Tomkins Business Report FY2007
Business Highlights
Financial
overview
(1)
Power Transmission
-Power Transmission had another solid year with strong underlying organic growth in most industrial and automotive original equipment and replacement markets. This growth was offset by the weakness in the North American automotive original equipment market.
During 2007, the Company opened a new Power Transmission facility in Chennai, India supplying local customers with belts and tensioners for the industrial and automotive sectors. The Company was awarded record automotive OE programmes of $186 million in 2007, with customers such as Audi, Nissan, Hyundai and Chery. 70% of these programmes were outside of North America. The integration of Stackpole into Gates is progressing well with Stackpole returning to profitability in 2007.
Fluid Power
-Fluid Power produced good results in most of its geographic markets, although the North American business was negatively impacted by the continued weakness in US residential construction. Fluid Power capitalised on the strong growth of many of its end markets including agriculture, oil and gas and mining.
The relocation of manufacturing from the St. Neots facility in the UK to Karvina in the Czech Republic is expected to be completed in early 2008 and will position Fluid Power for improved performance and a stronger competitive position in Europe. In order to support the high-growth hydraulic market in India, the Company increased the manufacturing capacity at its Fluid Power facility in Chandigarh, India and established a manufacturing capacity in China in order to grow our business in Asia.
Fluid Systems
-Fluid Systems had a strong year primarily due to the successful ramp-up of RTPMS at Schrader Electronics. The business had contract wins for its snap-in RTPMS with Mahindra & Mahindra, Mitsubishi and General Motors. The business was also awarded a fuel level-sensing programme from a German OEM. Sales of RTPMS retrofit kits to the aftermarket started to come through in the second quarter of 2007 and the business saw good growth over the balance of the year. During the fourth quarter, Schrader Electronics acquired Swindon Silicon Systems for ￡6.0 million, thereby accelerating Schrader’s product development capability based on ASIC technology with a view to expanding the product offering into new industrial applications.
Other Industrial & Automotive
-Other Industrial & Automotive includes the Dexter Axle, Plews and Ideal businesses. The Gates Fleximak and Gates Winhere water pump businesses, which are also part of this Group and were acquired in 2006, made a
positive contribution in 2007 and demonstrate the successful expansion of the Gates platform into new markets in the year. The Dexter Axle business was impacted by weaker volumes in the manufactured housing and recreational vehicle markets in 2007. The Ideal Clamp business continues to expand its small but growing presence in Europe and China.
Acquisitions
-Schrader Electronics acquired Swindon Silicon Systems, providing it with a technology platform for new applications. Gates Winhere is expanding its manufacturing capacity by constructing a new plant in Yantai, China.
The joint venture united the manufacturing and operational expertise of Winhere with the marketing and sales network capabilities of Gates. Going forward, I&A acquisitions will focus on the industrial space, particularly in rapidly developing regions, such as Eastern Europe and Asia.
Contracts
-In October 2007, Schrader Electronics has announced a major new order for its two pressure monitoring system (TPSM) from one of the India's largest vehicle manufacturers, Mahindre & Mahindra Ltd.
-In October 2007, Stockpole has been selected by Chrysler LLC to supply its variable displacement (variable vane) engine oil pumps for Chrysler’s new family of fuel-efficient V-6 “Phoenix” engines.
-In October 2007, Schrader Electronics has announced a major new order for its tire pressure monitoring systems (TPMS) from Mitsubishi. The order includes the supply of Schrader's new snap-in valve sensor to vehicles manufactured in Normal, Illinois for the North American market, starting in April 2008 through 2011.
-Schrader Electronics has announced a major new order for its tyre pressure monitoring systems (TPMS) from one of the world's largest car manufacturers. The order includes Schrader's new snap-in valve sensor and wireless auto-location technology, which will be fitted to 100% of the customer's vehicle for model years 2009 to 2011 inclusive.
Geographic expansion
-In Eastern Europe, where market growth is double digit, I&A added a sales office in Moscow to respond to increased market demand. Activities in India, the Middle East and South Africa continued to focus on building local presence and developing staff to support growth.
During the year, the Company opened a new Power Transmission manufacturing facility in Chennai, India and expanded hose production in Chandigarh, India. In Suzhou, China, the Company invested for increased capacity at its clamp manufacturing facility. Investment in other geographic regions includes Aachen, Germany; Glade Springs, Virginia; and Springfield, Tennessee.
Divesture
-In July 2007, the Company announces that it has sold its Trico Wipers (Trico) business to affiliates of Kohlberg & Company L.L.C. Headquartered in Rochester Hills, Michigan, Trico manufactures integrated wiper systems for the automotive original equipment market and automotive aftermarket.
| (in million pounds) | FY2007 | FY2006 | Rate of change(%) | Remarks |
| Consolidated Income Statement (selected) | ||||
| Revenue | 2,941.9 | 3,133.8 | (6.1%) |
- |
| Profit from operations | 264.7 | 295.8 | (10.5%) | |
| Industrial & Automotive (I&A) | ||||
| I&A revenue | 2,155.5 | 2,172.8 | (0.8%) |
(1) |
| Profit from operations | 238.2 | 240.7 | (2.5%) | |
(1)
Power Transmission
-Power Transmission had another solid year with strong underlying organic growth in most industrial and automotive original equipment and replacement markets. This growth was offset by the weakness in the North American automotive original equipment market.
During 2007, the Company opened a new Power Transmission facility in Chennai, India supplying local customers with belts and tensioners for the industrial and automotive sectors. The Company was awarded record automotive OE programmes of $186 million in 2007, with customers such as Audi, Nissan, Hyundai and Chery. 70% of these programmes were outside of North America. The integration of Stackpole into Gates is progressing well with Stackpole returning to profitability in 2007.
Fluid Power
-Fluid Power produced good results in most of its geographic markets, although the North American business was negatively impacted by the continued weakness in US residential construction. Fluid Power capitalised on the strong growth of many of its end markets including agriculture, oil and gas and mining.
The relocation of manufacturing from the St. Neots facility in the UK to Karvina in the Czech Republic is expected to be completed in early 2008 and will position Fluid Power for improved performance and a stronger competitive position in Europe. In order to support the high-growth hydraulic market in India, the Company increased the manufacturing capacity at its Fluid Power facility in Chandigarh, India and established a manufacturing capacity in China in order to grow our business in Asia.
Fluid Systems
-Fluid Systems had a strong year primarily due to the successful ramp-up of RTPMS at Schrader Electronics. The business had contract wins for its snap-in RTPMS with Mahindra & Mahindra, Mitsubishi and General Motors. The business was also awarded a fuel level-sensing programme from a German OEM. Sales of RTPMS retrofit kits to the aftermarket started to come through in the second quarter of 2007 and the business saw good growth over the balance of the year. During the fourth quarter, Schrader Electronics acquired Swindon Silicon Systems for ￡6.0 million, thereby accelerating Schrader’s product development capability based on ASIC technology with a view to expanding the product offering into new industrial applications.
Other Industrial & Automotive
-Other Industrial & Automotive includes the Dexter Axle, Plews and Ideal businesses. The Gates Fleximak and Gates Winhere water pump businesses, which are also part of this Group and were acquired in 2006, made a
positive contribution in 2007 and demonstrate the successful expansion of the Gates platform into new markets in the year. The Dexter Axle business was impacted by weaker volumes in the manufactured housing and recreational vehicle markets in 2007. The Ideal Clamp business continues to expand its small but growing presence in Europe and China.
Acquisitions
-Schrader Electronics acquired Swindon Silicon Systems, providing it with a technology platform for new applications. Gates Winhere is expanding its manufacturing capacity by constructing a new plant in Yantai, China.
The joint venture united the manufacturing and operational expertise of Winhere with the marketing and sales network capabilities of Gates. Going forward, I&A acquisitions will focus on the industrial space, particularly in rapidly developing regions, such as Eastern Europe and Asia.
Contracts
-In October 2007, Schrader Electronics has announced a major new order for its two pressure monitoring system (TPSM) from one of the India's largest vehicle manufacturers, Mahindre & Mahindra Ltd.
-In October 2007, Stockpole has been selected by Chrysler LLC to supply its variable displacement (variable vane) engine oil pumps for Chrysler’s new family of fuel-efficient V-6 “Phoenix” engines.
-In October 2007, Schrader Electronics has announced a major new order for its tire pressure monitoring systems (TPMS) from Mitsubishi. The order includes the supply of Schrader's new snap-in valve sensor to vehicles manufactured in Normal, Illinois for the North American market, starting in April 2008 through 2011.
-Schrader Electronics has announced a major new order for its tyre pressure monitoring systems (TPMS) from one of the world's largest car manufacturers. The order includes Schrader's new snap-in valve sensor and wireless auto-location technology, which will be fitted to 100% of the customer's vehicle for model years 2009 to 2011 inclusive.
Geographic expansion
-In Eastern Europe, where market growth is double digit, I&A added a sales office in Moscow to respond to increased market demand. Activities in India, the Middle East and South Africa continued to focus on building local presence and developing staff to support growth.
During the year, the Company opened a new Power Transmission manufacturing facility in Chennai, India and expanded hose production in Chandigarh, India. In Suzhou, China, the Company invested for increased capacity at its clamp manufacturing facility. Investment in other geographic regions includes Aachen, Germany; Glade Springs, Virginia; and Springfield, Tennessee.
Divesture
-In July 2007, the Company announces that it has sold its Trico Wipers (Trico) business to affiliates of Kohlberg & Company L.L.C. Headquartered in Rochester Hills, Michigan, Trico manufactures integrated wiper systems for the automotive original equipment market and automotive aftermarket.
R&D
The Group's expenditure
on research and development
New Product development
-Schrader Electronics pioneered new fuel sensing technology, which detects fuel level and type, and signed its first contract with a major German OEM. Opportunities for growth will continue, especially as alternative fuel use increases.
-Fluid Power engineers continued to drive innovation through hose connector interface technology that provides customers with added product safety, reliability and core product enhancements such as the new Xtreme(TM) Heat hose. New operations in India are well positioned to manufacture belt and tensioner products as well as hoses for local markets.
| (in million pounds) | 2007 | 2006 | 2005 |
|
Total |
49.4 | 46.8 | 46.7 |
New Product development
-Schrader Electronics pioneered new fuel sensing technology, which detects fuel level and type, and signed its first contract with a major German OEM. Opportunities for growth will continue, especially as alternative fuel use increases.
-Fluid Power engineers continued to drive innovation through hose connector interface technology that provides customers with added product safety, reliability and core product enhancements such as the new Xtreme(TM) Heat hose. New operations in India are well positioned to manufacture belt and tensioner products as well as hoses for local markets.