ElringKlinger AG Business Report FY2011

Business Highlights

Financial Overview

(in million euros)
  FY2011 FY2010 Rate of Change (%) Factors
Sales 1,032.8 795.7 29.8 1)
EBITDA 245.5 188.9 30.0 -
OE Segment
Sales 827.2 606.9 36.3 2)

1) Overall
-Sales in 2011 increased by 29.8% year-on-year to 1,032.8 million euro, which is the highest in its history, due to the buoyant demand for cars in the majority around the globe, with several new product roll outs in the Original Equipment segment as well as the acquisitions.

2) OE Segment
-All divisions within the Original Equipment segment managed to increase their sales revenue in 2011. The Company benefited from the growing trend towards downsizing concepts applied by the majority of vehicle manufacturers within the field of engine development.

<By divisions>
-Cylinder-head Gaskets: The Division captured additional market share with projects that focus on the new generation of downsized, direct-injection petrol engines.

-Specialty Gaskets: The Division recorded the highest growth rate in the period under review. This area benefited in particular from growing customer demand for highly heat-resistant gaskets for turbocharger and exhaust system applications. Unit volumes were also increased significantly with regard to V-rings for turbochargers as well as control plates for the latest generation of automatic transmissions.

-Shielding Technology: The division also recorded double-digit growth in 2011. Engine downsizing and turbocharging translated into a continued rise in customer demand for thermal shielding parts and all embracing thermal-acoustic solutions.


Hummel-Formen GmbH
-On September 10, 2011, the Company concluded a purchase agreement for the purpose of acquiring a 90% interest in Hummel-Formen GmbH, Lenningen, Germany, a manufacturer of injection molding tools used in plastics processing. In acquiring a majority interest, the Company has reinforced its expertise with regard to tooling technology and expanded its knowledge in the field of lightweight engineering on the basis of plastics, particularly in terms of incorporating fiber reinforced composites. The replacement of heavy metal parts with lightweight plastics is currently considered one of the key trends within the automotive industry when it comes to reducing fuel consumption and CO2 emissions. This acquisition offers considerable opportunities for growth.

Hug Group
-The Company announced that its acquisition of a 66.7% interest in the Hug Group, a Swiss exhaust treatment system manufacturer, was closed on May 11. 2011. The Hug Group expects to generate sales revenue of approx. 46 million euros in its current financial year. (From a press release on May 12, 2011)

-The Company announced that it will acquire a 66.7 percent interest in Hug Engineering AG of Switzerland. Hug Engineering develops and manufactures exhaust gas purification systems. Hug diesel particulate filter systems will be combined with the ElringKlinger CleanCoat coating material for soot reduction and will be used within the commercial vehicle sector. The agreement is expected to be closed by the second half of 2011. (From a press release on April 6, 2011)

OEM gaskets business from Freudenberg Group
-The Freudenberg Group announced that it has handed over its OEM cylinder head and exhaust gasket business to the Company with effect from January 1, 2011. These products are produced in three European countries: Eurasburg and Geretsried-Gelting (Germany), Chamboret and Nantiat (France), and Settimo (Italy). (From a press release on January 5, 2011)


-The Company announced that it has sold the Ludwigsburg industrial park in Germany. The Group generates a cash inflow of 34 million euros from the sale. Proceeds from the sale of the industrial park will be deployed to finance the Group's continued growth around its core expertise in CO2 reduction and exhaust-emissions technology, and to support the further expansion of its E-Mobility division. (From a press release on August 31, 2011)


-Against the backdrop of rising demand for cell contact systems used in lithium-ion batteries and components for fuel cell units, the Company established the E-Mobility Division back in 2010 and expanded this area of the business significantly over the course of 2011. In short succession, the Company secured both development and series production contracts from customers. This Division is considered the incubator for growth within the Company in the area of hybrid and pure electric vehicles. Although production output of pure electric vehicles is likely to be restricted to smaller volumes in the coming 15 to 20 years, the Company will be in a position to benefit from the growing trend towards hybrid solutions. The classic products aimed at more efficient downsized combustion engines together with the new solutions for hybridization offer considerable opportunities for growth.


R&D Expenditure

(in million euros)
  FY2011 FY2010 FY2009
Overall 49.9 40.6 35.7

R&D Structure

-In 2011, R&D activities focused on two drive concepts: 1) the optimization of the combustion engine through downsizing and lightweight construction techniques and 2) e-mobility.

-As of Dec. 31, 2011, the number of people employed in the Company's R&D-related departments rose to 416 (2010: 316).

-To safeguard its development know-how and key process advantages, the Company has concentrated the Group's R&D activities at the sites of headquarters in Germany, ElringKlinger Abschirmtechnik AG and Hug Engineering AG (both in Switzerland). In 2011, the Centers of Excellence established at these locations provided most of the development services required by the entire Group.

-The site in Gelting, Germany, was integrated into the headquarters, Dettingen/Erms. Its focus is on the development and production of mica and graphite seals/gaskets used in the exhaust system.

-The Company began to expand its local capacities close to its markets for applications technology in North America, China and Japan.

R&D Activities

-In addition to developing several new applications for existing technologies and production methods within its core business, the Company focused on significantly expanding its activities in the new E-Mobility division in 2011. Around 60 engineers and technicians are currently working on customer projects within this division. While this area has incurred significant costs, as well as requiring other inputs, it has not yet made any significant revenue contributions. The second half of 2011 saw the ramp-up of the first industrial-scale machinery for the series production of cell contact systems required for lithium-ion batteries, which are used in all-electric vehicles and particularly in hybrids.

Investment Activities

Capital Expenditure

(in million euros)
  FY2011 FY2010 FY2009
Overall 121.6 134.3 95.6
OE Segment 105.9 123.5 83.1

-In 2011, the focus in investments was on expanding facilities worldwide, procuring new, state-of-the-art machinery and systems, as well as implementing automation and streamlining measures. From a regional perspective, the emphasis was on the growth markets of Asia, particularly China.

Investment in Germany

-The Company established a fully automated high-performance plant for plastic housing modules at the Company's headquarters in Dettingen/Erms. A total amount of around 24 million euro is being invested in the site that encompasses approx. 20,000 m2 in production space and 3,000 m2 in office space. Operations at the new plant commenced in January 2012. Full completion of the facility is scheduled for June 2012.

Investment Outside Germany

-The Company opened a new factory in Changchun in the first quarter of 2011, thus doubling its previously available production space to around 15,000 m2.

-Worked aimed at expanding the production area by an additional 5,000 m2 commenced at the Company's second Chinese production facility in Suzhou.