliers and research institutions to successfully conclude the ALIVE research project in 2016. The goal of the ALIVE project was to provide significant weight savings in a clean and affordable electric vehicle. Specifically, the focus was to use a variety of different materials and semi-finished products to achieve this goal. The Company provided components including a thermoformed B-pillar made from a new, high-strength material, as well as connector technology that attached it to adjacent aluminum components.

-The Company, in cooperation with various companies and research institutions, concluded the ENLIGHT research project in 2016. ENLIGHT was a sister project to the ALIVE which focused on innovative lightweight material technologies for use in future electric vehicles. The Company and its research partners provided a solution for a floor module and a front crash management system based on a combination of aluminum with fiberglass-reinforced thermoplastics. The ENLIGHT project was able to achieve an additional 25% in weight savings compared to the ALIVE project through higher costs.

Product Development

Front axle prototype for electric vehicles
-The Company showcased a prototype of a front-axle beam for electric vehicles at its first lightweight construction conference held in Germany. Through the use of a new steel concept, the front-axle beam featured weight savings of 35% compared to traditional front-axle beams. Furthermore, the use of welded tubes from a new type of steel combined high strength with above-average formability.

Ultra high-strength tubes for automotive suspension system
-The Company produced ultra high-strength tubes for use in an automotive suspension system. The use of the high-strength tubes provided weight savings of up to 30% compared to current tubing solutions.

-In recent years the Company has increased the percentage of total investment into the Automotive Division, from 34.8% of total investment in the fiscal year ended December 31, 2014, to 76.8% in the fiscal year ended December 31, 2016.

-Of the EUR 338 million invested in the Automotive Division in the fiscal year ended December 31, 2016, approximately EUR 212 million was invested in project-specific investments, production facilities, and equipment for the division. The largest investments were in thermoforming lines at Paderborn, Germany; Vigo, Spain; Port Elizabeth, South Africa; and Campinas, Brazil. The Company also made investments in module projects in Spartanburg, U.S., and Wrzesnia, Poland.

Investments outside Germany

-The Company is continuing to invest in the growth market of Eastern Europe with its first production location is going into operation in Wrzesnia, Poland. The location is the Company’s second modules plant in Eastern Europe. In the future, front-end and chassis modules will be produced at the Wrzensia plant from individual components for the next-generation Volkswagen Crafter. From 2018 onwards the plant will produce an average of over 100,000 vehicle modules per year. The plant has 5,300-square-meters of production space and is in close proximity to the VW plant. By the end of 2017 the plant will generate around 100 new jobs. (From a press release on September 5, 2016)


-The Company is investing in a new components plant in the Czech Republic. Its fifth plant in the country will go into operation at the end of 2017 and will focus on the production of lightweight components made of aluminum and hot-formed steel parts. Up to 500 new jobs will be created at the industrial park near Klasterec nad Ohri. The Company’s four plants in the Czech Republic, employ more than 2,100 employees in total at sites in Liberec, Chrastava, Rumburk, and Jablonec. In the beginning of 2016, the expansion to the Jablonec production plant began operations, which increased the size of the plant by one-third to approximately 11,000 square meters. The expansion created an additional 70 jobs and focuses on the manufacturing of lightweight aluminum products. (From a press release on July 11, 2016)


-On June 3, 2016, the Company held an opening ceremony for Benteler Automotive (Shenyang) Co., Ltd., its ninth production facility in China. The Company began preparations for the plant construction in April 2014, broke ground in September 2014, and began mass production at the new plant in June 2016. The plant primarily manufactures front and rear suspension modules for BMW Brilliance. USD 20 million was invested in this plant which is built on 9,400 square meters of land and employs over 140 people. (From news releases issued by multiple sources on June 13, 2016)