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5. Benteler Deutschland GmbH Business Report FY ended Dec. 2017

Benteler Deutschland GmbH Business Report FY ended Dec. 2017

Factors
1) Net Sales
-The Company’s net sales increased by 5.8% in the fiscal year ended December 31, 2017 to EUR 7,856.1 million. The prior-year revenues of EUR 7,423 million still included EUR 182 million in respect of the strip steel trading business, which was sold to Casper Benteler GmbH on May 31, 2016. All three Divisions of the Benteler Group contributed to the rise in revenues.

2) Automotive Division
-Sales in the Company’s Automotive Division increased by 7.1% in the fiscal year ended December 31, 2017 to EUR 6,296 million. Automotive accounts for 78.4% of Group revenue. Key contributors to the revenue increase were the growth regions of Eastern Europe, particularly as a result of the new module plant at Shenyang in China. The recovery of the Brazilian market and the rise in revenues from the new Italiana module plant for Land Rover is also contributing to the positive revenue trend. The Southern European region is benefiting from rising revenues from Volkswagen at the Palmela (Portugal) and Vigo (Spain) sites. Revenues in the Western European region remain fairly constant. The North America region has recorded a decline in revenue, but this is more than offset by the effects above. In addition to the aforementioned volume rise, a smaller proportion of the revenue increase is due to higher raw material prices.

Awards

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

New Plant

-The Company announced that Benteler Automotive 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 BENTELER Management and local employees. With this new plant in Klasterec, the Company is further strengthening its customer proximity 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 hot-forming of steel parts, blanking, welding and laser-cutting for the key customers 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, increasing to 400 by the end of 2018. (From a press release on April 12, 2018)

-Benteler Automotive opens a new plant in Sao Caetano do Sul, Brazil to focus on module assembly. 65 trained Benteler employees work at this new 8,531 square meter factory. The new plant is able to produce modules on five production lines. The new location is the fifth plant in Brazil in addition to the Mercosur headquarter. It complements the other locations in Camacari, Porto Real, Joinville and Itatiaia. The new location, three kilometers away from the customer, ensures a quick and responsive reaction to customer needs with convenient access to Benteler worldwide facilities and headquarters. (From a press release on July 13, 2017)

Plant Expansion

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

Acquisition of Business by Chassix Inc.

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

-Chassix, Inc. announced that it has signed a definitive agreement to acquire Benteler Automotive Farsund’s lightweight aluminum low pressure automotive casting business. The company’s casting business produces safety critical components, such as sub frames, swing arms, steering knuckles and rear hubs for luxury brand automotive customers. Approximately 275 employees are employed by Benteler Automotive Farsund. Casting is not a core competency and only done at the site in Farsund. When needed, Benteler will source aluminum casting products through cooperation with external partners. (From a press release on October 26, 2017)

Disposal of Shares

-The Company announced that SGL Technologies Composites, a fully owned subsidiary of SGL Carbon, acquires the 50-percent share of Benteler Carbon Composites Beteiligungs in the joint venture Benteler-SGL. Thus, SGL Carbon becomes the sole owner of the company. A corresponding agreement on the sale, which should be completed by the end of 2017, has been signed by the two shareholders. The Benteler-SGL joint venture was founded in 2008. Today, it is considered one of the leading developers and large-scale producers of lightweight composite components (based on fiberglass and carbon fibers) for the automotive industry. In 2016, the joint venture generated sales revenues of around EUR 33 million with a workforce of 221. Its product range includes components such as car roofs, rear spoilers, and leaf springs made from fiber composite materials. Manufacturers such as Audi, BMW, Porsche and Volvo are among its customers. (From a press release on November 8, 2017)

Business Plan

-The Company announced that it is implementing the EU project BOOST 4.0 at the company's plant An der Talle, Paderborn. This project is one of ten pan-European pilot projects for Big Data. To implement this project, Benteler will receive funding from the European Commission to foster the topic of Big Data with a focus on predictive maintenance. Benteler's partner in this project is 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. Benteler is an active and long-standing member of this cluster. (From a press release on March 13, 2018)

New Site

-Benteler Automotive hosted an opening reception for its new engineering, program management and sales office location in Coventry, England. The new location in England is a second location next to the Benteler component plant in Corby which was built in 1996. With this new location and the existing component plant in Corby, Benteler strengthens its existing relationship with Jaguar Land Rover who has been a key customer since the late 1980’s. Benteler also supplies Jaguar Land Rover in Brazil, India and China, as well as continental Europe. Coventry is situated in the West Midlands, near to the city of Birmingham. This location ensures a quick and responsive reaction to customer needs with convenient access to Benteler worldwide facilities and headquarters. By 2019, Benteler expects to employ around twelve employees (FTE) in this location. (From a press release on June 13, 2017)

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

-The Company announced that it is implementing the EU project BOOST 4.0 at the company's plant An der Talle, Paderborn. This project is one of ten pan-European pilot projects for Big Data. To implement this project, Benteler will receive funding from the European Commission to foster the topic of Big Data with a focus on predictive maintenance. Benteler's partner in this project is 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. Benteler is an active and long-standing member of this cluster. (From a press release on March 13, 2018)

-Benteler Automotive announced that it becomes a partner in Plug and Play’s innovation platform STARTUP AUTOBAHN. The core founding members of the STARTUP AUTOBAHN program, alongside US partner Plug and Play Tech Center, are Daimler AG, the University of Stuttgart as well as the research factory Arena2036. Within this innovation and collaboration platform startups develop ideas for future mobility and digitalization. Benteler is now working with the European subsidiary of Plug and Play. (From a press release on July 18, 2017)

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.

-Of the EUR 386 million invested in the Automotive Division in the fiscal year ended December 31, 2017, approximately EUR 289 million was invested in project-specific investments, production facilities, and equipment for the division. The major investment projects in 2017 were in hot-forming lines/presses in Klasterec in Czech Republic, Chongqing (China), Talle (Germany), Gebze (Turkey), Vigo (Spain) and project-specific investments in Norway, USA, Mexico, China, as well as infrastructure for the new Klasterec site in Czech Republic.

Investments

-The Company announced that it will invest a total of EUR 200 million in its locations in Paderborn, Schloss Neuhaus, Lingen, Dinslaken and Bottrop by 2021. This is part of the future concept "Job security Germany”, which intends to ensure the future success of the company's German sites by adapting them to a difficult, ever-changing market environment. For Paderborn plant, Benteler invested into a new high-performance saw for the production of airbag tubes. Starting in 2018, it can increase production to 50 million components per year. In the Schloss Neuhaus plant, BENTELER plan to invest in a new galvanizing system in 2018. This will help the company meet the growing demand in the market, because environment-friendly products are increasingly important in the area of conduit tubes - particularly within the EU. (From a press release on October 25, 2017)