Financial Overview

(in million EUR)

	FY ended Dec. 31, 2013	FY ended Dec. 31, 2012	Rate of change (%)	Factors
Sales	4,302.7	4,300.1	0.1	-
Net Income	366.7	295.0	24.3	-
Commercial Vehicle Systems
Sales	2,070.4	2,098.2	(1.3)	1)

Factors
1)
-In 2013, the Commercial Vehicle Systems division posted a slight year-on-year drop in sales (-1.3 %). Positive development in Europe and South America were almost able to offset downturns in North America and Asia/Australia.

Factors by region
Europe: Sales increased by 3.2 % year-on-year. Disc brakes and electronic braking systems were the key sales drivers.

Americas: Sales decreased by 4.8 % year-on-year. Overall truck build in North America declined for the period.  In other hand, South America met a 40 % surge of production output year-on-year.

Asia/Australia: Sales decreased by 1.6 % year-on-year.

Recent Development Outside Germany

<Australia>
-In December 2013, the Company announced the inauguration of its new braking systems, doors and HVAC plant in Granville, Australia.  The opening of the new plant marks the cross-functional merger of its four former locations in New South Wales into one site in Granville. The plant provides work for approximately 240 employees in the various departments of Knorr-Bremse Australia. The new facility, which provides almost 16,000 square meters of office and production space, represents a total investment of approximately EUR 25 million. In Granville, the Company is bringing together its ongoing Australian business and production activities for rail and commercial vehicle brake components, IFE-Tebel door systems, and Sigma HVAC systems.

<India>
-In November 2013, the Company opened a new plant for Commercial Vehicle Systems in Pune, India.The plant is located just a few hundred meters from the former site, and it has 12,000 square meter for production and office space. Here, 250 employees manufacture products including brake cylinders, valves, pedal units, air dryers, slack adjusters, compressors and so on. This new space construction is due to the fast growing vehicle market in India. Directly alongside of the new production plant, Knorr-Bremse Technology Center India has been built. Here, the Rail Vehicle Systems and Commercial Vehicle Systems divisions have concentrated their engineering and development services in response to the rapidly increasing importance of the Asia-Pacific region. 200 engineers will work here by the end of 2014.

<Brazil>
-In April 2013, the Company has opened its new plant in Itupeva, Brazil. Housed in new buildings covering an area of more than 32,000 square meters, the development, production and sales facility has increased its capacity by around 30 %. The EUR 40 million facility replaces the former plant in Sao Paulo, some 80 kilo-meters away. The Company operates the new production facility for the Rail Vehicle Systems and Commercial Vehicle Systems divisions in Brazil. In the commercial vehicle sector – which accounts for around 70 % of the plant's business volume – the Company manufactures its entire product portfolio for the South American commercial vehicle market, including brake control systems, electronic systems (ABS), air supply and treatment systems, brake cylinders, disc and drum brakes and torsional vibration dampers.

Contracts

-Major contracts in FY2013

(From the annual report 2013)

Customers	Products	Annual volume	Start of production, Production plant, etc.
European market
Major European Commercial vehicle manufacturer, Buses and heavy duty trucks in Europe	Single-cylinder compressor	18,000-20,000 pcs.	-The production commences towards the end of the decade. The vehicle is also to be marketed in Brazil.
Avtodiesel Yaroslavl Motor Works (YaMZ), the engine plant of GAZ Group, Medium and heavy-duty trucks in Russia	3 kinds of compressors adjusted to 4 to 6 cylinder engines	9,000 pcs. (2013), 12,000 pcs. (2014), up to 25,000 pcs.	-The production commences in 2013 at Nizhny Novgorod, Russia.
American market
Major American Commercial vehicle manufacturer, (Kenworth、Peterbilt), Option of 6×2 Class 8 tractors and trucks	Automated air pressure transfer system	-	-Useful to avoid slippery accident. 225 Kg weight saving by replacing 6×4 with 6×2.
Asian/Australian market
Major Japanese truck manufacturer	EBS system	6,700 pcs.	-The production commences in summer 2014 at Hungary.
Jianghuai Automobile Co., Ltd. (JAC) in China, (Number 2 light truck manufacturer in China), Newly-developed light-duty truck	ABS system	-	-Production in China. The Company has been nominated as exclusive supplier.
Hyundai Motor Company in Korea, new overland buses	Autonomous emergency brake system (AEBS), Lane departure warning system (LDWS), Electronic air treatment system (EAC)	-	-The production commences in 2015.
Daimler India、 for Asian, African market new heavy truck platform	Pneumatic braking systems	Accumulated q'ty: 290,000pcs. by the year 2020	-The vehicle production commences in May 2013. -Parts production takes place in Pune, India.

R&D Expenditure

(in million EUR)

	FY ended Dec. 31, 2013	FY ended Dec. 31, 2012	FY ended Dec. 31, 2011
Total	253	250	209
% of Sales	5.9	5.8	4.9

-Approximately 3,208 engineers are working for research and development. (As of December 2013)

R&D Facilities

-In November 2013, the Company's Rail Vehicle Systems and Commercial Vehicle Systems divisions jointly built Knorr-Bremse Technology Center India (TCI) in Pune, India.

Product developments

Energy-efficiency
-Compressor with Clutch
-Electronic Air Control

Safety
-Electronic Driver Assistance Systems
Example of contracts:

• EAC (Electronic Air Control) for DAF
• ELC (Electronic Levelling Control) for Irisbus
• EBS (Electronic Braking System) for Ford Otosan
• ABS8 (Anti-lock Braking System8) for Mercedes

Capital Expenditures

(in million EUR)

	FY ended Dec. 31, 2013	FY ended Dec. 31, 2012	FY ended Dec. 31, 2011
Commercial Vehicle Systems	67.3	56.9	74.7
Rail Vehicle Systems	84.0	79.5	65.9
Other	8.2	29.5	18.3
Overall	159.5	165.8	158.9

-In 2013, investment activity focused primarily on the expansion of worldwide production capacities and on the completion of construction of new production plants in India (Palwal/Pune), the US (Westminster), Australia (Granville) and Brazil (Itupeva).