Beru AG Business Report FY2006

Business Highlights

Financial overview
By segment
Growth driver Electronics and Sensor Technology
The Electronics and Sensor Technology division achieved the Company's strongest growth rate of 31.6% with sales revenues of EUR 135.8 million (EUR 103.2 million).
This was primarily a result of revenues from sales of tire-pressure monitoring systems, which more than doubled from EUR 21.9 million to EUR 46.5 million and stronger demand for PTC auxiliary heating systems, which increased sales revenues of EUR 31.5 million from EUR 29.5 million.

Tough market for its core division
The Company's Diesel Cold-Start Technology division decreased its sales revenue by 6.6% to EUR 181.2 million in 2006 (EUR 194.0 million). Production cuts by some automobile manufacturers led to lower unit sales in the Original Equipment segment; on the other hand, this development was partially due to high pressure on prices from customers.
The Company anticipates a tough competitive situation for these products in the years 2007 and 2008, with a resulting impact on revenues and earnings. As of 2009, the global diesel trend and the production startup of new products are expected stimulate rising sales revenues once again.

Higher sales revenue in the Ignition Technology division.
Its Ignition Technology division achieved an increase in sales revenues of 8.2% to EUR 122.0 million (EUR 112.7 million). This was due in particular to higher revenues from sales of ignition coils. In addition, the supply of the new compact 12-millimeter spark plug for series production started successfully. The French subsidiary, BERU Eyquem, developed positively; its sales revenues increased by approximately 11% compared with the twelve-month period of the prior year.

High operating-profit margin
In 2006, the Company achieved an operating profit (EBIT) of EUR 53.5 million. In relation to sales revenues, this represents an EBIT margin of 12.2%. However, various special effects had a net negative impact of EUR 1.0 million on earnings in 2006 (due to impairments, pension-plan changes, altered conditions for pre-retirement part-time work and restructuring in the production of spark plugs).

In June 2006, the Company announced that it is developing and producing platinum spark plugs using innovative bi-hex technology for the compact four-cylinder gasoline engine of the new Peugeot 207 and 307. They are manufactured at BERU TDA in the French town of Chazelles sur Lyon. For the production of the new platinum spark plugs, several new machines have also been brought into operation there.

-In November 2006, the Company announced that BMW would be fitting its US export models with its second-generation Tire Safety System (TSS) with trigger transmitter.

Furthermore, Audi, Bentley, Bugatti, DaimlerChrysler, Ferrari, Maserati, Porsche, Ssang Yong and Volkswagen offer TSS as original equipment. And joint venture partner Lear in the United States, the Company supplies Ford and Hyundai with TSS for the North American market.
Automobile manufacturers such as Audi, Ford, Hyundai, Kia, Mazda, Seat, Skoda, Volvo and VW are also customers for the Company's PTC aixiliaty heating systems (Positive Temparature Coefficient).
The Company also succeeded in expanding it deliveries of ignition-technology components to car markets, particularly to Renault in France.
With the supply of diesel cold-start components as original equipment, the Company did not further expand its market share, but succeeded in maintaining its leading position.


R&D Expenditure

(in EUR thousand) Dec. 2006
Dec. 2005
(9 months)
March 2005 March 2004
R&D Expenditure 33.5 24.8 30.1 27.6

R&D Structure
-The Company employs more than 220 people at its research and development facilities in Germany.
-The Company registered 29 number of patents in 2006 (16 in 2005).

R&D center

-The expansion of the research and development center in Ludwigsburg was continued in 2006, with completion planned for the spring of 2007. The main element of this expansion is a cooling chamber with a double-axle roller-type test stand, which complements the existing cooling units, the EMC (electro-magnetic compatibility) measuring room and the engine test benches.
-In May 2007, the Company implemented an official inauguration of the extended research and development center (RDC) in Ludwigsburg.

Product Developments in 2006
Diesel Cold Start Technology:
-The BERU PSG(Intelligent Pressure Sensor Glowplug) is currently being tested by all renowned producers of diesel engines and will go into series production with two of its customers at the end of 2007. Starting in 2008, the Company will also offer the PSG with a ceramic heating element.

-The development of new glow plugs with ceramic heating elements made good progress in 2006 and is nearly completed. The product is now in the industrialization phase, with market launch planned for the middle of 2009.

Ignition Technology:
-In the field of ignition coils, single-cylinder coils in the form of so-called pencil coils and plug top coils are being increasingly used. For the future, the Company is working on the development of high-frequency ignition systems, which appear to be particularly suitable for gasoline engines with direct fuel injection

Electronics and Sensor Components
-In 2006, the Company's development activities in the field of tire-pressure monitoring systems (Tire Safety System or TSS) focused on integrating this product into the vehicle models exported to the United States by several major German manufacturers. The current technological development of these components aims to eliminate the need for batteries, which will extend the currently limited lifetime of tire-pressure monitoring systems.

-Second-generation PTC auxiliary heaters are 30% lighter than their predecessors, require 66% less installation depth, and are significantly less expensive to produce.

-In 2006, the Company further developed its high-temperature sensor (HTS).
The HTS is used in exhaust-gas recirculation systems and to monitor diesel particulate filters and deNOx catalysts. A cost-optimized version is now undergoing tests with customers.

-In the field of position sensors, the Company has received an order for a turbocharger regulator. This sensor is needed on modern VTG (variable turbine geometry) turbochargers because the increased demands placed on exhaust emissions require more exact controls.

Investment Activities

Investment Dec. 2006
Dec. 2005
(9 month)
March 2005 March 2004
Investment in property, plant and equipment 24.1 24.8 34.9 35.6