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5. WABCO Holdings Inc. Business Report FY ended Dec. 2016

WABCO Holdings Inc. Business Report FY ended Dec. 2016

Factors
1) Net Sales
-The Company’s net sales in the fiscal year ended December 31, 2016 totaled USD 2,810.0 million, an increase of 6.9% over the previous year. Excluding foreign currency effects, the Company’s sales increased by 8.7%. The main cause for the increase was due to the increased Company content per vehicle. While sales in Europe and Asia increased, sales in North America and South America decreased due to lowered production of commercial vehicles and buses.

Acquisitions

-The Company announced that it has acquired Laydon Composites Ltd. (LCL), a manufacturer of aerodynamic devices for heavy-duty trucks and trailers. LCL generated revenues of approximately CAD 25 million in 2015 and is headquartered in Oakville, Ontario, Canada. LCL’s collapsible air fairings improve air flow over tractor cabs, reducing fuel usage as much as 12%. For trailers, LCL’s SmartWay Elite certified Trailerskirt and nose fairings reduce air drag for a combined 9% fuel savings and lower CO2 emissions. (From a press release on April 19, 2016)

Recent Developments

-Results of a federal study give clear evidence of the safety benefits offered by the Company joint venture, Meritor WABCO's OnGuard collision mitigation system and OnLane lane departure warning system. The National Highway Traffic Safety Administration's (NHTSA) Field Study of Heavy-Vehicle Crash Avoidance Systems found that trucks equipped with collision avoidance systems for a 12-month period experienced no rear-end crashes with vehicles traveling ahead. According to the study, overall systems worked as intended with no negative impact to safe driving behavior. Additionally, fleet safety managers reported that they would recommend collision avoidance technology as standard equipment. (From a press release on June 15, 2016)

-The Company announced that it marked a major milestone of more than 100,000 OnGuard collision mitigation systems (CMS) sold in North America through its Meritor WABCO joint venture. More than 200 fleets are currently utilizing the system. Heavy-duty truck fleets have reported a reduction of 65% to 87% in accidents and up to an 89% reduction in accident costs since adopting OnGuard. (From a press release on March 31, 2016)

Contracts

-The Company reported that several major Chinese heavy duty truck manufacturers – including China National Heavy Truck Corporation (CNHTC) and Dongfeng Liuzhou Motor Company (DFLQ) – continue to increase adoption of the OptiRide electronically controlled air suspension (ECAS) in series production. Since 2014, the Company remains the first and only supplier of ECAS systems for truck and bus manufacturers in China. OptiRide technology improves fuel economy up to 3% while providing optimal ride performance. (From a press release on August 30, 2016)

-The Company reported details of its new multi-year supply agreement with Geely. Extending new business with its existing customer, the Company will supply the vast majority of vacuum pumps for Geely cars and sport-utility vehicles in the Chinese market, starting in 2019. The Company’s manufacturing for this major new contract will continue to take place at its factory in Qingdao, Shandong Province, China. (From a press release on August 10, 2016)

-The Company announced that it has received an order from Mahindra & Mahindra to supply vacuum pumps across the automaker’s major engine platforms, with series production expected to begin in late 2017. Vacuum pump manufacturing will be implemented locally in India. The Company will supply compact vacuum pumps that feature a modular, lightweight design and ultra-low power consumption for braking as well as non-braking functions for better fuel economy and reduced emissions. (From a press release from August 03, 2016)

-The Company announced that it has entered into a new long-term agreement with Cummins Inc. to manufacture and supply high-performance air-compressor technology globally. This major contract expands the scope of the Company’s existing U.S.-based joint venture with Cummins. Located in Charleston, South Carolina, WABCO Compressor Manufacturing is majority-owned by the Company in partnership with Cummins since 1998. The Company now becomes the exclusive supplier to Cummins in North America for air compressors applied in trucks, buses and industrial equipment. The new agreement also significantly expands the volume and variety of demand for the Company’s air-compression technologies at Cummins facilities in South America, Europe and India, with incremental opportunities for further growth in Asia. (From a press release on April 28, 2016)

-The Company disclosed that from Q2 2015 to Q1 2016, it has entered into contracts in local currencies with customers across the globe that total USD 918 million of expected cumulative incremental business. These awards include USD 612 million in new business to be realized from 2016 through 2020. These contracts represent new incremental business for the Company that is separate from replacement and renewal of existing contracts. It comprises orders for products that improve vehicle safety and efficiency, mostly in vehicle dynamics systems, air management and vehicle electronic systems, transmission automation technologies, and electronic suspension and braking technologies on commercial vehicles as well as car components and systems. The orders also include fleet management solutions that enhance connectivity between the truck, trailer, driver and fleet hub. Two thirds of this new business is anchored in emerging economies such as China, India and Brazil. (From a press release on April 14, 2016)

-The Company announced that it has started delivery of its MAXX air disc brakes (ADB) to Daimler AG. Daimler now equips its current heavy-duty truck platforms, including its Actros, Antos, and Arocs models, for the European market with the Company’s single-piston air disc brakes. The Company is supplying Daimler AG with the lightest air disc brake package for heavy-duty vehicles in the market. It consists of the MAXX 22 ADB on the front axle and the new MAXX 22L ADB on the rear axle. (From a press release on March 9, 2016)

Awards

-Meritor WABCO, the Company’s joint venture with Meritor, announced that it has received the 2015 Masters of Quality Supplier Award from Daimler Trucks North America (DTNA). The joint venture’s production facilities in Hebron, Kentucky, U.S. and Monterrey, Nuevo Leon, Mexico received the award. (From a press release on September 6, 2016)

-Geely has recently granted the Company’s WABCO China subsidiary their "2016 Supplier Excellence" award. (From a press release on August 10, 2016)

-The Meritor WABCO joint venture received the 2015 Excellence in Quality and the 2015 On-Time Delivery Performance awards from Hino Motors Manufacturing U.S.A., Inc. Meritor WABCO has been recognized with the quality award seven times in the past eight years and has received the on-time delivery award five times. Meritor WABCO has supplied Hino with pneumatic and hydraulic anti-lock braking systems (ABS) for commercial vehicles built in North America since 2003. (From a press release on July 12, 2016)

R&D Facilities

-In 2016, the Company engaged in construction of a new research and development center in Germany, which is expected to be complete in 2017.

R&D Structure

-The Company has approximately 2,382 employees working in research and development.

Product Development

Evasive Maneuver Assist system
-The Company has demonstrated the prototype of a collision avoidance technology for commercial vehicles. Jointly developed by the Company and ZF Friedrichshafen AG, the Evasive Maneuver Assist (EMA) combines the Company's braking, stability and vehicle dynamics control systems on trucks and trailers with ZF's active steering technology. EMA marks another step toward enabling autonomous driving in the commercial vehicle industry. (From a press release on June 29, 2016)

OnLane lane departure warning system
-The Company unveiled its next-generation OnLane lane departure warning system (LDWS), which now links to SmartDrive’s driver performance management system that incorporates video recording and near real-time video analysis. The OnLane system features a camera that combines the functionalities of lane marking detection and video streaming. It also delivers improved lane marking recognition due to an intelligent lane tracking algorithm. These newly combined capabilities eliminate the need for two forward-looking cameras previously required to provide the same functionality as the new OnLane system. (From a press release on March 31, 2016)

Patents

-In the fiscal year ended December 31, 2016, the Company was granted 319 new patents.

-The Company expects an increase of up to 10% in capital expenditures for the fiscal year ending December 31, 2017.

Investment in U.S.

-The Company invested USD 17 million to construct a new state-of-the-art facility in Charleston, South Carolina, U.S. The facility will be used to manufacture air compressors and braking system components due to increased demand by OEMs in North America.