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5. Knorr-Bremse AG Business Report FY ended Dec. 2014

Knorr-Bremse AG Business Report FY ended Dec. 2014

Factors
1)
-For FY ended Dec. 2014, Sales of the Commercial Vehicle Systems division increased by 7.6% year-on-year.

Factors by region

-Disc brakes and electronic braking systems were the key sales drivers for the Commercial Vehicle Systems division. Apart from a long-term agreement running until 2019 with a major European commercial vehicle builder covering full product portfolio, the Company has also concluded a further long-term agreement for the supply of brake control systems with another European commercial vehicle manufacturer.


-The Company's business in North America is largely handled under brand "Bendix". In 2014, Bendix posted sales of over USD 1 billion for the first time.


-In 2014, the Company benefited from the introduction of a regulation whereby 100% of newly registered commercial vehicles in Brazil must be equipped with ABS anti-lock brakes.

<Asia/Australia>
-The Company was able to post a marked increase in market share by start supplying dampers and compressors to local engine manufacturers.
-The Company concluded an agreement with a Japanese commercial vehicle builder governing the supply of EBS systems for its latest vehicle platform. Deliveries are slated to commence in the final quarter of 2015.

Joint Ventures

-The Company announced that Knorr-Bremse Asia Pacific (Holding) Ltd. and the Chinese company Dongfeng Electronic Technology Co., Ltd. (DETC) signed an agreement governing the formation of the joint venture company "Knorr-Bremse DETC Commercial Vehicle Braking Technology Co., Ltd." The total investment in this project is expected to reach CNY 175 million. The new company will be capitalized at CNY 70 million. The new company, in which Knorr-Bremse holds a 51% stake and DETC 49%, is to manufacture components for complete commercial vehicle braking systems in Shiyan, Hubei Province, China. The product spectrum will embrace the air supply, brake control, and wheel end segments, including ABS anti-lock brakes, air disc brakes and brake valves, as well as transmission and exhaust brake components for medium and heavy-duty trucks. (From a press release on July 31, 2014)

Contracts

-Karsan in Turkey (manufacturer of buses and commercial vehicles) and Alexander Dennis Limited (ADL), the leading bus manufacturer in the UK, have opted for complete system solutions from the Company. The Company will supply not only air supply, air treatment, brake control, and wheel-end solutions, but also various driver assistance systems such as the lane departure warning system and the autonomous emergency braking system.

Awards

-Major awards in FY ended Dec. 2014

-In 2014 the proportion of the Group's development capacity located in countries such as India and China was further increased.
-Approximately 3,176 engineers are working for research and development. (As of December 2014)

R&D Facilities

-The Company announced that it is building a test and development center in Munich, Germany. The Company is investing a total of around EUR 80 million in this project. The new center at the Munich site will bring together under a single roof the testing and development functions of the two Group divisions - Rail Vehicle Systems and Commercial Vehicle Systems. On a floor space measuring some 17,000 square meters there will be around 100 rigs for technical testing and quality assurance of components for braking systems and their subsystems, providing modern workplaces for up to 350 engineers and technicians. (From a press release on April 28, 2014)

-The Company and the Munich district authorities are jointly investigating expansion of test circuit in Overschleissheim in Germany.

-The Company officially opened a new production plant and testing center for commercial vehicle systems in Kecskemet, Hungary. The new facilities have created 110 new jobs, so that more than 900 employees will now work on developing and producing brake components for commercial vehicles on a production and office floor space measuring almost 25,000 square meters. The Company has invested around EUR 20 million in the facilities. (From a press release on March 28, 2014)

Product developments

Pneumatic Booster System (PBS)
-The Pneumatic Booster System eliminates the turbo lag of turbocharged diesel engines and reduces the fuel consumption at the same time. During acceleration, PBS briefly injects air from the vehicle's compressor air system into the engine's intake manifold. This allows a correspondingly larger amount of fuel to be injected, so that full-load torque is available almost immediately. PBS is a mechatronic product with its own ECU and can communicate directly with the engine ECU. In the context of efficiency, the significant improvement in accelerating power can also be used to support engine downsizing or downspeeding to reduce the fuel consumption.

Reducing Braking Distance
-The Company demonstrated its innovative capabilities with a pre-development project investigating the feasibility of further reducing commercial vehicle braking distances as another step towards fully-automated driving. By optimizing individual components and improving their interaction within the overall braking system, the engineers managed to reduce truck braking distances without having to increase maximum braking torque. The braking distance of a fully-laden 40-tonne truck during emergency braking to standstill from a speed of 85km/h was reduced by exactly ｔhe length of a compact car.

Autonomous Emergency Brake System (AEBS), Lane Departure Warning System (LDWS)
-From late 2015, both of the systems will be mandatory in new commercial vehicles across Europe. Successful field trials were conducted with various customers to ensure these products possessed the required maturity.

Modular merging of ABS (Anti-lock Braking System) and EBS (Electronic Braking System)
-Concepts were drawn up for the next generation of brake control system that will enable the modular merging of current ABS and EBS systems, laying the foundations for a global scalable braking system.

Electro-pneumatic Parking Brake (EPB)
-The Electro-pneumatic Parking Brake (EPB), which is fully integrated into the Electronic Air Control (EAC) system has now gone into volume production. The Company is now developing the EPB as a standalone solution with a separate valve block and control unit.

Transmission Control System goes into Volume Production
-During 2015 the new mechatronic transmission control unit developed by the Company is going into volume production with a fully-automated gearshift system from ZF. The Company's system is modular in design, with an electronic control and pneumatic module and sensor unit that monitors the position, temperature and rotational speed of the gearbox. Modular design means that if repair is required, only certain modules have to be replaced and intact one can remain in operation.

Shifting Module for Dual-clutch Transmission in a Heavy-duty Truck
-The world's first shifting module for dual-clutch transmission in a heavy-duty truck has launched already. It contributes to comfort and convenience for the driver and also fuel saving.

-In 2014, investment activity focused primarily on the completion of construction of the new facilities at the Kecskemet site in Hungary and in particular on work on the Test and Development Center in Munich (Germany).

Investments Outside Germany

-The Company officially opened a new production plant and testing center for commercial vehicle systems in Kecskemet, Hungary. The new facilities have created 110 new jobs, so that more than 900 employees will now work on developing and producing brake components for commercial vehicles on a production and office floor space measuring almost 25,000 square meters. The Company has invested around EUR 20 million in the facilities. (From a press release on March 28, 2014)