Auto supplier Behr reports progress in 2011

2011 was a successful year for the global automotive industry, but also a year of mixed messages. Following a strong start with high growth rates, from mid-year onwards the prospects started to deteriorate noticeably, chiefly on account of the European debt crisis. However, compared to 2010, global light vehicle production for the year as a whole rose by three percent to around 76.6 million units. Only the Japanese market recorded a severe downturn due to the devastating natural disaster. The global truck production figures also saw a slight increase; the positive trends in Europe and North America were able to offset the losses in Asia.

Sales exceed pre-crisis level

The Behr Group, specialist in auto air conditioning and engine cooling, also profited from this upward market trend. In fiscal 2011, Behr was able to increase its sales by 10.6 percent to around EUR 3.7 billion, and thus exceed the level attained prior to the crisis in 2008/2009. The strongest sales drivers were the regions of Europe and North America. These increases were attributable worldwide to growth of the original equipment market. The engine cooling sector recorded the strongest growth in OE sales, although HVAC business also improved significantly.

The earnings situation of the Stuttgart auto supplier also showed a positive trend in 2011. Earnings before taxes came to EUR 135 million (2010: EUR 53 million), while the company’s net income stood at EUR 93.2 million (2010: EUR 59.9 million).

“Behr has made further progress in 2011“, concludes Peter Grunow, Behr CEO. “This is partly attributable to market growth, but also to our extensive optimization and cost-reduction projects. Our employees around the world have supported these efforts and again demonstrated outstanding commitment in 2011. We have to continue working on this basis in 2012 as not all of our projects and locations are within target range yet”.

Grunow goes on to emphasize that the good figures should not disguise the fact that for Behr, the second half of 2011 was already marked by slowing growth rates. Another issue of concern for the company were the spiraling material prices during the course of the year. “In order to better cushion such negative effects in future, we must pursue our long-term goal of achieving a return on sales of five percent with unabated intensity. In such a fiercely competitive environment as ours, the 3.6 percent ROS achieved in 2011 is just not good enough”, he warns.

On the other hand, Behr has reached another target it set itself for 2011, namely that of further enhancing personnel efficiency. Although volumes and sales rose, permanent staff numbers of the Behr Group only increased by 5.4 percent to17,421 (as at December 31, 2011); this compares to 16,522 employees in the previous year.

MAHLE/Behr integration progressing well

After becoming new Behr shareholder in October 2010, the Stuttgart auto supplier company MAHLE raised its stake in January 2011 as planned from 19.9 percent to 36.85 percent. The associated capital infusion played a significant role in helping Behr to reduce its net debt further over the course of the year so the company now stands on a firm financial footing.

According to the participation agreement, MAHLE is to become the new majority shareholder by January 1, 2013, thus enabling the integration as of that date of the thermal management specialist Behr into the MAHLE Group. “The merger of MAHLE and Behr will give rise to a powerful ten-billion-euro group offering trendsetting products and attractive jobs“, says Behr CEO Grunow. “The integration project we launched at the end of 2010 in both companies has made considerable headway. The teams at the two companies’ headquarters and in the regions have done a good job which, after the majority takeover, will quickly result in initial synergy effects and the acquisition of joint customer projects.”

That this partnership between the two companies can offer considerable added market potential is underscored by our success in the growing field of integrated indirect charge air cooling. Solutions jointly developed by Behr and MAHLE can play an important role in the years to come in cutting emissions and fuel consumption with downsized engine solutions.

Behr aims to expand its global footprint

For Behr, Europe and North America will initially continue to be its most important light and commercial vehicle markets. At the same time the company aims to further expand its presence in the global growth markets in order to profit from their dynamic development.

Against this background, in the year under review Behr invested not only in building up its capacities for new customer products but also in the expansion of its global production network. In 2011, new Behr plants commenced operations in Namestovo (Slovakia) and Chennai (India). In February of the same year, Behr RUS was founded which is based in
St. Petersburg. In the current business year, production capacities will be established for the first time on Russian soil. Due to growing competitive pressure, over the next few years the company also plans to set up further capacities in Eastern Europe to accommodate diverse projects.

One strategic focus of global growth for Behr lies in Asia. In China, for example, the company aims to support the expansion strategies of international automakers, while also intensifying efforts to win local customers. To this end Behr has already extended its footprint in China: in 2010, a new plant was established in Nanjing, which is to be complemented in 2012 by another new production facility in Chengdu. Plans are also in the pipeline to build up capacities in India, while future efforts will also focus on securing a firmer foothold in Japan and South Korea through close cooperation with MAHLE.

Cautious optimism for 2012—thanks to new projects and trendsetting products

The 2012 global market trend for light vehicles is subdued, not least on account of the mixed picture related to premium and volume vehicles. At present, the truck industry is also anticipating a fall in demand and planning accordingly.

“Nevertheless, we expect that the Behr Group will be able to achieve slightly positive growth overall in 2012 fueled by new projects“, predicts Peter Grunow. At the same time he emphasizes that the further optimization of the cost structures and processes—which will particularly focus on Europe and South America—are a key prerequisite to achieving this goal, and is confident that “if we consistently pursue this path, Behr will continue to be able to offer its customers an attractive overall package combining optimum technological solutions, competitive costs and excellent service in 2012 and beyond.”

Products for the thermal management of hybrid and electric vehicles, innovations to cut fuel consumption and emissions as well as to enhance cabin comfort continue to be the focal issues of Behr’s development engineers. The on-demand control of coolant supply via the Visco® coolant pump, for example, already leads to a fuel saving of around 1 percent in today’s trucks. A further reduction of up to 5 percent can be realized using new heat exchangers currently under development that use energy recovered from the exhaust gas heat. In light vehicles, start-stop systems are experiencing a strong upsurge. These systems can be fitted with Behr’s storage evaporator which maintains cabin comfort during engine shutdown periods and allows fuel savings of around 2 percent in city traffic. To effectively cool the lithium-ion batteries of hybrid and electric vehicles, Behr offers diverse solutions in its portfolio which can be customized to meet individual requirements. The thermal management specialist is also applying innovative approaches to providing cabin heating in electric vehicles. In such systems, a heat pump integrated in the refrigerant circuit will in future provide for comfortable temperatures in the winter season. This raises the battery range by around 40-50 percent as the electric auxiliary heater is restricted to very low temperature levels.

About the company:

Behr GmbH & Co. KG, Stuttgart, Germany, is a systems partner for the international automobile industry. A specialist for automotive air conditioning and engine cooling systems, the Behr Group is one of the world’s leading manufacturers and suppliers of original equipment for light vehicles and trucks. Group sales in the 2011 business year came to EUR 3.7 billion. Currently, Behr employs some 17,400 staff at 36 production locations and 17 R&D centers worldwide.

For further information, please contact:

Behr GmbH & Co. KG

Wiebke Wöllner

Group Communications

Mauserstrasse 3

70469 Stuttgart

Germany

Tel.: +49 (0) 711/896-2057

Fax: +49 (0) 711/8902-2057

wiebke.woellner@behrgroup.com