Eaton Corporation plc Business Report FY ended Dec. 2016

Financial Overview

(in million USD)
FY ended Dec. 31, 2016 FY ended Dec. 31, 2015 Rate of
change (%)
Net Sales 19,747 20,855 (5.3) 1)
Operating Profit 2,958 3,133 (5.6) -
Vehicle segment
Sales 3,153 3,682 (14.4) 2)
Operating Profit 474 645 (26.5) 3)

1) Net Sales
-In the fiscal year ended December 31, 2016, the Company’s net sales decreased by 5.3% to USD 19,747 million. Organic sales decreased by approximately 4% during the fiscal year, while negative currency translation effects caused a decrease in sales of 1%. The decrease in organic sales was primarily because of weakening demand in the Company’s end markets.

2) Vehicle segment sales
-Sales in the Vehicle segment for the fiscal year ended December 31, 2016 totaled USD 3,153 million, a decrease of 14.4%. The segment’s organic sales decreased by approximately 13%, with the remaining losses caused from the impact of negative currency translation effects. The main contributing factor towards the decrease in organic sales was weakness in the North American Class 8 truck market.

3) Vehicle segment operating profit
-The operating profit for the Company’s Vehicle segment was USD 474 million in the fiscal year ended December 31, 2016, a decrease of 26.5%. Lower sales volumes and an unfavorable product mix contributed to the decrease in operating profit, which was partially offset by cost control and restructuring measures.

Recent Developments

-The Company and Cummins, Inc. announced new features to their lineup of integrated powertrain offerings for the commercial trucking industry that will provide customers with additional downspeeding options. The introduction of downspeeding has improved efficiency by 7.5% with the current powertrain package. Starting in April, new options will include a 1,850 lb-ft torque rating for the Cummins ISX15 diesel engine that can be specified with an Eaton Fuller Advantage C-Ratio 10-speed transmission, an Eaton UltraShift PLUS MHP 13-speed transmission, or an UltraShift PLUS MXP 18-speed transmission. (From a press release on February 28, 2016)


-The Company announced that it is supplying its electronic-locking differentials for the new Chevrolet Colorado ZR2 mid-size truck. The differentials are applied to both the front and rear axles to improve off-road performance. The Company also supplies the automatic rear locking differential available on other Colorado models, as well as Chevrolet’s Silverado, Tahoe, and Suburban. (From a press release on December 15, 2016)


-The Company expects that its organic growth for the fiscal year ending December 31, 2017 will remain flat compared to the previous year.

R&D Expenditures

(in million USD)
FY ended Dec. 31, 2016 FY ended Dec. 31, 2015 FY ended Dec. 31, 2014
Overall 589 625 647

-Over the last five years, the Company has invested approximately USD 2.9 billion in research and development.

R&D Facilities

-The Company has engineering, research and development centers dedicated to the automotive industry located in Marshall, Michigan, U.S.; Turin, Italy; Baden-Baden, Germany; Pune, India; and Shanghai, China.

-The Company announced its decision to establish a global innovation center in India over a 390,000-square-foot facility at Magarpatta City in Pune. The establishment of the new Eaton India Innovation Center (EIIC) is a strategic program that is focused on enhancing organizational capabilities by leveraging high-end engineering talent and best-in-class infrastructure. The establishment of the EIIC will create a vertically integrated engineering organization that will deliver complete product design lifecycle management solutions for the Company’s global businesses. The EIIC’s incubation center is operational as of April 2016. (From a press release on April 6, 2016)

Product Development

TVS R2650 supercharger
-On November 1, the Company announced the expansion of its TVS Supercharger platform to include the TVS R2650, the largest supercharger rotating group ever produced by the Company. It has several new features designed to maximize efficiency and performance at the upper RPM range of engines. The new, optimized higher twist, 4-lobe rotor design is 15% larger (2650 cc versus 2300 cc) than its predecessor, the TVS R2300, and provides 25% more air flow. The R2650 features 170-degree twist lobes which shorten the rotor lead to help maintain peak efficiency, an optimized length-to-diameter ratio that improves sealing, thicker timing gears that enhance durability, and pressure relief ports that reduce input power requirements. “The all-new TVS R2650 is the ultimate, large displacement supercharger providing refined power and performance with unrivaled levels of durability,” said Brian Contat, product director, Boosting. (From press release on November 1, 2016)

Electric vehicle fuses
-The Company announced the release of its new Bussmann series electric vehicle (EV) fuses designed to provide superior circuit protection. The new compact and lightweight series EV fuse design requires up to 48% less space and weighs up to 50% less compared with traditional high speed fuses used for electric vehicles. (From a press release on August 30, 2016)

Electronically controlled limited slip differential
-The Company announced that it will launch its new electronically controlled limited slip differential (eLSD) in 2017. The eLSD is approximately 36 kilograms lighter than conventional LSD systems. The eLSD will be equipped on 2018 model year vehicles from U.S. automakers launched in North America. The system can be installed in the wheel house, eliminating the need for the propeller shaft tunnel. The eLSD is able to maintain performance across a wide temperature range and is compatible with the existing vehicle safety systems. Traction levels can be set and adjusted by the driver. (From an article in the Nikkan Jidosha Shimbun on August 1, 2016)

Capital Expenditure

(in million USD)
FY ended Dec. 31, 2016 FY ended Dec. 31, 2015 FY ended Dec. 31, 2014
Overall 497 506 632
-Vehicle 142 119 160

-The Company expects to invest approximately USD 525 million in capital expenditures in the fiscal year ended December 31, 2017.