Knorr-Bremse AG Business report FY2007
Business Highlights
Financial overview
In million euros | FY2007 | FY2006 | Rate of change(%) | Factors |
Sales | 3,250.6 | 3,120.6 | 4.2 | - |
Net Income | 197.8 | 185.5 | 6.6 | |
Sales result for Commercial Vehicle Systems | 1,966.4 | 1,967.8 | (0.1) | See note (1). |
Note (1)
Europe
The Company's European companies succeeded in boosting sales by 120%,
largely compensating for the decline in the USA.
NORTH AMERICA
As expected, the introduction of stricter exhaust emission standards in
the USA on January 1, 2007 caused a sharp decline of about 400% in commercial
vehicle production. Many logistics companies had stocked up on vehicles
immediately prior to this date in a bid to avoid additional costs. Bendix
was well prepared for this development and adjusted its capacity accordingly,
but the company's sales nevertheless declined by almost 30%.
The US truck market is expected to recover over the next few years.
SOUTH AMERICA
A significant rise in South American vehicle production (28%) was driven
mainly by higher demand from the agricultural sector and stronger exports.
The Company increased sales in the region by some36%.
ASIA/AUSTRALIA
India and China continued to invest considerable sums in expanding their
road networks. The high demand for commercial vehicles is currently largely
being met by local manufacturers, who are also aiming to increase their
export volumes in the medium term. The greater focus of original equipment
manufacturers on export markets has brought with it a heightened awareness
of quality issues. For the Company, this trend has been particularly noticeable
in the compressor segment: During 2007 an order for 100,000 compressors
was received from Dongfeng/Cummins.
Buoyant sales in the region (+25%) were driven above all by Japan, India
and China. In China, the Company considerably expanded its business in
Shanghai and Dalian, and in Japan, production at the Sakado plant, which
opened in 2006, continued to rise.
Access to the Russian market
Acquisition
Early in 2007, Hasse & Wrede took over STE SchwingungsTechnik GmbH,
the world's third-largest manufacturer of visco-dampers. Acquisition of
this company, which is based in Klieken, near Berlin, boosted Hasse &
Wrede's 2007 sales volume by some 25%. The move is highly significant
for access to the Russian market, as STE is the sole supplier of visco-dampers
to KAMAZ, Russia's biggest truck manufacturer.
Joint venture
In December 2007, the Company and KAMAZ, the biggest truck manufacturer
in the CIS states, signed an agreement setting up a joint-venture for
the manufacture of complete truck braking systems in the Russian market.
Under the terms of the agreement, KAMAZ will incorporate its existing
drum brake production into the new company, and the Company will set up
a production facility for disc brakes, torsional vibration dampers and
other components on the KAMAZ site. Both partners will hold a 50% share
in the joint-venture, with the Company responsible for industrial management.
The new joint venture will exclusively equip all KAMAZ trucks but will
also supply other commercial vehicle manufacturers in Russia and neighboring
countries. By the end of 2007 KAMAZ will have produced a total of 55,000
heavy trucks, especially three-axle vehicles. (From a press release on
Dec. 5)
GLOBAL SOURCING ESTABLISHED IN ASIA
The Company has set up a global sourcing team for China, Taiwan, Vietnam,
Korea and Thailand that greatly expanded its activities in 2007. Part
of the team is based in Shanghai, with responsibility for exports, and
the other part in Dalian, where it focuses on purchasing for local production.
A similar team already exists in India.
R&D
Euro in million | 2007 | 2006 | 2005 | 2004 | 2003 |
R & D overall expenditure | 159 | 141 | 133 | 124 | 120 |
Expanded development center at Budapest
In this favorable environment, the existing development center at Budapest
is being expanded to enable a consistent focus on preparing new truck
Platforms for series production. Staffing in Budapest is being boosted
by almost 100 new engineers, and the resources already available for developing
electronic systems are to be supplemented with additional capacity for
design.
The main customers of the development center will remain the Electronic
Systems and Air Supply and Treatment CoCs.
Product developments
Second generation of EAC electronic air treatment system
Commercial vehicles use oil-lubricated compressors for their air supply.
This means that in addition to moisture, the air also contains oil residues.
In 2007, a system for cooling the cylinder casing was introduced that
reduces this environmental pollution to less than one-fifth of the customary
level.
The second generation of EAC electronic air treatment system also uses
intelligent compressor control and regeneration to achieve greater energy
savings.
New model of rear axle disc brake
The new model of rear axle disc brake-the SN7-25-is considerably lighter
than its predecessor, saving fuel and increasing the truck's potential
payload. The amount of material and energy required to manufacture the
spheroidal graphite castings has been reduced by some 1096, and further
savings in weight and materials are currently in the pipeline.
New solution for emissions legislation
Knorr-Bremse Japan has developed a solution for regenerating diesel particulate
filters and reducing emissions. This takes the form of a special valve
that holds back the exhaust gases, thereby ensuring that the right temperature
for soot combustion is reached.
Suitable for both passenger cars and commercial vehicles, this technological
solution has considerable market potential and has already made a breakthrough
in Japan, where emissions legislation is particularly strict. The introduction
of tighter regulations in Europe and the USA could well result in it becoming
established there too.
Investment Activities
Capital expenditures by division
Euro in million | 2007 | 2006 | 2005 | 2004 | 2003 |
Commercial Vehicle Systems | 72.3 | 69.5 | 62.4 | 45.0 | 43.0 |
Rail Vehicle Systems | 67.9 | 36.8 | 50.4 | 30.3 | 23.9 |
Overseas Investment
NEW PLANT FOR BENDIX SPICER
In April 2007, the U.S. joint venture Bendix Spicer Foundation Brake
LLC started the process of transferring wheel brake production from its
two sites in Glasgow and Frankfort to Bowling Green, Kentucky. Until then,
drum brakes had been manufactured in Glasgow in a plant belonging to joint
venture partner Dana, and disc brakes had been produced in Frankfort.
Merging the two operations generated considerable synergies-and Bowling
Green also offers better transportation links. The layout of the new plant
has been planned to offer improved material flows, shorter throughput
times and optimum use of available space, with flexible options for further
expansion. More than 700,000 drum brakes and 100,000 disc brakes can now
be manufactured annually on a production site measuring just under 30,000
square meters.