J. Eberspaecher Business Report FY2007
Business Highlights
Financial
overview
Factor
(1)
-With regard to Exhaust Technology, the Company generated sales of EUR 1,914 million, which equals an increase of 13 % in comparison to the prior year. Seen in terms of regions, the production facilities in South Africa and the USA, in addition to those in Germany, once again made the biggest contribution to the increase in sales. The takeover as of August 1, 2007 of Eberspaecher Unna GmbH & Co. KG, Unna (formerly: PUREM Abgassysteme GmbH & Co. KG) constituted a major factor in the increase in sales.
-Net sales increased by the disproportionately higher rate of 15 % in comparison to the prior year which can be attributed to a change in the product mix. The Company was able to compensate for part of the decline in sales of
discontinued car models with major new product launches by its key accounts. Furthermore, 2007 was the first whole year of production for important series. It also reports sales growth in the area of commercial vehicles. This growth results from the positive economic environment (unit sales effect) in Germany and abroad and from starting up the production of systems for the after-treatment of exhaust gas to comply with EURO 4 and EURO 5.
-The upcoming start of series production of a number of new vehicles permit the Company to look forward to a satisfactory order book. Its market prospects over the next few years are very favorable thanks to additional follow-up and new orders. The Company succeeded in improving its position in an international comparison and anticipate sales growth beyond the year 2007.
(2)
-Sales in the Vehicle Heating Division amounted to EUR 336.6 million in 2007, i.e. up 3 % on the prior year. However, the domestic OEM vehicle business and the trading business reported slight declines in sales. The decline in the number of new vehicle registrations made an impact on the domestic trading business. This was, however, offset by other market segments such as specialty vehicle and marine areas.
-In Europe and Asia, the Company succeeded in reinforcing its strong position with major passenger vehicle customers. The foreign trading and the commercial vehicle business developed in a particularly positive way. In the foreign trading business, the eastern European and Asian markets revealed exceedingly positive growth in the course of business. In the commercial vehicle business, the Company was benefiting from the very stable economic situation in Europe. It blames the exceptionally weak sales situation in North America on consumer reticence as a consequence of the exhaust emission regulations valid from 2007 (EPA 07). The resulting much more complex technology has led to a noticeable increase in the price of low-emission vehicles. Nevertheless, the Company also expects North American demand to slowly pick up again in the near future. The Company succeeded in further reinforcing and expanding its position in the passenger vehicle and commercial vehicle business by concluding long-term contracts and acquiring new orders.
Acquisitions
-In November 2007, the Company acquired Purem GmbH & Co. KG, a wholly owned subsidiary of Daimler based in Unna, Germany. Purem, a specialist in medium-and heavy-duty truck exhaust after-treatment systems and an exhaust-systems integrator, has 135 employees and reported sales of $100 million in 2006. Financial details of the transaction were not released. Bernd Hofmann, formerly general manager of Purem, will head Eberspaecher's Commercial Vehicle business unit focused on the development of advanced exhaust system technology for the medium-and heavy-duty truck, construction-equipment and commercial-vehicle industries. Hofmann also will serve as general manager of the new Eberspaecher subsidiary in Unna. (From a press release on Nov. 19, 2007)
-Effective as of January 1, 2008, the Company increased its shareholding in catem Holding GmbH & Co. KG, Herxhein from 50 % to 100 %. This step enables us to fully integrate the catem Group, a joint venture, into the Group. catem GmbH & Co. KG is considered all over the world to be the market leader for electric auxiliary heaters, millions of which are installed in diesel passenger vehicles each year and increasingly in gasoline and hybrid vehicles. The Company intends to employ the subsidiary catem DEVELEC GmbH & Co. KG to significantly reinforce its commitment to the market of the future constituted by power electronics and to link in and expand these operations with other related activities within the Group.
| (in million EUR) | FY2007 | FY2006 | Rate of change(%) | Factors |
| Sales | 2,250.4 |
2,023.3 |
11.2 | - |
| Profit before tax | 63.1 | 29.7 | 112.5 | |
| Sales by Division | ||||
| Exhaust Systems Division | 1,913.8 | 1,695.5 | 12.9 | (1) |
| Vehicle Heaters Division | 336.6 | 327.8 | 2.7 | (2) |
Factor
(1)
-With regard to Exhaust Technology, the Company generated sales of EUR 1,914 million, which equals an increase of 13 % in comparison to the prior year. Seen in terms of regions, the production facilities in South Africa and the USA, in addition to those in Germany, once again made the biggest contribution to the increase in sales. The takeover as of August 1, 2007 of Eberspaecher Unna GmbH & Co. KG, Unna (formerly: PUREM Abgassysteme GmbH & Co. KG) constituted a major factor in the increase in sales.
-Net sales increased by the disproportionately higher rate of 15 % in comparison to the prior year which can be attributed to a change in the product mix. The Company was able to compensate for part of the decline in sales of
discontinued car models with major new product launches by its key accounts. Furthermore, 2007 was the first whole year of production for important series. It also reports sales growth in the area of commercial vehicles. This growth results from the positive economic environment (unit sales effect) in Germany and abroad and from starting up the production of systems for the after-treatment of exhaust gas to comply with EURO 4 and EURO 5.
-The upcoming start of series production of a number of new vehicles permit the Company to look forward to a satisfactory order book. Its market prospects over the next few years are very favorable thanks to additional follow-up and new orders. The Company succeeded in improving its position in an international comparison and anticipate sales growth beyond the year 2007.
(2)
-Sales in the Vehicle Heating Division amounted to EUR 336.6 million in 2007, i.e. up 3 % on the prior year. However, the domestic OEM vehicle business and the trading business reported slight declines in sales. The decline in the number of new vehicle registrations made an impact on the domestic trading business. This was, however, offset by other market segments such as specialty vehicle and marine areas.
-In Europe and Asia, the Company succeeded in reinforcing its strong position with major passenger vehicle customers. The foreign trading and the commercial vehicle business developed in a particularly positive way. In the foreign trading business, the eastern European and Asian markets revealed exceedingly positive growth in the course of business. In the commercial vehicle business, the Company was benefiting from the very stable economic situation in Europe. It blames the exceptionally weak sales situation in North America on consumer reticence as a consequence of the exhaust emission regulations valid from 2007 (EPA 07). The resulting much more complex technology has led to a noticeable increase in the price of low-emission vehicles. Nevertheless, the Company also expects North American demand to slowly pick up again in the near future. The Company succeeded in further reinforcing and expanding its position in the passenger vehicle and commercial vehicle business by concluding long-term contracts and acquiring new orders.
Acquisitions
-In November 2007, the Company acquired Purem GmbH & Co. KG, a wholly owned subsidiary of Daimler based in Unna, Germany. Purem, a specialist in medium-and heavy-duty truck exhaust after-treatment systems and an exhaust-systems integrator, has 135 employees and reported sales of $100 million in 2006. Financial details of the transaction were not released. Bernd Hofmann, formerly general manager of Purem, will head Eberspaecher's Commercial Vehicle business unit focused on the development of advanced exhaust system technology for the medium-and heavy-duty truck, construction-equipment and commercial-vehicle industries. Hofmann also will serve as general manager of the new Eberspaecher subsidiary in Unna. (From a press release on Nov. 19, 2007)
-Effective as of January 1, 2008, the Company increased its shareholding in catem Holding GmbH & Co. KG, Herxhein from 50 % to 100 %. This step enables us to fully integrate the catem Group, a joint venture, into the Group. catem GmbH & Co. KG is considered all over the world to be the market leader for electric auxiliary heaters, millions of which are installed in diesel passenger vehicles each year and increasingly in gasoline and hybrid vehicles. The Company intends to employ the subsidiary catem DEVELEC GmbH & Co. KG to significantly reinforce its commitment to the market of the future constituted by power electronics and to link in and expand these operations with other related activities within the Group.
R&D
R&D Expenditure
| (in million EUR) | FY2007 | FY2006 | FY2005 |
| R&D expenditure | 70.2 | 63.5 | 66.4 |
| % of Sales | 3.1% | 3.1% | 4.1% |
R&D structure
R&D centers: Esslingen and Detroit
R&D Office: France, Italy, UK, and Brazil
Activities by division
Exhaust Technology Division
-In the Exhaust Technology Division, research and development concentrated, among other things, on new mixers to improve urea processing. Other projects include combined DPF (diesel particulate filter)/SCR (selective catalytic reduction) systems for application in passenger vehicles and in the commercial vehicle segment in preparation for the future emission standards EPA 10 and EURO 6. Other projects included the refinement of the Company's ActiveSilence System and the fuel processor.
The acquisition of Eberspaecher Unna GmbH & Co. KG puts the Company into a position to cover the entire range of exhaust gas after-treatment products:
from dosing urea in the SCR catalytic converters, through thermal management to acoustics.
Vehicle Heaters Division
-With regard to parking heater systems, a newly developed 5 kW water heater has gone into serial production of a premium car manufacturer. The Hydronic II family of products fulfils the short start-up times demanded specifically by premium OEMs of under 25 seconds and satisfies the requirements of flexible fuel systems. This is made possible by an innovative burner concept involving a heated evaporator. The manufacturers’ system requirements are constantly on the increase. One example of this is the integration of the parking heating system into the electronics architecture of the whole vehicle. In this respect, integrating the control unit suppliers into the overall project structure has successfully proven itself.
-The current research projects in the Vehicle Heating Division are primarily built on the core competency of the Company's development department: developing combustion processes for compact burners with an output of 0.8 to 40 kW. The Company's close cooperation with institutes and research facilities has proven to be very successful in this area. Successes include not only the development of a reformer and residual gas burner for a fuel cell (APU) but also the development of a combustion process for the “smallest oil heater in the world” for use in residential buildings, for example.
Investment Activities
| (in million EUR) | FY2007 | FY2006 | FY2005 |
| Investments | 47.3 | 58.5 | 61.3 |
| Depreciation | 47.2 | 41.5 | 39.7 |