oerlikon cmd 2008 oerlikon drive systems print

Oerlikon Drive Systems – Global leader in gear and drive system technology

Marcello Lamberto, CEO Oerlikon GrazianoGary Lehman, CEO Oerlikon Fairfield

Oerlikon Capital Market Days 2008Zurich, September 25-26, 2008

Capital Market Days 2008

Drive Systems

Disclaimer

This presentation is based on information currently available tomanagement. The forward-looking statements contained herein could be substantially impacted by risks and influences that are not foreseeable at present, so that actual results may vary materially from those anticipated, expected or projected.


Drive Systems

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Drive Systems

• Founded in 1919• Lafayette, Indiana USA • North American market leader • Gear and drive solutions for mobile

and industrial machinery• Acquired by Saurer Group in 2006

• Founded in 1951• Torino, Italy • Market leader in Europe• On – highway and off – highway gear

and drive train solutions• Part of the Saurer Group since 1992

Oerlikon Drive Systems

> CHF 1bn sales in 2007> CHF 1bn sales in 2007

Acquired by Oerlikon in January 2007

Long standing history


Drive Systems

USA (Duluth)

USA (Lafayette)

UK (Huntingdon)

Czech Republic (Cerveny Kostelec)

China (Suzhou)

India (Noida & Belgaum)Italy (Torino)

n

n

n

n

n n

n

China (Shanghai)

n

13 manufacturing facilities with over 5,000 employees globally13 manufacturing facilities with over 5,000 employees globally

n

Russia (Moscow)

n Sales & Marketing Officesn Manufacturing Plants

Global footprint - customer proximity


Drive Systems

CHF 112bn global gear / drives market in 2008

§ CAGR 2005 – 2008: ~6%

§ Projected to reach CHF 130bn by 2011

55%

5%

24%

16%

On-HighwayIndustrialNon - SteelAerospace

123 130117112107

0

25

50

75

100

125

150

2007 2008p 2009p 2010p 2011p

(in CHF bn)

Sources: Freedonia Associates Global Gear Market Study 2004 updated 2006, AGMA Gear Market figures 2007


Drive Systems

Target markets: industrial and on–highway

Industrial

Aerospace

On-Highway

Non - Steel

“Growth through technology” market areas

• Low emission & hybrid vehicles • Energy related applications• Automated drive technologies• Demanding / high performance

Ø Areas that value our combined capabilities

Ø Allow for “differentiated” offering

Ø Utilization of our technologies & experience


Drive Systems

Key market segments

Off-Highway SpecialtyIndustrial Energy

Zero-emission &Utility recreational

VehiclesTransportation Automotive

(premium cars)

61% 3% 2.5% 5% 21%7.5%

Sales split 2007


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Leader in market segment capabilities

GearComponents

Off-Highway synchronizers & clutch

packs

Off-Highway driveline products

High-end automotive transmissions

# 1 # 1 # 4 # 2

Okubo, and small regional gear

producers

Competition

Small regional producers

Competition

Dana, ZF, Carraro, Bosch Rexroth,

Bonfiglioli

Competition

Getrag, Magna, ZF, AMM

Competition


Drive Systems

Key business growth drivers

Need for a cleaner

environment

Zero emission and low noise

vehicles

Increased demand for newer, more

efficient machinery

Continued increase in wind farm construction

Continued demand for industrial

machinery

Increased crop demand for bio –fuels as well as

food

Increased demand for energy and

alternative sources

Infrastructure growth in

developing nations


Drive Systems

Global reachKey financials

Asia5%

North America

37%

Europe58%

(in CHF m) FY 07 ∆ YoY 1HY 08 ∆ YoY

Sales 1,113 +17% 626 +13%

EBIT 83 +11% 39 -9%

Backlog 231 +32% 218 n/a

Employees 5,048 +6% 5,239 +8%

Alignment with key customers and new market opportunities drive strong top line

growth

Expanding global reach provides further opportunities

for growth

Drive Systems key figures

(Based on 2007 sales figures)


Drive Systems

Drive Systems initiatives

§ Market Activities Ø Focus on high – growth market sectors with innovative products

and servicesØ Build strategic relationships with key global customers

§ Innovation & TechnologyØ R&D development – clean, more efficient, higher performing drive

systemsØ High performance and high technology “mechatronic” drive-train

solutions

§ Profitability & Growth InitiativesØ Continue business improvement initiatives (low cost sourcing, mfg.)Ø Manufacturing rationalization plan


Drive Systems

Clean technology opportunities Wind Power

§ Forming alliances with major wind energy providers § Become the customer’s wind gear “arm”

Ø Preferred choice for quality and precisionØ Producing gear components Ø Drive systems

§ Foster a “partner” relationship as opposed to competitive relationship

§ Major program with Winergy developed in late 2007, currently starting high – volume production

Zero Emissions

§ Utilize years of direct electric drive technology & know – how and apply to:Ø Specialty automotive opportunities Ø Mass transportation Ø Mobile utility vehicles

§ Do not pursue “ultra – high volume” automotive hybrid business (passenger car, etc.)


Drive Systems

Off-Highway Equipment

Agriculture

Construction

Lift Equipment

Specialty Industrial

Industrial Cooling

Utility Water Treatment

ShreddingMixing

Axles

CVT Transmissions

Synchronizers

Clutch packs

Torque – Hub Planetary

Drives

Electric Drives

Cooling tower fan drives

Gear products for pumps and

water treatment

High horsepower drives for

shredding and mixing

Construction Machinery Market

Softening however large machinery is

strong

Development activities for hybrid technology

on the rise

Agricultural Machinery MarketOutlook very good

through 2010

Market solutions


Drive Systems

Market solutions

Transportation

Rail

Mass Transit & Bus

Premium Automotive

Luxury andSports Cars

Motorcycles

Specialty Passenger Cars

Locomotive traction gears

and assemblies

Inverted Portal Axles for ultra-low

floor buses

Mass-transit drive gearboxes

Gear and shaft components for

hybrid buses

Manual / automated manual transmission

& dual clutch transmission

Power take-off units Front/rear

differentials for all wheel drive cars

Angle drives for motorcycles

Transportation Market

Currently very active due to penetration

into developing countries

Trend toward more mass transportation

due to fuel and energy costs

Premium Automotive Market

Essentially unaffected by

traditional passenger car marketVery slight

movements up / or down


Drive Systems

Energy

Wind

Oil & Gas

Mining

Market solutions Zero-emission and

Utility & recreational vehicles

Zero-emission vehicles

Recreational vehicles

Utilityvehicles

New market areas

Large gear components

for wind turbines

Large planetary gearboxes

for oil platforms

Single and two speed

gear assemblies for mining

Energy marketsegment growing

at +20% p.a.

Wind gear demand exceeds

supply

Oil / Mining extremely active

Gearboxes for zero emission

and hybrid vehicles

Torque – Hub®planetary drive

systems

Drive axles for utility & recreational

vehicles


Drive Systems

Strong customer relationships spanning 50 years


Drive Systems

Drive System initiatives

§ Market / Product Activities Ø Focus on high – growth market sectors with innovative products




solutions



Drive Systems

Dual clutch transmission technology with electronic control unit

DCT Technology in Premium Cars• High efficiency of manual

transmission – comfort of automatic• Gear changes ranging – from “comfort” to “racing”• Better fuel economy than automatics

Hybrid Drive Technology

High-tech modules for new generation transmission

Power-Split Gear Assemblies • Deliver greater efficiency than conventional torque

converter and power-shift gearboxes

Field test completion 2009 – Planned production 2010 with the leading manufacturer of loaders

Field test completion 2008 – Production target 2009 Developed with the leader in off – highway machinery

Field test completion 2009 – target 2010 Production with premier automotive producer

R&D development: meeting the technology challenge Hybrid Electric Drive Systems• For industrial machinery• Higher efficiency• Lower noise and fuel consumption


Drive Systems

The Solution:

High speed crawler drive gear assembly capable of:• Input speeds reaching 3,000 rpm• High horsepower capabilities – over 100 HP• Low reduction / High efficiency two – stage

planetary• Test units delivered in 6 weeks

Example: solution for high performanceKey global manufacturer developing market’s first “high – speed” dozer

capable of speeds over 20 mph

The Challenge:

• High horsepower to final drive assembly• High heat to drive system• Test units required in 8 weeks


Drive Systems

The Solution:Manual & Automated Manual (AMT) mid-engine transaxle for high performance 4WD applications.

• Fully integrated rear & center differentials

• Flexibility design in to meet future highperformance in other applications

Example: solution for high technology drive train

AUDI R8

The Challenge: Major premium car maker entering mid – engine sports car market

• Needed complex high performance 6 – speed transmission

• Extremely quick “time to market” requirement

• High “in house” development costs


Drive Systems

Drive System initiatives

§ Market / Product Activities Ø Focus on high – growth market sectors with innovative products




solutions



Drive Systems

Commodity Increase

Mitigation

RecoveryActivities

All major customers under long term agreement (LTA) with quarterly adjustments in prices to cover material and energy surcharges

2008 pricing actions in place and underway to cover all material and energy cost increases with average increase range of 6% - 9%

Significant changes in base commoditiesPig Iron ~174% Increase from 2007Scrap ~ 182% Increase from 2007

Strong movement in oilUS dollar loss of strength

Long term contracts protecting currency, material evaluations, reductionsStrong movement in LCC of castings/forgings

46% of all castings now in LCC30% of all forgings now in LCC

Indirect cost reviewed for further long term contracts / rebates

Raw material impacts and developments


Drive Systems

Ø Shifting % of spend from EU / US to low cost countries

Ø Currently developing additional suppliers in China / Eastern Europe

35%25%18%15%

2009p2008p20072006

Percent Spend in Low Cost Countries

Active global sourcing initiative in place


Drive Systems

Manufacturing rationalization underway

§ 2007: Moved large Torque – Hub®compact drives production to Graziano Czech facility – continues in 2008

§ 2008: Moving Graziano agricultural gear components for North American market to Fairfield USA

§ 2008: Transitioned Fairfield 2 – speed transmission for EU haul truck production to Graziano – Italy

§ 2008: Rationalized 2 India production facilities under single production management system

§ 2009: Install Torque – Hub® planetary compact wheel drives assembly line in China facility

Ø Cost savings (logistics, labor, duties & tariffs, etc.)

Ø Improved service to customers (localization)

Ø Ramp up to market and business demands faster(reduced shipping time, etc.)


Drive Systems

§ Excellent brand reputation throughout industries served

§ Globally recognized technology and solutions leader

§ Well positioned in key growth markets

§ Sound business strategy in place

Summary

Our VisionThe global leader and preferred choice in the design, manufacture, and supply of gear

and drive solutions for OEM’s in the on / off – highway and specialty industrial machinery markets.

oerlikon cmd 2008 oerlikon drive systems print

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