Financial Overview

(in million dollars)

	FY ended Dec. 31, 2012	FY ended Dec. 31, 2011	Rate of change (%)	Factors
Sales	2,477.4	2,794.1	(11.3)	1)
Operating profit	324.5	369.9	(12.3)	-

Factors
1)
-Sales for 2012 were $2,477.4 million, a decrease of 11.3%. The decrease, excluding foreign currency translation effects, was predominately driven by a decline in the global production of new trucks and buses greater than six tons. Total sales in Europe decreased approximately 13.9% for the full year 2012, driven mainly by lower levels of truck, bus and trailer production. Total sales increased 11.7% in North America, which benefited from increased commercial vehicle production. Total sales in Asia decreased 8.1%.

Contracts

-In September 2012, the Company announced that it has entered into a new agreement with GAZ Group, Russia's manufacturer of commercial vehicles. The contract is for delivery of anti-lock braking systems (ABS) for heavy-duty trucks and buses, and for electronic tire pressure monitoring systems for buses. WABCO supplies ABS for series production of Ural trucks and GAZ Group's whole line of buses. WABCO also supplies IVTM, its integrated system for tire pressure monitoring, for series production of low-floor LiAZ buses for Moscow's public bus fleet. WABCO and GAZ Group started their partnership in 2005 for supply of ABS on all GAZ Group buses. (From a press release on September 19, 2012)

-In June 2012, the Company has entered into a long-term supply agreement with Daimler Trucks North America (DTNA). WABCO supplies its new MAXXUS air disc brake technology for series production on DTNA's trucks starting in July 2012. WABCO's MAXXUS technology represents the lightest and highest performing single-piston air disc brake for North America's commercial vehicle industry. MAXXUS air disc brakes are based on WABCO's MAXX 22 single-piston air disc brake technology that the company pioneered in Europe. (From a press release on June 19, 2012)

-In June 2012, the Company announced that it has expanded its long term partnership with Kogel Trailer GmbH & Co. KG through a new supply agreement for WABCO's TrailerGUARD system, a telematics technology for trailer fleet management. Kogel, which is based in Burtenbach, Germany, manufacturers commercial trailers. (From a press release on June 12, 2012)

-In June 2012, the Company announced that the company has entered into a multi-year agreement with Chrysler Group to supply its vacuum pump technology for passenger cars in North America, Europe and Asia. (From a press release on June 12, 2012)

-In May 2012, the Company announced that it has entered into a long term agreement with IVECO to supply anti-lock braking technology for IVECO's platforms of light- and medium-duty trucks produced in Brazil from 2013 onward. (From a press release on May 15, 2012)

-In April 2012, the Company announced that from the second quarter of 2011 to the first quarter of 2012 the company has entered into contracts with customers globally totaling 570 million USD of expected cumulative incremental business from 2012 through 2016. It comprises orders mostly for WABCO technologies for air management, braking systems and vehicle dynamics systems on commercial vehicles, and 52 percent of this new business is rooted in emerging markets such as China, India and Brazil. (From a press release on April 18, 2012)

-In March 2012, the Company announced that it has entered into a new long term agreement with a truck manufacturer headquartered in the U.S. to supply its twin-cylinder air compression technology to equip diesel engines for heavy duty trucks in series production in the U.S. WABCO supplies this customer from WABCO Compressor Manufacturing located in Charleston, South Carolina. (From a press release on March 22, 2012)

-In February 2012, the Company announced that it has entered into a long term agreement with a major manufacturer of commercial vehicles to supply the vehicle maker's European operations with WABCO's OnGuardPLUS technology, an advanced emergency braking system (AEBS). It marks the first adoption of OnGuardPLUS technology in Europe. Series production is expected to begin in the third quarter of 2013 and WABCO expects to furnish more than 50,000 OnGuardPLUS systems annually. (From a press release on February 21, 2012)

-In February 2012, Meritor WABCO Vehicle Control Systems (joint venture with Meritor) has announced the release of Electrically Controlled Air Dyers (ECAD) for use on a major OEM's trucks beginning in late February, 2012. ECAD includes two solenoid valves which facilitates pressure control and regeneration, controlled by the vehicle ECU and monitors dryer working cycles and flow rate. It also detects cartridge change requirement and displays on control panel. (From a press release on February 16, 2012)

-In January 2012, the Company announced that it has entered into a new agreement with a Brazilian manufacturer of diesel engines for commercial vehicles. WABCO supplies its exhaust brakes for a range of truck engines that meet Euro V emission standards. (From a press release on January 19, 2012)

Acquisitions

-In September 2012, the Company announced it has acquired Ephicas, a spin-off company from Delft University of Technology in the Netherlands in the field of aerodynamic solutions for commercial vehicles. Leveraging Ephicas' expertise and patented technologies, WABCO develops a range of aerodynamic products -branded OptiFlow- for trucks, trailers and buses. WABCO's first product introduction from this acquisition under the OptiFlow brand is an aerodynamic SideWing for trailers. Launched by Ephicas in 2011, the SideWing is already installed on more than 100 vehicles within 17 major European commercial vehicle fleets. Independent tests verify that these fuel savings are up to 3 times greater than those delivered by comparable competitive products. (From a press release on September 18, 2012)

Recent Development Outside Belgium

-In August 2012, Meritor WABCO announced its next generation Lane Departure Warning (LDW) system, including the SafeTraK technology by Takata Corporation, is available for fleet installation starting in October 2012. (From a press release on August 15, 2012)

-In August, 2012, Meritor WABCO announced that its Electronically Controlled Air Suspension (ECAS) is available in September 2012 to the North American market. More than 3 million WABCO ECAS systems have been sold worldwide and Meritor WABCO is adapting the product to meet the growing demand in North America for the tractor, motor coach and bus markets. The ECAS system not only improves 6x2 traction and reduce fuel consumption, but also decreases axle wear and tear requiring less maintenance. (From a press release on August 15, 2012)

-In March 2012, the Company announced the availability of its new IVTM system for the North American market, representing the company's advancement in integrated monitoring of tire pressure on trucks, trailers and buses. By using IVTM, customers can maintain tire inflation at an optimum level that can reduce fuel consumption up to two percent. Using WABCO's IVTM system also helps increase the lifetime of tires up to 20 percent. (From a press release on March 21, 2012)

-In March 2012, the Company announced that its joint-venture factory, WABCO Compressor Manufacturing, in Charleston, South Carolina, the U.S., has recently produced its two-millionth air compressor. WABCO Compressor Manufacturing is majority owned by WABCO in partnership with Cummins Engine Company. WABCO in South Carolina designs and manufactures single- and twin-cylinder air compressors for diesel engines in commercial vehicle applications. It supplies five Cummins factories as well as the Cummins Product Distribution Center in North America and exports to eight other Cummins facilities worldwide. WABCO in South Carolina also supplies several other manufacturers of diesel engines and commercial vehicles. (From a press release on March 21, 2012)

Awards

-In November 2012, Meritor WABCO captured the 2012 Platinum Supplier Award from Wabash National Corp. This is the fifth consecutive year that Meritor WABCO has received this award. Meritor WABCO provides trailer anti-lock braking systems (ABS), roll stability systems (RSS) and InfoLink data gateway systems. (From a press release on November 12, 2012)

-In August 2012, the Company said that WABCO's manufacturing facility in Meppel, the Netherlands has received 2011 Quality Achievement Award from PACCAR Inc. The plant supplies vehicle parts for DAF trucks in series production. WABCO has a long established supply relationship with PACCAR in Europe and North America. The company furnishes technologies and systems for braking, air management, transmission automation and collision mitigation, as well as stability and adaptive cruise controls, among other WABCO products. From Meppel, WABCO supplies its TRISTOP brake actuators in the European market. (From a press release on August 8, 2012)

-In June 2012, the Company announced that its WABCO INDIA subsidiary has been recognized with a top award from Ashok Leyland. Ashok Leyland recently honored WABCO for its support by deploying WABCO employees at Ashok Leyland's new manufacturing facility in Pantnagar, India, during fiscal year 2011-12 where they worked on assembly lines to equip trucks with WABCO braking components, thus further enabling zero-defect installation. (From a press release on June 14, 2012)

-In April 2012, the Company announced that WABCO in China has recently received the "Developer of the Year" technology innovation award from Yutong Bus, and the "Best Quality" award from Higer Bus. In addition, China National Heavy Duty Truck Group's Jinan Commercial Vehicle division and CNHTC Power business unit honored WABCO with their "2011 Excellent Supplier" award respectively. (From a press release on April 4, 2012)

-In January 2012, the Company announced that it has been honored with supplier awards from seven Chinese commercial vehicles manufacturers. WABCO in China has received a "Supplier Excellence" award respectively from Baotou Bei Ben Heavy Duty Truck Company, Beiqi Foton Motor Company, C&C Trucks Company, China National Heavy Duty Truck Group and Dongfeng Commercial Vehicle Company. In addition, WABCO in China was honored with an award for "Quality Contribution" in 2011 by Dongfeng Liuzhou Motor Company and an award for "Best Quality Control" by China FAW Group Corporation. (From a press release on January 12, 2012)

Product Development

-In September 2012, the Company showcased its latest technologies at IAA Commercial Vehicles 2012 in Hanover, Germany. The new products included the following:
・ OptiDrive automated manual transmission (AMT) system;
・ e-comp electrically driven air compressor;
・ FuelGuard electronic air processing unit;
・ MAXXUS 22 air disc brake technology for trucks and buses in North America; and
・ OnLane technology, a lane departure warning system (LDWS) for trucks and buses.
(From a press release on September 18, 2012)

Collision Safety System
-In August 2012, Meritor WABCO introduced the next generation of its OnGuard collision safety system, featuring various advancements in its radar-based technology. This improved system, which integrates collision warning, adaptive cruise with active braking and collision mitigation, is available on every vehicle ordered with OnGuard from October 1, 2012. (From a press release on August 15, 2012)

Electronic Stability Control
-In August 2012, Meritor WABCO introduced ESCsmart technology that helps advance the performance of Electronic Stability Control (ESC) for the North American commercial vehicle market. ESCsmart, to be included in Meritor WABCO's next generation ESC when it is released in 2014, builds upon the "self-learning" capability whereby the system is designed to automatically adapt to changes in vehicle characteristics and wear without the need to reprogram a separate Electronic Control Unit (ECU). (From a press release on August 15, 2012)

Trailer Safety System
-In February 2012, Meritor WABCO Vehicle Control Systems developed the new trailer safety systems Roll Stability Support (RSS) 1M. The new system provides the benefits of both ABS and trailer stability control integrated into a single compact unit. If the system detects a potential rollover during the brake check process, a full brake application is put into effect. (From a press release on February 16, 2012)

Investment Outside Belgium

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-In September 2012, WABCO INDIA inaugurated its Plant 2 at Mahindra World City in Chennai, which was completed through the company's investment of over 50 crores Indian rupees, approximately 7 million euros. WABCO's Plant 2 at Mahindra World City will manufacture products to supply commercial vehicle manufacturers in Germany, Japan, Poland, and the U.S., amongst other markets internationally. The new 2,272-square meter plant employs 160 people, including 30 engineers. WABCO INDIA has four manufacturing sites located in Ambattur, Chennai; Jamshedpur; Mahindra World City; and Pantnagar; as well as a software development centre and a company-owned test track in Chennai. (From a press release on September 5, 2012)