Knorr-Bremse Group
At a Glance KNORR-BREMSE GROUP
Annual Report | 2010
2006
2007
2008
2009
2010
3,121
3,251
3,384
2,761
3,712
185
198
192
99
239
13,035 13,943 14,999 14,432
16,277
Sales
EUR mill.
Net income
EUR mill.
Employees (as per Dec. 31)
Personnel costs
EUR mill.
592
622
686
641
721
Balance-sheet total
EUR mill.
1,646
1,735
1,788
1,664
2,194
Equity
EUR mill.
493
566
639
533
754
Capital expenditure *
EUR mill.
107
140
134
101
113
Depreciation *
EUR mill.
104
113
115
118
147
Incoming orders
EUR mill.
3,541
3,767
3,209
3,185
4,040
Research and development expenditure
EUR mill.
141
159
171
153
175
Knorr-Bremse Group
Annual Report | 2010
* not including investments in financial assets
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Knorr-Bremse Group
At a Glance KNORR-BREMSE GROUP
Annual Report | 2010
2006
2007
2008
2009
2010
3,121
3,251
3,384
2,761
3,712
185
198
192
99
239
13,035 13,943 14,999 14,432
16,277
Sales
EUR mill.
Net income
EUR mill.
Employees (as per Dec. 31)
Personnel costs
EUR mill.
592
622
686
641
721
Balance-sheet total
EUR mill.
1,646
1,735
1,788
1,664
2,194
Equity
EUR mill.
493
566
639
533
754
Capital expenditure *
EUR mill.
107
140
134
101
113
Depreciation *
EUR mill.
104
113
115
118
147
Incoming orders
EUR mill.
3,541
3,767
3,209
3,185
4,040
Research and development expenditure
EUR mill.
141
159
171
153
175
Knorr-Bremse Group
Annual Report | 2010
* not including investments in financial assets
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Knorr-Bremse Group
Auf einen Blick KNORR-BREMSE KONZERN
2007
2008
2009
2010
3.121
3.251
3.384
2.761
3.712
185
198
192
99
239
13.035 13.943 14.999 14.432
16.277
Umsatz
Mio. EUR
Jahresüberschuss
Mio. EUR
Mitarbeiter (Stand 31.12.)
Personalaufwand
Mio. EUR
592
622
686
641
721
Bilanzsumme
Mio. EUR
1.646
1.735
1.788
1.664
2.194
Eigenkapital
Mio. EUR
493
566
639
533
754
Investitionen (ohne Finanzanlagen)
Mio. EUR
107
140
134
101
113
Abschreibungen (ohne Finanzanlagen)
Mio. EUR
104
113
115
118
147
Auftragseingang
Mio. EUR
3.541
3.767
3.209
3.185
4.040
Aufwand für Forschung und Entwicklung
Mio. EUR
141
159
171
153
175
Knorr-Bremse Group
Geschäftsbericht | 2010
Geschäftsbericht | 2010
2006
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Main Majority-owned Subsidiaries of Knorr-Bremse AG
The Americas Knorr Brake Holding Corporation Watertown, NY (USA)*
Indústria Freios Knorr Ltda. São Paulo (BR)
Anchor Brake Shoe Company LLC (USA)
Knorr-Bremse Sistemas para
Bendix Commercial Vehicle Systems LLC (USA) Bendix Spicer Foundation Brake LLC (USA)* IFE North America LLC (USA)
Veículos Comerciais Brasil Ltda. (BR) Knorr-Bremse Sistemas para Veículos Ferroviários Ltda. (BR)
Asia – Australia Knorr-Bremse Asia Pacific (Holding) Ltd. Hong Kong (CHN)
Europe – Middle East – Africa Knorr-Bremse Systeme für Schienenfahrzeuge GmbH Munich (D)
Knorr-Bremse Systeme für Nutzfahrzeuge GmbH Munich (D)**
Knorr Brake Ltd. (CDN)
Freinrail Systèmes Ferroviaires S.A. (F)
Bost Ibérica S.L. (E)
Merak North America LLC (USA)
Knorr-Bremse Rail Systems Italia S.r.I. (I)
Hasse & Wrede GmbH (D)
New York Air Brake Corporation (USA)
IGE-CZ s.r.o. (CZ)
Knorr-Bremse Benelux B.V.B.A. (B)
Knorr-Bremse Ges.m.b.H. (A)
Knorr-Bremse Fékrendszerek Kft. (H)
Knorr-Bremse Nordic Rail Services AB (S)*
Knorr-Bremse KAMA Systems for
Knorr-Bremse Systemy dla Kolejowych
Knorr-Bremse Polska SfN Sp. z o.o. (PL)
Knorr-Bremse Rail Systems (UK) Ltd. (UK)
Knorr-Bremse Sistemi per Autoveicoli
Knorr-Bremse Vasúti Jármű Rendszerek Hungária Kft. (H) Merak Sistemas Integrados de Climatización S.A. (E) Microelettrica Scientifica S.p.A. (I)
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Commercial Vehicles OOO (RUS)*
Srodków Lokomocji PL Sp. z o.o. (PL)
Knorr-Bremse S.A. (Pty.) Ltd. (RSA)*
As per December 31, 2010
IFE-VICTALL Railway Vehicle Door Systems (Qingdao) Co., Ltd. (CHN)* Knorr-Bremse Australia Pty. Ltd. (AUS) Knorr-Bremse Brake Equipment (Shanghai) Co., Ltd. (CHN)
Knorr Brake Corporation (USA)
* Minority holding in subsidiary by non-group companies ** 20 % stake held by Robert Bosch GmbH, Stuttgart (D)
Hasse & Wrede CVS Dalian, China Ltd. (CHN)*
Oerlikon-Knorr Eisenbahntechnik AG (CH) Sociedad Española de Frenos, Calefacción y Señales S.A. (E)* Dr. techn. Josef Zelisko Ges.m.b.H. (A)
Commerciali S.p.A. (I) Knorr-Bremse Systèmes pour Véhicules Utilitaires France S.A. (F) Knorr-Bremse System för Tunga Fordon AB (S) Knorr-Bremse Systems for Commercial Vehicles Ltd. (UK) Knorr-Bremse Systémy pro užitková vozidla ČR, s.r.o. (CZ)
Knorr-Bremse CARS LD Vehicle Brake Disc Manufacturing (Beijing) Co., Ltd. (CHN)* Knorr-Bremse Commercial Vehicle Systems Japan Ltd. (J)** Knorr-Bremse India Pvt. Ltd. (IND) Knorr-Bremse / Nankou Air Supply Unit (Beijing) Co., Ltd. (CHN)* Knorr-Bremse Rail Systems Japan Ltd. (J)* Knorr-Bremse Rail Systems Korea Ltd. (ROK) Knorr-Bremse Braking Systems for Commercial Vehicles (Dalian) Co., Ltd. (CHN) Knorr-Bremse Systems for Commercial Vehicles India Pvt. Ltd. (IND)
Contact Knorr-Bremse AG Moosacher Strasse 80 80809 Munich Germany Corporate Communications Christoph Günter Tel: +49 89 3547-1402 Fax: +49 89 3547-1403 E-Mail:
[email protected]
Knorr-Bremse Systems for Rail Vehicles (Suzhou) Co., Ltd. (CHN) Sigma Transit Systems Pty. Ltd. (AUS)
Additional information about Knorr-Bremse: www.knorr-bremse.com
SYDAC PTY. LTD. (AUS) Westinghouse Platform Screen Doors (Guangzhou) Ltd. (CHN)*
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Main Majority-owned Subsidiaries of Knorr-Bremse AG
The Americas Knorr Brake Holding Corporation Watertown, NY (USA)*
Indústria Freios Knorr Ltda. São Paulo (BR)
Anchor Brake Shoe Company LLC (USA)
Knorr-Bremse Sistemas para
Bendix Commercial Vehicle Systems LLC (USA) Bendix Spicer Foundation Brake LLC (USA)* IFE North America LLC (USA)
Veículos Comerciais Brasil Ltda. (BR) Knorr-Bremse Sistemas para Veículos Ferroviários Ltda. (BR)
Asia – Australia Knorr-Bremse Asia Pacific (Holding) Ltd. Hong Kong (CHN)
Europe – Middle East – Africa Knorr-Bremse Systeme für Schienenfahrzeuge GmbH Munich (D)
Knorr-Bremse Systeme für Nutzfahrzeuge GmbH Munich (D)**
Knorr Brake Ltd. (CDN)
Freinrail Systèmes Ferroviaires S.A. (F)
Bost Ibérica S.L. (E)
Merak North America LLC (USA)
Knorr-Bremse Rail Systems Italia S.r.I. (I)
Hasse & Wrede GmbH (D)
New York Air Brake Corporation (USA)
IGE-CZ s.r.o. (CZ)
Knorr-Bremse Benelux B.V.B.A. (B)
Knorr-Bremse Ges.m.b.H. (A)
Knorr-Bremse Fékrendszerek Kft. (H)
Knorr-Bremse Nordic Rail Services AB (S)*
Knorr-Bremse KAMA Systems for
Knorr-Bremse Systemy dla Kolejowych
Knorr-Bremse Polska SfN Sp. z o.o. (PL)
Knorr-Bremse Rail Systems (UK) Ltd. (UK)
Knorr-Bremse Sistemi per Autoveicoli
Knorr-Bremse Vasúti Jármű Rendszerek Hungária Kft. (H) Merak Sistemas Integrados de Climatización S.A. (E) Microelettrica Scientifica S.p.A. (I)
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Commercial Vehicles OOO (RUS)*
Srodków Lokomocji PL Sp. z o.o. (PL)
Knorr-Bremse S.A. (Pty.) Ltd. (RSA)*
As per December 31, 2010
IFE-VICTALL Railway Vehicle Door Systems (Qingdao) Co., Ltd. (CHN)* Knorr-Bremse Australia Pty. Ltd. (AUS) Knorr-Bremse Brake Equipment (Shanghai) Co., Ltd. (CHN)
Knorr Brake Corporation (USA)
* Minority holding in subsidiary by non-group companies ** 20 % stake held by Robert Bosch GmbH, Stuttgart (D)
Hasse & Wrede CVS Dalian, China Ltd. (CHN)*
Oerlikon-Knorr Eisenbahntechnik AG (CH) Sociedad Española de Frenos, Calefacción y Señales S.A. (E)* Dr. techn. Josef Zelisko Ges.m.b.H. (A)
Commerciali S.p.A. (I) Knorr-Bremse Systèmes pour Véhicules Utilitaires France S.A. (F) Knorr-Bremse System för Tunga Fordon AB (S) Knorr-Bremse Systems for Commercial Vehicles Ltd. (UK) Knorr-Bremse Systémy pro užitková vozidla ČR, s.r.o. (CZ)
Knorr-Bremse CARS LD Vehicle Brake Disc Manufacturing (Beijing) Co., Ltd. (CHN)* Knorr-Bremse Commercial Vehicle Systems Japan Ltd. (J)** Knorr-Bremse India Pvt. Ltd. (IND) Knorr-Bremse / Nankou Air Supply Unit (Beijing) Co., Ltd. (CHN)* Knorr-Bremse Rail Systems Japan Ltd. (J)* Knorr-Bremse Rail Systems Korea Ltd. (ROK) Knorr-Bremse Braking Systems for Commercial Vehicles (Dalian) Co., Ltd. (CHN) Knorr-Bremse Systems for Commercial Vehicles India Pvt. Ltd. (IND)
Contact Knorr-Bremse AG Moosacher Strasse 80 80809 Munich Germany Corporate Communications Christoph Günter Tel: +49 89 3547-1402 Fax: +49 89 3547-1403 E-Mail:
[email protected]
Knorr-Bremse Systems for Rail Vehicles (Suzhou) Co., Ltd. (CHN) Sigma Transit Systems Pty. Ltd. (AUS)
Additional information about Knorr-Bremse: www.knorr-bremse.com
SYDAC PTY. LTD. (AUS) Westinghouse Platform Screen Doors (Guangzhou) Ltd. (CHN)*
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Knorr-Bremse Group
Auf einen Blick KNORR-BREMSE KONZERN
2007
2008
2009
2010
3.121
3.251
3.384
2.761
3.712
185
198
192
99
239
13.035 13.943 14.999 14.432
16.277
Umsatz
Mio. EUR
Jahresüberschuss
Mio. EUR
Mitarbeiter (Stand 31.12.)
Personalaufwand
Mio. EUR
592
622
686
641
721
Bilanzsumme
Mio. EUR
1.646
1.735
1.788
1.664
2.194
Eigenkapital
Mio. EUR
493
566
639
533
754
Investitionen (ohne Finanzanlagen)
Mio. EUR
107
140
134
101
113
Abschreibungen (ohne Finanzanlagen)
Mio. EUR
104
113
115
118
147
Auftragseingang
Mio. EUR
3.541
3.767
3.209
3.185
4.040
Aufwand für Forschung und Entwicklung
Mio. EUR
141
159
171
153
175
Knorr-Bremse Group
Geschäftsbericht | 2010
Geschäftsbericht | 2010
2006
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1/
Overview
04 06 08 10 12
2010 at a Glance The Executive Board of Knorr-Bremse AG The Supervisory Board of Knorr-Bremse AG Report of the Supervisory Board The State and Development of Knorr-Bremse AG and the Knorr-Bremse Group
2/
Reports
38 40 42 54 64 70
Rail Vehicle Systems Markets Market Successes Projects Products Service
3/
Consolidated Financial Statements
76 78 82 92 98 104
Commercial Vehicle Systems Markets Market Successes Projects Products Service
108 110 116 124 128
Group Knorr Excellence Responsibility Employees Trade Fairs
134 155 156 158 159 160 161
Notes to the Consolidated Financial Statements Consolidated Cash Flow Statement Segment Reporting Statement of Changes in Group Equity Independent Auditors’ Report Consolidated Balance Sheet Consolidated Statement of Income
3
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2010 at a Glance Knorr-Bremse is voted “Best Brand in Commercial Vehicle Sector” for the fifth time running
Bendix receives a “Top 5 Aftermarket Products 2010 Award” for the Tire Pressure Monitoring System (TPMS)
The 1 millionth Air Processing Unit is manufactured in Kecskemét
Knorr-Bremse and Berkelium Group set up the Icer Rail joint venture for production of organic brake shoes and pads A new assembly line for torsional vibration dampers is set up in Russia
Knorr-Bremse Global Care celebrates its fifth anniversary
The 2010 Financial Statements Press Conference takes place at headquarters in Munich
Knorr-Bremse is granted UIC approval for wheel slide protection systems
Knorr-Bremse is honored as “Best Investor Suzhou 2009”
Standard & Poor‘s and Moody‘s raise Knorr-Bremse’s rating to A(Outlook stable) and Baa1 (Outlook positive) respectively
January
March
May
February
April
June
The Knorr-Bremse Aldersbach plant celebrates its 30th anniversary
By supplying the brake equipment for the Shinkansen E5 Knorr-Bremse accesses the Japanese high-speed rail market
Knorr-Bremse Czech Republic opens a new Commercial Vehicle Systems plant
Sydac wins the “Top 20 South Australian Innovation Award” Knorr-Bremse India acquires the remaining shares in the Tata Autocomp. Systems Ltd. joint venture
Knorr-Bremse takes part in the nationwide “Logistics Day” in Germany Knorr-Bremse receives Elogistics Award
A delegation from the City of Qingdao in China visits Knorr-Bremse in Munich Short-time working ends at Commercial Vehicle Systems in Germany
Dresden University of Technology receives a brake test rig from Knorr-Bremse Knorr-Bremse presents a brake exhibit to Deutsches Museum in Munich
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“Efficient.Technology.Worldwide”: Knorr-Bremse showcases products and services at the key IAA and InnoTrans fairs Knorr-Bremse Rail Vehicle Systems inaugurates a new plant in Budapest 25th Truck Grand Prix at the Nürburgring: Knorr-Bremse goes racing with Team Hahn World Cup in South Africa: KnorrBremse supplies braking systems for Gautrain Electrostar trains
July
Knorr-Bremse Aldersbach produces its 20 millionth disc brake Merak manufactures HVAC systems with an eco-friendly refrigerant Knorr-Bremse strengthens the HVAC segment through the strategic acquisition of Sigma Coachair Group Knorr-Bremse sets up assembly of rail vehicle brake equipment in Russia
Knorr-Bremse adopts a Group-wide corporate social responsibility strategy
September
November
August
October
December
Knorr-Bremse Commercial Vehicle Systems signs a joint venture agreement with CAFF in China
Microelettrica Scientifica acquires a majority stake in Heine Resistors GmbH
In Daxing, Knorr-Bremse produces the 100,000th brake disc for the Chinese market
Knorr-Bremse employees donate to help flood victims at Knorr-Bremse in the Czech Republic A “Girls for Technology” camp is held at Knorr-Bremse in Munich
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Global Care helps victims of an environmental disaster in Hungary Knorr-Bremse becomes a signatory to the UN Global Compact
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6
The Executive Board of Knorr-Bremse AG
Klaus Deller
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EXECUTIVE BOARD
Dr. Dieter Wilhelm
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Dr. Raimund Klinkner Chairman
7
Dr. Lorenz Zwingmann
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8
The Supervisory Board of Knorr-Bremse AG
Klaus Gegenfurtner* Aidenbach
Frank Hellmer* Munich (since April 1, 2010)
Werner Ratzisberger* Aldersbach
Dr. Kurt Kiethe Munich
Dr. Martin Kimmich* Munich (since July 1, 2010)
Manfred Wennemer Bensheim
Toolmaker, Knorr-Bremse Systeme für Nutzfahrzeuge GmbH
Test engineer, Knorr-Bremse Systeme für Schienenfahrzeuge GmbH
Chairperson of the Works Council of Knorr-Bremse Systeme für Nutzfahrzeuge GmbH, Aldersbach Plant
Attorney at law
IG Metall Trade Union Secretary, Munich Office
2nd Deputy Chairman, Former Chairman of the Executive Board of Continental AG
Elfriede Hilger*, Munich (until March 31, 2010) Chairperson of the General Works Council of Knorr-Bremse Systeme für Schienenfahrzeuge GmbH, Chairperson of the Works Council of Knorr-Bremse AG, Knorr-Bremse Systeme für Schienenfahrzeuge GmbH, Munich Plant, and KB Media GmbH Daniela Fischer*, Bruckmühl (until June 30, 2010) Head of the Legal Office of the IG Metall Trade Union, Munich Office
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SUPERVISORY BOARD
Heinz Hermann Thiele Munich
Dr. Eduard Gerum* Rosenheim
Dr. h. c. Horst Zimmer LampertheimHofheim
Dr. Hans-Peter Binder Berg
Dr. Wolfram Mörsdorf Essen
Heinz Hausner* Salzweg
Chairman, Entrepreneur
1st Deputy Chairman, Vice President Global R & D, Knorr-Bremse Systeme für Nutzfahrzeuge GmbH
Retd. Member of the Board of Management of Mercedes-Benz AG
Retd. Member of the Board of Management of Deutsche Bank AG, Munich Branch
Retd. Member of the Executive Board of Thyssen-Krupp AG
Assistant Representative of the IG Metall Trade Union, Passau Office
9
*Employee representative
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10
Report of the Supervisory Board In the course of fiscal 2010, the Supervisory Board concerned itself in detail with the state and development of Knorr-Bremse AG and all Group companies.
Along with important individual transactions and human resources decisions, this also included consideration of fundamental aspects of strategic direction and corporate planning. In addition, the Supervisory Board received regular reports from the Executive Board either in the course of its meetings or in written or oral form. The Supervisory Board examined important individual transactions, as well as deciding on items of business that required its approval either by law or in line with company statutes. The information and analyses upon which the decisions of the Supervisory Board were based were discussed and assessed in depth together with the Executive Board. In order to comply with the requirements of the German Accounting Law Modernization Act in terms of corporate governance, a second meeting of the Financial Statements Committee was held in mid year. At its meetings, the Financial Statements Committee dealt in particular with the supervision of the accounting process, the efficacy of the internal controlling system, the risk management system and the internal audit system, as well as the work of the auditors. Following the global financial and economic crisis in 2009, which led to substantial declines in sales and earnings, in fiscal 2010 the Knorr-Bremse Group was able to increase sales to EUR 3.71 billion (2009: EUR 2.76 billion). This figure includes positive currency translation effects in the amount of approximately EUR 170 million. The Rail Vehicle Systems division posted further sales growth on the back of the marked expansion of its business in the passenger transport sector, above all in Asia where sales more than doubled. The Commercial Vehicle Systems division benefitted from the unexpected pace of recovery in markets across all regions. Yet despite the rise in activity in the commercial vehicle sector, in 2010 the markets in Europe and North America remained well below their pre-crisis level. To safeguard the future development of the company, in 2010 Knorr-Bremse continued to invest in the strategic development and expansion of its production plants. In the year under review, both the Rail Vehicle Systems plant in Budapest, Hungary, and the new Commercial Vehicle Sys-
KB_GB_2010_LageEntwicklung_EN_V1.indd 8
tems plant in Liberec, Czech Republic, were inaugurated. As well as bringing an increase in capacities in the Rail Vehicle Systems sector, these new facilities also allow the company to implement advanced production and logistics concepts. Also in the year under review, the Rail Vehicle Systems plant in Suzhou, China, was expanded. In addition to organic growth, the year under review saw corporate strategy continue to focus on targeted acquisitions and joint ventures with the aim of optimizing the product portfolio. In the rail vehicle sector the acquisition of the business of the Sigma Coachair Group in Wetherill Park, Sydney, Australia, and of Heine Resistors in Dresden, Germany, reinforced the portfolio in the fields of air conditioning systems and band resistors respectively. Also, through the joint venture with the Icer Brakes company, the product portfolio was further expanded to include organic brake pads and brake shoes. In the commercial vehicle sector, the signing of a preliminary contract governing the establishment of a joint venture with the Chinese company CAFF for the production of commercial vehicle brake system and drivetrain components marked an important strategic step in the world’s largest commercial vehicle market. The final contract was closed in January 2011. Against the backdrop of rising sales, the company’s top priority remained ensuring the highest quality standards. This was achieved not only through the quality assurance processes in place across the Group but also by means of targeted human resource development. By way of examples, two key modules were added to the Group-wide “Knorr Excellence” initiative: the FIT (Finance & IT Excellence) initiative aims to make Knorr-Bremse best in class in the long term in these two areas, while the PEX (People Excellence) initiative was set up in response to the competition for the best specialist and management staff in the employment market. The 2010 Financial Statements and the Management Report on Knorr-Bremse AG, the 2010 Consolidated Financial
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SUPERVISORY BOARD
Statements and the Management Report on the KnorrBremse Group drawn up by the Executive Board, and the company‘s accounts were examined by the auditors elected by the Annual Shareholders‘ Meeting, KPMG AG Wirtschaftsprüfungsgesellschaft, Munich, and endorsed with their unqualified opinion dated March 2, 2011. The Supervisory Board also examined the Financial Statements for fiscal 2010, the Management Report, the proposed allocation of unappropriated retained earnings, and the Consolidated Financial Statements and Management Report on the Knorr-Bremse Group. No objections were raised. At its meeting on March 18, 2011, the Supervisory Board approved the 2010 Financial Statements, which thereby became legally binding. The Supervisory Board concurs with the Executive Board’s proposal for the allocation of unappropriated retained earnings. The Consolidated Financial Statements were also approved.
On March 31, 2010 Ms Elfriede Hilger stepped down from her position as an employee representative on the Supervisory Board of Knorr-Bremse AG. Frank Hellmer, who was elected at the Supervisory Board elections in 2008 to replace Ms Hilger should she leave the Board, joined the Board on April 1, 2010. On behalf of Knorr-Bremse AG the Supervisory Board wishes to express its sincere thanks to Ms Hilger for her long-standing and committed contributions to its work.
The auditors attended the meeting of the financial statements committee on February 25, 2011 as well as the financial statements meeting of the Supervisory Board on March 18, 2011, reported on their key findings and answered outstanding questions.
It is with a deep sense of gratitude that we honor the memory of Dr.-Ing. E. h. Wilfried Lochte, who passed away on March 7, 2011. Dr. Lochte was a member of the Supervisory Board of Knorr-Bremse AG and of the Supervisory Board of Knorr-Bremse Systeme für Nutzfahrzeuge GmbH from 1993 to 2008. With his extensive experience and pronounced entrepreneurial thinking, throughout this period Dr. Lochte stewarded the progress of Knorr-Bremse with great commitment and was instrumental in shaping the company’s development through fundamental decisions on its strategic direction. He played a decisive part in enabling Knorr-Bremse to become established as global market leader in the rail vehicle systems and commercial vehicle systems sectors. He maintained close, friendly and trusting relations with the company’s shareholders. We will not forget him.
KPMG AG Wirtschaftsprüfungsgesellschaft, Munich, also examined the Executive Board‘s report on relations with affiliated companies, drawn up in line with Paragraph 312 German Corporation Law (AktG). The auditors endorsed this report with the following opinion: “Having audited and assessed this report in accordance with professional standards, we confirm that: 1. The factual contents of the report are correct. 2. The consideration furnished by the Company in the legal transactions set out in the report was not unreasonably high.“ The Supervisory Board also examined the Executive Board‘s report on relations with affiliated companies and has no objections to the concluding statement by the Executive Board or to the auditors‘ findings.
11
On June 30, 2010, Ms Daniela Fischer stepped down from her position on the Supervisory Board of Knorr-Bremse AG. Effective July 1, 2010, Dr. Martin Kimmich was appointed by the Munich Registration Court to replace Ms Fischer as an employee representative on the Supervisory Board. The Supervisory Board wishes to thank Ms Fischer for her contributions to its work.
Munich, March 18, 2011 The Supervisory Board
Heinz Hermann Thiele Chairman
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1/
Management Report
In fiscal 2010 the Knorr-Bremse Group reported sales of EUR 3.71 billion, up by 34% or almost EUR 1 billion (2009: EUR 2.76 billion). Sales at the Rail Vehicle Systems division moved ahead to EUR 2.02 billion (2009: EUR 1.55 billion). The increase was primarily driven by a steep rise in sales of over 100% in Asia, where Knorr-Bremse has been progressively expanding its market presence since the late 1980s. In 2010 the Commercial Vehicle Systems division of Knorr-Bremse benefitted from the increasing pace of recovery of commercial vehicle markets, posting sales of EUR 1.70 billion (2009: EUR 1.22 billion). Despite the rise in activity in the commercial vehicle sector, however, in 2010 the markets in Europe and North America remained well below their pre-crisis level.
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14
The State and Development of Knorr-Bremse AG and the Knorr-Bremse Group
An overview of the Knorr-Bremse Group
General economic developments
The Knorr-Bremse Group is the world‘s leading manufacturer of braking systems for rail and commercial vehicles. For more than 100 years now the company has pioneered the development, production, marketing and servicing of state-of-the-art braking systems. Other lines of business in the rail vehicle systems sector include automatic, electropneumatic or electric door systems, air conditioning systems, control components and windscreen wiper systems, as well as platform screen doors. In the commercial vehicle systems sector, the product range includes complete braking systems with driver assistance systems, as well as torsional vibration dampers and powertrain-related solutions such as the Pneumatic Booster System (PBS) and transmission control systems for enhanced energy efficiency and fuel economy.
The negative economic background conditions caused by the global economic and financial crisis that dominated 2008 and 2009 improved in 2010 and a relatively robust if regionally different real-market recovery set in.
The structure of the Knorr-Bremse Group is based on the regions Europe, North America and South America, and Asia/Australia, and the development of the Group is geared to meeting the specific requirements of the markets and customers in these regions. This regional organizational structure is designed to offer globally active customers uniform technical platforms worldwide, while at the same time taking specific local needs into account. It also ensures that customers who operate on a regional basis are supplied with globally proven systems and components.
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The emerging economies of Asia continued to drive the recovery. The relative contributions to growth of the emerging and industrialized nations showed the same marked divergent progression as they had during the crisis. In 2010, average growth among the emerging nations was 7.1%, while the industrialized nations posted just 3.0% growth on average. Global figures are expected to show overall economic growth of around 5.0% (2009: minus 0.6%). As the global markets recovered, the economic performance of the Eurozone also stabilized in 2010. Following a 4.1% decline in 2009, economic output rose 1.8% in 2010. With GDP growth of 3.6% (2008: minus 4.7%) which was above average for the region, Germany made a substantial contribution to ensuring greater stability. As an exportoriented economy, Germany was initially harder hit by the collapse of global trade, but then benefitted more strongly from its recovery in 2010 than other Eurozone countries. With commodity prices firming up, Russia too with its marked dependency on energy exports saw GDP rise 3.7% (2009: minus 7.9%).
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15
3,712 3,121
3,251
3,384 2,761
2,743 2,423
239 185
198
192
154 130 99
2004
2005
2006
2007
2008
2009
2010
Sales and net income for the Knorr-Bremse Group in EUR millions Sales
Net income
In the USA, by contrast, the markets remained under pressure. Economic output rose 2.8% (2009: minus 2.6%) on the back of growing stability in the real estate sector. The Brazilian economy presented a far more positive picture, with economic output showing year-on-year growth of 7.5% in 2010 (2009: minus 0.6%). Along with Brazil, it was China and India in particular that drove global economic growth in 2010. In China GDP was up 10.3% in 2010 (2009: 9.2%), while India saw GDP rise 9.7% (2009: 5.7%). In Japan too, industrial output again showed moderate growth, while GDP moved ahead 4.3% in the year under review (2009: minus 6.3%). Firmer commodity prices supported global market stabilization in 2010. After peaking at USD 140 per barrel in 2008 and falling to below USD 40 in 2009, the price of oil settled at around USD 90 per barrel at the end of 2010. Aluminum prices followed a similar pattern and stabilized at around USD 2,400/t (top price in 2008 approx. USD 3,300/t, lowest price in 2009 approx. USD 1,300/t). On the balance sheet date, the value of the US dollar – which lines up alongside the euro as one of the Group’s main operating currencies – had risen 7.2% against the euro compared to December 31, 2009, with one euro worth USD 1.34. As an annual average, the euro was worth USD 1.32.
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Development of the Knorr-Bremse Group in 2010
Consolidated sales for the Knorr-Bremse Group were up 34% from EUR 2,760.9 million in 2009 to EUR 3,712.2 million in 2010. This figure includes positive currency translation effects in the amount of approximately EUR 170 million. In an improving but still volatile economic environment, the company benefited from its strong strategic position with two divisions, Rail Vehicle Systems and Commercial Vehicle Systems, in markets that developed differently. The Rail Vehicle Systems division showed a positive development in the year under review, stepping up sales to EUR 2,024.4 million (2009: EUR 1,552.6 million). The increase was primarily driven by a steep rise in sales of over 100% in Asia, where Knorr-Bremse has been progressively expanding its market presence since the late 1980s. In 2010 the Commercial Vehicle Systems division benefitted from the increasing pace of recovery of the commercial vehicle markets, posting sales of EUR 1,700.7 million (2009: EUR 1,221.5 million). One major focus of commercial vehicle activities in the year under review was on expansion in China.
The business environment by sector The Group benefitted decisively from the recovery of the global markets and the resultant increase in the volume of freight transportation – although with major differences from one region to the next. Despite a modest rise in transportation volumes, demand in the rail freight sector in the North and South America region and in Europe remained subdued. This was reflected in 2010 by a further 30% fall in demand for freight cars in Europe (2009: minus 31%) and by a 32% decline in North America (2009: minus 63%). In the rail-borne passenger transportation sector major projects were postponed or cancelled in Europe and North America. The Asian market, by contrast, showed positive development in both the freight and passenger sectors.
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Following a 25% slump in worldwide truck output in 2009, the year under review saw global truck production rise 48%. In Europe, where a record year in 2008 was followed by the sharpest downturn in any region, truck production was 55% up in 2010 (2009: minus 63%). The North American market witnessed its first upswing since 2006, growing 23% in the year under review (2009: minus 37%). In South America, truck output was 56% up in 2010 (2009: minus 29%). The Asian region showed further growth in 2010 with truck production rising 52% (2009: 1%). Aftermarket business also benefitted from these positive developments across all regions and posted further growth in 2010.
Acquisitions, additions and joint ventures In the year under review Knorr-Bremse continued its strategy of improving its market position through targeted acquisitions. In the first quarter of the year under review, Knorr-Bremse Asia Pacific (Holding) Ltd., Hong Kong, China, and KnorrBremse AG, Munich, Germany, acquired the 26% stake held by Tata Autocomp. Systems Ltd., Pune, India, in the joint venture Knorr-Bremse Systems for Commercial Vehicles India Private Ltd., Pune, India. Knorr-Bremse is now the sole owner of the company. The acquisition of the outstanding shares took place by mutual agreement between the joint venture partners. To further strengthen its position in the rail vehicle brake pad business, Knorr-Bremse entered into a joint venture for the development and production of organic brake pads and brake shoes. The company is called Icer Rail S.L., and is based in Pamplona, Spain. The two joint venture partners are Knorr-Bremse Group subsidiary Sociedad Española de Frenos, Getafe, Spain, and Icer Brakes S.A., Pamplona, Spain, a member of the Spanish Berkelium Group. Knorr-Bremse originally accessed the brake pad business in 2008 with
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the acquisition of Anchor Brake Shoe LLC, West Chicago, USA.
global market position in a series of business areas and thereby ensure its commercial success.
Knorr-Bremse subsidiary Knorr-Bremse Asia Pacific (Holding) Ltd., Hong Kong, China, acquired the Australian heating, ventilation and air-conditioning (HVAC) systems specialist Sigma Transit Systems Pty. Ltd., Wetherill Park, Australia. While Knorr-Bremse has to date supplied HVAC systems primarily in China, Europe and the Americas, this move will enable the company to access the growth markets of Southeast Asia, India and Australia in particular. As a result of the acquisition, the Knorr-Bremse Group is now the world‘s leading manufacturer of rail vehicle HVAC systems.
As part of the ongoing strategic development of the Group‘s production plants, the new Rail Vehicle Systems plant in Budapest was opened in July 2010. As well as boosting capacity, under the heading of the “5-day factory” the new plant also implements innovative production and logistics concepts based on the globally standardized Knorr-Bremse Production System (KPS). The new development and production facility replaces the old factory located in the immediate vicinity.
By acquiring a majority stake in Heine Resistors GmbH, a manufacturer of special-purpose resistors based in Dresden, Germany, Knorr-Bremse subsidiary Microelettrica Scientifica S.p.A., Milan, Italy, reinforced its capabilities in the field of power systems. With decades of experience, Heine ranks among the most renowned developers and manufacturers of resistors for drive technology and rail vehicles. Knorr-Bremse subsidiary Knorr-Bremse Rail Systems (UK) Ltd., Melksham, UK, acquired the main electronic components business of Precimax Precision Engineering Ltd., Bristol, UK. Overall, these acquisitions had no substantial effect on the assets, financial status and profitability of the Knorr-Bremse Group in fiscal 2010.
Major projects Knorr-Bremse made good use of the healthier business environment in 2010 to pursue its strategy of safeguarding the company’s long-term health as well as to drive forward numerous projects. Aligned with Knorr-Bremse’s regional approach, this enabled the company to further enhance its
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At the new factory, Knorr-Bremse manufactures bogie equipment components such as brake caliper units and block brakes. The product portfolio also includes brake control components, such as brake panels and valves, as well as a virtually complete range of components for freight cars and individual air supply elements. Along with the production facilities, Knorr-Bremse has also expanded the research and development function at the new plant. The primary focus here is on brake actuators, software, technical calculation and testing. June 2010 also witnessed the official opening of a new Commercial Vehicle Systems plant in Liberec (Czech Republic). As a value stream factory, like the Budapest plant this new facility too permits the KPS-based implementation of advanced production and logistics concepts. In Liberec Knorr-Bremse manufactures commercial vehicle braking system components such as brake cylinders and clutch servo units, foot- and handbrake valves, and air dryer cartridges. When the transfer of operations had been completed, the former production facility in Hejnice was closed down. In China the Rail Vehicle Systems division geared up to meet the ever-increasing market requirements and invested in the progressive expansion of production capacity. At
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the Daxing site a new production plant for brake discs for mainline rail vehicles came on stream in April of the year under review. In Wuxi two new production shops were added for HVAC systems for high-speed trains and new production equipment was installed. At Qingdao the production facilities for door systems were extended in response to higher demand. And on account of the substantial growth in China, 2010 saw the renewed expansion of the Suzhou site, which was only founded in 2005 and first expanded in 2007. The additions in 2010 brought an extra 5,700 m² of production space, with offices and social areas covering around 3,300 m². Both divisions expanded their production capacities in Russia in the year under review. The Rail Vehicle Systems division joined forces with OAO Vagonremmash, a subsidiary of Russian Railways RZD to set up an assembly line for disc brakes and compressors in Voronezh, which is slated to start production in 2011. The start of production will mark a major milestone in the ongoing expansion of the company’s presence in the highly promising Russian rail market. In May 2010 the Commercial Vehicle Systems division inaugurated the first torsional vibration dampers assembly line at its Knorr-Bremse KAMA joint venture in Naberezhnye Chelny. The new line expands the product portfolio of the joint venture, which was previously focused on drum brakes.
Quality and processes Knorr-Bremse continues to target best-in-class processes as the foundation on which its competitive capabilities are based. In 2010, processes and structures were again reviewed and enhanced across all key areas. The KnorrExcellence (KE) business model which has now been rolled out across the Group was again enhanced in 2010 and two new initiatives were added.
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The FIT initiative (Finance & IT Excellence) brought the integration of processes from the areas of finance and IT into the KE model. The aim of the initiative is to prepare the organization to face future challenges by establishing bestin-class processes in the fields of finance and IT. The PEX initiative (People Excellence) involved upgrading existing human resources and executive development tools and adding new ones. The aim of the initiative is to promote qualified and talented employees at KnorrBremse and retain them in the long term. In PEX, KnorrBremse has created a pioneering basis for the ongoing enhancement of its own leadership culture. Q-First stands for the optimization of three aspects: professional project management, a robust product development process, and a zero defect strategy in the production and assembly sectors, in the interest of attaining even higher quality. Other aspects also pursued successfully in 2010 included stabilizing supplier structures and improving the sustainable resolution of complaints. One focus of the Knorr-Bremse Production System (KPS) in 2010 was on the optimization of entire value streams. The aim of a holistic value stream approach is to be able to respond faster and more flexibly to customer wishes. In the year under review the foundations for this approach were reinforced at methodology level as well as in the course of actual projects. At the new factories in Budapest and Liberec, for example, the production processes were interlinked in such a way that throughput times were substantially reduced. This approach was not restricted to newly built facilities, however; workshops were also held to adapt it to existing plants such as Berlin, Germany, and Melksham, UK. In the Rail Vehicle Systems division, one key measure was to anchor the specific requirements of the International Railway Industry Standard (IRIS) in the various processes
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Assets, financial status and profitability
and ensure compliance across all plants. In 2010 all KnorrBremse plants worked hard to meet the new and more rigorous requirements of IRIS Revision 02 and were rewarded by recertification.
In 2010 the main factors in the development of the KnorrBremse Group’s business were growth in the rail vehicle sector, which varied from one region to the next, and the incipient recovery of the commercial vehicle markets.
For several years now the Strong Focus program has successfully brought together all activities designed to boost productivity, cut costs and promote growth. As part of a multi-year forward projection, valuable ideas submitted by the workforce and management are collected, evaluated and gradually implemented. In 2010 this brought further substantial cost savings and improvements in productivity along the value chain, helping safeguard the company‘s competitiveness.
Consolidated sales rose 34.5% in 2010 to EUR 3,712.2 million (2009: EUR 2,760.9 million). In Europe, consolidated sales were up 16.0% to EUR 1,886.0 million (2009: EUR 1,626.0 million), which corresponds to 50.8% of the consolidated total (2009: 58.9%). The Americas contributed EUR 827.0 million (2009: EUR 620.4 million) or 22.3% (2009: 22.5%) to consolidated sales. In the Asia/Australia region, sales amounted to EUR 999.2 million (2009: EUR 514.5 million), which equates to 26.9% (2009: 18.6%) of the consolidated total. Incoming orders were valued at EUR 4,040.0 million (2009: EUR 3,184.5 million), 8.8% above the level of annual sales and 26.9% up on the previous year, exceeding the EUR 4 billion mark for the first time. Orders on the books at the Knorr-Bremse Group rose 17.8% in the year under review to EUR 3,381.8 million (2009: EUR 2,870.7 million). Net income for the Knorr-Bremse Group was up 142.5% in the year under review to EUR 239.4 million (2009: EUR 98.7 million). Net return on sales reached 6.4% (2009: 3.6%). The European region contributed EUR 109.8 million to net income, corresponding to a net return on sales of 5.8%. Net income from the Americas totaled EUR 47.3 million, with a net return on sales of 5.7%. The Asia/Australia region posted net income of EUR 82.3 million, which equates to a net return on sales of 8.2%. The consolidated balance sheet total rose 31.8% in 2010 to EUR 2,194.2 million (2009: EUR 1,664.4 million), largely influenced by the sales-led increase in accounts receivable and inventories, and the rise in liquid funds. At year-end 2010, total assets represented 59.1% of sales. As a proportion of the balance sheet total, intangibles, fixed assets,
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Overall assessment of the economic position of the Group
and investments were down against the prior-year level to 36.5% (2009: 42.4%). Working capital, defined as the sum of inventories and accounts receivable, minus accounts payable trade, rose as a result of the increased volume of orders to EUR 415.6 million at year-end (2009: EUR 289.2 million) or 40.3 days’ sales (2009: 37.7 days). The equity ratio rose by 2.4 percentage points from 32.0% to 34.4%. Of the Group’s total assets, 45.5% are in the European region, 23.9% in the Americas, and 30.6% in the Asia/Australia region. The improvement of EUR 215.0 million in net liquidity to EUR 202.3 million was achieved primarily by an inflow of funds from cash flows from operating activities in the amount of EUR 456.4 million. Substantial capital requirements were generated in 2010 by investments (EUR 113.4 million) and the acquisition of Sigma Transit Systems Pty. Ltd., Wetherill Park, Sydney, Australia, and Heine Resistors GmbH, Dresden, Germany. The ratio of net liquidity to shareholders‘ equity stood at 26.8%. In 2009 the ratio of net indebtedness to shareholders’ equity (gearing) was minus 2.4%. Knorr-Bremse‘s robust strategic positioning, the positive development of the company‘s business and its excellent working capital management were confirmed by the external rating agencies Standard & Poor’s and Moody’s, who have been rating the Knorr-Bremse Group since 2000. Moody‘s awarded Knorr-Bremse a “Baa1/Outlook positive” rating, while Standard & Poor‘s rated the company “A-/Outlook stable”. That makes Knorr-Bremse the only familyowned company in the Standard & Poor‘s “Global Automotive Suppliers Ranking 2010” with investment grade status to be awarded an “A” rating.
Within the general economic environment described above, the Knorr-Bremse Group has maintained its overall position with regard to its assets and financial status. The Group, which was already almost free of debt at the end of 2009, was able to build up substantial net liquidity in 2010. The Group’s profitability was ensured by rigorous cost management and above all by the internal optimization of processes and structures. With an equity ratio of 34.4% and net liquidity of EUR 202.3 million, the structure of the Group’s assets is extremely stable, so that it can continue to readily meet its financial obligations.
Knorr-Bremse AG As the parent company, Knorr-Bremse AG performs the role of service provider and holding company, as well as a strategic management function on the operational side. The marked decline in income from investments in associated and related companies meant that income before taxation fell to EUR 119.3 million in the year under review (2009: EUR 141.7 million). At EUR 81.9 million, net income for the year was higher than the dividend paid out in 2010 in the amount of EUR 52.0 million, so that the unappropriated retained earnings of Knorr-Bremse AG increased by EUR 29.9 million to EUR 262.6 million (2009: EUR 232.7 million). Along with interests in affiliated companies, the balance sheet of Knorr-Bremse AG largely reflects receivables from and payables to Group companies and these are centrally administered, partly within the framework of the cashpooling process managed by Knorr-Bremse AG. All business processes within the parent company KnorrBremse AG are analyzed, documented and optimized with the aid of Knorr Excellence.
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Appropriation of retained earnings Knorr-Bremse AG posted unappropriated retained earnings of EUR 262.6 million in 2010 (2009: EUR 232.7 million). The Annual Shareholders Meeting will be asked to approve the proposal that an amount of EUR 156.0 million from the unappropriated retained earnings of Knorr-Bremse AG be used to pay a dividend of EUR 60.00 per dividend-bearing share with a par value of EUR 26.00, with the balance to be carried forward to new account.
Relations with affiliated companies KB Holding GmbH, Grünwald, Germany, directly holds more than half the share capital of Knorr-Bremse AG. Pursuant to § 312 German Corporation Law (AktG), a report on relations with affiliated companies has been drawn up which includes the following statement: “In the legal transactions listed in the Report on Relations with Affiliated Companies, in accordance with the circumstances known to us at the time at which the said transactions took place, our company received appropriate counter-performance in each case.” The report was audited by the Auditors and received their unqualified opinion.
Assets Balance sheet total in EUR millions
FIxed assets/intangibles
Investments
Current assets/RAP
Liquid assets
21
Liabilities 1,664.4
40%
2%
2,194.2
1,664.4
2,194.2
34%
32%
34%
3%
10%
9%
49%
49%
48%
52%
9%
14%
10%
5%
2009
2010
2009
Balance sheet total in EUR millions
Shareholders’ equity
Pension accurals
Short-term debt
Borrowings
2010
Structure of assets, liabilities and finances of the Knorr-Bremse Group
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Regional developments by division
In the year under review, the Rail Vehicle Systems division contributed EUR 2,024.4 million (2009: EUR 1,552.6 million) to consolidated Group sales and the Commercial Vehicle Systems division EUR 1,700.7 million (2009: EUR 1,221.5 million). The growing buoyancy of the commercial vehicle markets led to convergence of the contribution to sales of the two divisions in 2010. The Commercial Vehicle Systems division accounted for 46% (2009: 44%) and the Rail Vehicle Systems division for 54% (2009: 56%) of consolidated sales. The development of the two divisions is set out below for the individual regions that make up the Group.
Europe Rail Vehicle Systems The decline in rail freight transportation that set in towards the end of 2008 under the influence of the financial and economic crisis continued in the year under review, with a sustained impact on the market situation for the Rail Vehicle Systems division in both the original equipment and aftermarket sectors. Compared to the previous year, far fewer freight cars and locomotives were purchased in 2010. Production of freight cars was down by around 30% year-on-year, with locomotive output falling approximately 20%. In addition, in the European passenger transportation sector several projects were postponed or cancelled in 2010. In the UK in particular, three major projects were shelved on account of local financial difficulties. Despite the prevailing challenging market situation in Europe, Knorr-Bremse was able to win some important orders. In particular, the company‘s position in the European mass transit sector was strengthened by incoming orders from the metro and streetcar segments. One example here was the order Knorr-Bremse obtained from Alstom to sup-
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ply the braking systems for 450 cars (including options) for one line of the Amsterdam metro. In the streetcar segment, the company won an order from vehicle builder Stadler to supply door and braking systems for its Variobahn streetcars, which are destined for service in various European cities. In the multiple unit and high-speed rail markets too, KnorrBremse was able to conclude significant sales agreements. For example, Knorr-Bremse was named sole supplier of braking systems for the new generation of double-decker multiple units built by Stadler in Germany. The company also won the order to supply the braking and door systems for 1,160 cars of the TWINDEXX high-speed platform from Bombardier. Knorr-Bremse also signed a service agreement with Bombardier for the TRAXX fleet, one of the leading European locomotive platforms. Siemens is building 270 new multiple units for the 2014 Winter Olympics in Sochi, Russia, and here too Knorr-Bremse will be supplying the braking system. In the HVAC segment, Knorr-Bremse was the successful bidder for the two major French projects Régiolis (with Alstom) and Régio2N (with Bombardier) and will initially be supplying systems for around 1,300 cars. The company has also secured a strong position regarding possible future options in both projects.
Commercial Vehicle Systems After truck output in Western Europe had fallen to around 200,000 units in 2009, the market began to recover in 2010 and by year-end production had reached 320,000 trucks. However, while this equated to a 60% increase year-onyear, the market still trailed far behind its pre-crisis level. All of Knorr-Bremse‘s customers in the original equipment sector benefited equally from this upturn, which therefore had a positive impact on the full range of products manufactured and marketed by the European production network of Knorr-Bremse Systeme für Nutzfahrzeuge GmbH. The output of trailers in Western Europe also recovered in
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2010 after falling 65% in 2009, the steepest decline of any segment in the region. Following on from 70,000 units built in 2009, trailer output increased by over 50% and exceeded the forecast level of 105,000 units. The level of aftermarket sales rose by 21% against the prior year to reach an all-time high in 2010 after adjustment for foreign exchange effects. Production of trucks in Central and Eastern Europe also increased, rising 37% from around 55,000 units in 2009 to 75,000 units in 2010, as the pace of recovery failed to match that of Western European truck output. The key sales driver in Europe in 2010 was once again the disc brake, which also celebrated a milestone in the year under review. In the fall of 2010, the 20 millionth disc brake came off the line at the company‘s largest disc brake production facility in Aldersbach, Germany. In the Western European OEM market, Knorr-Bremse was able to maintain its leading role as supplier of disc brakes for tractor units. Another production milestone came up in 2010 at the company‘s Kecskemét plant in Hungary, where the 1 millionth Air Processing Unit (APU) was manufactured in the spring of 2010. Since 1997, the APU, which was originally developed by Knorr-Bremse in the 1990s, has seen successful service with Daimler, Iveco and DAF, among others. 2010 also brought the next stage in the expansion of the exceptionally successful Knorr-Bremse KAMA joint venture initiated in 2007 between Knorr-Bremse and the largest Russian commercial vehicle builder KAMAZ. May 2010 saw the inauguration of the first assembly line for torsional vibration dampers at the production plant in Naberezhnye Chelny. The new line expands the product portfolio of the joint venture, which was previously focused on the production of drum brakes.
23
North America Rail Vehicle Systems The freight car market in North America experienced a further decline in 2010. New freight car construction decreased from around 22,000 units in 2009 to approximately 15,000 units in the year under review, the lowest level since 1987. On top of this, North American customers took delivery of just 350 locomotives in 2010, a downturn of around 30% and the lowest level since 1992. For equipment manufacturers in the freight car and freight locomotive sectors, however, second-half order intake showed signs of improvement and orders on the books at year-end indicated better prospects ahead. Even so, and despite a decline of almost 10% in the North American freight car fleet due to scrapping, some 20% of the fleet remained idle, even at year-end. The aftermarket too was severely impacted. In the freight sector, Knorr-Bremse was able to mitigate the effects of the continued strong market downturn in 2010 by improvements in market share and freight car content. The key factors here were the company‘s strong position in the original equipment and aftermarket sectors, increased exports, especially via the growing number of inter-company shipments to China, and gains due to increased investments by railroads in new technology products, such as the electronic braking system EP-60 and the Locomotive Engineer Assist Display and Event Recorder, LEADER. In North America too, several major projects in the passenger transportation sector were cancelled or postponed. But even against this difficult backdrop Knorr-Bremse succeeded in winning the contract from the Washington Metropolitan Area Transit Authority (WMATA) to equip 364 vehicles with brakes and HVAC systems by 2015. 2010 brought growing demand for the type VV-120T oilfree Air Supply Unit in the North American market. WMATA,
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for example, procured another 180 units for retrofitting to their existing vehicle fleet, while New York Transit Authority ordered 332 oil-free units for their fleet of vehicles. The push to expand high-speed rail services in North America continued in 2010. Knorr-Bremse expects this to have a positive impact on the company’s long-term prospects.
Commercial Vehicle Systems For the first time since 2006, the decline in truck output in North America was reversed in 2010. However, production remained extremely low, 56% down on the record level of 2006. Compared to the prior year, output was up 23% at approximately 218,000 units. This positive trend was echoed in the aftermarket sector, where growth was around 20% in the year under review. In 2010, Knorr-Bremse was again able to win important orders in North America. As a result, Bendix Spicer Foundation Brake LLC expanded its position in the North American drum brake market. The company’s drum brakes were adopted as standard for the on-highway and vocational commercial vehicles built by Mack Trucks. Bendix has also experienced continued strong acceptance of its air disc brake technology at OE and fleet customers, not least in anticipation of the new Stopping Distance Regulation in North America, where phase one launches in August 2011. In addition, Bendix reinforced its collaboration with other OEMs. As announced at the Mid-America Truck Show in 2010, the PACCAR company‘s Peterbilt Motors brand became the first North American heavy truck manufacturer to make air disc brakes standard equipment on its flagship Model 587. Bendix safety technology products were also featured during PACCAR‘s eight-month Peterbilt and Kenworth tours and during the 2010 Volvo North American
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Driving Success tour. In particular, Bendix was able to showcase the superior performance of the Bendix ADB22X air disc brakes, Bendix ESP, and the Bendix Wingman ACB – Active Cruise with Braking collision mitigation technology. Bendix also reached two major production milestones in 2010: The company built its 750,000th BA-921 air compressor, first introduced in 2002, and Bendix shipped its 100,000th ESP full stability system, first launched in late 2004.
South America Rail Vehicle Systems Production of freight cars in South America showed a marked recovery in 2010 compared to the previous year, climbing over 100% to 2,800 units. Procurement of freight cars, however, remains at a relatively low level (2008: 5,000 freight cars procured). The expansion of mass transit networks in major cities such as São Paulo, Buenos Aires, and Rio de Janeiro, by contrast, led to a positive development in the rail-borne passenger transportation sector in the year under review. In all, KnorrBremse is to equip 450 cars with braking, HVAC, and door systems by 2012.
Commercial Vehicle Systems Following a 28% decline in output in 2009, truck production rose 56% in 2010 to 184,000 units. This was even higher than the record level of 163,000 vehicles built in 2008. The main driver of this development was the Brazilian market. As a result of the marked economic recovery across all sectors – and in the construction, infrastructure, and commodities industries in particular – combined with easier
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access to vehicle financing, transportation volumes soared in the year under review. In the context of the introduction of mandatory ABS antilock brake systems for commercial vehicles in Brazil, KnorrBremse was able to conclude an agreement with Ford Caminhões governing the supply of ABS technology: From 2013, Knorr-Bremse will be meeting 100% of the ABS needs of Brazil‘s third-largest commercial vehicle builder. This order also involves meeting the entire EBS requirements of Ford Otosan in Turkey.
Asia/Australia Rail Vehicle Systems The rail vehicle market in Asia/Australia continued its positive development in 2010. The main growth driver was China, where state stimulus packages and extensive infrastructure projects resulted in high demand for rail vehicles. Knorr-Bremse‘s strategy in China, based on its own production plants and close collaboration with its Chinese partners, was rewarded by further high-speed train orders from the region. Knorr-Bremse is supplying the braking and door systems for over 1,000 cars for the CRH1-380 highspeed train. The company also received a follow-on order for the braking systems for 320 cars from the CRH1-250C series. In addition, Knorr-Bremse won the order to supply the bogie equipment for 1,920 cars of the CRH2-380 highspeed train. China now has the largest and fastest highspeed fleet in the world, operating on a network of some 7,000 kilometers of high-speed track. Knorr-Bremse is the only supplier of brake equipment for high-speed trains to cover all existing vehicle platforms in China. Along with the high-speed sector, orders were also obtained in the mass transit and locomotive markets. In 2010 Knorr-Bremse was commissioned to supply the braking
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systems for around 1,400 new locomotives, thereby further expanding its market position. In the context of the ongoing extension and construction of the metro systems in Guangzhou, Shanghai, and Beijing for example, the company won orders to supply braking systems for almost 700 cars. In addition, Knorr-Bremse was commissioned to supply some 1,500 platform screen doors for metro projects in Shenzhen and Dalian. The other Asian markets also developed positively: In India Knorr-Bremse posted further growth in the classical market for freight and passenger transportation vehicles and won a ground-breaking order from Indian Railways to equip over 11,000 freight cars with modern bogie-mounted brake systems. In 2009 and 2010, Knorr-Bremse also secured a large proportion of the mass transit projects in India, supplying the braking, door and HVAC systems for over 600 cars. In the heavy-haul locomotive sector too, Knorr-Bremse was able to build on its existing market position and win some key orders. In Japan the company continued its successful association with the Shinkansen E5. Back in 2009, KnorrBremse had already been selected to supply bogie equipment for all of the power cars for the new generation of Shinkansen trains. Shipments began in 2010 and will continue until 2012.
Commercial Vehicle Systems The Asia/Australia region reported a further increase in truck production in 2010. This was due to the contribution of China, the world‘s largest commercial vehicle market in unit output terms. In China, truck production was up 47% at 1,328,000 units in 2010. Once again this development was supported by the state stimulus programs introduced in 2009, which led to a veritable boom in commercial vehicle production in the first half of the year under review. In the second half year, state intervention in the capital mar-
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ket also throttled back domestic truck production, so that output volumes returned to normal. Chinese manufacturers hold a dominant 98% share of the domestic commercial vehicle market, which explains why foreign manufacturers and suppliers are increasingly entering into joint ventures in order to secure a share of the growing market. By signing a joint venture agreement with the Chinese company Chongqing CAFF Automotive Braking & Steering Systems Co. Ltd. governing the production of commercial vehicle brake system and drive train components, Knorr-Bremse too has succeeded in taking an important strategic step forward in the Chinese market. The joint venture opened for business at the beginning of 2011. Knorr-Bremse‘s local presence in China through its companies in Dalian and Shanghai already dates back several years. The positive market development in 2010 brought Knorr-Bremse major orders in the compressor, torsional vibration damper, disc brake and electronic brake control system segments. For example, Knorr-Bremse won the order to supply CNHTC with compressors for its D20/26 product line. In addition, Knorr-Bremse will be supplying disc brakes to the Chinese OEM Yutong. To meet rising demand for disc brakes in the Chinese market, Knorr-Bremse also prepared the ground for setting up a disc brake assembly line at its Dalian plant. The commercial vehicle markets in India and Japan also experienced an upswing in 2010. Truck production in India increased 83% to 280,000 vehicles built. Japan, which was hard hit by the global economic crisis in 2009, recovered to step up its truck production by 55% to 155,000 units. In 2010, Knorr-Bremse Japan was able to obtain a major order from vehicle builder Isuzu. For the first time, Knorr-Bremse will be supplying drum brakes for a Japanese light truck. In the past, these models have featured hydraulic brakes. The scope of supply will comprise the complete wheelend module, plus the electronics and specific valves.
The Americas 22.3% Asia/Australia 26.9% Europe 50.8% Consolidated sales by region
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Capital expenditure and depreciation
In 2010, the Knorr-Bremse Group invested EUR 113.4 million in fixed and intangible assets, which was 13% more than in the previous year (2009: EUR 100.6 million). This upward trend was due to the marked improvement in the business environment in the year under review. At EUR 74.8 million, 66.0% of the company‘s capital expenditure was invested in Europe. EUR 21.3 million (18.8%) was invested in the Americas and EUR 17.3 million (15.2%) in Asia/Australia. Allocation of capital expenditure was such that the Rail Vehicle Systems division benefited in the amount of EUR 61.2 million (2009: EUR 66.6 million) and the Commercial Vehicle Systems division in the amount of EUR 50.4 million (2009: EUR 33.4 million).
2006 2007 2008 2009 2010
Depreciation on intangible and fixed assets increased across the Group, rising from EUR 117.7 million in 2009 to EUR 146.9 million in the year under review. With EUR 72.4 million, Europe accounted for the majority of depreciation, followed by Asia/Australia with EUR 41.4 million and the Americas with EUR 33.1 million. A breakdown of depreciation by division shows that the larger proportion of EUR 82.9 million (2009: EUR 51.3 million) was accounted for by Rail Vehicle Systems, while depreciation at the Commercial Vehicle Systems division amounted to EUR 61.0 million (2009: EUR 63.4 million). In 2010, investment activity focused primarily on the expansion of production capacities in Asia and on replacement investments, as well as on the construction of the new production plant in Budapest (Hungary).
107 104 140 113 134 115 101 118 113 147
Capital expenditure Depreciation Consolidated capital expenditure and depreciation in EUR millions
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Research and development
As a technology group, Knorr-Bremse continued to drive forward its research and development efforts in the year under review in close collaboration with its customers. Total expenditure on research and development and project planning amounted to EUR 175.3 million in 2010, which equates to 4.7% of consolidated sales. As the global technology leader in the fields of braking systems for rail and commercial vehicles, Knorr-Bremse develops innovative products distinguished by their safety, high quality, reliability and customer benefits. This also applies to the other fields covered by the product portfolios of the Rail Vehicle Systems division (automatic door systems, airconditioning and driver assistance systems, control components and platform screen doors) and the Commercial Vehicle Systems division (driver assistance systems, torsional vibration dampers and powertrain-related components such as PBS and transmission control systems). Knorr-Bremse‘s success in the market with these products is founded on its comprehensive command of electronics, pneumatics, and mechanical engineering. These capabilities enable the company to adopt an integrated approach and provide its customers with complete systems. In the European commercial vehicle industry in particular, the long-standing trend towards the introduction of innovative system solutions and modular solutions involving the increasing use of mechatronic systems is continuing, which means that Knorr-Bremse has a competitive edge in the marketplace.
In 2010, development activities in the rail vehicle sector focused among other things on systems and products that meet the demanding requirements of the Chinese mass transit and high-speed train markets. In the commercial vehicle sector, development activities included a focus on innovative systems that enhance road safety. In both sectors a great deal of time and effort was dedicated to the advancement of systems that boost energy efficiency. Moreover, both divisions pressed ahead with the development of innovative products for the BRIC countries. The Rail Vehicle Systems division reached an important milestone in its efforts to access the Russian rail vehicle market with the development of a control valve that is compliant with the Russian GOST standards. For the Commercial Vehicle Division too, the development of solutions tailored to the requirements of the BRIC markets also took center stage. In line with Knorr-Bremse‘s regional strategy, in 2010 the proportion of the Group‘s development capacity located in emerging markets such as India and China was again increased. At year-end 2010, the Knorr-Bremse Group employed a worldwide total of 1,999 people in the field of research, development and project planning (2009: 1,885). In 2010 the Group continued to pursue its ambition of realizing innovative solutions that meet local market and customer requirements, and of continuously improving these solutions in the interests of its customers, as evidenced by an impressive number of innovations and awards.
2006
141
2007
159
2008
171
2009
153
2010
175
Consolidated research and development expenditure in EUR millions
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Human Resources
At year-end 2010, the Knorr-Bremse Group employed a total of 16,277 persons or 12.8% more than at the end of 2009. In the European region, there were 9,243 employees on the payroll at year-end 2010 (2009: 8,555). At 56.8%, the proportion of employees in Europe declined from 59.3% in 2009. The workforce in Germany totaled 3,235 employees, which is 164 more than in 2009 (3,071) and equates to 19.9% of the total Group payroll. The number of employees in the Americas also rose in 2010, reaching 3,556 at year-end compared to 3,217 in 2009. The proportion of the total Group workforce in the Americas showed a slight downturn to 21.8% (2009: 22.3%). In Asia/Australia the size of the workforce again increased from 2,660 in 2009 to 3,478 on the back of regional growth. The significance of the region is also reflected in a further rise in the proportion of the payroll now employed in Asia/Australia, which rose from 18.4% in the previous year to 21.4% in 2010.
The number of employees in both divisions increased, although without keeping pace with the rise in sales. In the Rail Vehicle Systems division, the number of employees at yearend 2010 was again up at 9,523 (2009: 8,256). In the Commercial Vehicle Systems division, following a crisis-led decline in the prior year, the headcount rose to 6,590 employees (2009: 6,014). In view of demographic trends and in line with the company‘s international growth strategy, Knorr-Bremse attaches great importance to sustained human resource development. The importance of HR development is underlined by the People Excellence (PEX) initiative which bundles all of the necessary measures. The targeted advancement of high potentials and the creation of the appropriate development and career opportunities provide a source of employee motivation and support long-term loyalty. Through cooperation with key universities and participation at recruiting and university job fairs, Knorr-Bremse is regularly perceived as an innovative employer by young talents. And in line with the increasingly international nature of its HR efforts, the company continues to support periods of employment at foreign locations within the Group. We would like to thank all of the company‘s employees for their commitment and hard work in 2010. Our thanks also go to the employee representatives for their constructive collaboration.
The Americas 21.8% Asia/Australia 21.4% Europe 56.8% Group workforce acc. to regions on Dec. 31, 2010
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2006
13,035
2007
13,943
2008
14,999
2009
14,432
2010
16,277
Group workforce on Dec. 31, 2010
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Social responsibility and sustainability
Particularly in times of globalization and climate change, being successful invariably also means conducting all aspects of one‘s business, from planning to execution, with foresight. Doing so in awareness of a responsibility for the impact of one‘s actions on people, the environment, and society, and working relentlessly to optimize that impact, has become a maxim of modern corporate management. In 2010, several projects were initiated to further enhance Knorr-Bremse‘s sustainability performance. For example, Knorr-Bremse became a signatory to the United Nations Global Compact initiative, thereby not only making a commitment to observe the Global Compact‘s ten globally acknowledged principles in the fields of human rights, labor, environment, and anti-corruption, but also undertaking to implement and promote them in its everyday work.
efforts in the wake of natural disasters, such as the earthquake in Haiti, floods in Pakistan and the Czech Republic, and the toxic sludge disaster in Hungary. Knorr-Bremse Global Care was founded in response to the tsunami disaster of December 26, 2004 to provide unbureaucratic, effective and lasting help to the victims. Since then, 69 aid projects have been realized in a total of 31 countries on four continents. The projects are supervised on a voluntary basis and with great dedication by KnorrBremse employees. By year-end 2010, with donations totaling EUR 5.3 million, Global Care had reached out to help some 200,000 people.
The spotlight in 2010 was on the adoption of the KnorrBremse Corporate Social Responsibility (CSR) Strategy, which anchors corporate responsibility and sustainability in the corporate strategy, the management system, and the company‘s business processes. Together with the Knorr-Bremse Corporate Values and the UITP Charta for Sustainable Development, the ten principles of the Global Compact form the basis for all activities and commitments in this area. Through its new CSR strategy, Knorr-Bremse is also responding to the needs of its customers, who are increasingly demanding documentary proof of compliance with and management of ecological and social standards. As in previous years, in 2010 Knorr-Bremse supported the charitable organization Knorr-Bremse Global Care, which was founded in 2005, providing funding for its activities in the amount of EUR 1,000,000 in the year under review. The main focus of the organization‘s activities in 2010 was on the pursuit of long-term projects, such as the construction of a permanent hospital ward in Burma‘s Irrawaddy Delta which was devastated by Cyclone Nardis in 2008. In 2010, the organization also supported several emergency relief
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Follow-up report
Subsequent to the conclusion of fiscal 2010, effective January 1, 2011, Knorr-Bremse Nordic Rail Services AB, Lund, Sweden, acquired the Swedish specialist in the door systems aftermarket business Kalmar Tågkompetens AB, Kalmar, Sweden, strengthening its portfolio in the Northern European market. Moreover, on January 1, 2011, the Knorr-Bremse IT-Services GmbH organization, based in Munich, Germany, became operational. Knorr-Bremse IT-Services GmbH bundles the IT activities of Knorr-Bremse AG, Munich, Germany, KnorrBremse Systeme für Nutzfahrzeuge GmbH, Munich, Germany, and Knorr-Bremse Systeme für Schienenfahrzeuge GmbH, Munich, Germany, under one roof. Effective January 19, 2011, Knorr-Bremse Asia Pacific (Holding) Ltd., Hong Kong, China, and the Chinese manufacturer Chongqing CAFF Automotive Braking & Steering Systems Co. Ltd., Chongqing, China, founded the joint venture company Knorr-Bremse CAFF Systems for Commercial Vehicles Chongqing Ltd., Chongqing, China. Knorr-Bremse holds a 66% stake in the joint venture with the remaining 34% being held by its Chinese partner. The joint venture company manufactures brake components in the air supply and brake control segments, as well as components for transmission and clutch control systems.
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Report on risks and opportunities
The Knorr-Bremse Group operates an established, multistage, worldwide planning, reporting, and controlling system. Standard reporting periods and report contents have been defined across the Group, and these formal reports are supplemented in greater depth by presentations on routine and special subjects at monthly review meetings. In addition, the Knorr-Bremse Group has put in place a standardized risk management system at top management level. This is based on a semi-annual risk report that is discussed at regular Executive Board meetings and used as a basis for introducing appropriate measures. This ensures that the operational risk management system is duly complemented at strategic level. In its entirety, this control system has proved an effective, reliable network for the early identification and remediation of potentially undesirable developments. Risk assessment and management also forms an important part of the process of describing, documenting, and continuously improving business processes across the Knorr-Bremse Group (Knorr Excellence model).
Business risks The Knorr-Bremse Group is active in business segments that for years have been characterized by a dynamic process of consolidation on the customer side. This has resulted in powerful demand-side leverage, with corresponding pressure on prices. Knorr-Bremse responds to these factors with innovative products and systems, positioning itself as a partner for long-term relationships that target cost-effective solutions for the customer. The earlier Knorr-Bremse is involved in the customer‘s project as a whole, the better the chance of attaining that target. Regional commercial vehicle and rail vehicle markets are subject to irregular cycles. Market volatility and fluctuating growth can affect individual suppliers, market segments or entire regions. As a globally active corporate group, Knorr-
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Bremse is particularly exposed to the risks implicit in the changing state of the global economy. The development of the economies of individual countries and of the worldwide flow of trade is carefully monitored in order to minimize risks affecting the company‘s sales. At the same time, the international presence of Knorr-Bremse renders the Group largely immune to risks that are restricted to an individual region. In the course of its dynamic growth in recent years, KnorrBremse has integrated a number of companies or shareholdings into the Group. In the past, the financial and cultural risks typically associated with such integration processes were minimized by means of systematic analysis and assessment of the target companies. When it comes to overcoming cultural barriers, Knorr-Bremse can look back on 20 years of experience with integration processes related to the acquisition of numerous companies as well as to joint ventures in which the company holds a majority stake and is responsible for operational management. This experience will pay dividends in any future mergers and acquisitions and has been mapped in the form of structured processes. Knorr-Bremse and its systems are regularly at the leading edge of technological development. This also engenders risks which, because of the safety-critical nature of the application concerned, require particularly careful monitoring. To this end, Knorr-Bremse routinely employs comprehensive quality planning, quality assurance, and testing procedures. To ensure continuous improvement of its quality procedures, Knorr-Bremse takes its lead from international standards. The individual plants regularly undergo internal and external audits in this context. Above and beyond this, despite having already attained a very high level of quality, both divisions work intensively to continuously improve the quality and reliability of their products with the aid of the Knorr Excellence quality program “Quality First”.
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Operational risks Risks due to production downtimes are covered by commercially appropriate insurance contracts. Flexible working time models enable unexpected short-term shifts in capacity requirements to be accommodated efficiently. Knorr-Bremse maintains a close working relationship with many suppliers and service providers. In order to avoid delivery delays or quality defects, which in turn could lead to lost production time and have a negative impact on earnings, Knorr-Bremse attaches great importance to careful supplier selection procedures. Suppliers are also continuously subjected to technical and commercial audits. Exchange rate risk is not of crucial importance for the Knorr-Bremse Group because geographic diversification over recent years has enabled the Group to establish a high proportion of local manufacturing and local suppliers within the respective currency zones. In order to limit the residual exchange rate risk related to transactions across different currency zones, Knorr-Bremse is increasingly identifying opportunities to exploit compensatory supply volumes within the Group. In selected cases, currency risks are also hedged by means of derivatives. Such measures, however, serve exclusively to hedge underlying transactions within the scope of normal business operations. The basis for managing foreign exchange risks is provided by the Knorr-Bremse Guidelines on Managing Currency Exposure, which set out the procedures to be followed and the necessary scope of hedging transactions in binding form for all Group companies. The monitoring of compliance with these Guidelines is part of the relevant Knorr Excellence process. The risk of fluctuations in commodity prices that are of relevance to Knorr-Bremse is also hedged by means of derivatives, in so far as such fluctuations could have a substantial impact on the Group‘s profitability. This is the case with steel and aluminum.
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order to avoid malfunctions, Knorr-Bremse attaches great importance to harmonization of the hardware and software architecture, the integrity and security of existing data, appropriate back-up solutions, and careful management of access control. Compliance with the IT Security Guidelines is comprehensively monitored with the aid of internal and external audits at all major sites around the world. The Corporate Data Center in Munich, Germany, meets the very highest requirements (industry standard) in terms of efficiency, reliability, and security. Based on this platform, the necessary global transparency and the integration of all corporate sites – and of recent additions in particular – are being further enhanced. In response to increasingly stringent environmental requirements, Knorr-Bremse has aligned its activities with the international standard ISO 14001. The majority of the company’s sites have already been certified or recertified accordingly. In Asia, as well as in the other regions, imitation and counterfeit products remain a serious threat to business in the commercial vehicle and rail vehicle sectors. The most effective countermeasure to this threat is Knorr-Bremse’s technical expertise, which on account of the safety-critical applications of its products is both recognized and appreciated by customers around the world. Careful analysis of the Group-wide risk profile has revealed that no identifiable risks exist that would threaten the survival of the company or have a substantial impact on its assets, financial status or profitability. Nor are any such risks currently expected to arise in the future.
Business processes within the Knorr-Bremse Group are supported by powerful and state-of-the-art IT systems. In
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Outlook
In 2011 the Knorr-Bremse Group expects to see the positive development of its business continue, albeit in an environment that remains highly volatile. Following the worldwide market recovery that set in during 2010, we are currently expecting that trend to persist, although the pace of recovery will vary considerably from one region to the next. In Europe a divided picture will likely emerge. On the one hand the export-oriented countries – and Germany in particular – will show strong growth driven by the recovery of global trade. On the other hand the countries of Southern Europe and Ireland will remain burdened by high levels of national debt. In the USA, the world‘s largest economy, levels of consumer spending which are being depressed by prevailing high levels of unemployment are still considered extremely critical. The emerging Asian markets will probably continue to make a significant contribution to economic growth in 2011. In the European rail vehicle market there are currently no signs of any decisive growth drivers for 2011. The locomotive sector is expected to make a modest recovery while the freight car market remains stagnant. A stable market environment is anticipated for the passenger sector. The postponement or cancellation of major procurement projects in 2010 was a key factor in the continued depressed state of the market. In Russia, large-scale projects associated with the 2014 Winter Olympics in Sochi and the 2018 World Cup are revitalizing the market. In the European commercial vehicle sector the recovery that has set in is expected to continue in 2011. The volume of trucks built in 2011 will probably be up on the prior-year level. However, the record level of 2008 will not be repeated in the medium term. In fiscal 2011, the main challenge for the Commercial Vehicle Systems division in Europe will be posed by the in-
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creasing globalization of its business. Further expansion into markets of the future, such as Russia and China, and the shipments this calls for from Europe, along with the introduction of products that meet specific local requirements, and selective penetration of new fields of activity should drive the growth of the company‘s business in the medium term. In all growth projects, the focus is on increasing customer benefits and extending our technology leadership, with the quality and reliability of all products being assigned top priority. In the North American rail vehicle sector, Knorr-Bremse anticipates that 2011 will bring a moderate market recovery for equipment manufacturers for freight cars and locomotives compared to 2010. In both of these segments, however, growth will be at relatively low levels. To offset the weak state of the domestic market, North American locomotive manufacturers are stepping up their export activities, bringing new challenges for market players. In the passenger transportation sector in North America the anticipated investments failed to materialize in 2010, leading to a marked deterioration in the mood of the market, so that the outlook for 2011 is for zero growth. The commercial vehicle market in the North American region is expected to continue its modest recovery in 2011. The sharp drop in unit sales anticipated for 2010 on account of the new emissions regulations will probably not happen in 2011 either. Owing to increasing market shares in the OEM sector, aftermarket business is set to grow in 2011 as well as in subsequent years. In the South American region the rail freight sector is expected to show a recovery, driven by the ongoing rise in demand for raw materials. In particular, the infrastructure projects associated with the 2014 World Cup in Brazil and the 2016 Olympics in Rio de Janeiro are exerting a positive influence on the market. The Knorr-Bremse Rail Vehicle Systems division will also be involved in the expansion of the
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mass transit networks in São Paulo, Buenos Aires, and Rio de Janeiro. In the South American commercial vehicle sector, the market environment is expected to remain stable compared to 2010. The construction activities triggered by major events will have a supporting impact on the commercial vehicle market, which will likely be influenced by advance purchases, given that the introduction of EURO 5 emissions standards is planned in 2012. In Asia/Australia Knorr-Bremse expects to see the expansion of the transportation infrastructure continue over the next few years. It is anticipated that growing environmental awareness, higher energy costs, and increasing levels of gridlock on the roads will have a positive impact on the development of rail transportation. The focus here will be on the passenger sector, although the rail freight market will also benefit from this development. In 2011 Knorr-Bremse will continue to expand its activities in the rail vehicle sector in the Asia/Australia region. The high pace of growth in the region’s rail fleets will also create potential new aftermarket business. At the Rail Vehicle Systems division’s plants in China, measures will be taken to increase capacities in order to meet existing orders and future customer demand.
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scribed above for the further growth of the global economy. Presuming that the economy continues to pick up speed, earnings are expected to remain stable. Based on the assumptions made for the Group, the assets, financial status, and profitability of Knorr-Bremse AG too can be expected to remain stable, depending on income from the company‘s investments. In 2011 Knorr-Bremse will continue to pursue a policy geared to safeguarding the company‘s long-term health and in particular will be driving forward the steps already introduced to expand its capacities in regions where demand is growing. These include, for example, an intensive marketing effort in Asia and the introduction of innovative products, as well as the selective expansion of the company‘s fields of activity. Extending this outlook to 2012 is difficult on account of market volatility and the risks described above. KnorrBremse currently expects to see global economic growth accompanied by an increase in transportation volumes. Further factors with a positive influence on the development of business for Knorr-Bremse will include the megatrends of ongoing urbanization and the increasing importance of energy-efficiency and safety. Consequently, against the backdrop of the economic context described above, a stable earnings position can be anticipated for 2012 as well.
In the commercial vehicle sector the region is expected to see a steady level of truck production for 2011 as a whole. In the medium term, however, Knorr-Bremse is anticipating renewed growth since China is driving forward its vehicle exports, particularly to Africa and South America. The commercial vehicle markets in India and Japan look set to show a positive development. Based on the regional backdrops set out above, KnorrBremse expects to see the business develop positively in 2011. Progress will, however, be influenced by the risks de-
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Report
Against a background of general economic recovery in 2010, Knorr-Bremse benefited from its strong strategic position with two divisions: Rail Vehicle Systems and Commercial Vehicle Systems. In the rail division one of the main drivers of growth was a dramatic increase of more than 100% in Asian sales, while the truck division benefited from rapidly accelerating recovery in commercial vehicle markets. 2010 saw the company once again invest considerable effort in driving innovation, accessing new markets and improving internal processes. The response of the prestigious rating agencies Moody‘s and Standard & Poor‘s was to upgrade their ratings of the company once again.
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Rail Vehicle Systems
Over the year Knorr-Bremse Rail Vehicle Systems benefited in particular from a high volume of orders from Asia. The main growth driver was China, where state-sponsored programs and large-scale infrastructure projects resulted in buoyant demand for mass transit and mainline vehicles, but the division was also successful in other parts of the region. In a bid to improve its global market position it once again invested extensively in products and production facilities, while at the same time strengthening its position through carefully targeted acquisitions.
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RAIL VeHICLe SYSteMS
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Markets Despite persistent weakness in the European market, Knorr-Bremse won important orders for metros, streetcars, multiple units and high-speed trains. In North America, there was increased demand for environmentally-friendly air supply units and South America experienced a significant recovery in freight car production. In Asia there were positive developments virtually across the board in the rail vehicle market.
Europe
The downturn in European freight traffic continued in 2010, with freight car production declining by some 30% and locomotive production down about 20% on the previous year. In the passenger segment several projects were not implemented as planned. Even so, Knorr-Bremse was able to win a number of important orders. A downturn in the freight sector was compensated by important contracts in the metro, streetcar and multiple unit/high-speed segments.
North America
The North American freight market continued to decline in 2010, with production of new freight cars down from 22,000 units in 2009 to 15,000 in 2010 – the lowest level since 1987. Nevertheless, by the end of 2010 the volume of orders received by Knorr-Bremse had started to grow, indicating possible signs of market recovery. In the passenger sector Knorr-Bremse won a number of major orders in the metro segment.
South America
There was a distinct recovery in South American freight car production in 2010, even though it did not return to pre-crisis levels. The main growth drivers in the passenger sector came from major cities like São Paulo, Buenos Aires and Rio de Janeiro, where local transport networks were extended. Preparations for the Soccer World Cup in Brazil in 2014 and the Summer Olympics in Rio de Janeiro in 2016 are expected to provide a further boost.
Asia/Australia
There was further positive development in the rail vehicle markets in Asia and Australia in 2010. The main source of growth was China, where there was continued strong demand for rail vehicles. The company’s strategy of operating its own production facilities and co-operating closely with Chinese partners reaped rewards in the form of major orders from the high-speed sector in the region. 2010 was also a successful year for Knorr-Bremse in other Asian countries such as India and Japan.
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Market Successes Knorr-Bremse is recognized worldwide as a reliable and innovative manufacturer and business partner. This was once again demonstrated during 2010 by the conclusion of major project agreements in all regions. In China, Knorr-Bremse is to supply braking and door systems for a large number of new high-speed trains; from both North and South America the company received major orders for the metro segment; and in India it is involved in refitting more than 11,000 freight cars with modern bogie equipment. But these were not the only successes recorded by the company. Worldwide sales figures for the Rail Vehicle Systems division in eUR millions 2008
1,431
2009
1,553
2010
2,024
Europe Linear eddy current brakes and door systems for Velaro D Knorr-Bremse is to equip 15 new Deutsche Bahn high-speed multiple units based on the Siemens Velaro platform with the latest generation of eddy current brakes. Knorr-Bremse subsidiary IFE is also supplying the door systems. Specially designed for international operations within Europe, the trains will link France and Germany at speeds up to 320 km/h. Eddy current brakes are completely wear-free and operate without contact between the wheel and the rail. They can be applied progressively and act virtually without delay. In the case of the new Velaro D, the requirements for the braking system were set even higher than usual, mainly because the traction technology is based on bipolar transistors. The higher voltages involved meant the coils of the eddy current brake had to be provided with improved insulation. Knorr-Bremse developed coils capable of withstanding up to 10 kilovolts, and its engineers also enhanced the brake’s characteristics in terms of signal transfer technology. Knorr-Bremse delivered four eddy current brakes to Siemens for testing at the end of 2009 and by January 2010 sample testing had been completed and series production could begin. By mid 2011, output is scheduled to reach eight brake sets per month.
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Pan-European maintenance agreement with Bombardier The first ever pan-European maintenance agreement between Knorr-Bremse and Bombardier was signed during the InnoTrans trade fair in Berlin. Knorr-Bremse is to overhaul the braking systems of all European TRAXX (Transnational Railway Applications with eXtreme FleXibility) locomotives for which Bombardier has full servicing agreements with the owners. The new agreement is not just confined to maintaining the systems supplied by Knorr-Bremse. Parallel to the regular overhaul work, specialists from both companies will also be attending workshops to discuss further improvement of the servicing, particularly in terms of cost and availability. As a systems specialist, for example, Knorr-Bremse can dismantle components in its own service centers to examine their actual condition and develop specific maintenance measures. It is an approach that supports Bombardier’s “total cost of ownership” (TCO) approach aimed at making its vehicles and systems more attractive to potential customers. In return, Knorr-Bremse will receive feedback on the performance of its systems under real operating conditions. Another element of the agreement involves Knorr-Bremse advising Bombardier on setting up a warehouse with a range of replacement components. The company’s years of practical experience in the field will help Bombardier meet customers’ high expectations in terms of availability.
Major Swiss order Another success story for Knorr-Bremse came when the company signed a contract to supply braking systems for 59 TWINDEXX double-decker mainline passenger trains ordered by Swiss Railways (SBB) from vehicle builder Bombardier. In addition to onboard components – including the EP compact brake control system – the package includes complete bogie equipment and air supply modules with oil-free compressors. Knorr-Bremse subsidiary IFE will also be supplying the train doors. The 59 double-decker trains will require more than 1,600 passenger doorsets, 40 loading doors and 40 catering doors in all. Each of the passenger and catering doors will also be supplied with an intelligent sliding step with automatic platform detection. The order covers nine 4-section and fifty 8-section trains. An option for more than 100 further trains has also been formally agreed between Bombardier and SBB. Delivery of the first components is scheduled for the end of 2011, with the 59 completed vehicles due for delivery to SBB between 2013 and 2019. The first trains will go into regular service from December 2013 onwards. The TWINDEXX double-decker multiple units operated by Swiss Express are some of the most modern rail vehicles currently available. They include a large on-board restaurant and a spacious family car, as well as a business compartment offering space for businessmen to hold meetings or work undisturbed. The trains have a top speed of 200 km/h (optionally 230 km/h) and will initially operate on the St. Gallen – Zurich – Bern – Geneva and Romanshorn – Zurich – Bern – Brig lines as well as on the InterRegio service between Zurich and Lucerne.
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Braking systems for Amsterdam Metro Years of close cooperation between Knorr-Bremse and French vehicle builders Alstom paid off once again in 2010 when Knorr-Bremse received an order for braking equipment for rail vehicles destined for operation on Amsterdam Metro. The order is part of a framework agreement with Alstom dating back to 2008 that covers the development and supply of braking systems for the “Metropolis” metro platform. The contract involves supplying a total of 138 car-sets with complete braking systems based on the EP Compact Lite brake control system, with additional components for the parking brake and pneumatic suspension. It also includes oil-free compressors, axle brake discs and brake calipers. As only 5.5 kilometers of the 40 km metro network actually runs underground, the operator is also equipping the trains with sanding systems – again supplied by Knorr-Bremse. Delivery of the braking systems for Amsterdam Metro is scheduled for the period 2011-2013.
Supplying Alstom’s CITADIS Evo platform During the year under review, Knorr-Bremse received an order to equip the CITADIS Evo platform for vehicle builder Alstom. 27 of the low-floor streetcars manufactured by Alstom are to be fitted with a hydraulic braking system using electro-magnetic track brakes. Because of restricted installation space on the bogies, the braking systems are designed to be as compact as possible. Higher maximum operating pressures of up to 100 bar compared with 10 bar for pneumatic systems make it possible to use smaller brake calipers. The order for the vehicles – which are destined for operation in Rouen, France – also includes door systems from Knorr-Bremse subsidiary IFE. Knorr-Bremse also signed a declaration of intent with Alstom to supply hydraulic braking systems for future orders of the CITADIS Evo platform. The framework agreement covers a period of seven years and involves the company equipping up to 100 vehicles per year. Knorr-Bremse already has a longstanding connection with the CITADIS platform – some 800 vehicles have already been fitted with the company’s systems. The most recent order came in 2009 in the form of braking systems for 75 vehicles in the French cities of Montpellier, Dijon and Brest.
Moscow Metro opts for Knorr-Bremse systems Handling over nine million passengers a day, Moscow Metro is one of the world‘s busiest networks. The metro operates a fleet of more than 4,500 vehicles, which is modernized every year by the acquisition of new car-sets. In May 2010, Moscow Metro brought into service the initial prototypes of the latest generation of vehicles. These are fitted with multiple systems manufactured by Knorr-Bremse. Along with the oil-free compressor and block brake units, these vehicles are equipped with braking resistors from Microelettrica and door systems manufactured by Knorr-Bremse subsidiary IFE. Vehicle builder Metrovagonmash (MVM) and Moscow Metro opted for IFE doors because with extremely short intervals of less than 50 seconds between trains, it is vital that the door systems can be relied on to work perfectly.
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The first production order covers 53 cars due for delivery during the course of 2011. A total of nearly 800 doors is required, and production began at the IFE facility in the Czech Republic in November 2010. Within the same time frame Knorr-Bremse will be supplying all the oil-free compressors, block brake units and braking resistors. These recent orders from Metrovagonmash have enabled Knorr-Bremse to further expand its penetration of the Russian metro market: Both the new cars and their predecessors, which will continue to be built in parallel in 2011, are now equipped throughout with Knorr-Bremse compressors and Microelettrica brake resistors.
Braking systems for Russian State Railways Russia is currently modernizing its regional train fleet in advance of the Sochi Winter Olympics – which is one reason why the country’s state railway system (RZD) is calling the new regional trains ordered from Siemens the “Desiro RUS Sochi 2014”. Knorr-Bremse is to supply complete braking systems and bogie equipment for a total of 54 multiple units. The 5-car trains will be equipped with the EP Compact brake control system. The fact that KnorrBremse is also supplying the oil-free compressor marks a further milestone in the company’s activities in Russia. The Russian Desiro multiple units will be braked by a combination of wheel and axle brakes. Both types have been combined because passenger densities of up to seven people per square meter make high demands of the brakes. The braking systems are designed to operate in temperatures ranging between +50 and -50 degrees Celsius. All three of Knorr-Bremse’s Russian sites – St Petersburg, Moscow and Voronezh – were involved in their development.
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Framework agreement with AAE Knorr-Bremse has signed an agreement for the overhaul of brake components with AAE (Ahaus Alstätter Eisenbahn AG), the leading European leasing company for standard freight cars. The contract covers a period of three years and includes all Knorr-Bremse control valves, load-proportional valves and load brake valves installed in freight cars covered by the company’s European overhaul program. The program starts in 2011 and a total of some 6,000 valves will be overhauled over the period covered by the contract. The logistics will be handled by the Knorr-Bremse Service Center in Berlin, but the actual overhaul will take place at the company’s specialized Service Center in Budapest. The time frame for carrying out the overhaul and returning components to AAE is a mere five days. By setting up a pool of overhauled components and maintaining them on the basis of forecast deadlines it is possible, in cooperation with the customer, to guarantee minimum throughput times. At any one time the service center has valves undergoing overhaul and also a stock of finished valves. As freight cars come in, they can immediately undergo servicing and the valves can be installed as rapidly as possible, enabling Knorr-Bremse to keep out-of-service times to a minimum. This quick turnaround was one reason why the contract was awarded to Knorr-Bremse. Another was the company’s ability to offer a single central location for all the customer’s overhaul requirements. And of course a further deciding factor was Knorr-Bremse’s excellent reputation amongst operators for service reliability.
Service contract with Danish Railways extended Danish Railways (DSB) is continuing to rely on the competence of Knorr-Bremse when it comes to servicing its fleet: Knorr-Bremse will also be handling the second overhaul cycle for the hydraulic brakes of DSB’s commuter rail fleet. For Knorr-Bremse this renewed vote of confidence is a great success and underlines the company’s strong competitive position in such major projects. A key factor in obtaining the order was doubtless Knorr-Bremse’s extremely reliable performance in the first overhaul cycle of these commuter trains. The follow-up order covers the entire commuter rail fleet operated by DSB, which comprises 120 eight-car sets and 35 four-car sets. The second overhaul cycle will run from 2012 to 2018. At the same time, DSB secured an option to extend the contract beyond this period.
North America Locomotive exports to China, South Africa and South America Due in part to the ongoing weakness of the domestic freight market, locomotive exports have become an important factor for North American rail equipment suppliers. Recent procurements, originating primarily in China, Africa and Australia, have also benefited Knorr-Bremse’s US subsidiary New York Air Brake (NYAB).
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Strong demand from China in particular has driven up exports by North American locomotive builders. In the year under review this was reflected in orders of CCB II microprocessor-controlled braking systems for the Chinese market. By the year’s end, some 1,800 CCB II systems had been supplied. Knorr-Bremse is also involved in a major order that the US conglomerate General Electric (GE) received in South Africa: South African rail operator Transnet Freight Rail ordered 100 new diesel locomotives from GE, and by the end of 2010, NYAB had supplied 18 CCB II brake control systems to GE for this project, with the remaining 82 to follow in 2011. In addition, NYAB also supplied a further 20 CCB II systems to Union Carriage & Wagon (UCW) destined for South African operator Transnet, the parent company of Transnet Freight Rail. Again, most of the systems are to be delivered in further batches during the course of the current year. NYAB is also involved in GE orders from Brazil, for which Knorr-Bremse also supplied over 100 CCB II systems. For the Canadian locomotive builder Electro Motive Diesel (EMD), NYAB supplied not only CCB II systems but also the EP 60 electro-pneumatic braking system for some of the locomotives ordered. The same applied to 25 locomotives ordered from EMD by Saudi rail operator SRO (Saudi Railway Organisation).
EP-60 for Australian freight trains In addition to supplying EP-60 for the locomotives being built by EMD, Knorr-Bremse also received orders from Australia for the electro-pneumatic braking system. By the end of 2010, the company’s subsidiary NYAB had equipped more than 1,000 Australian freight cars with EP-60 systems, and a total of four different operators were operating the system on a trial basis. The EP-60 braking system considerably improves the braking of long, heavy freight trains because the braking signal is transmitted electrically rather than pneumatically from the locomotive to the freight cars, only being converted into a pneumatic signal when it reaches the bogie. This avoids a situation where the front cars are braked first but the delay in signal transmission means the rear cars continue to shunt them.
Largest order ever for Knorr Brake Corporation For the new trains operated by Washington Metropolitan Area Transit Authority (WMATA) in Washington DC, Knorr-Bremse is supplying the brakes (including oil-free compressors) and the HVAC systems. The braking systems are being developed in Westminster, while Knorr-Bremse’s Spanish subsidiary Merak is responsible for the design and development of the HVAC. The North American division of Knorr Brake Corporation, Merak NA, will produce the HVAC units. The contract concluded with the Japanese manufacturer of the vehicles, Kawasaki, is the largest North American project in the history of Knorr Brake Corporation. The order covers the equipment for 364 cars with an option for 384 more. The first car-sets are scheduled for delivery as early as 2012, with series production slated for the period from 2013 to 2015. The new trains will boost transportation capacity for what, in terms of passenger numbers, is the second largest metro in the United States. By 2030, WMATA anticipates carrying an average of one million passengers a day. Metro Washington DC has also ordered a further 180 oil-free compressors for retrofitting in existing car-sets.
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The recent order is the latest development in a partnership between Knorr-Bremse and Kawasaki on the North American continent that stretches back many years: Knorr Brake Corporation is currently supply braking systems to Kawasaki for the M-8 Project for Connecticut DOT. In the 1990s, the company also supplied the braking system for coaches for the Long Island RR. Knorr-Bremse is also a long-time supplier to Washington Metro, having supplied the previous two series of trains built by CAF and Alstom. Knorr-Bremse is also involved in the expansion and modernization of the metro network in Chicago, where it is to supply braking systems for 160 metro cars being built by Nippon Sharyo.
South America Braking and HVAC systems for Rio de Janeiro and São Paulo metros Major orders from Rio de Janeiro and São Paulo metros further strengthened Knorr-Bremse’s lead in the South American mass transit market during the year under review. The company will be supplying modern braking systems for 119 cars ordered from Chinese manufacturer China Railway Construction (CRC) by Rio de Janeiro Metro as part of its fleet expansion. The order for HVAC systems was secured by Sigma Coachair Group, which was taken over by Knorr-Bremse Asia Pacific in September 2010. Knorr-Bremse also successfully tendered to supply the newly built Line 8 operated by Companhia Paulista de Trens Metropolitanos (CPTM) in São Paulo. The company is to provide braking systems for all 288 new cars ordered from Spanish vehicle builder CAF, and Merak will also supply the HVAC systems. The business partnership between Knorr-Bremse and São Paulo Metro goes back many years. Some 60 per cent of trains operating on the existing six lines have Knorr-Bremse braking systems on board.
Contract to supply Buenos Aires Metro Knorr-Bremse also chalked up a success in Argentina during 2010, when it became involved in a major order placed with Chinese manufacturer China Railway Construction (CRC) by Buenos Aires Metro as part of the mega-city’s modernization of its metro network. Knorr-Bremse Rail Vehicle Systems is to supply the braking systems. The first step in a project covering a total of 45 vehicles involves replacing the oldest ones on Line A, which dates back to 1913. These are the oldest metro vehicles still in operation anywhere in the world. The contract was signed in August 2010, and shipment of the systems starts in May 2011. In addition to the current order for 45 new vehicles China Railway Construction has also signed an option for a further 234.
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Asia Further orders from China in the high-speed train segment Knorr-Bremse has received further major orders from China: The company’s Chinese subsidiaries and partner companies are supplying the braking and door systems for more than 1,000 cars for the CRH1380 high-speed train, the “Zefiro China”, built by the Bombardier Sifang Transportation joint venture. They have also been commissioned to supply the braking systems for 320 cars from the CRH1-250C series. In addition, Knorr-Bremse won the order to equip the CRH2-380 high-speed train manufactured by CSR Sifang Locomotives & Rolling Stock Co. Ltd. In this project, Knorr-Bremse and its Chinese partners are responsible for supplying the bogie equipment for almost 2,000 cars. Besides these orders, Knorr-Bremse will also be supplying the braking systems for 480 cars for the new CRH3 and CRH5 series trains. In addition, the company is supplying door and HVAC systems for several hundred cars and equipping many of them with electronic components made by Microelettrica. The year 2010 brought a very special highlight for Knorr-Bremse in China: The company’s products were installed in the CRH380A train that set a new speed record of 486 km/h. The new CRH380 highspeed trains are equipped with high-performance disc brakes, door systems and HVAC systems from Knorr-Bremse. In 2011 these trains are scheduled to go into service on the Beijing to Shanghai route.
Expo Shanghai Following the success of Knorr-Bremse’s supporting role during the Beijing Olympics in 2008, organizers of the EXPO in Shanghai also opted to put their local rail services in the company’s hands. A record tally of 70 million visitors meant that ten times as many people as two years ago had to be transported daily to the World Exhibition site between May 1 and October 31, 2010.
Most of the visitors were carried by local rail services. Massive expansion means Shanghai now has the world’s largest metro system – bigger even than London Underground. Knorr-Bremse is one of the leading component suppliers to Shanghai Metro – accounting for 80 per cent of the braking systems delivered by April 2010. In particular its reputation for reliable and innova-
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Orders for heavy locomotives Knorr-Bremse also received important orders in the Chinese heavy-duty freight locomotive segment. The company was commissioned by CNR Dalian Locomotive and Rolling Stock Company and CNR Beijing 7th Railway Transportation Equipment Co. Ltd. to develop and manufacture braking systems for a total of 450 7200kW locomotives. And CSR Zhuzhou ordered braking systems for more than 700 further locomotives in the same category. The order also included 150 braking systems for 9600kW locmomotives. In addition, Knorr-Bremse received an order from the CSR Qishuyan Locomotive Company Ltd. for braking systems for 300 diesel-electric lcomotives.
Knorr-Bremse accesses Japanese high-speed market Knorr-Bremse has succeeded in accessing the Japanese high-speed train market. In 2010 Japanese railway company JR East commissioned the company to supply braking components for the traction bogies of 23 units of the new E5 Shinkansen generation. The high-performance brakes had to be capable of bringing the Japanese high-speed train safely to a halt from speeds of up to 360 km/h, and for this purpose Knorr-Bremse developed an ultra-compact lightweight type of brake caliper based on a tried-and-tested modular design. The brake discs and flexible ISOBAR sintered brake pads were also specially developed for the extreme demands of possible emergency braking in the event of an earthquake.
tive products has enabled the company to establish a strong footing in this vast metropolis with its 20 million-plus inhabitants. The EP2002 intelligent brake control system, for example, is a huge success in Shanghai. And as one of the most important sub-suppliers for Shanghai Metro, Knorr-Bremse also offers rapid, professional aftermarket support: Field service engineers, operations technicians and other specialists ensure the smooth running of systems round the clock. Rapid delivery of original spare parts is also guaranteed: In Suzhou, Shanghai and Wuxi the necessary components are manufactured either in-house or by joint ventures. And the company’s own logistics department ensures fast, efficient transportation and delivery.
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With the new E5 generation of the Shinkansen, JR East will be extending the “Tohoku“ line between Tokyo and Hachinohe to Aomori, on the west coast of the main island of Honshu. If it is to compete with air travel, the high-speed train has to complete the trip within three hours – which means increasing its top speed from 275 km/h to 320 km/h. This calls for a braking system with substantially higher performance. In addition to supplying the E5 generation, Knorr-Bremse also received an order to supply most of the bogie equipment for the pre-series prototype of the next generation – the E6. Delivery took place within a few months of receipt of the order, and initial testing started in June 2010.
Knorr-Bremse upgrades Indian freight car brakes The Indian national rail operator, Indian Railways, has chosen Knorr-Bremse to supply the new brakes for a staged upgrade of its freight car fleet. In place of conventional braking technology, the cars will be equipped with modern bogie brakes from Knorr-Bremse that are not only lighter and more efficient but also more reliable, as well as having just one brake cylinder per bogie. Indian Railways management began showing an interest in collaboration with Knorr-Bremse back in 2009, and in 2010 placed an initial order for the supply of bogie-mounted brake systems for approximately 11,000 freight cars by September 2011. Knorr-Bremse India wasted no time and began deliveries in October 2010. Along with modern bogie brakes, the Knorr-Bremse plant in India also manufactures conventional brakes; however, demand is progressively shifting toward the more technically advanced bogie brakes.
Prizes and awards Elogistics Award Knorr-Bremse Systeme für Schienenfahrzeuge has won an Elogistics Award from AKJ Automotive – a working group that brings together experts and top managers from the German automotive industry and offers a platform for exchanging experience amongst OE manufacturers, suppliers and service providers in the automotive value chain. The Elogistics Award is made in recognition of best-practice solutions in the fields of IT and logistics developed by companies in the automotive industry and related sectors. Knorr-Bremse received the award for a pioneering solution to the problem of “uniform disposition responsibilities in a complex plant structure” based on a sophisticated combination of logistics and information technology. The company succeeded in designing an integrated disposition system with only one person responsible for each category of goods, enabling customer requirements to be dealt with much more rapidly and efficiently, even on a cross-plant basis.
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Sydac wins Australian award Knorr-Bremse subsidiary Sydac, an industry-leader in the development of simulation technology and engineering software, won first prize in the Top 20 South Australian Innovation Awards. The new awards system profiles the 20 most influential business-to-business innovations of the 21st century. The judges felt that Sydac’s highly innovative technology and development of a successful business model demonstrated twin competitive advantages that have gained the company a significant market share at home and abroad.
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Projects 2010 saw Knorr-Bremse further improve its capabilities, extending its product portfolio and thus strengthening its market lead in many areas with a combination of newly established sites, joint ventures and acquisitions. In China, for example, many of its production sites were expanded, and in Munich the first and only testing center outside Russia for GOST-standard brake equipment used in Russia and the Commonwealth of Independent States went into operation.
Brake equipment assembly in Russia In September, Knorr-Bremse completed preparations for the assembly of disc brakes and compressors in the Russian city of Voronezh. Production at the new facility promises to strengthen the company’s presence in the country and enable even more Russian trains to be directly supplied with products tailored to local market requirements. Knorr-Bremse’s collaboration with OAO Vagonremmash, a subsidiary of Russian railway company RZD, is an important partnership that could bring further orders from the Russian rail market. The disc brakes manufactured in Voronezh will be initially installed in mainline passenger cars built by OAO TVZ – but can also be used in other vehicle types. The oil-free compressors assembled at the same plant are suitable for electric multiple units or locomotives. Knorr-Bremse’s aim is to be able to deliver customized equipment from Voronezh for all Russian vehicle types. To guarantee high quality standards the assembly line has been designed along the lines of the Knorr Production System (KPS), with globally tested quality standards applied. With its new production facility for disc brakes and compressors Knorr-Bremse is building on a long tradition of business activity in Russia. Back in the 1960s, the former Knorr-Bremse parent plant in East Berlin supplied braking equipment for Soviet passenger trains, and today, Knorr-Bremse equipment is used in mainline trains, locomotives and multiple units. Prestigious Russian high-speed trains like the Siemens Sapsan or the Alstom Allegro also use Knorr-Bremse braking equipment and on-board systems.
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Certification of GOST-standard testing facility Knorr-Bremse is the first – and currently the only – company outside Russia to have achieved certification of a testing facility for braking equipment built to the GOST standard, which applies in Russia and the Commonwealth of Independent States. The company is now in a position to test and certify a wide range of components for the Russian market both at its Munich headquarters and also in Berlin. The facility can be used during product development and also for certification purposes. Avoiding the need to ship components to Russia for testing and certification means the company can considerably increase its process flexibility and shorten its delivery times. Depending on the project concerned, the company is able to test rail vehicle braking equipment such as brake discs and brake blocks as well as complete bogie equipment. Other testable components include compressors with their motors and air reservoirs, and also control valves.
New building in India In the fall of 2010 Knorr-Bremse India completed its plans for the construction of a new rail vehicle systems plant. On a site close to the existing facility, a modern building offering about 18,000 m2 of production and office space will house some 400 employees who will manufacture rail vehicle brake control systems, bogie equipment, compressors and air dryers. The new building had become necessary because of recent exponential growth in the Indian market – with predictions of a further medium-term increase in demand as India continues to expand its infrastructure. In line with Knorr-Bremse India’s international strategy, the new plant will work with certified suppliers to produce components for the Indian market. The company will be applying the global Knorr-Bremse Production System (KPS), which ensures that processes are standardized along the entire value chain – from raw material processing and surface treatment right down to assembly and final quality testing. Knorr-Bremse’s new building will also set a new environmental benchmark by adhering to the “Green Building Standard”. This involves, for example, significantly reducing CO2 emissions through efficient air conditioning and high-specification building insulation.
Expansion in China Knorr-Bremse China is preparing for the future and responding to steady growth in demand. The company’s Chinese sites are expanding their production facilities, installing new plant and streamlining their processes – reflecting the company’s huge success in this growth market.
Suzhou site grows In 2010 the first major expansion of Knorr-Bremse’s “Suzhou II” plant, which had been a new-build in 2007, was completed. Within five months an additional 5,700 m2 of production facilities and approximately 3,300 m2 of office space and functional/social areas were created, bringing the total to 22,500 m2.
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More room for machining operations was created, enabling the plant to operate with a high degree of vertical integration and further localize production. Assembly lines were redesigned to cope with high levels of demand for brake control systems, especially in the mainline segment. Throughput was further optimized in terms of timing and routing, with alignment of assembly, inspection and packing processes. And the service area was expanded to 1,400 m2 in response to growing aftermarket demand. A new laboratory measuring 350 m2 was also created to house the so-called System Engineering and Commissioning Center China. Environmental aspects were also taken into account in the expansion program, with a rainwater tank installed for irrigation of the surrounding gardens and solar panels mounted on the roof for hot water supply. A modern canteen, new locker rooms and showers were also built to take care of the 1,000-strong workforce.
Rapid growth in Wuxi The Merak-Jinxin joint venture in Wuxi, which produces air conditioning systems, was also further expanded in 2010. Since it was first set up in June 2008, the company has grown its workforce from 10 to 300. During the year under review, high order volumes from the region drove up production to more than 2,000 on-board HVAC units. To meet such demand, the workshops were expanded, increasing potential annual output to 2,400 units.
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“5-day factory” opened in Budapest It is one of the most advanced plants in the Knorr-Bremse Group: following a construction phase lasting only a year or so, the new development and production plant for rail vehicle systems was officially inaugurated in Budapest in July 2010. For Knorr-Bremse the plant represents a massive increase in capacity and sets new standards of production and logistics.
At the new factory, Knorr-Bremse manufactures bogie equipment components such as brake caliper units and block brakes. The product portfolio also includes brake control components, such as brake panels and valves, as well as a virtually complete range of components for freight cars and individual air supply elements. The move to new premises had become necessary because the old factory, located just a few hundred meters away, had reached the limits of its capacity. Along with the production facilities, Knorr-Bremse has also expanded the research and development function at the new plant. The primary focus here is on brake actuators, software, technical calculation and testing.
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A unique concept in the rail vehicle industry One innovative aspect of the new plant, in which the company has invested some EUR 45 million, is the underlying concept of the “5-day factory”, based on the globally standardized Knorr-Bremse Production System. The concept involves a wide range of pioneering measures aimed at significantly reducing throughput times along the entire value chain. In the past a major component like the block brake would take from 20 to 30 days to complete from provision of the raw materials to final shipment, but standardization of all production processes at the new factory now means the same process should take just five days – an improvement by a factor of four.
Ingenious supply chain models Underlying these improvements is the use of intelligent supply chain models, integrated manufacturing cells, an in-house surface treatment center, and one-piece-flow assembly lines aligned with customer cycles. This in turn is facilitated by an ingenious system that ensures optimal integration of procurement, production, and delivery systems. Knorr-Bremse has developed a system that precisely assigns all products to a supply model. This is based on more than just the customary analyses: The “5-day factory” also weights the competence of each supplier, for example, as well as other aspects with a bearing on logistics, such as volumes.
Focus on customer benefits By moving to the new plant, Knorr-Bremse is enhancing customer benefits in several respects – first and foremost through greater flexibility and optimized schedule effectiveness. The closed value-loop within the company has also been improved and more efficient transportation and handling processes have further improved product quality. On a site situated close to the old facility, more than 1,000 employees now work in a modern building offering over 30,000 m² of production and office space. A combination of selected building materials and innovative control technology ensures optimum energy use and has significantly reduced the new plant’s energy requirements and operating costs.
Opening ceremony High-ranking visitors attended the inauguration of the new Knorr-Bremse Rail Vehicle Systems plant in Budapest in early July: Both the Hungarian Minister of National Development, Dr. Tamás Fellegi, and the Chairman of the Supervisory Board and owner of Knorr-Bremse, Heinz Hermann Thiele, were present at the ceremony.
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In June 2010 two workshops were set up for production of HVAC systems for high-speed trains. A month later, three assembly lines went into service, producing, amongst other things, air heaters, exhaust systems and mixing boxes.
Output doubled in Qingdao Massive growth in demand for high-speed train door systems mean that IFE-VICTALL in Qingdao had to double its average monthly output with effect from early January 2010. Expansion of the company’s production capacity was also used as an opportunity to redesign processes in line with the principles of the globally standardized Knorr Production System (KPS) and introduce the basic concept of a “5-day factory”, in which the throughput time for a product is reduced to a maximum of five days.
First Gautrain line opened The Gautrain’s first track section was opened in the South African capital Johannesburg just in time for the start of the 2010 Soccer World Cup.
Knorr-Bremse’s contribution to the 24 modern Electrostar trains built by the Bombela Consortium cannot be missed: the company has supplied the entire electro-pneumatic braking system including oilfree compressor and sanding system. And Knorr-Bremse subsidiary IFE supplied each Gautrain with 16 access systems and four cab doors. The new 80-kilometer express link is a showcase project when it comes to expansion of South Africa’s public transportation network. Running at speeds of up to 160 kilometers per hour, the Gautrain is one
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New plant in Daxing In Daxing, Knorr-Bremse and its Chinese partner CARS (China Academy of Railway Sciences) produces brake discs for Chinese-built locomotives and multiple units. In April 2010, after a mere four months’ construction time, a new plant for the manufacture of brake discs went on stream. And by December of the same year, it was able to celebrate a further success: within less than four years it had produced its 200,000th brake disc. A combination of state-of-the-art machines, streamlined production flow using six lines, and application of Knorr-Bremse’s standardized global production strategy makes for highly efficient production of up to 9,000 discs per month. This means Daxing has the highest output of rail vehicle brake discs of any plant in the world.
of the fastest trains on the Electrostar platform. During its first four months in operation the train’s popularity as an alternative to often-congested roads was demonstrated when more than a million passengers opted to use the new link. Passengers can make the trip on this first section from Johannesburg International Airport to Sandton, in the northern part of the city, in just 14 minutes. The second section linking Johannesburg with Pretoria is scheduled to open in 2011 and will take a mere 42 minutes longer.
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Clear objective: market leadership A combination of acquisitions and new partnerships has enabled KnorrBremse to further strengthen its position in rail markets around the world. During 2010 a joint venture – Icer Rail – was set up to develop organic UIC brake pads and UIC brake blocks. Acquisition of Sigma Coachair Group (SCG) raised the Knorr-Bremse Group to the status of the world’s leading manufacturer of rail vehicle HVAC systems. And the takeover of Heine Resistors GmbH strengthened the company’s market position in the field of resistors for rail applications.
Addition in brake pad segment In May, Knorr-Bremse’s subsidiary Sociedad Española de Frenos formed a joint venture with Icer Brakes, part of the Berkelium Group, with the specific aim of developing and manufacturing brake pads and blocks. It was a logical next step for Knorr-Bremse’s strategy in the rail vehicle brake pad segment. Back in 2008 it had acquired Anchor Brake Shoe Company, the leading North American manufacturer of brake shoes for locomotives and freight cars. In this case the focus was on the American market, whereas the new Icer Rail joint venture expanded Knorr-Bremse’s portfolio of brake blocks to include organic brake pads and brake blocks designed to European UIC standards.
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Joint development activities The joint venture enables Knorr-Bremse for the first time to take an integrated approach to developing braking systems with organic UIC brake pads and UIC brake blocks. Engineers in both companies are now working on achieving optimum interplay of friction materials and braking systems to ensure minimum wear and maximum operating life for the individual components. The two partners are a perfect match: Icer Brakes is a recognized expert in the development and manufacture of friction materials – an area where Knorr-Bremse has not been particularly active up till now – while Knorr-Bremse offers something a highly specialized manufacturer like Icer Brakes does not have: a century of experience in rail vehicle applications and braking systems combined with a global sales and marketing network.
Strategic acquisition in HVAC segment There were similar motives in the case of Knorr-Bremse’s acquisition of the well-established Australian HVAC specialist, Sigma Coachair Group (SCG). The takeover has considerably expanded Knorr-Bremse’s market position. Via its subsidiary, Merak, the company already has a well-established reputation mainly in China, Europe and America, but SCG gives it easier access to growth markets in Southeast Asia, India and Australia. The merger will generate many synergies for both companies, particularly in development, production and procurement. More than 30 years of experience in the field have enabled Sigma Coachair Group to achieve top quality standards combined with high levels of efficiency. The company has also been involved in a large number of projects worldwide. For example, trains built by Kawasaki Heavy Industries for Taipei Metro are being equipped with Sigma HVAC systems. And via Hyundai Rotem the public transport operator in Boston has ordered Sigma Coachair systems for new metro trains. Many of the management positions at Sigma Coachair have been deliberately preserved so that the company’s years of expertise will continue be available in the future.
Further foothold in special resistors Knorr-Bremse’s purchase of a majority share in German company Heine Resistors GmbH also fits into the Group’s strategy of making targeted acquisitions to expand its market position in a range of further business areas. Heine Resistors GmbH was taken over by Microelettrica Scientifica S.p.A., a member of the KnorrBremse Group based in Rozzano, Italy. This Knorr-Bremse subsidiary has been designing, developing and producing switches, protection relays and resistors for rail vehicles and industrial applications for more than 50 years. The acquisition of Heine is particularly promising for Microelettrica in the field of brake resistors, as the two firms will be able to benefit from industrial synergies. They also complement each other perfectly in worldwide markets, with Microelettrica particularly well represented in Sweden, Italy and Japan, while Heine has a particularly strong customer base in Germany and Eastern Europe.
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Products For more than 100 years Knorr-Bremse has been pioneering the development, production, marketing and servicing of modern braking systems for the rail vehicle industry. In fiscal 2010 Knorr-Bremse also launched a number of innovative products in other areas such as access and HVAC systems – all aimed at making rail transportation safer, more economical and more environmentally friendly.
New HVAC system from Merak Knorr-Bremse subsidiary Merak has developed a new air-conditioning system that operates with the new, ultra-eco-friendly refrigerant HFO1234yf. The use of this refrigerant for air-conditioning in rail vehicles represents a major advance in the field, as its Global Warming Potential (GWP) of 4 in 100 years is much lower than that of the currently used refrigerant R134a (GWP 1,300). By using HFO1234yf the rail vehicle HVAC system also complies with the strict criteria of an EU Directive that regulates emissions from mobile air-conditioning systems and requires the use of a refrigerant with a GWP lower than 150. Merak has a long tradition of developing eco-friendly systems. Back in the early 1980s, for example, the company developed the first high-performance rail vehicle HVAC system based on the use of a heat pump. Thanks to its continuous development there are now over 1,000 Merak HVAC systems in operation that use this technology.
Simulators further developed Sydac develops state-of-the-art train driving simulators for customers in Australia, North America and Europe. High-definition graphics enable all possible weather conditions, various seasons and times of day to be simulated, along with detailed depictions of the surroundings and persons such as passengers or trackside workers which create a virtual environment for train driving. Crucially they enable drivers to practice coping with all kinds of situations caused by technical failure or human action without damage to persons or materials. In the summer of 2010 Sydac delivered simulators to Australian operator Downer EDI Rail for use in its new Waratah trains in Sydney. The order comprised four simulators in all – two for training multiple
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unit drivers and two for other personnel. One of each of these two types was mounted on a truck, to enable them to be used flexibly and independently of location. For the Norwegian Rail Academy Sydac also developed state-of-the-art simulators that realistically simulate the FlytoGet line in the Norwegian capital of Oslo. The Norwegian Rail Academy ordered six full cab simulators and three additional ones for operations control. 2010 also saw Sydac further expand its cooperation with TDS (Train Dynamic Systems), a company owned by Knorr-Bremse subsidiary New York Air Brake (NYAB). The main focus was on merging simulation of heavy-duty freight trains from North America with Sydac’s simulator technology for passenger operations.
Further development of EP2002 brake control system Knorr-Bremse has launched the EP2002 Cube brake control system for metros and multiple units. Based on the proven EP2002 brake control system, the Cube features an additional integrated control module. The mechatronic system, which combines mechanical and electronic elements in a single, ultra-compact unit, now not only offers the service and emergency brake functions of EP2002 but also additional pneumatic functions for controlling the parking brake and air suspension. As a result there is no longer any need for an additional, separate control panel. In the past, auxiliary functions such as air treatment or parking brake control have been installed in brake control modules in sub-frames or on equipment panels. This is where the EP2002 Cube makes a real difference. The Cube is basically a three-dimensional aluminum block with no active functional elements of its own that fills the roles of the conventional EP2002 assembly subframe, the connector block and the piping, effectively making it a three-dimensional multifunctional component. All of the components required for the above functions are attached to the Cube. The multiple air lines encased within the aluminum block mean that except for the compressed air feed pipe and the lines to the mechanical brake components, air spring components, and reservoirs, all of the piping in the vehicle can be dispensed with. Even then, the installation envelope of the Cube is no larger than the crosssection of an average air reservoir. This simplifies integration of the brake control system, enabling it to be installed beneath the car within a length of just 400 millimeters. Advantages like these have greatly accelerated the market penetration of the new EP2002 Cube. By the end of the year under review some 700 units had already been installed in metro projects in China.
New E3D door system During the year under review, Knorr-Bremse’s subsidiary IFE developed a new door system for trains travelling at speeds up to 300 km/h. E3D is an electrically operated single-leaf door system that combines the familiar E3 and DET door systems. It is supplied almost completely pre-assembled and features a compact installation envelope and easy maintenance.
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A clear opening width of up to 1,400 mm and an excellent pressure seal up to 6,000 pascals offers passengers high levels of comfort. The seal prevents unpleasant pressure fluctuations inside the train caused by aerodynamic effects at high speeds. E3D also has a highly sensitive obstacle detection system. If it is triggered while the door is closing, it stops within a fraction of a second until it receives a further close command.
Intelligent sliding step Another new development from Knorr-Bremse showcased at InnoTrans 2010, was an intelligent sliding step developed for double-decker trains. This is equipped with an ultrasound sensor that measures the distance from the platform and calculates how far it needs to extend, stopping the step automatically between 3 and 4 centimeters from the platform edge. By reducing the gap and height difference between step and platform it offers greater safety especially for elderly people. The system is also equipped with a contact strip to prevent passengers becoming caught in the step.
Series assembly of door systems Door manufacturer IFE has further expanded its door assembly services. In addition to first assembly, it now also offers specific assembly aids and diagnostic instruments – or alternatively it can even carry out full series assembly for the customer. In 2010, as part of the negotiations on equipping the FLEXITY 2 platform, IFE concluded an initial agreement on door system assembly with Bombardier. Vehicle manufacturers are increasingly relying on specialized systems suppliers to take over the task of door assembly. Using expert technicians from the original equipment manufacturer is the only way to ensure correct installation. When IFE assembles the door systems itself the company is able to offer a guarantee that includes pre-defined standards of reliability. Such high standards can usually only be achieved through skilled assembly by an expert.
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Valves for the world There are few rail vehicles for which Knorr-Bremse cannot supply a control valve that complies with the required standard. The company’s valves are used in their millions worldwide – but they are by no means interchangeable. In the past, various regions have set differing standards, none of which are compatible with one another. When selling to particular markets it is therefore essential to adapt products to the specific regional requirements. Control valves have to be capable of functioning reliably in desert sand but also at minus 60 degrees Celsius in the Russian winter.
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From Europe to the world In the core European market, decades of experience, state-of-the-art technology and long service intervals have contributed to the success of the Knorr KE valve, which complies with the European UIC standard. The valve is globally regarded as a synonym for extreme reliability, having proved itself millions of times. The secret to its success is its continuous development: Improvements and innovations are tested on Knorr-Bremse’s UIC test bench in Munich, where engineers can simulate braking of trains up to 1,500 in length and record the performance data of every individual control valve. Acquisition of the US company New York Air Brake (NYAB) and the launch of the Knorr-Bremse DB60 control valve specially designed for the American AAR standard, marked the continuation of KnorrBremse’s worldwide expansion – and also gave the company access to the South African market, which uses the same standard. Knorr-Bremse valves are also installed in trains in Australia, where the AAR system is used for transportation of heavy iron ore and otherwise the Australian Railways ARA standard applies. Knorr-Bremse was also able to draw on its experience with adapting to the AAR standard when it entered the Russian market. In close collaboration with the Russian state railways the company developed valves for trains operating on 1,520 mm gauge tracks. They are designed to be easily installed on Russian trains and to be compatible with competing valves – but also to offer demonstrable advantages for operators.
Close collaboration with local experts For a major project such as development of control valves for the GOST standard it was crucial for Knorr-Bremse to have the support of experienced Russian rail experts who were familiar with local conditions and knew what was important for the Russian market. But despite being able to call on their experience the project was a major challenge. Whereas in Europe and America the valves are designed to function at temperatures down to minus 40 degrees Celsius, in Russia the temperature limit was minus 60 degrees Celsius.
Successful certification This certification project involved detailed testing of systems, components and materials on special test benches in Munich over a period of several months. Compatibility tests were backed up by field and operational testing. At the end of the year under review an important milestone was reached when the new valves were certified for the Russian market. Once in-service testing begins in 2011 the company will be well on its way to becoming a certified supplier of GOST standard control valves for use in Russia and the Commonwealth of Independent States.
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Service Every vehicle builder and train operator has a unique customer profile – and therefore also has unique needs when it comes to aftermarket service for brakes and on-board systems. KnorrBremse Rail Services brings together the company’s full range of aftermarket activities for rail vehicles into a single, flexible program designed to offer efficiency, ease of use, delivery effectiveness and high availability of spare parts. In 2010 the company’s aftermarket logistics concepts were further developed in the form of “Original Spare Parts Kits” and the “FastMover Spare Parts Concept”, and the e-business system for spare parts ordering was also further expanded. The aim of all these measures was to maximize efficiency of spare parts management for the customer.
Original spare parts kits The success of Knorr-Bremse’s original spare parts kits continued in 2010, with kits being supplied to more than 50 customers. Each consists of a complete set of the spare parts required for maintaining and overhauling a specific Knorr-Bremse system. The kits are a crucial factor in increasing efficiency. They simplify disposition, ordering and delivery monitoring, as well as receipt of goods and invoicing. They also help improve warehousing, commissioning and inventory processes. The kits mean Knorr-Bremse can automatically supply service staff with the correct original parts required for their work, enabling them to concentrate on the job at hand. The composition of the kits enables the repair shop to operate more economically at each stage of the process. Standardization ensures a consistent quality of overhaul work, repair shops benefit from reduced day-to-day pressure and vehicle operators welcome the improvement in terms of quality, safety and cost.
FastMover spare parts concept It is difficult to plan for the precise moment when a product component will require replacement on account of wear and tear. This makes efficient spare parts management all the more important to ensure the overhauled components are in the right place at the right time. It was with this in mind that Knorr-Bremse developed a program entitled “FastMover Spare Parts Concept”. Under the program Knorr-Bremse undertakes contractually to hold in inventory a certain range of socalled “fast movers” – components with a fast turnover that cover the majority of spare part requirements. This reduces capital tie-up for the customer, minimizes delivery times and increases parts availability.
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Electronic data interchange With its expansion of electronic data interchange (EDI), Knorr-Bremse has taken another step towards improved efficiency and leaner processes. EDI considerably simplifies spare parts ordering. A successful pilot project demonstrated that an EDI system using a standardized SAP interface enables spare parts to be ordered up both quickly and efficiently. When a customer enters an order on his PC it is initially stored in his internal IT system. A click of the mouse then forwards it to Knorr-Bremse, where it goes directly to the delivery system, which converts the customer’s reference number into the Knorr-Bremse order and dispatch system. This then automatically generates data on availability, price, delivery and payment conditions. The customer receives automatic confirmation of every order he submits, together with information on when the part is due to be shipped from Knorr-Bremse.
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Booming aftermarket in Asia As expected, the large-volume orders received from Asia in recent years are now beginning to trigger demand for servicing and spare parts in this growth region. In 2010 Knorr-Bremse therefore continued to expand its aftermarket capacity in China.
Rapid growth of the Chinese rail market started at least 10 years ago and continues apace. With the support of the Chinese government, high-speed rail lines have been planned and constructed, and many major cities have invested in modern metro networks or expanded existing ones. At the same time the state railway operator decided to invest in modern locomotives manufactured in the West, and by the end of 2010 almost 3,500 locomotives equipped with KnorrBremse systems were in operation, with a further 1,000 or more due for delivery in 2011. It is no coincidence that Knorr-Bremse was involved in many of these initial investments and is now also benefiting from increased demand for aftermarket services. The company has maintained contacts with China since the 1970s and its first major project came in 1990, when it was contracted to equip 96 cars with braking systems for Shanghai Metro. From that moment onwards, Knorr-Bremse managed to steadily expand its business activities in China, culminating in last year, when the company received the largest order in its 100-year history – a contract worth some EUR 500 million to supply braking, door and HVAC systems for the Chinese CRH3 high-speed train.
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Changing aftermarket activities In the past, Knorr-Bremse’s aftermarket activities in China consisted largely of supplying spare parts, but components supplied several years ago for the braking systems of high-speed trains, metros and locomotives are now due for their first major technical overhaul. Knorr-Bremse Rail Vehicle Systems has been quick to react to this development and has rapidly built up the required additional aftermarket capacity. This involved in particular establishing a service center in Suzhou in Jiangsu Province and expanding the field service teams who work directly with customers at local level.
New service center The main backbone of Knorr-Bremse‘s aftermarket service in China is its Suzhou service center, and the workforce here was considerably expanded during the year under review, enabling the company to react more swiftly to demand in the Chinese aftermarket and further improve the safety and reliability of trains operating in China. The servicing skills of all local staff were also developed in close collaboration with established service centers and Knorr-Bremse production units worldwide. The equipment used in China meets the same standards as in Europe, as do the tools used, the key performance indicators and the tried-and-tested methods of the Knorr-Bremse Production System (KPS). This means Knorr-Bremse can guarantee uniform quality standards around the globe. Delivery performance at the service center in Suzhou is already running at well over 95%.
Expansion of field service team Knorr-Bremse reacted to the new requirements of the market in two ways. First of all it expanded its field service teams – virtually doubling them in size during 2010. And secondly it encouraged other service units to pass on their expertise – particularly technical skills – to the Chinese field service teams so as to make local support for customers even more effective. At the same time the company adapted structures and processes to the requirements of the Chinese market.
Expansion of aftermarket service in Asia continues In the future, too, Knorr-Bremse will be able to draw on its experience of developing from a simple spare parts supplier to providing aftermarket services for entire systems. China is currently about a decade ahead of many Asian threshold countries in terms of developing its rail market. So the expertise gathered by Knorr-Bremse in the Chinese aftermarket should stand the company in good stead when it comes to future developments in other rapidly growing Asian markets.
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Commercial Vehicle Systems
Following a dramatic slump the previous year, Knorr-Bremse Commercial Vehicle Systems posted significantly higher sales in all markets in 2010. Truck production in China rose by 47%, and in North America the ongoing decline since 2006 was halted. In addition, the proportion of trucks produced in Western Europe grew by 60% to 320,000 units. After increasing capacity in line with this trend, the Commercial Vehicle Systems division was able to benefit disproportionately from this new growth.
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Markets There was a distinct upturn in the European commercial vehicle market, even though it failed to return to pre-crisis levels. Production figures rose significantly in virtually all segments. Knorr-Bremse successfully tendered for a wide range of projects, winning new orders in North and South America and also in many Asian countries.
Europe
Recovery in the truck market picked up speed during the course of the year under review. In Western Europe, truck production was up 60% at 320,000 units, and trailer production also recovered, expanding by more than 50% to exceed the forecast output of 105,000 units. Developments in Central and Eastern Europe were also positive, with truck output rising by 37% to 75,000 units. However despite these increases, sales remained well below pre-crisis levels.
North America
2010 saw the decline in North American truck production halted for the first time since 2006. Output was 23% up on the previous year at some 218,000 vehicles, though this was still 56% below the record level achieved in 2006. Aftermarket developments were also positive. Against a background of these positive trends, Knorr-Bremse North America won a number of important orders.
South America
In a context of economic recovery in all segments – particularly the construction, infrastructure and raw materials industries – combined with measures to facilitate vehicle financing, transport volumes in South America increased significantly during the year under review. As a result, South American commercial vehicle production rose 56% in 2010 to 184,000 units, surpassing the record level achieved in 2008.
Asia/Australia
2010 saw truck production in Asia/Australia continue to expand, driven mainly by output in China, which was 47% up at 1,328,000 vehicles. The commercial vehicle markets in India and Japan also recorded growth. Knorr-Bremse benefited from this positive trend, winning important orders for compressors, torsional vibration dampers, disc brakes and electronic brake control systems.
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Joint venture with CAFF in China As part of a significant expansion of its activities in China in the year under review, Knorr-Bremse Commercial Vehicle Systems signed a joint venture agreement for the manufacture of brake valves, transmission valves and air dryers in August. The setting up of the new company marks a milestone in Knorr-Bremse‘s China strategy and is a good example of the benefits of longterm engagement in a local market.
The agreement was signed between Knorr-Bremse Asia Pacific (Holding) Ltd. and the Chinese manufacturer Chongqing CAFF Automotive Braking & Steering Systems Co. Ltd. Knorr-Bremse holds a 66% stake in Knorr-Bremse CAFF Systems for Commercial Vehicles Chongqing Ltd., as the new joint venture is called, with the remaining 34% being held by its Chinese partner.
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Partner with an excellent reputation Chongqing CAFF Automotive Braking & Steering Systems Co. Ltd. is a company with an excellent reputation, especially within China. Founded in 1952, the company was one of the first manufacturers of automotive components in China and has had a lasting influence on the development of the Chinese automobile and commercial vehicle industries over recent decades. CAFF currently employs around 1,600 people.
Declared goal: market leadership The declared medium-term goal is to become one of the leading commercial vehicle industry suppliers in the People’s Republic of China, and the German-Chinese partnership is an important step in that direction. Collaboration with CAFF enables the Commercial Vehicle Systems division to produce a wide-ranging product portfolio with a high element of value-added directly in the Chinese market. At the same time, the new joint venture will strengthen the company‘s local presence yet further. In addition to the choice of partner, the location was also of great importance for Knorr-Bremse. Situated at the heart of China, the municipality of Chongqing is home to some 32 million people and is a key driver of industrial development in virtually the whole of Western China. Chongqing is also a major cultural and industrial center and an important transportation hub in this region to the east of Sichuan province. Many western companies have set up operations here and some countries maintain general consulates in the city.
Strategic vision pays dividends once again The formation of the joint venture Knorr-Bremse CAFF Systems for Commercial Vehicles Chongqing Ltd. is yet another example of the success of the Group’s long-term strategy in China. Parallel to the expansion of the Rail Vehicle Systems division, Knorr-Bremse Commercial Vehicle Systems had entered into negotiations on potential partnerships with Chinese companies at a very early stage, and the foundation of this joint venture demonstrates the value of this approach.
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Market Successes Against a background of general market recovery, Knorr-Bremse achieved notable successes in 2010: from Volvo the company received an order to supply compressors for its new mediumduty engine platform; in Brazil it became the market leader for electronic braking systems; and in Germany it was voted “Best Brand” in the “Brakes” category of the commercial vehicle sector for the fifth year in succession. Worldwide sales figures for the Commercial Vehicle Systems division in eUR millions 2008
1,975
2009
1,221
2010
1,701
Europe Electronic brake control system 5.1 at Daimler This was not the first time that Knorr-Bremse had received an order to supply electronic brake control systems (EBS) to Daimler AG. But this latest contract nevertheless represented an important milestone, as the company will now also be supplying the world’s leading commercial vehicle manufacturer with an EBS system for heavy-duty trucks. The system will be used on the twin-axle semitrailer tractors belonging to the new SFTP vehicle platform, which means Knorr-Bremse will be supplying about half of the EBS systems for the platform. Last year the final preparations were made at the Aldersbach site for series production of components in 2011. The preparations for production kick-off had been preceded by almost four years’ intensive joint development work on the system’s software and hardware, including many testing phases both at KnorrBremse and at Daimler. During the year under review the machine tools for production were manufactured and assembly lines modified so that series production could start on schedule in 2011. The EBS5.1 brake control system was specifically designed for the requirements of the new vehicle platform and its new electronic architecture and represents a variant of the EBS5. As a platform development, EBS5 succeeds in integrating into a single brake control system a wide range of functions that are now taken for granted in commercial vehicles. In addition to driver assistance systems like the ESP electronic stability program or the ABS anti-lock system, these also include coupling force control, wear control and retarder blending.
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ABS for agricultural vehicles This is an example of a new area of application for a well-established product: 2010 saw Knorr-Bremse continue its development of an electro-pneumatic anti-lock braking system for agricultural vehicles and virtually complete the preparations for series production. During the first half of 2011, full production of the new ABS system will start for the Fendt 900 vehicles series. There were two basic reasons why Knorr-Bremse became involved in this new market segment. Firstly, market analyses had indicated that as agricultural tractors become ever larger, demand is growing for safety-critical products. In developing the system Knorr-Bremse was able to draw on its core competences and decades of experience with vehicle safety systems. For this new category of vehicle the company used tried-and-tested electro-pneumatic components from the related truck sector. The second reason was increasing convergence of the parameters for agricultural tractors and trucks. Tractors are becoming faster and capable of pulling heavier loads. And their engines are increasingly not just used to power the vehicle but also for other functions, for example driving snow blowers. As the fields of use expand, so, too, do the technical requirements. If, for example, agricultural vehicles are used for clearing snow, then safety aspects become increasingly important.
Compressors for Volvo Powertrain Knorr-Bremse has won an order from Volvo Powertrain to supply compressors for the company’s new medium-duty engine platform. This means that Knorr-Bremse’s share of the compressor market for Volvo Powertrain will rise significantly from 2013 onwards. At the end of 2009 Knorr-Bremse had already secured a contract to supply compressors for the company’s heavy-duty engine platform. The total volume will be more than 72,000 units per year, making Knorr-Bremse one of Volvo Powertrain’s five most important suppliers. Production facilities in Lisieux (France), Dalian (China) and Pune (India) will be involved in supplying the compressors.
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North America Bendix becomes main supplier for to Mack Trucks The joint venture Bendix Spicer Foundation Brake LLC between Knorr-Bremse’s US subsidiary Bendix Commercial Vehicle Systems LLC and Dana Commercial Vehicle Products LLC, USA, has reinforced its North American market leadership position. In April, the foundation drum brakes manufactured by Bendix Spicer Foundation Brake LLC became standard at Mack Trucks for the company’s commercial vehicles, which are mainly long-haul models. For the joint venture, becoming the main supplier for Mack Trucks confirmed its strategic direction. Ever since the company was founded in 2004, Bendix Spicer Foundation Brake LLC has remained focused on the development and production of highly robust and durable foundation drum and disc brakes and slack adjusters.
Active Cruise with Braking System (ACB) for Peterbilt Motors Company The Bendix Wingman ACB (Active Cruise with Braking) – an automatic emergency braking system – is being offered by another major North American vehicle builder, Peterbilt Motors Company, further underpinning the key position of Knorr-Bremse subsidiary Bendix as a manufacturer of safety technologies for commercial vehicles in the U.S. market. The ACB system is built upon the Bendix Electronic Stability Program and helps drivers avoid collisions and mitigate the risk of rollover and loss-ofcontrol situations. Using a radar sensor, ACB constantly measures the distance to the forward vehicle and, based on the acquired data, automatically governs the speed of the truck. The radar sensor, which is mounted to the front of the vehicle, can detect up to 32 moving and stationary objects within a radius of approximately 150 meters. If the following distance closes too fast, the system provides audible and visual alerts to the driver. If the distance continues to close, ACB proactively intervenes in the engine and brake control systems to mitigate the risk. In inclement weather or in heavy traffic, the driver can deactivate the automatic intervention in the engine and brake control units. Of course, ACB cannot replace a good driver. But the system can bring a significant improvement in highway safety in everyday truck traffic and help reduce the risk of collisions and the related costs. In addition, by assisting the driver to maintain a set following distance to the forward vehicle and preventing abrupt acceleration, the ACB system can help save fuel.
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20 millionth disc brake delivered The success story continues apace: parallel to the 2010 IAA in Hanover, the Knorr-Bremse site in Aldersbach, Germany produced its 20 millionth disc brake.
The success of the pneumatically operated disc brake started in 1992, when Knorr-Bremse produced a small series for a bus application. Then, in 1996, the leading truck manufacturers introduced the brakes as standard, and in the third year of production an important milestone was reached when the millionth unit came off the production line. By January 2006, Knorr-Bremse had produced its 10 millionth brake. As the number of different applications grew, production steadily increased by more than 200,000 to 2.8 million a year in 2007 and 2008. Then, only a few years later in 2010, the company celebrated brake number 20,000,000.
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Consistent performance the secret of success There are many reasons for the success of the pneumatic disc brake, including its light, compact design, even brake pad wear, greater ease of servicing and related cost savings. But the main reason remains the enhanced safety levels it offers. Introduction of the disc brake significantly reduced braking distances compared with traditional drum brakes. The brake’s consistently strong performance under all operating conditions and its rapid response and controlled application ensures safe braking especially at high speeds. And the development engineers are currently focusing on reducing the braking distance even further.
Continuous improvement the key to market success The enduring success of the disc brake is due in no small part to the product’s continuous development and improvement. Modifications introduced in recent years have included the monoblock caliper and the splined disc – which offers improved heat-resistance. Parallel to these developments the brake has also been adapted for specific applications, for example on trailers. Some 50 engineers are currently working on continuous improvement of this innovative product. By constantly enhancing the product’s advantages for customers, Knorr-Bremse has managed to further consolidate its position as the leading supplier of disc brakes and complete braking systems for the commercial vehicle industry. Its many applications now set the industry standard for trucks weighing between 6 and 44 tons. The company is also particularly focused on developing products that are tailored to the various regional markets. Thus, for example, the disc brake is currently being adapted for use in North America, Brazil and – most recently – China. The R&D expenditure involved represents an important investment in the global success of the disc brake.
Uniform quality standards world-wide Knorr-Bremse relies on state-of-the-art technology and a comprehensive quality management system in the production of these brakes, with EUR 80 million invested in the machining and assembly equipment at the Aldersbach factory alone. A similar volume of investment is also devoted to suppliers. And the Knorr-Bremse Production System (KPS) ensures that all the disc brakes are produced to the same high standard the world over. Across-the-board quality management ensures top quality at every stage of the value chain. In recent years the Disc Brake Center of Competence in Aldersbach has helped establish further centers of competence in Brazil, the USA and China.
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South America Anti-lock system for Ford Knorr-Bremse Brazil and Knorr-Bremse Turkey have jointly won important orders from Ford. In June, Ford Caminhões decided to put its faith in Knorr-Bremse ABS technology: with effect from 2013, KnorrBremse Brazil will be supplying the complete ABS requirements of South America’s third biggest truck manufacturer. Knorr-Bremse’s Brazilian subsidiary is also set to benefit from new legislation requiring trucks to be equipped with ABS systems in Brazil from 2013 onwards. In addition to this order from South America, Knorr-Bremse will also be supplying the entire EBS requirements of Ford Otosan in Turkey. The contract was secured as a result of close cooperation between the teams in Brazil, Knorr-Bremse’s Turkish organization and the Electronics Center of Competence responsible for developing ABS systems in Schwieberdingen.
Series production of compressor with clutch Series production of the compressor with clutch started in September of the year under review. The compressors will be initially installed in the TGX Efficient Line, a new vehicle series from truck manufacturer MAN, but during 2011 will be extended to the entire range of heavy vehicles. The compressor with clutch is an innovative development that connects and disconnects compressor and engine according to air requirements, thereby saving significant quantities of fuel. The compressor disengages from the engine in situations where this makes sense in terms of energy management – for example where more power is needed for the vehicle itself during drive-off, accel-
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Asia Successes in China Knorr-Bremse has been represented in China by its companies in Dalian and Shanghai for several years. In order to expand its activities in China, a start was made in 2010 with the development of an assembly line for disc brakes in Dalian, which should be completed in 2011. In August a contract was signed with commercial vehicle supplier CAFF to form a joint venture that will take up operations in 2011 (see pages 80/81). During 2010 Knorr-Bremse received growing numbers of orders for compressors from China National Heavy Duty Truck Group (CNHTC) and the engine manufacturer Weichai. FOTON, one of the leading Chinese truck manufacturers also decided to bring in Knorr-Bremse to provide equipment for a number of important products. The new orders have considerably strengthened the position of KnorrBremse in the Chinese truck market. The company is also to supply the majority of the torsional vibration dampers for CNHTC trucks as well as WP7 and WP12 engines from Weichai.
eration or overtaking. This means the engine does not need to generate extra power to drive the compressor, and fuel is saved. But even during normal driving the compressor can be disengaged when the braking system already has sufficient air – so the engine does not have to drive the compressor in neutral.
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Partnership with Volvo in Asia further expanded Winning the order to develop and supply central braking system components for the Asian market has enabled Knorr-Bremse to further expand its strategic global partnership with Volvo. From 2013 onwards Knorr-Bremse will be supplying braking systems from its Chinese and Indian plants for medium and heavy-duty trucks to be manufactured locally by Volvo. At the end of 2010 Knorr-Bremse received an order for complete ABS and air treatment systems for the trucks. The company also won the tender to supply the engine compressors, which will be manufactured in India. By producing for the local mass-premium segment Volvo aims to significantly expand its share of the Asian market – one reason why Knorr-Bremse attaches such significance to the latest orders and the expansion of its strategic product lines at Volvo.
Prizes and awards “Best Brand” for fifth year running For the fifth year running, Knorr-Bremse was named “Best Brand in the Commercial Vehicle Industry” in the “Brakes” category. The award recognizes the reliability, quality and safety of Knorr-Bremse products and is regarded by customers as a reliable indicator of quality. Readers of the trade journals lastauto omnibus, trans aktuell and FERNFAHRER were invited by DEKRA, the vehicle inspection experts, and publishers ETM to vote for the best brands in the commercial vehicle segment. Participants were not just voting on brand recognition but also on the perceived value of the products concerned and the degree of confidence they inspired. The fact that Knorr-Bremse won the award for the fifth time running despite difficult market conditions is an incentive for the company to remain a preferred supplier for its customers, offering them high quality, innovative and competitive products.
Knorr-Bremse wins die casting competition In the 2010 International Aluminum Pressure Die Casting Competition, Knorr-Bremse, together with Swiss supplier DGS Druckguss Systeme AG, won first prize in the category “Multifunctional near-net shape castings” for its casing for the Electronic Air Control 2 (EAC2) for braking systems. The term “near-net shape” is used by experts to describe products that have virtually achieved their final shape following casting and only require minimal finishing. The process jointly developed by Knorr-Bremse and DGS brings enormous advantages: During finishing of a component weighing 4.6 kilograms following conventional pressure die casting, anything up to a kilogram of waste can be generated, whereas the figure for the new process is a mere 300 grams.
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PACCAR quality award The fact that Bendix Spicer Foundation Brake LLC (BSFB) won a “50 PPM” quality prize from American manufacturer Paccar is an indication of the company’s success in working towards the “zero defects” goal laid down by Knorr-Bremse. PPM stands for “parts per million“ and is a common metric used in manufacturing to refer to the number of defects – or defective units – per million parts examined. BSFB received the prize in recognition of the fact that fewer than 50 in a million parts delivered were faulty or defective. This makes Bendix one of a small circle of preferred PACCAR suppliers.
SmarTire among TOP 5 aftermarket products US industry publication Heavy Duty Aftermarket Journal has named the SmarTire TPMS tire pressure monitoring system as one of the top 5 aftermarket products of 2010. The criteria for selection are innovation, customer usefulness and customer retention. The system, which can be retrofitted to almost any commercial vehicle, monitors the pressure and temperature of each tire to provide tire status information in real time. If the tire pressure falls below a set level, the system warns the driver of the potential danger, enabling him to check and if necessary adjust tire pressure at any time. Continuous monitoring can also have a positive impact on running costs, as tire pressure influences both tire wear and fuel consumption.
Three supplier awards from Caterpillar During the year under review Bendix received three awards for quality excellence from commercial vehicle manufacturer Caterpillar. In the categories OEM air treatment products, remanufactured air compressors and service parts the company received silver level designation – a status only granted by Caterpillar to a select group of suppliers. Bendix regards this achievement as validation of its system of continuous quality improvement. At the same time it boosts the company’s commitment to supporting Caterpillar with top quality products.
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Projects During 2010 Knorr-Bremse further strengthened its market position in the commercial vehicle sector with a wide range of different projects. In Russia, for example, a new torsional vibration damper assembly line was opened, and in Kecskemét, Hungary, the one millionth air treatment unit was produced. In response to growing demand in the Chinese market, Knorr-Bremse also paved the way for transferring an entire disc brake assembly line from its German site in Aldersbach to Dalian, China.
New damper assembly line opens in Russia In May 2010 a new assembly line for dampers started up at Knorr-Bremse KAMA in Naberezhnye Chelny in the Russian Republic of Tatarstan. This joint venture between Knorr-Bremse and Russia’s biggest truck manufacturer, KAMAZ, produces torsional vibration dampers for the Russian market. Currently some 250 truck dampers leave the assembly line during every shift. Locating production in Naberezhnye Chelny has considerably increased supply chain flexibility, as products previously shipped from Europe to Russia can now be produced locally. This establishment of local production facilities in Russia is part and parcel of Knorr-Bremse’s global strategy of ensuring that products are manufactured directly in the market in which they are to be sold as far as possible. The strategy has proved highly successful: since it was first set up the new Russian joint venture has grown steadily and expanded production despite the difficult economic circumstances.
Milestone in Kecskemét A milestone was passed in the production of air treatment equipment at Knorr-Bremse in March 2010, when the company’s plant in Kecskemét, Hungary turned out its one millionth APU (Air Processing Unit). The APU in question is a pneumatically controlled unit for air treatment in commercial vehicles that combines several different functions in a single item of equipment. Among other things, it comprises an air dryer with pressure regulator, as well as a four-circuit safety valve with one or more integrated pressure limiters. Production of the one-millionth APU is a further step forward in the long success story of Knorr-Bremse: The first such units to feature in a standard production model appeared in the Mercedes Actros truck over ten years ago. Since 1997 Iveco and DAF have also been using air processing units from Knorr-Bremse to replace their previous stand-alone air dryers and multi-circuit safety valves.
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Up till 2005 the APUs were manufactured at the Knorr-Bremse plant in Aldersbach, Lower Bavaria (Germany). Then production was transferred to Kecskemét in Hungary, where today Knorr-Bremse employs some 650 people making not only air treatment systems but also pneumatic and electronic brake control systems for the European commercial vehicle industry. Kecskemét is also where APU sales activities for Central and Eastern Europe are based.
Cooperation with Robert Bosch Knorr-Bremse Systeme für Nutzfahrzeuge and Robert Bosch GmbH are to jointly develop a radar sensor for commercial vehicle safety systems, including the AEBS automatic emergency braking system. By forming a joint venture, both companies will be able to benefit from the expertise of their respective partner. Knorr-Bremse will contribute its considerable experience with safety systems in the commercial vehicle market, and Bosch will offer its expertise in developing and manufacturing radar sensors. The result of this successful collaboration will be an intelligent radar sensor that meets all requirements in terms of design and function and combines the specific expertise of both companies.
Strategic relocation Bendix Spicer Foundation Brake LLC, a joint venture between Knorr-Bremse subsidiary Bendix Commercial Vehicle Systems LCC and Dana Commercial Vehicle Products LLC, reorganized its production of spring brake actuators and brake chambers at the end of 2010. This included transferring production operations from Di-Pro Inc. in Fresno, California to the new Bendix facility in Acuña, Mexico. The move, which was completed in December 2010, is consistent with Bendix’s overall strategic plan to optimize its North American manufacturing locations by leveraging corporate shared services, alongside its goal of maintaining lean and cost-effective manufacturing processes to remain competitive in the marketplace.
Development of a disc brake production line in Dalian During the year under review, Knorr-Bremse drove forward the development of local supply structures and production capacity at its Chinese plant in Dalian in response to growing demand for a commercial vehicle disc brake designed for the Chinese market. The process of transferring an entire assembly line from Aldersbach to Dalian will be completed during 2011, and deliveries of locally produced disc brakes are scheduled to start in 2012. Parallel to the relocation process, the task of designing a marketspecific disc brake will be completed and the green light given to Chinese suppliers for series production to start. The new production line will enable Knorr-Bremse to manufacture some 300,000 disc brakes per year – all to the company’s usual high quality standards. As in the case of previous relocation projects in North and South America, the project was able to draw on the experience of experts at the Aldersbach plant and the Disc Brake Center of Competence who supported the operations in Dalian, working with local colleagues and providing them with training.
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By the end of the year under review Knorr-Bremse was already working with all the major Chinese truck manufacturers on application projects involving the localized disc brake.
Knorr-Bremse CVS India joint venture acquired As of February of the year under review, the joint venture Knorr-Bremse Systems for Commercial Vehicles India Private Ltd., originally formed between Knorr-Bremse Far East Limited and Tata Autocomp. Systems, became a wholly-owned subsidiary of the Knorr-Bremse Group. The company is thus responding to the pace of growth in the Indian market and clearing the way for further expansion. In keeping with the excellent past and prospective collaboration between the two companies, the acquisition took place by mutual agreement. For Knorr-Bremse, the move opens up additional opportunities to serve the Indian market as an autonomous systems supplier and to participate in market growth as a supplier to all Indian truck manufacturers. At the same time, it enables Knorr-Bremse to play a more prominent part in shaping technological market trends. Initial orders have already been won and provide a promising start for the execution of Knorr-Bremse’s expansion plans. In addition, in terms of both technology and economy the products developed and manufactured in India frequently meet the requirements of customers in other emerging markets. As a result, KnorrBremse India will be able to build a network of efficient local suppliers.
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Value-stream factory opens in Czech Republic Development of a new facility in the town of Liberec, Czech Republic, involved more than just transferring production activities. In early June 2010, KnorrBremse Commercial Vehicle Systems introduced an entirely new approach to production and logistics based on its globally standardized production system KPS and taking the form of a “value-stream factory”. The result was a significant increase in efficiency and flexibility in both areas.
The new production and sales center in the northern Bohemian town of Liberec replaced the existing facility in Hejnice, some 30 kilometers away. On a site measuring almost 8,000 m² Knorr-Bremse Commercial Vehicle Systems now produces components for truck braking systems such as brake cylinders, clutch servos, foot and hand brake valves and filter cartridges.
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Focus on value creation All processes at the new factory are focused on value creation, with a particular emphasis on flexibility and economy. The proverbial key to success is synchronization of processes, with individual production processes no longer regarded separately but rather as part of a single process. Thus the focus is no longer on optimizing and maximizing capacity utilization of individual workplaces but on the process as a whole, optimizing resource utilization and eliminating deviations. The basic elements of a value-stream factory were incorporated into the planning process from the very outset. Logistics are situated immediately next to production processes, with standardized, modularized product islands and workstations. Tugger trains ensure a coordinated and efficient supply of materials to assembly operations, reducing inventory and improving component availability. In addition to standardization, another focus was on further developing shopfloor management. The company value chain was concentrated on the production process itself, with all supporting processes aimed at making production as cost-effective, flexible and error-free as possible.
The right time, the right workplace Modular factory design provides the basis for an ideal materials flow. The layout of the plant and its individual buildings is based on current value streams, but is designed to be flexible enough for the materials flow to be maintained even when a change in product and production structures is introduced. The new layout with its optimized processes guarantees the right quantity of the required material being sent at the right time to the right place.
The many advantages of Liberec The decision to move to Liberec came as part of Knorr-Bremse’s strategic development of its production network. In addition to having good transport links, the region of Northern Bohemia also offers large numbers of highly skilled workers. And the town of Liberec, which has engineering and mechatronics faculties at its university, is home to many engineers. Proximity to Knorr-Bremse’s former plant at Hejnice also facilitated the transfer of expertise to the new site.
Long tradition of links with Czech Republic This latest move to a new site is one further step in Knorr-Bremse‘s long history of activities in the Czech Republic. In 1992, shortly after the fall of the Iron Curtain, the Knorr-Bremse plant in Aldersbach started to co-operate with the Czech company AUTOBRZDY a.s. A year later the German-Czech joint venture Knorr-Autobrzdy s.r.o. was set up, and in 1998 was fully taken over by Knorr-Bremse and incorporated into the Knorr-Bremse Group.
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Products Reliable, safe, high performing, efficient and tailored to the requirements of international customers – these were the characteristics of the commercial vehicle products either newly developed or further improved during 2010. They included the AEBS automatic emergency braking system, the compressor with clutch and the latest version of the TEBS trailer electronic braking system.
Screw compressor for hybrid buses In response to growing demand for commercial vehicles that use hybrid drive technology, KnorrBremse began series production of screw compressors for hybrid buses in spring 2010. The new design of compressor is to be installed in the 5,000 Volvo buses ordered as part of London’s fleet renewal program, some of which is due to be completed in time for the 2012 Olympic Games. In addition to supplying Volvo, Knorr-Bremse has also launched similar projects with other commercial vehicle manufacturers. Screw compressors are capable of producing large volumes of compressed air, using two synchronous counter-rotating screws with a large inlet valve and smaller outlet valve. Unlike conventional compressors, they are not powered by the vehicle engine but by their own electric motor. They are low-vibration and quiet in operation. Knorr-Bremse is convinced of the potential offered by screw compressors and has also started designing a compressor application for hybrid trucks. Unlike buses, trucks are not constantly stopping and starting and therefore require less air to operate their brakes, so the engineers are focusing on designing a unit that produces smaller volumes of compressed air.
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New lightweight disc brakes Knorr-Bremse continues to develop its portfolio of pneumatic disc brake products with a view to covering as wide a range of vehicle applications as possible while at the same time catering for regional differences. The company’s latest disc brake is much lighter, and can reduce the overall weight of a truckset by up to 100 kilos, saving fuel and cutting emissions without compromising safety. In the trailer segment the successor to the SK disc brake – the ST – was also presented in 2010. Specially designed for trailer applications, this brake is extremely light but offers the same braking performance as before.
Trailer-EBS further developed The TEBS trailer electronic braking system specially developed by Knorr-Bremse for trailers ensures even braking on all wheels of a truck-trailer combination. TEBS receives the driver’s braking signal and adjusts it to the weight distribution of the trailers, thereby reducing brake wear and cutting vehicle maintenance costs. During the year under review Knorr-Bremse added a number of additional functions to the second generation of TEBS, including ABS configuration for vehicles with more than three axles. This means that trailer EBS is now available for all vehicle types. Applications for pony trailers were also added. If combined with the Trailer Roadtrain Module (TRM), electronic transmission of the braking signal to the trailers also makes it possible to bring extra-long vehicles safely and rapidly to a halt.
AEBS automatic emergency braking system During the year under review Knorr-Bremse continued to develop the AEBS automatic emergency braking system for commercial vehicles. At the 2010 IAA Commercial Vehicles it gave an impressive demonstration of the system during a special session on hazardous goods transportation organized by the German Association of the Automotive Industry VDA. AEBS involves a radar sensor mounted on the truck monitoring the distance to the vehicle in front. If this starts to close too quickly, the system intervenes in the braking system, helping avoid a collision. Combined with an optional video camera, AEBS can even trigger full emergency braking if it identifies a completely stationary object (for example the end of a tailback) in front of the vehicle. In each of these two versions, AEBS initially alerts the driver to the imminent danger with acoustic and optical signals or a brief application of the brakes. If the driver fails to react within a predefined period of time, the system triggers partial braking, thereby allowing for a longer driver reaction time. Only when the system spots an imminent danger of collision is emergency braking triggered. In this way the system avoids an accident as far as physically possible or at least mitigates its consequences. This latter effect can be increased by the system continuing to brake even during a collision, thereby enabling the brakes to absorb some of the energy. Even when AEBS applies the brakes without the driver’s involvement, he still retains full control over the vehicle (in line with the Vienna Agreement) and can interrupt AEBS braking at any time by accelerating, steering etc.
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Tire Pressure Monitoring System now also available in Europe During the year under review Knorr-Bremse launched the Tire Pressure Monitoring System (TPMS) in the European market. This wireless sensing system for state-of-the-art tire monitoring in commercial vehicles had already been available on the North American auto market since 2009. TPMS is the only tire monitoring system in the world that keeps a constant eye on both tire pressures and temperatures in semi-trailer tractors, trailers, trucks and buses. If the tire pressure falls below a set level, the system warns the driver of the potential danger. TPMS is not just suitable for new-build trucks – it can also be retrofitted to virtually any commercial vehicle. As well as being a safety feature, TPMS can also play a key role in cutting fleet operation costs. By enabling the driver to check and if necessary adjust tire pressure at any time, both tire wear and fuel consumption can be significantly reduced. A further positive effect is that fact that maintaining the right tire pressure also enhances the performance of the braking system.
Production of brake pad retaining system with ProTecS launched During the year under review Knorr-Bremse launched production of the new brake pad retaining system with ProTecS. This replaces the system used hitherto on air disc brakes SN6, SK7 and SN7 and can be used on all applications. What is new is the use of a welding point to connect the spring and brake pad. This increases the pressing force across the entire working area and significantly increases service life, particularly in rough driving conditions. The pad retaining system also acts like a sliding shoe, providing good protection against abrasion on the spring and retaining clip caused by dirt. The system also has a further advantage – it enables the pad to be slid back more easily out of contact with the disc. A further feature that comes with the introduction of ProTecS is the cast back plate. This weighs less than the previous steel plate, generating less momentum, thus preventing radial acceleration of the pad and reducing deformation in contact with the brake carrier. The new pad retaining system with ProTecS also offers considerable safety advantages in terms of servicing. With ProTecS the risky practice of re-using springs is not possible. And the new pad sets are also more environmentally friendly – the friction materials meet the requirements of Eco-Class 1 and 3 respectively. The cadmium and lead compound content of the pads has been considerably reduced.
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Meeting the needs of the BRIC states As the world’s largest commercial vehicle markets, Brazil, Russia, India and China – the BRIC states – have high requirements for commercial vehicle components. For many years, Knorr-Bremse has pursued a consistent regionalization strategy aimed at covering the specific needs of the markets in these countries. And its efforts have paid off in the form of steady growth in demand for Knorr-Bremse components.
All over the world Knorr-Bremse offers innovative, region-specific solutions aimed at improving vehicle safety and energy efficiency and tailored to the needs of individual markets. In developing its products it always takes into account customer requirements in the various countries, with their differing infrastructures, transport systems and climatic conditions. Localized products also must comply with national legislation and, in some cases, have to be locally produced, either for cost reasons, or to meet customs regulations or quite simply because of the distances involved. In 2010 the focus was on products especially tailored to the needs of the BRIC states.
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20-inch disc brake for China Unlike in Europe and North America, commercial vehicles in China use tires with inner tubes. This creates a wheel contour that provides less space for disc brakes. To cope with this reduced installation envelope Knorr-Bremse has developed a special design of brake with an internal mechanism based on the well-known disc brake concept that has sold in its millions in the company’s core markets. In 2010 the process of localizing production of the 20-inch disc brake began, including the development of a local supply infrastructure. At the same time the process began of transferring an entire disc brake assembly line from the German site in Aldersbach to Dalian, China.
ABS for BRIC With more than 20 years’ experience of designing electronic brake control systems, Knorr-Bremse is the world’s leading manufacturer of ABS systems. This means Knorr-Bremse Commercial Vehicle Systems is well placed for accessing BRIC markets. With its ABS system specially designed for the BRIC states, Knorr-Bremse offers a scaleable, cost-effective solution that meets the needs of these countries. The system covers a wide range of functions: It has to meet certain minimum requirements but also has to be modular in design and capable of being customized to regional customers’ requirements. The ABS is therefore available with integrated ESP function on the one hand, and on the other hand can also reproduce electronic brake control functions.
PBS – Pneumatic Booster System The concept underlying this development is both simple and ingenious: the Pneumatic Booster System (PBS) utilizes the compressed air that has already been generated for the braking system, injecting measured amounts briefly into the inlet manifold of the engine to boost its short-term performance. Within half a second the engine has enough oxygen to eliminate so-called “turbo lag” during acceleration. This brief but significant improvement in performance enables the driver to change up faster and maintain lower average engine revs without affecting performance. This short-term boost in engine performance is not only useful during drive-off and overtaking. The acceleration of a vehicle equipped with the Pneumatic Booster System is comparable to one with a 20% to 30% higher cubic capacity – which means PBS is of considerable benefit to BRIC states, where vehicles are traditionally fitted with smaller engines.
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Service Knorr-Bremse’s “Active Service” concept set new standards of support for dealerships, repair shops and fleet operators, offering tailor-made, cost-effective solutions and a strong regional presence, with the company available 24/7 by telephone, on the Internet or via local contacts. 2010 saw it further improve its already excellent levels of aftermarket service.
Active Service Knorr-Bremse has brought together its entire range of services for dealerships, repair shops, fleet managers and drivers under the title of “Active Service” with the aim of helping them achieve maximum efficiency and economy in all aspects of their operational and business processes. Active service offers a concept tailored to each particular application and adjusted to the increasing complexity of commercial vehicle systems. From initial product development to installation and subsequent servicing, everything is focused on offering the customer the best possible service. The service portfolio is based on the criteria of safety, quality and economy throughout the entire lifecycle of a product. A combination of OE-quality products and enhancement of practical skills through technical training and hotline support enables turnaround times in repair shops to be shortened. Rapid online access to servicing manuals, service news and other technical documentation is included. Standardization of products reduces inventory costs and capital tie-up and also – despite the increasing variety of products involved – ensures product availability for servicing. Internet-based services such as the electronic product catalogue enable products and relevant information to be rapidly found. The entire product catalogue including technical details and drawings can be viewed at any time on the Knorr-Bremse website. And to ensure ease of use, the functions related to product search, web shop, legacy parts and warranties are linked with SAP. In Europe, warranty inquiries are also linked directly to Knorr-Bremse’s QSYS quality system.
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NEO system diagnostics With its new NEO System Diagnostics tool, Knorr-Bremse has created an electronic diagnostic platform that provides rapid, professional support for repair shop personnel working on electronic vehicle systems. Depending on the particular configuration involved, it either communicates via the vehicle’s diagnostic interface or directly with the electronic control unit (ECU). Not only can it read off the error code – in the case of complex faults it can also run a system analysis to localize and deal with the problem. NEO has a modular design and is compatible right across the range, from the starter version through to the top model. Regular software updates enable repair shops to guarantee state-of-the-art servicing. In 2010, for example, when the full service product portfolio for the latest generation of the EBS5.X electronic braking system and corresponding vehicle applications was made available on the aftermarket, the updated diagnostic software was also included. In addition to the basic functions such as error display and localization, the data transfer function also enables a repair shop to replace the entire ECU smoothly and efficiently if necessary. NEO System Diagnostics and the accompanying software can also be used for sensor calibration. The NEO software also offers a full range of functions for the latest EBS5 electronic braking system family for special OE applications.
Technical training Building on past experience with its technical training program, Knorr-Bremse has created a new training portal that will be available online for customers from 2011. The portal facilitates communication between the Knorr-Bremse training team and participants, for example by offering regularly updated information on training provisions and availability of places as well as supervising waiting lists. In addition, with the launch of its collaboration with Robert Bosch, a further milestone has been reached in the field of technical training of commercial vehicle repair shops. The two companies now offer joint training sessions on commercial vehicle braking systems as part of the Active Service concept. The main beneficiaries are repair shops and dealerships, who can now update their skills and knowledge from a single source.
“TruckWorks” “TruckWorks” is a new service concept developed by Mercedes-Benz that relies crucially on the support of partners such as Knorr-Bremse. It involves Mercedes-Benz offering OEM-quality services from a single source not just for vans and trucks but also for trailers, semitrailers and attachments. To create this one-stop shop concept, 19 co-operation partners – one of which was Knorr-Bremse – were recruited from the vehicle manufacturing and supply sectors. The company’s full range of aftermarket capabilities is called for to support the program – including component searches, training, hotline and OEM systems diagnostics.
Quality management program for aftermarket customers The quality management program for aftermarket customers (QMPAD) is being subjected to a thorough revision and expansion for the first time since its launch in 2004. The system, which was rolled
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out progressively in the aftermarket following the introduction of the Group Exemption Regulation (GER) in 2002, is being adapted to take into account changing market conditions and new legislation. At the same time the regional application of the program is being expanded, with a version not based on the GER being introduced for future cooperation with export customers serving markets outside Europe.
Aftermarket event at 21st Automechanika in Frankfurt Some 155,000 visitors from a record 180 different countries attended one of the world’s biggest international trade fairs for the automotive industry – the 21st automechanika in Frankfurt. Much interest was shown in a customer event on the subject of the aftermarket organized by Knorr-Bremse outside the trade fair grounds: At the Marriott Hotel Josef Frank, Aftermarket Director of CLEPA, the European Association of Automotive Suppliers (Comité de liaison européen des fabricants d‘équipements et de pièces automobiles), talked about the Euro V and VI technical standards and the new Motor Vehicle Block Exemption Regulation MVBER. Afterwards, participants also had an opportunity to discuss current issues.
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In addition to the targeted fostering of product innovations, the key success factors for Knorr-Bremse in the future will include process optimization, employee development, corporate responsibility, environmental protection and social engagement, aspects which remained among the top priorities for this family-owned company in 2010.
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Knorr Excellence Under the heading of Knorr Excellence (KE), Knorr-Bremse has introduced a standardized model for all its management systems and has merged all process optimization initiatives across the entire Group. The aim of KE is to achieve excellence in all corporate processes and to ensure higher levels of customer satisfaction by continuously improving the Group‘s performance. In 2010, Knorr-Bremse consistently pursued this program and further improved standardized processes throughout the Group by launching new initiatives, notably in the fields of finance, IT and human resources on the one hand and by pursuing existing initiatives on the other hand.
Finance & IT Excellence Within its FIT initiative, Knorr-Bremse made further efforts to establish best in class processes across the board in the finance and IT sectors in 2010. In the IT sector, FIT includes two projects: “IT 2.5“ and “ONE IT“. The objective of IT 2.5 is to boost productivity, thus improving IT cost structures. In the course of the project, the individual IT cost items were reviewed and specific improvement potentials identified and then tapped by specific action. ONE IT is a global organizational project that seeks to realize further synergies through global harmonization in the IT sector. In 2010, the main focus was on integrating the previously separate IT systems of the Rail Vehicle Systems and Commercial Vehicle Systems divisions of Knorr-Bremse and of the parent company, Knorr-Bremse AG, under the heading of Global Shared Services. In the finance sector, the FIT projects “Intercompany Netting“ and “Fast Close“ were launched. The Intercompany Netting project seeks to simplify and expedite intercompany payment transactions and related liaison processes, thus reducing transaction costs in the long term. The objective of Fast Close is to increase the flexibility of timing for the annual financial statements process, at the same time as ensuring and improving analysis quality. Thanks to the process improvements already implemented, Knorr-Bremse was able to save ten working days during the preparation of annual financial statements for 2010. In the finance sector, the Supplier Early Payment Program SEPP launched a few years ago was rolled out worldwide in 2010. SEPP has proven to be an effective means of safeguarding liquidity and reducing the cost of capital for selected suppliers. SEPP therefore provides sustained reinforcement for the financial stability of key external partners of the Knorr-Bremse Group.
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PEX
People Excellence Within the PEX – People Excellence – initiative, existing human resources and executive development projects were continued and new projects were launched in 2010. The objective of the initiative is to implement basic elements of human resources development around the world and to take the Group management culture forwards. The elements of the initiative, including the staff dialogue, executive development and the identification and development of high-potentials aim to create further performance incentives and to highlight the long-term prospects for employees. With PEX, Knorr-Bremse has established a future-oriented basis for the ongoing development of its management culture (see also the “Employees“ section on pages 125 to 127).
Quality First Within the Q-First quality campaign, a large number of specific measures were defined to ensure that each and every component developed and supplied by Knorr-Bremse is of the highest possible quality. Quality First comprises a raft of measures covering areas such as management, human resources, development, production, supplier development, complaints management and customer relations. As a manufacturer of safety-critical products, Knorr-Bremse considers these measures indispensable. One fundamental principle of the Knorr-Bremse quality management policy is prevention rather than cure. Potential errors must be detected in good time before they lead to defects in product components in service. In 2010, Knorr-Bremse therefore once again dedicated its efforts to ensuring that safety-relevant requirements were taken into consideration from the beginning of the development process. In addition, the company again conducted a large number of Product Safety Audits (PSA). These especially strict audits that are specific to Knorr-Bremse ensure that internal and external suppliers comply with the Group‘s very high quality standards.
Supply Chain Excellence The Supply Chain Excellence (SCE) project has now been successfully launched at all Knorr-Bremse sites. The main focus of the project in 2010 was to ensure that internal and external production capacities were adapted to the increasingly rapid recovery in global demand. The introduction of best in class logistics processes at the Budapest (Rail Vehicle Systems) and Liberec (Commercial Vehicle Systems) plants under the headings of “5-day factory“ and “value-stream factory“ were other key aspects of the SCE initiative. Global inventory management was continued and schedule effectiveness was significantly improved in many areas.
Knorr-Bremse Production System In 2010, the Knorr-Bremse Production System (KPS) concentrated on value stream optimization and employee training. For example, joint training events for the Rail and Commercial Vehicle Systems divisions were held during the year. These events focused on KPS expert training and on shop floor management training for executives. In practically oriented training sessions, the participants were familiarized with or learned more about KPS methods by working in teams to optimize real production lines and processes. The new KPS process audit in the Rail Vehicle Systems division, which has now been introduced at nine Knorr-Bremse production facilities, is a tool for systematically determining the KPS
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maturity level of production lines at the same time as identifying scope for improvement and indicating how it can be achieved. In the Rail Vehicle Systems division, within the framework of KPS, value stream methodology was systematically implemented at Kecskemét, for example, on production lines operated at high capacities, with a view to identifying potential for further improvements. In addition, a stronger focus on shop floor management was adopted and training for new employees, experts and executives was driven forward.
PROGRESS In 2010, the optimization and harmonization of business processes on the basis of improvements resulting from Knorr Excellence initiatives was continued under the PROGRESS program. SAP was introduced at nine locations in 2010 and is now used at more than 70 Knorr-Bremse facilities. The simultaneous optimization and harmonization of business processes together with the introduction of SAP for all the companies of the Knorr-Bremse Group has proved itself in practice and will be continued in 2011.
Efficient Cut of CO2 To combine environmental and economic aspects, Knorr-Bremse defined Group-wide climate protection targets and launched the ECCO2 (Efficient Cut of CO2) environmental initiative for worldwide implementation in 2009. By 2020, the energy efficiency of the Group is to be improved by 20% and CO2 emissions thereby cut by 20% (see also “Responsibility“, p. 118). In 2010, measures to reduce CO2 emissions were taken at a variety of locations as part of ECCO2. At the new plants in Budapest and Liberec in particular, special attention was paid to resource conservation during the construction of the buildings.
Prizes and awards MIS Asia IT Excellence Award 2010 The MIS Asia IT Excellence Award is one of the most coveted awards for outstanding IT performance in Asia. Asian IT organizations and CIOs in particular are honored for their outstanding management contribution to the use of IT for enhancing corporate value and achieving business targets. In 2010, Knorr-Bremse Asia-Pacific won the award for the second year in succession. Knorr-Bremse received the accolade in the Best Security Strategy category for its Securegate Asia Pacific program.
MNC Corporate Treasury Team of the Year Award Not least because of the strict selection criteria that apply, Asset Magazine‘s Triple A Awards are some of the most prestigious annual honors presented by the Asian finance industry. The awards honor companies and individuals that have made a significant contribution to the development of the finance industry in Asia. In 2010, Knorr-Bremse Asia-Pacific received the MNC Corporate Treasury Team of the Year Award for its successful financial management.
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Further improvement in external ratings Knorr-Bremse’s rapid and rigorous reaction to the onset of the economic crisis in the fall of 2008 paid renewed dividends in terms of the Group’s external creditworthiness rating in 2010: Two prominent rating agencies not only reaffirmed the Group’s investment grade status, they also upped their ratings again. In the opinion of the rating agencies Moody’s and Standard & Poor’s, KnorrBremse has steered a safe course through the crisis. Moody’s initially retained its 2009 rating of Baa1, but raised the outlook from “stable” to “positive”. Standard & Poor’s awarded Knorr Bremse a rating upgrade from “BBB+/Outlook positive” to “A-/Outlook stable”. Standard & Poor’s had already seen the potential for an upgrade a year earlier, despite a very difficult market environment. With its 2009 financial indicators, on which the 2010 rating was based, Knorr-Bremse was able to demonstrate that it had been able to realize that potential.
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Two pillars provide mutual support A key role here is played by the fact that the Group’s two separate business areas, rail vehicles and commercial vehicles, are subject to different economic cycles that can take very different courses – in terms of time and from one region to the next. Thus in times of crisis the two pillars provide mutual support and mitigate the overall impact of the cyclical global market. The fact that the company’s product portfolio has been expanded beyond the core field of braking also helps to safeguard its longterm future. Its innovative products in the areas of engine management, HVAC, power electronics or automatic door systems stand for reliable leading-edge technology at its finest.
International strategy a stability factor In 2010 Knorr-Bremse maintained its global strategic focus with a broad-based position in numerous markets. Knorr-Bremse invested not only in product development but also in strategically important production facilities such as the new Rail Vehicle Systems plant in Budapest, Hungary, or the new Commercial Vehicle Systems plant in Liberec, Czech Republic. The agencies rated this diversification in terms of both regions and product groups as an additional stability factor in mitigating the effects of cyclical crises.
Dependable planning Knorr-Bremse’s documented continuity in meeting or exceeding agreed targets over a long period of time was considered by the rating agencies proof of a solid and consistent management performance. A moderate financial policy is key to this management approach. The Group’s balance sheet structure and cash flow generation are geared to stability and sustainability and supported by an appropriate volume of short and medium-term committed lines of credit that are by no means taken up in full. Should the need arise, however, these credit facilities could bridge the gap between cash flow generation and cash requirements, ensuring the flexibility that the company needs if it is to generate a rapid response.
Appropriate level of debt The rating agencies both affirm that Knorr-Bremse’s credit facilities are strictly aligned with the company‘s core business and in keeping with its economic capabilities. No speculation takes place. Through their ratings, Moody’s und Standard & Poor’s confirm that in times of crisis and of larger external acquisitions, the Group is always capable of generating sufficient cash flow to ensure that its level of net debt remains appropriate or, as was the case in 2010, can be transformed into net liquidity.
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Responsibility Sustainability and responsibility are increasingly important elements of modern corporate governance. Knorr-Bremse is therefore expanding its activities in the area and integrating them into its overall corporate strategy.
A family business like Knorr-Bremse sets great store by sustainability and responsibility. As part of its long-term business planning process the company has drawn together its business, environmental and social activities and formulated a corporate social responsibility strategy. And by signing up to the United Nations Global Compact, Knorr-Bremse has publicly signaled its commitment to the ten globally recognized basic principles that are also part of its own corporate culture.
Corporate social responsibility strategy The corporate social responsibility strategy that Knorr-Bremse has developed in collaboration with several of its divisions forms an integral part of the Group’s overall corporate strategy. It systematizes the company’s responsibilities for the environment, the workforce and society in general and determines the main focus of its future activities in the area. The overarching objective is to use its global and local activities in the field of corporate responsibility to develop the business and strengthen corporate culture, protect against risks, contribute towards sustainable development and create a positive public image for the Group. Knorr-Bremse will focus its activities on six areas in future. Measures in the field of “Products and Partners”, for example, are designed to support customers in saving energy and conserving sources and help business partners to achieve higher environmental and social standards.
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CSR program Each year a CSR program based on this strategy lays down specific objectives and measures for the various different areas of corporate social responsibility. Following the launch of the energy efficiency campaign ECCO2 (Efficient Cut of CO2), the company is also further developing and implementing its climate strategy and auditing its suppliers’ environmental and social standards. The CSR program for 2011 includes a process of dialogue and benchmarking with key customers, greater focus on marketing energy-efficient products and a pilot project for auditing CO2 emissions at company plants. Protecting the climate with ECCO2 With its ECCO2 environmental and climate campaign Knorr-Bremse has set itself the goal of improving energy efficiency by 20% and achieving a similar percentage reduction in carbon dioxide emissions by the year 2020. The campaign forms part of the Knorr Excellence Model for improving business processes. During the year under review, the main focus of ECCO2 was on optimizing compressed air and lighting systems, with further measures related to space heating and heat recycling. These enabled energy efficiency to be improved by 10% during 2010 and CO2 emissions to be reduced by 10% compared to the previous year. The – mainly technical – measures involved have resulted in savings of EUR 1.2 million per year. Synergies were also achieved as part of the Supply Chain Excellence Initiative (SCE), which looks at supply structures and inter-site logistics within the Knorr-Bremse Group. Reorganizing the system and
UN Global Compact Knorr-Bremse has become a signatory to the United Nations Global Compact initiative which, with its ten principles, sets international standards for companies and organizations in the fields of human rights, labor, environment and anti-corruption. Knorr-Bremse will be engaging in an international exchange of experience and contributing to a dialogue on corporate responsibility within the worldwide network of more than 8,000 Global Compact corporate members, including 140 companies and organizations in Germany. Five years on from the founding of the charitable organization Knorr-Bremse Global Care e. V., KnorrBremse has marked a further major milestone in meeting its corporate responsibilities by signing up to the Compact.
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establishing a central hub will in future halve transportation distances and cut 165 tons of annual CO2 emissions. A program of CO2 audits of company sites has also been launched with the aim of creating greater transparency about energy consumption and CO2 emissions and identifying scope for reductions. Following a pilot program to calculate the CO2 footprint of the Munich and Berlin sites, the program is now to be rolled out at other locations around the world.
Energy-efficient products Knorr-Bremse pays great attention to the potential environmental impact of the innovative technologies it develops. It was, for example, the first company in the rail vehicle sector to market a compressor that operates without oil lubrication. A more recent example is the newly developed HVAC system from Knorr-Bremse’s subsidiary Merak, which uses a new ultra-eco-friendly refrigerant – HFO1234yf – which has a very low global warming potential rating. In the commercial vehicle sector, climate change and pressure to reduce costs have also boosted demand for energy-efficient technologies in recent years – which is why Knorr-Bremse has long since made the development of fuel-saving technologies a priority and has showcased various solutions at trade fairs over the years. These have included the LEADER driver information system, which enables the fuel consumption of rail vehicles to be reduced by up to 15% and – in the truck sector – the Pneumatic Booster System (PBS), which eliminates turbo-lag and saves 2-3% fuel. At the same time, PBS increases engine power, enabling a smaller, lighter engine with lower fuel consumption to be used. The year also saw the launch of a further development of the Electronic Air Control System (EAC2), which differs from conventional com-
Customers are also increasingly making demands on Knorr-Bremse in this respect, with some even explicitly quoting the ten principles of the UN Global Compact when placing orders. During the year under review, Knorr-Bremse started to develop its own standard code of behavior for suppliers, using the UN Global Compact as an important, globally recognized frame of reference.
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mercial vehicle air systems by switching the air supply compressor on and off according to the driving situation, saving up to 2.5 tons of CO2 emissions per vehicle per year. Environmental protection and workplace health & safety In 2001 Knorr-Bremse launched a process of certifying the Group’s rail and commercial vehicle sites according to the ISO 14001 environmental management standard. This program continued in 2010, with sites in Johannesburg (South Africa) and Guangzhou (China) achieving certification. As part of its global health and safety and environmental policy Knorr-Bremse also takes a systematic approach to workplace safety. Having long since achieved certification of virtually all its European sites, confirming their compliance with the international occupational health and safety standard OHSAS 18001, the company is now rolling out a program of external auditing of its other sites world-wide. In 2010 the sites in Suzhou and Shanghai (China) as well as Westminster (USA) achieved OHSAS 18001 certification. In order to minimize environmental impact and energy consumption at new sites from the very outset, Knorr-Bremse has drawn up a list of requirements in the form of a “Green Building Guideline”. The idea is that intelligent planning can reduce the environmental impact and resource requirements of new buildings and create a pleasant and healthy working atmosphere for employees.
Health promotion Knorr-Bremse regards health promotion as an important duty, and its health facilities and measures are designed for young and old alike. At its European sites the company increasingly has to adjust to an aging workforce. Many sites run special sports programs and health campaigns aimed at promoting employees’ health and wellbeing, maintaining their ability to give of their best and encouraging communication and a team spirit. Health days and health fairs are also used to raise awareness and show employees what is on offer. Knorr-Bremse’s subsidiary Bendix has already attracted several awards for the measures it has taken at its four North American sites, where health programs include mammography check-ups provided by the company medical service, a slimming program entitled “Weight Watchers@Work”, an in-company fitness center, cardiovascular training, free blood tests for
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employees and their families, an annual health fair, breakfast seminars with information on health topics and a monthly health newsletter.
Energy management When it comes to measures for reducing energy consumption and CO2 emissions in its processes, Knorr-Bremse adheres closely to the provisions of the international standard for energy management (ISO 50001). This requires continuous improvement of the energy balance through efficient and sustainable use of energy resources of all kinds. The concept of energy management thus affects a wide range of different company processes, including energy procurement, use and conversion. One important aspect is the fact that efficient energy use should be taken into account at them planning stage for new company sites and production facilities, so that the scope for achieving energy savings is identified in advance and can be utilized during implementation.
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Providing long-term assistance The charitable organization Knorr-Bremse Global Care e. V. was set up by the Knorr-Bremse Group to provide long-term aid to individuals who, through no fault of their own, are victims of environmental catastrophes, accidents, armed conflict, poverty or disease. At the start of 2010, the organization celebrated its fifth anniversary. Since its foundation five years ago it has implemented 50 aid projects in 31 countries on four continents, providing assistance to some 200,000 people.
In December 2004 the world witnessed a tragic and shocking event: a tsunami triggered by an earthquake devastated entire coastal areas of Thailand, Indonesia, Sri Lanka and India as well as many other states in Southeast Asia and East Africa. More than 230,000 people lost their lives. Knorr-Bremse was quick to react, and on January 18, 2005 the charitable organization Knorr-Bremse Global Care e. V. was set up with the aim of providing targeted and effective aid to victims of the disaster. The first projects were launched as early as February, and within a year the organization was supporting no fewer than 13 different programs in the region.
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A new approach Then as now, the basic approach taken by Knorr-Bremse Global Care e. V. differed from that of other aid organizations. It is not just funding that is provided – volunteers, including members of the company’s management, also act as sponsors for individual projects, monitoring their progress closely. Their input ranges from visits to the regions concerned to collaboration with local partners over drawing up plans for hospitals or schools. Their close involvement with the projects ensures a high degree of commitment to the people at local level. The aim is always to provide sustainable, long-term support and the most important criterion when selecting projects is therefore an emphasis on helping people to help themselves. Project funding is intended as an investment in an economically independent future for the people concerned.
Expansion of activities In 2006, Global Care expanded its activities to include Africa, where it funded a number of school projects in a bid to help improve the often catastrophic situation of education in that part of the world. Since 2007, Knorr-Bremse sites around the world have also become increasingly involved in projects – around half of Global Care projects now benefit from the involvement of local Knorr-Bremse employees. 2008 and 2009 saw the organization continue its work in these two regions and also become involved in Central America. Other areas of focus were emergency aid and reconstruction projects in the aftermath of the cyclone in Burma, the earthquake in the Chinese province of Sichuan and the cholera epidemic in Zimbabwe. At the same time, Global Care intensified its involvement in educational projects. The basic emphasis is on long-term projects that enable people to support themselves and determine their own lives. In 2010 a total of 35 projects in 24 countries were funded, with more than EUR 1,100,000 donated and over 65,000 people provided with assistance and support. For example Global Care joined forces with the aid organization Jnana Pradodhini to construct a three-story building with five apartments per floor to house divorced or widowed women in the rural district of Harali, India. Global Care also decided during 2010 to build and equip two learning centers in the Sabeh region of Borneo. A floating classroom was also created for teaching children who live in such remote locations that they cannot otherwise attend school on a daily basis. During the year Knorr-Bremse Global Care e. V. also ran five emergency aid projects in Haiti, Chile, Pakistan, the Czech Republic and Hungary.
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Employees Thanks to the outstanding work ethic and motivation of its employees, in 2010 Knorr-Bremse was again able to strengthen its position in the global marketplace. The effects of the global economic crisis had made adjustments in staffing levels inevitable in 2009, particularly in the commercial vehicle segment. In the year under review, by contrast, the number of employees rose across the Group.
Employment situation By the end of 2010, the workforce of the Knorr-Bremse Group had risen to 16,277 employees, 1,845 more than in the previous year. This represents a 12.8% increase in staffing levels compared to 2009. In the Rail Vehicle Systems division, the number of employees grew by 15.3%, from 8,256 in 2009 to 9,523 in 2010. Due to the global recovery in truck production, the number of employees in the Commercial Vehicle Systems division rose by 9.6%, from 6,014 in the previous year to 6,590 in 2010.
Employees in the regions In the Europe, Middle East and Africa region, the Knorr-Bremse Group employed 9,243 people at the end of 2010, 8.0% more than in 2009 (8,555). 56.8% of the Knorr-Bremse workforce was employed in this region (2009: 59.3%) at the end the year under review. In absolute terms, this represents an increase of 688 employees. As per December 31, 2010 Knorr-Bremse employed 3,235 people in Germany, 5.3% more than one year previously (3,071). In 2010, 19.9% of the company’s total workforce was employed in Germany (2009: 21.3%). In the rest of Europe the number of employees grew from 5,484 to 6,008, which equates to 36.9% (2009: 38.0%) of the total workforce. The Group had 2,751 employees in North America on December 31, 2010, up 7.5% from the previous year (2,559). This represents a decline in the proportion of employees in North America from 17.7% to 16.9%. The Group had 658 employees in South America at the end of 2009, compared to 806 at the end of the year under review. The Asia/Australia region saw a rise in staffing levels from 2,660 employees in 2009 to 3,477 at the end of 2010. As a result, the proportion of the Group workforce employed
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in this region climbed to 21.4% (2009: 18.4%). This increase also reflects the extremely positive growth of Knorr-Bremse’s business in Asia/Australia.
Human resources development Knorr-Bremse stands for outstanding, globally recognized products, processes and services. The Group’s human resources policy plays an important supporting role by providing for systematic and targeted HR development and placing particular emphasis on international job assignments around the entire globe. In the year under review, the HR development instruments defined in the Human Resources Roadmap and the People Excellence Initiative (PEX) were harmonized worldwide and implemented in all Knorr-Bremse locations. A comprehensive talent management program develops qualified successors for key management positions and offers high potentials attractive career opportunities within the Group. The International Development Center and International Development Programs modules for junior managers were redesigned and reworked during the period under review. The Development Center, which is held several times each year, allows Knorr-Bremse to identify individual strengths and areas for improvement and to define targeted and systematic professional development measures for each participant. The Leadership Feedback initiative, which was successfully completed in November 2010, for the first time featured a uniform international questionnaire and made use of a supporting online program. Approximately 1,000 managers in over 50 locations were evaluated by around 13,000 employees. This confidential and anonymized process aims to promote and optimize cooperation within each team by allowing managers to receive feedback from their employees on their leadership skills. 2010 also saw the revision of the staff dialogue – the regular performance review process between supervisor and employee – and the introduction of a uniform global standard for performance review procedures and timing.
Management Evolution Program (MEP) Successfully established twelve years ago, Knorr-Bremse’s Management Evolution Program (MEP) gives new hires the opportunity to participate in three important projects as trainees, gaining valuable insights into operations in different parts of the Group. The combination of direct project responsibility and special training courses helps to develop the trainees’ hard and soft skills in a professional context. In the year under review, strong growth in the Asia region led to the inclusion of two Chinese and one Indian participant in the program for the first time. Knorr-Bremse has given priority to the continued internationalization of the MEP.
University marketing In 2010 Knorr-Bremse again participated in around 40 human resources and recruiting fairs, strengthening the awareness and position of the company among university professors and departments as well as university graduates. Cooperation agreements with well-known universities and colleges in Germany and other locations around the world allowed early links to be forged between Knorr-Bremse
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and students with key qualifications. This helps the Group to meet its demand for highly qualified specialists, especially in the technical fields.
International human resources policy Knorr-Bremse is a successful global corporate player with 87 locations around the world. The expertise, innovative capabilities and work ethic of the Group’s workforce are important factors in its success. To safeguard the high quality standard of its products around the globe, Knorr-Bremse actively encourages its employees to participate in job exchanges across all regions. The International Transfers Department, which is located at corporate headquarters in Munich, is responsible for coordinating all overseas assignments and supporting global networking within the Group. In addition to long-term international assignments, in the past year Knorr-Bremse sent more employees abroad for shorter periods of time to receive training in departments in different Group locations. The number of new international assignments rose again during the year under review after stagnating during the economic crisis. While China continues to be the primary destination for international transfers within Knorr-Bremse, there has also been a steady increase in the number of employees from other countries coming to work in Germany.
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Trade fairs Local presence as a global player: Knorr-Bremse was represented by expert teams at all the major trade fairs and also showcased its innovative products to an international audience at other national and international events. Over the next few years, the business of both KnorrBremse divisions will be influenced by the major trends of energy efficiency, safety, urbanization and globalization.
In 2010, Knorr-Bremse presented innovative products at the two key industry showcases, InnoTrans in Berlin and the IAA Commercial Vehicles in Hanover, under the motto of “Efficient.Technology.Worldwide“. Also in the year under review, Knorr-Bremse exhibited solutions for current and future market requirements to a wide audience at the main industry shows.
39th Conference on Modern Rolling Stock, April 2010, Graz The first event attended by Knorr-Bremse Rail Vehicle Systems in 2010 was the 39th Conference on Modern Rolling Stock, which was held at the Technical University of Graz in Austria. For the first time, the Knorr-Bremse Mödling plant had its own stand at the event, which became a popular meeting point for actual and potential customers.
Metro China, Mai 2010, Shanghai Metro China is one of China‘s largest and most highly reputed industry showcases for metro technology. The event covers all aspects of the metro sector from planning and design through to operation and maintenance. The trade fair has long been established as a key platform for exhibitors from around the world. At the show, Knorr-Bremse, IFE, Microelettrica and EMC Traction displayed innovative solutions for the Chinese metro market.
EXPO Ferroviaria and INTERtunnel, June 2010, Turin Growth of 12% in visitor numbers compared with the previous event confirmed the sustained success of EXPO Ferroviaria and INTERtunnel. In June 2010, 7,000 visitors from 48 countries attended the only regular rail and tunnel trade fairs in Italy. IFE and Microelettrica were among the successful participants.
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Automechanika, September 2010, Frankfurt Knorr-Bremse Commercial Vehicle Systems organized an exclusive customer event at Automechanika in Frankfurt. More than 200 guests took part in the chill-out event at the auto industry‘s most important meeting point in September. The program at the event was rounded off by brief product presentations given by Knorr-Bremse experts against the backdrop of the world‘s largest automotive aftermarket showcase.
Business on Rails Trade Fair, November 2010, São Paulo In November, more than 7,000 experts from the rail sector exchanged views on the latest rail trends at the 13th Business on Rails Trade Fair, held in São Paulo, Brazil. 180 exhibitors from across the globe had their latest developments on show. The Knorr-Bremse Group was represented by its Brazilian subsidiary Indústria Freios Knorr and Group company IFE.
Modern Railways und UIC Highspeed, December 2010, Beijing In December 2010, the 7th World Congress on High Speed Rail (UIC Highspeed) was held in Beijing at the same time as Modern Railways. Modern Railways is a major platform for interchange between manufacturers and rail operators from more than 20 countries and regions. UIC Highspeed has also established itself as the premier major international event for the high-speed rail sector. The congress provided a good overview of recent successes and developments in high-speed rail systems. KnorrBremse and Group companies IFE, Westinghouse, Merak and Microelettrica took the opportunity to present themselves and their products to a wide trade audience at the two events.
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Knorr-Bremse a magnet for visitors Under the heading of “Efficient.Technology.Worldwide”, Knorr-Bremse showcased its leading-edge braking technology and on-board systems to a broadbased audience at the two key trade fairs of 2010 – both held in Germany. At the rail transportation fair InnoTrans in Berlin, efficient products and technological innovations shared the spotlight with solutions that underpinned the Group’s worldwide systems expertise. At the IAA Commercial Vehicles show in Hanover, the focus was on energy efficiency, cutting emissions, and boosting safety through driver assistance systems.
Hundreds of thousands of visitors from across the globe, top level customer contacts and impressive trade fair stands left exhibitors with plenty to talk about at the InnoTrans and IAA Commercial Vehicles fairs in 2010. With an increase of over 20% in visitor numbers the InnoTrans broke the previous record set in 2008. This was also reflected at the Knorr-Bremse stand, which at times hosted as many as 300 visitors at once. At the Knorr-Bremse Commercial Vehicle Systems stand at the IAA too, visitor numbers were up by around 10% compared to the previous IAA in 2008, despite an overall downturn in attendance at the fair.
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InnoTrans 2010 – top level talks The main highlight of the InnoTrans fair in Berlin came right at the start with a visit from the German Federal Minister of Transport Dr. Peter Ramsauer, who also opened the fair. Dr. Dieter Wilhelm, Member of the Executive Board responsible for Rail Vehicle Systems, showed Dr. Ramsauer around the KnorrBremse stand and explained the latest exhibits. The German Federal Minister of Transport showed a special interest in the bogie equipment for high-speed trains with integrated eddy current brake. This exhibit, which was on show in its entirety for the first time at a trade fair, gave an impressive demonstration of the perfect interplay between all the Knorr-Bremse components. In the procurement and operation of rail vehicles and their sub-systems the topic of efficiency is moving steadily up the agenda. As a result, at this year’s InnoTrans Knorr-Bremse chose to focus on low life-cycle costs and efficient maintenance. As the world’s leading manufacturer of braking systems for rail vehicle and the technology leader, Knorr-Bremse also had innovations on show at the fair that are designed to maximize customer benefits, increase passenger safety and comfort and ensure ecofriendly operation. On top of this, in the international project business sector Knorr-Bremse is increasingly out to provide customized solutions for the different regional requirements encountered around the world. At the InnoTrans fair this was impressively documented by the presentation of control valves, for example, that comply with all of the major globally applicable standards.
IAA 2010 an all-round success The Knorr-Bremse stand at the IAA Commercial Vehicles 2010 proved a magnet for visitors and hosted almost 600 meetings with customers. The main topics were cutting fuel consumption, boosting safety and protecting the environment. One particularly impressive factor was the very high level of our visitors, with a vast increase in the proportion of visitors from Asia. This was clearly a reflection of the Group’s long-standing and sustained commitment to the Asian region. Around 100 customers from China and India were welcomed to the Knorr-Bremse stand in the course of the week-long fair. Along with the Innovation Center, where the latest product developments and future technologies were presented to selected customers, the Regional Technology Center again proved another crowdpuller. Here Knorr-Bremse used the IAA 2010 to present a large number of products specially geared to the requirements of the BRIC markets, in each case adapted precisely to the needs of the respective region, taking into account the different climates, infrastructures and driving conditions. Among the visitors to the Knorr-Bremse stand was the President of the Association of the German Automotive Industry, Matthias Wissmann, who was brought fully up to speed with the latest KnorrBremse technologies and developments by Hans-Peter Moser, Member of the Executive Board of Knorr-Bremse Systeme für Nutzfahrzeuge GmbH.
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1
Principles and methods
The consolidated financial statements have been drawn up in accordance with generally accepted accounting principles, complying with the accounting requirements of the German Commercial Code (HGB) and additional statutory provisions. Figures in the consolidated financial statements are shown in thousands of euros (TEUR). Certain items on the balance sheet and in the statement of income are combined for the sake of greater clarity. These items are explained separately in the Notes to the Consolidated Financial Statements.
Accounting and valuation The financial statements of the companies included in the consolidated financial statements are prepared according to uniform principles of accounting and valuation applied to the Group. For the purposes of consolidation according to the equity method, any valuations in the financial statements of the associated companies that deviate from the uniform principles applied to the Group are retained. In fiscal year 2010, the provisions of the German Accounting Law Modernization Act are applied for the first time. Because this is the first time they have been applied, the requirements of §§ 252 (1) no. 6, 265 (1), 284 (2) no. 3 and 313 (1) no. 3 of the German Commercial Code (HGB) have not been applied, as provided for under Article 67 (8) of the Act Introducing the German Commercial Code (EGHGB). In accordance with EGHGB Article 67 (8) clause 2 subclause 1, the previous year’s figures have not been adjusted. Consequently the previous year’s figures are only comparable with the figures for the year under review to a limited extent, as specified in HGB § 265 (2) clause 2. Purchased intangible assets are valued at acquisition cost less scheduled depreciation; additional depreciation is taken where necessary. Fixed assets are recorded at acquisition or production cost, less scheduled depreciation in the case of items subject to wear and tear; additional depreciation is taken where necessary. Depreciation on fixed assets is generally applied using the linear method, based on useful life. In the case of German companies included in consolidation, additions prior to January 1, 2008 and after January 1, 2009 are for the most part depreciated using the declining balance method, switching over to the linear method as soon as the latter results in higher depreciation. For fiscal year 2010, application of the linear method results in a difference of TEUR 496. Minor fixed assets are depreciated to the maximum extent permissible under the respective countries’ tax provisions. Interests in affiliated, associated and related companies and miscellaneous investments are stated at cost or, in the event of a probable sustained diminution in value, at fair value (where the latter is lower). Materials and supplies are carried in inventories at the lower of average acquisition cost or replacement cost. Provision against realization risks is made where necessary.
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Work in process and finished products are stated at production cost, but in no case higher than the projected sales revenues less any costs accruing prior to sale. Production cost includes direct cost of materials and labor, as well as production overhead. A reasonable allowance is made where there is a risk of a decline in inventory values. Receivables are stated at their nominal value, less any necessary provisions against specific debts. Receivables bearing no or low interest are stated at their net present value. General charges have been made to cover the general credit risk. Other assets are stated at the lower of average acquisition cost, net present value or fair value. Earnings or disbursements prior to the balance sheet date are shown as prepaid income or prepaid expenses where they represent revenues or expenses for a certain period after the balance sheet date. Foreign currency items are valued at the rate existing at the transaction date or – if less favorable – at the rate at the balance sheet date. Where foreign currency items have been hedged, they are valued at the corresponding hedging rate. In the individual financial statements of companies included in consolidation, assets and liabilities denominated in foreign currencies are translated at the mean spot rate at the final balance sheet date. Unrealized currency gains as defined in § 256a clause 2 and § 252 (1) no. 4 of the German Commercial Code (HGB) have no overall significance. Rate-hedging and option transactions are performed selectively and exclusively for hedging purposes. Wherever possible, financial derivatives covering assets, borrowings, open contracts or transactions with a high probability of closure are bundled together as single items for valuation purposes (“macro hedges”). Accrued liabilities include reasonable and sufficient allowance for all perceivable risks and any contingent liabilities. Accruals are valued in accordance with § 253 (1) and (2) of the German Commercial Code (HGB), whereby use has been made of the options for retention of control laid out in Article 67 (1) clause 2 and (3) clause 1 of the Act Introducing the German Commercial Code (EGHGB). Transfers to accrued liabilities are made using the net method. In Germany, pension plan accruals and similar commitments are set up according to actuarial principles based on realistic assumptions. Assumptions included in the calculations include future salary increases and future pension adjustments, as defined in § 16 of the German Law on Occupational Pensions (BetrAVG), as well as assumptions relating to staff turnover. The calculations are based on the biometric reference values devised by Klaus Heubeck (mortality tables RT 2005 G). The following parameters were applied:
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Interest rate: Salary increases: Annuity trend:
5.16% p. a. 3.00% p. a. 1.00% to 1.50% p. a.
Pension plan accruals are determined using the modified discount value method. Our foreign subsidiaries cover pension plans and similar commitments by accruals which are calculated according to principles similar to those used in Germany. Only in the United States of America are pension plans and similar commitments of major significance to the net worth, financial position and results of the Group. Here the projected unit credit method has been used, based on the following parameters: Interest rate: Salary increases: Annuity trend:
6.24% p. a. 3.50% p. a. up to 3.00% p. a.
Liabilities are stated at their settlement value.
Consolidated companies In addition to Knorr-Bremse AG, 19 German and 93 foreign subsidiaries over which Knorr-Bremse AG can exert a direct or indirect controlling influence are included in the consolidated financial statements. Investments in one German and two foreign companies are shown in the consolidated financial statements as investments in associated companies. Eight foreign subsidiaries have not been included in consolidation because of their minor significance with respect to the net worth, financial position and results of the Group. For the same reason, three German companies are not shown as associated companies, but instead are stated at acquisition cost. During fiscal year 2010 the Group acquired the following companies, which are included in consolidation: Heine Resistors GmbH, Dresden/Germany Heine Resistors (Suzhou) Co. Ltd., Suzhou/China Sigma Coachair (UK) Ltd., Newhall/Great Britain Sigma Coachair Group (China) Co. Ltd., Changzhou/China Sigma Coachair Group Pty. Ltd., Wetherill Park, Sydney/Australia Sigma Coachair Systems (US) Inc., Chicago/USA Sigma Transit Systems Pty. Ltd., Wetherill Park, Sydney/Australia
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The following companies are also newly established or included in consolidation for the first time: Knorr-Bremse Rail Systems (Machining) Ltd., Melksham, Wiltshire/Great Britain Knorr-Bremse SA Holding Company (UK) Ltd., Melksham, Wiltshire/Great Britain Merak Knorr Climatizacion S.A., Buenos Aires/Argentina The following companies have been renamed: Knorr-Bremse IT-Services GmbH, Munich/Germany (formerly KB Delta Beteiligungs GmbH, Munich/Germany) Knorr-Bremse Rail Systems Italia S.r.l., Campi Bisenzio/Italy (formerly Frensistemi S.r.l., Florence/Italy) The following companies have been merged or wound up: Hasse & Wrede North America Inc., North Aurora, IL/USA Di-Pro Inc., Fresno, California/USA This means that compared to the previous year, the number of companies included in consolidation has increased by one German and seven foreign companies. On the following pages, a detailed list of affiliated and associated companies appears in a separate breakdown of the Group’s shareholdings. The above-mentioned changes in the scope of consolidation had no significant impact on the Group’s net assets, financial position and operating results. The newly consolidated companies caused the balance sheet total to increase by MEUR 46.9.
Principles of consolidation Until December 31, 2009, the book value method was used to consolidate investments in subsidiaries. This entailed offsetting book values against the value of our interests in the shareholders’ equity of the subsidiaries at the time of the initial consolidation. Companies were included in consolidation at the date of acquisition or at the balance sheet date. Since fiscal year 2010, investments in subsidiaries have been consolidated using the revaluation method. This entails reporting shareholders’ equity at the value corresponding to the market value of the assets and borrowings to be included in the consolidated financial statements. Companies are included in consolidation at the date of acquisition. Since 2002, any resulting goodwill has been capitalized in compliance with GAS standards. Scheduled depreciation is applied on the basis of operational considerations relating to useful life, which may not exceed 20 years in the Group. The useful life of goodwill is determined using the subsidiaries’ longerterm, strategic business models. Wherever possible, a negative goodwill resulting from the consolidation in investments is released for the year in which it arises, as permitted by German commercial law and accounting standards.
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Associated companies are consolidated using the equity method, with goodwill generally included as part of the cost of acquiring interests in associated and related companies. Associated companies acquired prior to January 1, 2010 were consolidated at the date of acquisition or the balance sheet date. As from year-end 2010, companies are included in consolidation at the date of acquisition. Our share in the annual results of companies consolidated in accordance with this method, including amortization on goodwill, is shown in the statement of income under Financial results. Receivables and liabilities are offset between consolidated companies. Unrealized intercompany profits resulting from intercompany trade in goods and services are eliminated in the consolidated statements. In the consolidated statement of income, revenues from intercompany sales and other intercompany income are offset against the corresponding expenses.
Foreign currency translation The individual financial statements of the foreign companies included in consolidation are translated into euros at the mean spot rate at the balance sheet date, with the exception of shareholders’ equity, which is translated into euros at the historic rate. Income statement items are translated into euros at the mean rate. Any resulting translation difference is shown in Group equity as the equity difference arising on currency translation.
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Deferred taxes Deferred taxes as defined under §§ 274 and 306 of the German Commercial Code (HGB), resulting from temporary differences between the amount stated in the tax accounts of individual group companies and the amount stated in the consolidated balance sheet (including differences arising as a result of accounting and valuation adjustments or during the consolidation process), are netted wherever possible, in accordance with legal requirements. In the individual balance sheets prepared according to the uniform principles of accounting and valuation applied to the Group (”Financial statements II“), the option to capitalize assets to the amount of probable tax relief in the following years is used in individual cases. The calculation of deferred taxes is based on the tax rates that are expected to be valid at the time of their realization. Deferred taxes on losses carried forward are capitalized in individual cases, where there is sufficient probability that the tax benefits can be realized. At each balance sheet date, the book value of deferred tax assets is reviewed and, if necessary, adjusted as appropriate.
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2
Changes in intangibles, fixed assets and investments Acquisition or production cost Additions to purchased fixed and intangible assets amounted to TEUR 197,271 in fiscal year 2010. This figure includes investments in the amount of TEUR 113,369.
In EUR thousands (TEUR)
Carried forward Jan. 1, 2010 *)
Additions *)
Reclassifications *)
Disposals *)
Industrial property rights/trademarks
246,017
10,039
58
(4,027)
Goodwill
177,734
70,326
0
(1,427)
Purchased intangibles
423,751
80,365
58
(5,454)
Land, equivalent rights to real property, and build-
256,525
11,073
31,055
(802)
Technical equipment and machinery
439,969
27,958
8,206
(13,947)
Other equipment, plant and office equipment
340,140
30,115
28,688
(9,814)
75,411
47,760
(68,007)
(931)
1,112,045
116,906
(58)
(25,494)
6,301
0
0
0
330
4,500
0
(260)
Miscellaneous investments
46,482
22,851
0
(32)
Investments
53,113
27,351
0
(292)
1,588,909
224,622
0
(31,240)
ings, including buildings on land not owned
Advances to suppliers and construction in progress
Fixed assets
Investments in affiliated companies Investments in associated companies
Intangibles, fixed assets and investments
*) valued at acquisition or production cost
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Currency Balance differences *) Dec. 31, 2010 *)
Accrued depreciation/amortization
Net value Dec. 31, 2010
Net value Dec. 31, 2009
Depreciation/ amortization during the fiscal year
9,627
261,714
(179,581)
82,133
90,914
(21,843)
10,117
256,750
(121,606)
135,144
99,788
(38,437)
19,744
518,464
(301,187)
217,277
190,702
(60,280)
5,540
303,391
(121,904)
181,487
143,451
(7,665)
13,963
476,149
(301,835)
174,314
163,237
(43,339)
14,517
403,646
(291,364)
112,282
101,921
(35,389)
623
54,856
(5,938)
48,918
69,630
(190)
34,643
1,238,042
(721,041)
517,001
478,239
(86,583)
309
6,610
(2,788)
3,822
5,584
(2,046)
0
4,570
0
4,570
330
0
3,953
73,254
(16,077)
57,177
30,437
(32)
4,262
84,434
(18,865)
65,569
36,351
(2,078)
58,649
1,840,940
(1,041,093)
799,847
705,292
(148,941)
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3
Intangibles
This heading includes primarily the acquisition of goodwill, patents, rights to the use of names and trademarks, and IT software. IT software and goodwill account for the majority of additions. Any resulting goodwill is subject to scheduled depreciation over a period of not more than 20 years. Other intangibles are subject to scheduled depreciation over periods of between three and 10 years. In fiscal year 2010 a TEUR 29,137 provision was made against goodwill from the acquisition of the Sigma Group. All intangible assets have a limited useful life.
4
Fixed assets
Movements of fixed assets are presented in the compilation on the preceding pages. To take technical and economic factors into account, scheduled depreciation was applied to acquisition costs. During the fiscal year, unscheduled depreciation amounting to TEUR 522 was applied to a plot of land.
5
Investments
Investment movements are set out in the compilation above. Miscellaneous investments consist of miscellaneous loans (TEUR 21,237), loans to affiliated companies (TEUR 33,956), long-term investments (TEUR 1,829), and investments in other companies (TEUR 155). During the fiscal year a TEUR 2,046 provision was made against the Group’s shareholding in KnorrBremse RUS OOO, Nizhny Novgorod/Russia, an affiliated company which is not included in consolidation.
List of shareholdings
1 Consolidated affiliated companies
Share in capital in %
Albatros GmbH, Munich/Germany
100.0
Anchor Brake Shoe Company LLC, West Chicago/USA
100.0
BCVS Canadian Holdings LLC, Anjou, Quebec/Canada
100.0
BCVS Mexican Holdings LLC, Cd Acuña, Coah/Mexico
100.0
Bendix Commercial Vehicle Systems LLC, Elyria, Ohio/USA
100.0
Bendix CVS Canada Inc., Anjou, Quebec/Canada
100.0
Bendix CVS de Mexico SA de CV, Cd Acuña, Coah/Mexico
100.0
Bendix Spicer Foundation Brake Canada, Inc., Kingston, Ont./Canada
100.0
Bendix Spicer Foundation Brake LLC, Elyria, Ohio/USA
80.0
Bost Ibérica S.L., Madrid/Spain
100.0
BSFB Holdings, Inc., Elyria, Ohio/USA
100.0
Dr. techn. Josef Zelisko Ges.m.b.H., Mödling/Austria
100.0
EMC Traction S.r.l., Milan/Italy
100.0
Freinrail Systèmes Ferroviaires S.A., Reims/France
100.0
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1 Consolidated affiliated companies (continued) Hasse & Wrede CVS Dalian, China Ltd., Dalian/China Hasse & Wrede GmbH, Berlin/Germany Heine Resistors GmbH, Dresden/Germany
70.0 100.0 51.0 100.0
IFE ČR a.s., Brno/Czech Republic
100.0
IFE North America LLC, Westminster, Md./USA
100.0
IFE-Tebel Australia Pty. Ltd., Granville/Australia
100.0
IFE-Tebel Technologies B.V., Leeuwarden/The Netherlands
100.0 59.0
IGE-CZ s.r.o., Brno/Czech Republic
100.0
Indústria Freios Knorr Ltda., São Paulo/Brazil
100.0
KB Gamma Beteiligungs GmbH, Munich/Germany
100.0
KB Lambda Beteiligungs GmbH, Munich/Germany
100.0
KB Media GmbH Marketing und Werbung, Munich/Germany
100.0
KB Sigma Beteiligungs GmbH, Munich/Germany
100.0
KB Omikron Beteiligungs GmbH, Munich/Germany
100.0
Knorr Amabhiliki (Pty.) Ltd., Kempton Park/South Africa Knorr Brake Corporation, Westminster, Md./USA Knorr Brake Holding Corporation, Watertown, NY/USA
74.0 100.0 89.3
Knorr Brake Ltd., Kingston, Ont./Canada
100.0
Knorr Brake Truck Systems Company, Watertown, NY/USA
100.0
Knorr-Bremse / Nankou Air Supply Unit (Beijing) Co., Ltd., Nankou/China
55.0
Knorr-Bremse Asia Pacific (Holding) Ltd., Hong Kong/China
100.0
Knorr-Bremse Australia Pty. Ltd., Granville/Australia
100.0
Knorr-Bremse Benelux B.V.B.A., Heist-op-den-Berg/Belgium
100.0
Knorr-Bremse Beteiligungsgesellschaft mbH, Munich/Germany
100.0
Knorr-Bremse Brake Equipment (Shanghai) Co., Ltd., Shanghai/China
100.0
Knorr-Bremse Braking Systems for Commercial Vehicles (Dalian) Co., Ltd., Dalian/China
100.0
Knorr-Bremse CARS LD Vehicle Brake Disc Manufacturing (Beijing) Co., Ltd., Daxing/China Knorr-Bremse Commercial Vehicle Systems Japan Ltd., Tokyo/Japan
50.0 80.0
Knorr-Bremse Fékrendszerek Kft., Kecskemét/Hungary
100.0
Knorr-Bremse Ges.m.b.H., Mödling/Austria
100.0
Knorr-Bremse India Pvt. Ltd., Faridabad/India
100.0
Knorr-Bremse KAMA Systems for Commercial Vehicles OOO, Naberezhnye Chelny/Russia
50.0
Knorr-Bremse Investment GmbH, Munich/Germany
100.0
Knorr-Bremse IT-Services GmbH, Munich/Germany
100.0
Knorr-Bremse Nordic Rail Services AB, Lund/Sweden
75.0
Knorr-Bremse Polska SfN Sp. z o.o., Warsaw/Poland
100.0
Knorr-Bremse Rail Systems Italia S.r.l., Campi Bisenzio/Italy
100.0
Knorr-Bremse Rail Systems Japan Ltd., Tokyo/Japan
KB_GB_2010_Konzernanhang_EN_V3.indd 13
Share in capital in %
Heine Resistors (Suzhou) Co. Ltd., Suzhou/China
IFE-VICTALL Railway Vehicle Door Systems (Qingdao) Co. Ltd., Qingdao/China
145
94.0
Knorr-Bremse Rail Systems Korea Ltd., Seoul/South Korea
100.0
Knorr-Bremse Rail Systems OOO, Moscow/Russia
100.0
Knorr-Bremse Rail Systems (Machining) Ltd., Melksham, Wiltshire/Great Britain
100.0
Knorr-Bremse Rail Systems (UK) Ltd., Melksham, Wiltshire/Great Britain
100.0
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1 Consolidated affiliated companies (continued) Knorr-Bremse SA Holding Company (UK) Ltd., Melksham, Wiltshire/Great Britain
Share in capital in % 100.0
Knorr-Bremse S.A. (Pty.) Ltd., Kempton Park/South Africa
75.0
Knorr-Bremse S.R.L., Bucharest/Romania
70.0
Knorr-Bremse Sistemas para Veículos Comerciais Brasil Ltda., São Paulo/Brazil
100.0
Knorr-Bremse Sistemas para Veículos Ferroviários Ltda., São Paulo/Brazil
100.0
Knorr-Bremse Sistemi per Autoveicoli Commerciali S.p.A., Arcore/Italy
100.0
Knorr-Bremse System för Tunga Forden AB, Malmö/Sweden
100.0
Knorr-Bremse Systeme für Nutzfahrzeuge GmbH, Munich/Germany
80.0
Knorr-Bremse Systeme für Schienenfahrzeuge GmbH, Munich/Germany
100.0
Knorr-Bremse Systeme für Schienenfahrzeuge Ibero Holding GmbH, Munich/Germany
100.0
Knorr-Bremse Systèmes pour Véhicules Utilitaires France S.A., Lisieux/France
100.0
Knorr-Bremse Systems for Commercial Vehicles India Pvt. Ltd., Pune/India
100.0
Knorr-Bremse Systems for Commercial Vehicles OOO, Moscow/Russia
100.0
Knorr-Bremse Systems for Commercial Vehicles Ltd., Bristol/Great Britain
100.0
Knorr-Bremse Systems for Rail Vehicles (Suzhou) Co., Ltd., Suzhou/China
100.0
Knorr-Bremse Systemy dla Kolejowych Środków Lokomocji PL Sp. z o.o., Cracow/Poland
100.0
Knorr-Bremse Systémy pro uzitková vozidla ČR s.r.o., Hejnice/Czech Republic
100.0
Knorr-Bremse Ticari Arac Fren Sistemieri Limited Sirketi, Istanbul/Turkey
100.0
Knorr-Bremse US Beteiligungs GmbH, Munich/Germany
100.0
Knorr-Bremse US Investment GmbH, Munich/Germany
100.0
Knorr-Bremse Vasúti Jármü Rendszerek Hungária Kft., Budapest/Hungary
100.0
Knorr-Bremse Verwaltungsgesellschaft mbH, Munich/Germany
100.0
Maquiladora de Acuña SA de CV, Cd Acuña, Coah/Mexico
100.0
Merak Jinxin Air Conditioning Systems (Wuxi) Co., Ltd., Wuxi/China
51.0
Merak Knorr Climatizacion S.A., Buenos Aires/Argentina
100.0
Merak North America LLC, Albany/USA
100.0
Merak Railway Technologies (Shanghai) Co., Ltd., Shanghai/China
100.0
Merak Sistemas Integrados de Climatización S.A., Getafe/Spain
100.0
Microelettrica Power Devices (Pty) Ltd., Johannesburg/South Africa
100.0
Microelettrica Power (Pty) Ltd., Johannesburg/South Africa
74.0
Mircoelettrica Scientifica (Pty) Ltd., Johannesburg/South Africa
100.0
Microelettrica Scientifica S.p.A., Rozzano/Italy
100.0
Microelettrica USA LLC, Randolph, New Jersey/USA
100.0
MicroEner S.A.S., Noisy le Grand/France
89.9
M.S. Resistances S.A.S., Saint Chamond/France
51.0
New York Air Brake Corporation, Watertown, NY/USA
100.0
Oerlikon-Knorr Eisenbahntechnik AG, Niederhasli/Switzerland
100.0
Officine De Zan S.R.L., Rozzano, Milan/Italy
100.0
Sigma Coachair (UK) Ltd., Newhall/Great Britain
100.0
Sigma Coachair Group (China) Co. Ltd., Changzhou/China
100.0
Sigma Coachair Group Pty. Ltd., Wetherill Park, Sydney/Australia
100.0
Sigma Coachair Systems (US) Inc., Chicago/USA
100.0
Sigma Transit Systems Pty. Ltd., Wetherill Park, Sydney/Australia
100.0
Skach Ges.m.b.H., Mödling/Austria
100.0
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N O T E S T O T H E C O N S O L I D AT E D F I N A N C I A L S TAT E M E N T S
1 Consolidated affiliated companies (continued)
Share in capital in %
Sociedad Española de Frenos, Calefacción y Señales S.A., Getafe/Spain
100.0
Stahlwerk Volmarstein GmbH, Wetter (Ruhr)/Germany
100.0
STE Schwingungs-Technik GmbH, Klieken/Germany
100.0
SYDAC PTY. LTD., Adelaide/Australia
100.0
Sydac Ltd., Manchester/Great Britain
100.0
Techtrain Associates Limited, Doncaster/Great Britain
100.0
Unicupler GmbH, Niederurnen/Switzerland
100.0
Westinghouse Brakes Australia Pty. Ltd., Concord West/Australia
100.0
Westinghouse Platform Screen Doors (Guangzhou) Ltd., Guangzhou/China Westinghouse Platform Screen Doors Ltd., Walsall/Great Britain
2 Associated companies valued using the equity method
65.0 100.0
Share in capital in %
Gorilla Brake & Components, Inc., Brantford, Ont./Canada
20.0
Icer Brakes S.A., Pamplona/Spain
25.0
Webasto Kiekert Bustüren GmbH, Karlsfeld/Germany
50.0
3 Affiliated companies not included in consolidation
Share in capital in %
Black River Air Logistics Corp., Watertown, NY/USA
100.0
Di-Pro LLC., Fresno, California/USA
100.0
Freios Knorr Argentina S.A., Buenos Aires/Argentina
100.0
KB Investment UK Ltd., Chippenham/Great Britain
100.0
Knorr-Bremse RUS OOO, Nizhny Novgorod/Russia
100.0
Metco Technical Consulting AG, Zug/Switzerland
100.0
Sigma Coachair (UK) Holdings Ltd., London/Great Britain
100.0
Sigma Transit Systems (Taiwan) Co. Ltd./Taiwan
100.0
4 Associated companies valued without using the equity method Megalith Grundstücksverwaltungsgesellschaft mbH & Co. Vermietungs KG, Mainz/Germany
147
Share in capital in % 100.0
– Deutsche-Anlagen-Leasing GmbH holds majority voting rights OLB Oberlandbahn Fahrzeugbereitstellungs GmbH, Munich/Germany
24.8
Sanctor Grundstücks-Vermietungsgesellschaft mbH & Co. Objekt Marzahn KG, Düsseldorf/Germany
99.0
– Deutsche-Anlagen-Leasing GmbH holds majority voting rights
After reporting an annual net loss for the year of TEUR 402, OLB shows a net deficit of TEUR 11,199 which is not covered by equity capital (as at 2008, based on most recently available figures). Icer Brakes S.A. is headquartered in Pamplona/Spain. The company was included in consolidation for the first time as at September 30, 2010. The purchase price amounted to TEUR 4,500. The TEUR 2,869 goodwill included in the purchase price will be amortized over a 20-year period. As at the balance sheet date, there are no other differences for companies valued using the equity method.
KB_GB_2010_Konzernanhang_EN_V3.indd 15
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148
6
Inventories Materials and supplies Work in process
2009 TEUR
184,402
132,980
60,164
43,021
Finished products, merchandise
195,916
161,290
less advances received on orders
(221,145)
(204,306)
219,337
132,985
Total
7
2010 TEUR
Receivables and other asset 2010 TEUR
2010 TEUR
2009 TEUR
Remaining term more than 1 year
in total
in total
Accounts receivable, trade
8,425
689,066
493,974
Other assets
7,660
92,133
96,748
16,085
781,199
590,722
Total
8
Cash and cash equivalents
9
Prepaid expenses
This item includes cash at bank, checks and cash on hand.
Group prepaid expenses amounted to TEUR 12,182. In the previous year (TEUR 80,765) this heading comprised primarily deferred tax assets and liabilities. Following implementation of the German Accounting Law Modernization Act, the deferred taxes reported in this item in 2009 now appear under Deferred taxes. In accordance with Article 67 (8) clause 2 subclause 1 of the Act Introducing the German Commercial Code (EGHGB), values for the previous year have not been adjusted.
10
Deferred taxes
At the balance sheet date deferred tax assets amounted to TEUR 68,713 (2009: TEUR 70,382), while deferred tax liabilities totaled TEUR 1,636 (2009: TEUR 0). In compliance with the legal requirements, deferred tax assets and liabilities are stated at the netted amount. Of the deferred tax assets, TEUR 39,169 (2009: TEUR 46,137) relate to deferred taxes on individual balance sheets of group companies and TEUR 29,544 (2009: TEUR 24,245) relate to consolidation entries affecting net income. Deferred tax assets on individual balance sheets result primarily from temporary differences in accrued liabilities, receivables and other assets. Deferred tax assets relating to consolidation adjustments are primarily the result of eliminating unrealized intercompany profits. Deferred tax liabilities relate solely to deferred taxes on individual balance sheets of group companies. At individual company level and at Group level, deferred taxes are stated at the projected tax rate in the respective countries at the time of realization. Tax rates range from 0% to 40%, while the rate on consolidation activities is ca. 35%.
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N O T E S T O T H E C O N S O L I D AT E D F I N A N C I A L S TAT E M E N T S
11
149
Capital stock
The capital stock of Knorr-Bremse AG is divided up into 2,600,000 bearer shares, each with a nominal value of EUR 26. Stella Vermögensverwaltungs-GmbH and KB Holding GmbH, both based in Grünwald/ Germany, have informed Knorr-Bremse AG that directly or indirectly, they hold a majority interest in Knorr-Bremse AG.
12
Capital reserves
13
Retained earnings
14
Pension plan accruals
Capital reserves are unchanged from the previous year. Like the legal reserve, they are subject to the restrictions of § 150 of the German Corporation Law (AktG).
In addition to the legal reserve, retained earnings include the accumulated earnings of the companies included in consolidation, where these have not been distributed. Furthermore this heading reflects all Group items that exert an influence on shareholders’ equity. The legal reserve for Knorr-Bremse AG is unchanged at TEUR 6,607. Combined with TEUR 153 in capital reserves, the legal reserve stands at its statutory maximum.
Pension plan accruals are valued according to the provisions of the German Accounting Law Modernization Act. Pension plan accruals
2010 TEUR
2009 TEUR
192,257
160,390
As a result of adjustments made to comply with the German Accounting Law Modernization Act, a special allocation was made in the amount of TEUR 31,840. The voting option in Article 67 (1) clause 1 of the Act Introducing the German Commercial Code (EGHGB) was not used. The special allocation was made in full in 2010. The shortfall in cover for pension funds in the USA and Great Britain amounted to TEUR 23,867 as at year-end 2010.
15
Other accrued liabilities 2010 TEUR
2009 TEUR
59,109
31,829
Miscellaneous accruals
469,412
368,599
Total
528,521
400,428
Provisions for taxes
The taxation provisions include projected income tax payments for the year under review or, where the fiscal year diverges from the financial year, an income tax charge allocated on an accrual basis. Tax charges are also shown for preceding assessment periods. Miscellaneous accruals relate primarily to warranty and product liability commitments, personnel costs, restructuring activities, anticipated losses on contracts and other risks in connection with current operations, as well as invoices outstanding. Use of the retention option specified in Article 67 of the Act Introducing the German Commercial Code (EGHGB) means that surplus cover for accrued liabilities amounts to TEUR 4,122.
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150
16
Liabilities
Accounts payable, banks Accounts payable, trade
2010 TEUR
2010 TEUR
2009 TEUR
Remaining term less than 1 year
in total
in total
3,053
110,615
167,346
492,022
492,782
337,768
114
114
488
Other liabilities: Liabilities from accepted bills
96,626
111,353
62,191
(thereof for taxes)
(37,281)
(37,281)
(22,743)
(thereof for social security)
(11,530)
(11,530)
(10,144)
96,740
111,467
62,679
591,815
714,864
567,793
(101,758)
(102,662)
Miscellaneous liabilities
Total liabilities (thereof with a remaining term of more than 5 years)
17
Contingencies and miscellaneous financial commitments Warranties
2010 TEUR
2009 TEUR
8,601
7,288
Guarantees
8,474
9,937
Land charge
11,000
11,000
195,697
183,292
Leasing commitments
The Knorr-Bremse Group has entered into leasing contracts primarily for office buildings and production facilities in which the leased asset is assignable to the lessor. These off-balance-sheet leasing transactions represent an alternative form of finance to borrowing. Commitments associated with these leasing agreements are carried under miscellaneous financial commitments and amount to TEUR 195,697; maturities range from one year (TEUR 30,587), to between one and five years (TEUR 82,096), to over five years (TEUR 83,014). The agreements do not include any unusual termination or renewal options. A long-term purchase agreement exists between Group company Bendix Spicer Foundation LLC, Elyria, Ohio/USA and Gorilla Brake & Components, Inc., Brantford, Ontario/Canada. Under the terms of this agreement, Bendix Spicer Foundation LLC undertakes to purchase from Gorilla Brake & Components, Inc. 85% of the spare part deliveries made within the latter company’s regional sphere of influence. Thanks to the risk management system in place, the risk of a claim arising on contingent liabilities is rated as minimal.
18
Other operating income
Other operating income consists primarily of gains on currency exchange, income from the reversal of reserves, income from disposals of fixed assets and rental income. The heading also carries gains on currency differences amounting to TEUR 70,799 (2009: TEUR 37,946), as well as income relating to other accounting periods in the amount of TEUR 16,016, primarily from the reversal of reserves.
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N O T E S T O T H E C O N S O L I D AT E D F I N A N C I A L S TAT E M E N T S
19
Cost of materials 2010 TEUR
2009 TEUR
1,836,789
1,335,788
75,956
54,455
1,912,745
1,390,243
2010 TEUR
2009 TEUR
Wages and salaries
580,733
518,762
Statutory social welfare contributions and expenses relating to
140,131
121,769
Personnel costs
720,864
640,531
(thereof for retirement benefits)
(33,225)
(24,462)
Average number of employees during the fiscal year
Number
Number
Wage earners
7,211
6,700
Salary earners
7,851
7,400
201
172
15,263
14,272
2010 TEUR
2009 TEUR
146,863
117,670
Expenditure on materials, supplies and merchandise Expenditure on services purchased Total
20
151
Personnel expenses/staff
pensions and employee benefits
Apprentices Total
21
Depreciation Depreciation and amortization on purchased intangibles and on fixed assets
In addition, rental and leasing expenses totaling TEUR 47,499 (2009: TEUR 44,590) were incurred during the reporting period.
22
KB_GB_2010_Konzernanhang_EN_V3.indd 19
Other operating expenses
Other operating expenses consist primarily of maintenance costs, direct sales costs, legal and consulting fees, commissions, travel expenses and miscellaneous administrative expenses. Other taxes for the Group amount to TEUR 12,078 (2009: TEUR 10,523). Expenses resulting from foreign exchange fluctuations during the fiscal year amounted to TEUR 72,354 (2009: TEUR 46,076). The fee paid to the independent auditors, KPMG AG Wirtschaftsprüfungsgesellschaft, amounted to TEUR 660 for fiscal year 2010. Of this TEUR 570 was paid out for audit services, TEUR 10 for tax advice and TEUR 80 for other services.
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152
23
Financial results 2010 TEUR
2009 TEUR
6,163
5,129
Depreciation on investments
(2,078)
(3)
Interest and similar expenses
(14,818)
(8,742)
Miscellaneous interest and similar income
(thereof for discounts on accruals) Income from associated, affiliated and other companies
Total
24
Extraordinary result
25
Net income
(8,044) (239)
80
(10,972)
(3,536)
Extraordinary expenses reflect the one-off effect of adjustments in compliance with the German Accounting Law Modernization Act.
Net income
2010 TEUR
2009 TEUR
239,381
98,729
Minority interests in earnings of consolidated subsidiaries
(30,690)
(6,398)
Retained earnings brought forward from the previous year (after
180,670
107,762
(126,805)
32,577
262,556
232,670
distribution of dividends) Withdrawals from retained earnings
Unappropriated consolidated net income (Knorr-Bremse AG unappropriated retained earnings)
26
Financial derivatives
Financial instruments are not held for trading purposes. Underlying transactions and their derivatives are bundled together as single items for valuation purposes (“macro hedges”). These bundled derivatives are netted out without affecting net income wherever the respective impact on income of the underlying transaction (hedged item) and the related hedge offset each other (net hedge presentation method). Forward exchange and option transactions are performed purely and exclusively in order to hedge current and future foreign currency payables and receivables from the sale and purchase of goods and services and the elimination of exchange rate risk for selected assets. The aim of hedging operations at Knorr-Bremse is to reduce the risks posed by foreign exchange fluctuations to the ordinary course of business. Currency hedging is based on the volume of open commitments arising or expected to arise from core business activities. Maturities are based on the lifespans of the underlying business transactions, whereby highly probable transactions are hedged over a rolling three-year planning period. Because the conditions and parameters of the hedges match those of the hedged items, any payment
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N O T E S T O T H E C O N S O L I D AT E D F I N A N C I A L S TAT E M E N T S
153
flows or changes in value are offset in full. The Knorr-Bremse Group uses forward exchange contracts, currency options and cross currency swaps as hedging instruments. Not included in the hedging report are forward exchange derivatives with a nominal value of MEUR 28.0 and a negative net present value totaling MEUR 3.4. Currency futures contracts amounting to MEUR 876.6 in total (representing hedged risks) are included in macro hedges. Of this amount, MEUR 295.0 is attributable to the hedging of assets (micro hedges), MEUR 221.8 to the hedging of open contracts (micro hedges) and MEUR 359.8 to the hedging of high-probability transactions (portfolio hedges). Commodity futures contracts are used exclusively to hedge price risks arising on fluctuations in the purchase prices of raw materials used in Knorr-Bremse Group products (portfolio hedges). The volume of underlying transactions (hedged items) is calculated on the basis of high-probability requirements for raw materials over a rolling two-year planning period. The derivatives are based on reference indices traded on commodity futures exchanges. The effectiveness of the hedging relationship is retrospectively analyzed using statistical correlation techniques, showing a correlation in excess of 80%. Concluded contracts totaling MEUR 13.9 are carried in full in macro hedges. The nominal and market values of financial instruments as at December 31, 2010 break down as follows: Total Dec. 31, 2010
Total Dec. 31, 2010
Total Dec. 31, 2009
Total Dec. 31, 2009
Nominal value
Market value
Nominal value
Market value
Forward exchange transactions
652
(8)
668
(7)
Currency options
113
1
112
2
140
(26)
140
(12)
14
1
10
1
in EUR millions
Foreign exchange contracts
Interest rate contracts Cross currency swaps
Commodity-related contracts Swaps
Negative market values correspond to the risks associated with financial derivatives; of these, MEUR 3.4 are recorded under accrued liabilities. Positive market values are offset by risks associated with the underlying transactions (hedged items) in the respective macro hedges. While cross currency swaps generally come under the heading of interest rate instruments, in terms of content they are used exclusively to hedge foreign currency risks, because the interest rates in the underlying currencies are exchanged at fixed rates. The market value of financial derivatives is best defined as the price one party is prepared to pay in order to assume the rights and/or obligations of another party. Market values are calculated on the basis of market information available at the balance sheet date and by applying standard market valuation methods as follows:
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154
• Currency hedging contracts are valued on the basis of reference rates, taking account of forward premiums and discounts. • Cross currency swaps are valued analogously to pure interest rate contracts or currency hedging contracts, on the basis of discounted, projected cash flows using market interest rates and reference rates for the remaining life spans of the instruments. • Commodity contracts are used to hedge risks associated with steel and aluminum price fluctuations. The contracts are valued at market price. • Options are valued using recognized models for calculating option prices (e. g. Black-Scholes). Paid option premiums are carried under “Other assets”. As at the balance sheet date, the book value of call option premiums paid out amounted to MEUR 2.0.
27
Research and development expenditure
28
Miscellaneous
29
Total remuneration of the Supervisory Board and Executive Board
In fiscal year 2010, Group expenditure on research and development amounted to TEUR 175,284 (2009: TEUR 152,610).
The Group financial statements are published in the official electronic Federal Gazette and in the Commercial Register at the local first-instance court in Munich, Germany. Under the terms of § 264 (3) of the German Commercial Code (HGB), the subsidiary companies Knorr-Bremse Systeme für Schienenfahrzeuge GmbH (Munich/Germany) and Hasse & Wrede GmbH (Berlin/Germany) are exempt from the obligation to publish their figures pursuant to § 325 of the German Commercial Code.
The total remuneration of members of the Supervisory Board amounted to TEUR 257 and the total remuneration of the Executive Board to TEUR 4,651. Pension commitments to former members of the Executive Board and their surviving dependents are covered by an accrual of TEUR 24,228; payments in the fiscal year amounted to TEUR 2,926.
Munich, March 2, 2011 Knorr-Bremse AG Executive Board
Dr. Raimund Klinkner Chairman
KB_GB_2010_Konzernanhang_EN_V3.indd 22
Klaus Deller
Dr. Dieter Wilhelm
Dr. Lorenz Zwingmann
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C O N S O L I D AT E D C A S H F L O W S TAT E M E N T
155
Consolidated Cash flow Statement in Compliance with GAS 2 (German Accounting Standard)
Cash funds are comprised of the Group’s cash and cash equivalents, and marketable securities. 2010 TEUR
2009 TEUR
239,381
98,729
Depreciation and amortization on intangibles and fixed assets
148,941
117,673
Increase in accruals
Result for the period (including minority interests in consolidated results)
134,927
53,634
Profit on disposals of intangibles, fixed assets and investments
1,908
4,057
Decrease (2009: increase) in inventories, receivables and other
(208,489)
112,850
139,716
(40,544)
456,384
346,399
(8,344)
(6,467)
assets not related to investing or financing activities Increase (2009: decrease) in payables and other liabilities not related to investing or financing activities
Cash flows from operating activities
Disbursements for investments in intangible assets Proceeds from disposals of intangible assets Disbursements for investments in fixed assets
1,294
1,197
(105,025)
(94,148)
2,313
9,188
Disbursements for investments in financial assets
(27,347)
(16,344)
Disbursements for the acquisition of consolidated companies and
(42,672)
(11,595)
(179,781)
(118,169)
Proceeds from disposals of fixed assets
other business units
Cash flows from investing activities
Proceeds from additions to shareholders’ equity Disbursements to company owners and minority shareholders
956
17,608
(64,737)
(124,104)
43,557
80,903
Disbursements for the redemption of borrowings
(118,491)
(107,968)
Cash flows from financing activities
(138,715)
(133,561)
20,335
1,347
Changes in cash funds resulting from cash-relevant transactions
158,223
96,016
Cash funds at the beginning of the period
154,656
58,640
Cash funds at the end of the period
312,879
154,656
Proceeds from borrowings
Change in cash funds resulting from exchange rate movements and changes in group structure
KB_GB_2010_Konzernanhang_EN_V3.indd 23
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156
SEGMENT REPORT
Segment Report in Compliance with GAS 3 (German Accounting Standard)
In order to comply with GAS 3, Knorr-Bremse AG has compiled the following report on three segments that are subject to reporting requirements. The breakdown by segment is based on the Group’s activities in the three major geographical regions that provide the geographical framework for the Group’s internal organizational and reporting structures. The operating segments cover three regions: Europe, the Americas and Asia/Australia, each of which is characterized by different market and customer demands. The Knorr-Bremse Group’s main product lines – braking systems for rail and commercial vehicles – are represented in all three regions. Fiscal Year 2010
Europe
America
Asia/ Australia
Knorr-Bremse Group
Sales by region
2,288,048
891,346
1,041,295
4,220,689
thereof net sales with third parties
1,886,009
826,977
999,177
3,712,163
thereof net sales with other segments
402,039
64,369
42,118
508,526
Net income
109,783
47,320
82,278
239,381
Income tax charge
59,754
25,758
44,783
130,295
Investments (excluding financial investments)
74,751
21,337
17,281
113,369
Depreciation (excluding financial investments)
72,350
33,134
41,379
146,863
0
(252)
0
(252)
13
0
0
13
998,130
523,777
672,250
2,194,157
Europe
America
Asia/ Australia
Knorr-Bremse Group
Sales by region
1,841,381
661,232
529,313
3,031,926
thereof net sales with third parties
1,626,013
620,437
514,497
2,760,947
215,368
40,795
14,816
270,979
Net income
65,180
7,493
26,056
98,729
Income tax charge
32,014
3,681
12,797
48,492
Investments (excluding financial investments)
70,796
16,732
13,087
100,615
Depreciation (excluding financial investments)
77,442
32,066
8,162
117,670
Result for associated companies
0
74
0
74
Result for affiliated and other companies
6
0
0
6
871,718
455,984
336,718
1,664,420
in EUR thousands (TEUR)
Result for associated companies Result for affiliated and other companies Assets
Fiscal Year 2009
in EUR thousands (TEUR)
thereof net sales with other segments
Assets
KB_GB_2010_Konzernanhang_EN_V3.indd 24
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SEGMENT REPORT
Fiscal Year 2010
Net sales
Investments (excl. financial investments)
Depreciation (excl. financial investments)
Assets
Rail vehicle systems
2,024,389
61,236
82,941
1,435,022
Commercial vehicle systems
1,700,682
50,361
61,043
967,908
(12,908)
1,772
2,879
(208,773)
Knorr-Bremse Group
3,712,163
113,369
146,863
2,194,157
Fiscal Year 2009
Net sales
Investments (excl. financial investments)
Depreciation (excl. financial investments)
Assets
Rail vehicle systems
1,552,550
66,649
51,253
1,061,758
Commercial vehicle systems
1,221,460
33,362
63,403
809,847
(13,063)
604
3,014
(207,185)
2,760,947
100,615
117,670
1,664,420
157
in EUR thousands (TEUR)
Miscellaneous/consolidations
in EUR thousands (TEUR)
Miscellaneous/consolidations Knorr-Bremse Group
The analysis does not show borrowings or interest payable by region, because these items are controlled centrally across the Group by the parent company, thus are not dependent on regional decisions associated with day-to-day business operations. The usual prices apply as agreed between counterparties.
KB_GB_2010_Konzernanhang_EN_V3.indd 25
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158
S TAT E M E N T O F C H A N G E S I N G R O U P E Q U I T Y
Statement of Changes in Group Equity in Compliance with GAS 7 (German Accounting Standard) Changes in group equity 2010
Capital stock
Capital reserves
Retained earnings
Net income
Minority interests
Knorr-Bremse Group
67,600
153
153,717
232,670
78,639
532,779
Dividend payments
(52,000)
(9,882)
(61,882)
Net income 2010
208,691
30,690
239,381
in EUR thousands (TEUR) As at Dec. 31, 2009
Transfers to retained earnings
126,805
(126,805)
0
Currency fluctuations
37,319
4,565
41,884
Other fluctuations
(4,833)
6,532
1,699
As at Dec. 31, 2010
Changes in group equity 2009
67,600
153
313,008
262,556
110,544
753,861
Capital stock
Capital reserves
Retained earnings
Net income
Minority interests
Knorr-Bremse Group
67,600
153
279,071
211,762
80,753
639,339
(104,000)
(20,104)
(124,104)
92,331
6,398
98,729
in EUR thousands (TEUR) As at Dec. 31, 2008 Dividend payments Net income 2009 Withdrawals from retained earnings
(32,577)
Currency fluctuations
17,167
Offsetting of goodwill
(138,544)
Other fluctuations
32,577 (176)
67,600
153
153,717
16,991 (138,544)
28,600
As at Dec. 31, 2009
0
232,670
11,768
40,368
78,639
532,779
Group equity includes capital differences arising on foreign currency translation in the amount of TEUR -1,534, of which TEUR -1,047 relates to minority interests. Other changes in minority interests result primarily from the purchase of former minority interests in Knorr-Bremse Systems for Commercial Vehicles India Pvt. Ltd., Pune/India. Following the purchase, the Group holds a 100% interest as at the balance sheet date. Minority interests also reflect the first-time inclusion in consolidation of Heine Resistors GmbH, Dresden/Germany and Heine Resistors (Suzhou) Co. Ltd., Suzhou/China, as well as a capital increase for Knorr-Bremse KAMA Systems for Commercial Vehicles OOO, Naberezhnye Chelny/Russia.
KB_GB_2010_Konzernanhang_EN_V3.indd 26
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INDEPENDENT AUDITOR’S REPORT
159
Independent Auditors’ Report
We have audited the consolidated financial statements prepared by Knorr-Bremse Aktiengesellschaft, Munich, comprising the balance sheet, income statement, notes to the financial statements, cash flow statement, statement of changes in equity and segment report, together with the group management report, for the business year from January 1 to December 31, 2010. The preparation of the consolidated financial statements and the group management report in accordance with German commercial law is the responsibility of the parent company’s management. Our responsibility is to express an opinion on the consolidated financial statements and on the group management report based on our audit. We conducted our audit of the consolidated financial statements in accordance with § 317 HGB [German Commercial Code] and German generally accepted standards for the audit of financial statements promulgated by the Institut der Wirtschaftsprüfer (IDW). Those standards require that we plan and perform the audit such that misstatements materially affecting the presentation of the net assets, financial position and results of operations in the consolidated financial statements in accordance with German principles of proper accounting and in the group management report are detected with reasonable assurance. Knowledge of the business activities and the economic and legal environment of the Group and expectations as to possible misstatements are taken into account in the determination of audit procedures. The effectiveness of the accounting-related internal control system and the evidence supporting the disclosures in the consolidated financial statements and the group management report are examined primarily on a test basis within the framework of the audit. The audit includes assessing the annual financial statements of those entities included in consolidation, the determination of entities to be included in consolidation, the accounting and consolidation principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements and group management report. We believe that our audit provides a reasonable basis for our opinion. Our audit has not led to any reservations. In our opinion, based on the findings of our audit, the consolidated financial statements comply with the legal requirements and give a true and fair view of the net assets, financial position and results of operations of the Group in accordance with these requirements. The group management report is consistent with the consolidated financial statements and as a whole provides a suitable view of the Group’s position and suitably presents the opportunities and risks of future development.
Munich, March 2, 2011 KPMG AG Wirtschaftsprüfungsgesellschaft
signed Rupprecht Independent auditor
KB_GB_2010_Konzernanhang_EN_V3.indd 27
signed Peth Independent auditor
18.03.11 19:43
160
C O N S O L I D AT E D B A L A N C E S H E E T
Consolidated Balance Sheet as at December 31, 2010 Assets
Notes
Dec. 31, 2010 TEUR
Dec. 31, 2009 TEUR
Purchased intangibles
(3)
217,277
190,702
Fixed assets
(4)
517,001
478,239
Investments
(5)
65,569
36,351
Intangibles, fixed assets and investments
(2)
799,847
705,292
Inventories
(6)
219,337
132,985
Accounts receivable, trade
(7)
689,066
493,974
Other assets
(7)
92,133
96,748
12
6
312,867
154,650
1,313,415
878,363
(9)
12,182
80,765
(10)
68,713
0
2,194,157
1,664,420
Notes
Dec. 31, 2010 TEUR
Dec. 31, 2009 TEUR
Capital stock
(11)
67,600
67,600
Capital reserves
(12)
153
153
Retained earnings
(13)
313,008
153,717
Unappropriated consolidated net income
(25)
262,556
232,670
Minority interests
110,544
78,639
Group equity
753,861
532,779
Other marketable securities Cash and cash equivalents
(8)
Current assets Prepaid expenses Deferred tax assets Balance sheet total
Equity and Liabilities
Pension plan accruals
(14)
192,257
160,390
Other accrued liabilities
(15)
528,521
400,428
Accruals
720,778
560,818
Accounts payable, banks
110,615
167,346
Accounts payable, trade
492,782
337,768
Other liabilities
111,467
62,679
714,864
567,793
3,018
3,030
1,636
0
2,194,157
1,664,420
Liabilities
(16)
Deferred income Deferred tax liabilities Balance sheet total
KB_GB_2010_Konzernanhang_EN_V3.indd 28
(10)
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C O N S O L I D AT E D S TAT E M E N T O F I N C O M E
161
Consolidated Statement of Income for the Fiscal Year from January 1 to December 31, 2010 Notes Net sales Changes in inventories Own work capitalized
Total operating performance
2010 TEUR
2009 TEUR
3,712,163
2,760,947
2,832
(25,831)
272
162
3,715,267
2,735,278
Other operating income
(18)
154,943
94,951
Cost of materials
(19)
(1,912,745)
(1,390,243)
Personnel expenses
(20)
(720,864)
(640,531)
Depreciation and amortization on purchased
(21)
(146,863)
(117,670)
Other operating expenses
(22)
(677,250)
(531,028)
Financial results
(23)
(10,972)
(3,536)
401,516
147,221
(31,840)
0
(130,295)
(48,492)
239,381
98,729
30,690
6,398
intangibles and fixed assets
Income before taxes Extraordinary expenses
(24)
Taxes on income
Net income Minority interests in results of consolidated
(25)
subsidiaries
KB_GB_2010_Konzernanhang_EN_V3.indd 29
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Main Majority-owned Subsidiaries of Knorr-Bremse AG
The Americas Knorr Brake Holding Corporation Watertown, NY (USA)*
Indústria Freios Knorr Ltda. São Paulo (BR)
Anchor Brake Shoe Company LLC (USA)
Knorr-Bremse Sistemas para
Bendix Commercial Vehicle Systems LLC (USA) Bendix Spicer Foundation Brake LLC (USA)* IFE North America LLC (USA)
Veículos Comerciais Brasil Ltda. (BR) Knorr-Bremse Sistemas para Veículos Ferroviários Ltda. (BR)
Asia – Australia Knorr-Bremse Asia Pacific (Holding) Ltd. Hong Kong (CHN)
Europe – Middle East – Africa Knorr-Bremse Systeme für Schienenfahrzeuge GmbH Munich (D)
Knorr-Bremse Systeme für Nutzfahrzeuge GmbH Munich (D)**
Knorr Brake Ltd. (CDN)
Freinrail Systèmes Ferroviaires S.A. (F)
Bost Ibérica S.L. (E)
Merak North America LLC (USA)
Knorr-Bremse Rail Systems Italia S.r.I. (I)
Hasse & Wrede GmbH (D)
New York Air Brake Corporation (USA)
IGE-CZ s.r.o. (CZ)
Knorr-Bremse Benelux B.V.B.A. (B)
Knorr-Bremse Ges.m.b.H. (A)
Knorr-Bremse Fékrendszerek Kft. (H)
Knorr-Bremse Nordic Rail Services AB (S)*
Knorr-Bremse KAMA Systems for
Knorr-Bremse Systemy dla Kolejowych
Knorr-Bremse Polska SfN Sp. z o.o. (PL)
Knorr-Bremse Rail Systems (UK) Ltd. (UK)
Knorr-Bremse Sistemi per Autoveicoli
Knorr-Bremse Vasúti Jármű Rendszerek Hungária Kft. (H) Merak Sistemas Integrados de Climatización S.A. (E) Microelettrica Scientifica S.p.A. (I)
KB_GB_2010_Umschlag_EN_RZ.indd 2
Commercial Vehicles OOO (RUS)*
Srodków Lokomocji PL Sp. z o.o. (PL)
Knorr-Bremse S.A. (Pty.) Ltd. (RSA)*
As per December 31, 2010
IFE-VICTALL Railway Vehicle Door Systems (Qingdao) Co., Ltd. (CHN)* Knorr-Bremse Australia Pty. Ltd. (AUS) Knorr-Bremse Brake Equipment (Shanghai) Co., Ltd. (CHN)
Knorr Brake Corporation (USA)
* Minority holding in subsidiary by non-group companies ** 20 % stake held by Robert Bosch GmbH, Stuttgart (D)
Hasse & Wrede CVS Dalian, China Ltd. (CHN)*
Oerlikon-Knorr Eisenbahntechnik AG (CH) Sociedad Española de Frenos, Calefacción y Señales S.A. (E)* Dr. techn. Josef Zelisko Ges.m.b.H. (A)
Commerciali S.p.A. (I) Knorr-Bremse Systèmes pour Véhicules Utilitaires France S.A. (F) Knorr-Bremse System för Tunga Fordon AB (S) Knorr-Bremse Systems for Commercial Vehicles Ltd. (UK) Knorr-Bremse Systémy pro užitková vozidla ČR, s.r.o. (CZ)
Knorr-Bremse CARS LD Vehicle Brake Disc Manufacturing (Beijing) Co., Ltd. (CHN)* Knorr-Bremse Commercial Vehicle Systems Japan Ltd. (J)** Knorr-Bremse India Pvt. Ltd. (IND) Knorr-Bremse / Nankou Air Supply Unit (Beijing) Co., Ltd. (CHN)* Knorr-Bremse Rail Systems Japan Ltd. (J)* Knorr-Bremse Rail Systems Korea Ltd. (ROK) Knorr-Bremse Braking Systems for Commercial Vehicles (Dalian) Co., Ltd. (CHN) Knorr-Bremse Systems for Commercial Vehicles India Pvt. Ltd. (IND)
Contact Knorr-Bremse AG Moosacher Strasse 80 80809 Munich Germany Corporate Communications Christoph Günter Tel: +49 89 3547-1402 Fax: +49 89 3547-1403 E-Mail:
[email protected]
Knorr-Bremse Systems for Rail Vehicles (Suzhou) Co., Ltd. (CHN) Sigma Transit Systems Pty. Ltd. (AUS)
Additional information about Knorr-Bremse: www.knorr-bremse.com
SYDAC PTY. LTD. (AUS) Westinghouse Platform Screen Doors (Guangzhou) Ltd. (CHN)*
28.02.11 14:13
