GRUPO KUO, S.A.B. de C.V. (Formerly DESC, SA. De CV) Business Report FY2011

Business Highlights

Financial Overview

(in million USD)

	FY2011	FY2010	Rate of Change (%)	Factors
Overall
Net Sales	2,157	1,784	20.9	-
EBITDA	183	159	15.1	-
Automotive
Net Sales	325	313	3.8	1)
EBITDA	35	35	0	2）

Factors
1)
-Sales in dollars by KUO Automotive were 325 million US dollars in 2011, an increase of 4% over the 313 million US dollars reported in 2010. This was the product of higher sales in the domestic and export markets in the Aftermarket SBU, due to an increased market share, the signing of new clients and integration of new applications; as well as a rise in sales of auto components and spare parts by the Power Systems SBU.

2)

-For 2011, the result after general expenses in dollar terms was 20 million US dollars, 5% higher than the 2010 figure, and EBITDA was unchanged from its year-earlier level. This was due to a rise in sales volume and satisfactory expense controls, which offset an 11% rise in the price of steel.

Acquisitions

-In Jan. 2012, Grupo KUO, S.A.B. de C.V., by its subsidiary Transmisiones y Equipos Mecanicos, S.A. de C.V., acquired the assets of Hoerbiger Drivetrain Mechatronics B.V.B.A. in Loppem, Belgium. Hoerbiger Drivetrain Mechatronics develops mechatronics and software for dual-clutch transmissions. In 2010, the acquired business recorded sales of approximately 17 million USD. Its circle of customers includes transmission manufacturers in Europe. (From a press release on January 12, 2012)

Joint Ventures

-In Sept. 2011, the Company announced an agreement to form a 50/50 joint venture with the Chinese company Jiangsu GPRO Group Co. Ltd. (GPRO). This agreement stipulates that Grupo KUO and GPRO will establish a company named INSA GPRO (Nanjing) Synthetic Rubber Co. Ltd. and will jointly invest 60 million USD in a new nitrile rubber (NBR) plant located in Nanjing, Jiangsu Province, China, with an initial production capacity of 30,000 metric tons per year in its first phase. The Nanjing plant will create 100 direct jobs and is expected to begin operations by the beginning of 2014. NBR is used in a wide array of industries such as tire, industrial rubber goods, adhesives and sealants. Grupo KUO's wholly owned subsidiary, INSA (Industrias Negromex, S.A. de C.V.) already sells NBR to China. (From a press release on September 22, 2011)