Annual Press Conference on Fiscal 2005
Behr achieves targets and lays foundations for further growth(PresseBox) (Stuttgart, Germany, )
2005 business figures
For the very first time, Behr has produced its consolidated financial statement for 2005 according to IFRS international accounting standard.
Sales of the air conditioning and engine cooling specialist remained at the previous year’s level at 3.05 billion EUR.
Profit on ordinary business activities dropped by 3.2 percent to
92 million EUR. This reduction was primarily due to a considerable increase in the price of raw materials.
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At 178 million EUR, investments were 5.3 percent higher than in the previous year. Investment expenditure in Germany focused mainly on the extension of the company’s Technical Center and the introduction of an integrated SAP system. In Germany, alone, Behr invested 76 million EUR, which corresponds to an increase of 35.7 percent. Further major projects included preparations for launching new production runs at the US plant, Dayton, and the construction of new plants in China and India. Behr also invested in the expansion of its activities in the Czech Republic, South Africa, and Brazil, as well as for new production startups in France and Spain.
The company’s drive to further strengthen its innovation leadership was reflected in a marked increase in R&D expenditure, which climbed by
10.3 percent to 215 million EUR. Behr’s investment in technical innovations thus accounted for 7.0 percent of sales.
At the end of 2005, the Behr Group had 18,103 employees on its payroll, an increase of 6.6 percent over the previous year. This increase was primarily attributable to the acquisition of Behr Thermot-tronik and the increase in staffing levels in Asia and South Africa. In Germany, due to the first-time inclusion of Behr Thermot-tronik and Behr Industry Freiberg, workforce numbers rose by 366 to 7,039.
The balance sheet total rose in 2005 by 9.0 percent to 1.92 billion EUR. The main factors contributing to this were the more favorable exchange rates and the consolidation of Behr Thermot-tronik and Dongfeng Behr Thermal Systems (DBTS).
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Shareholders’ capital rose to 478 million EUR, thus accounting for
24.9 percent of the balance sheet total. “This ratio will allow us to fund future growth investments from our own resources”, emphasized
Wolfgang Schaefer, CFO.
The ROCE, the return on capital employed, is, at 10.0 percent,
1.3 percentage points lower than the comparative IFRS value for the previous year. The cause of this decline is to be found in the EBIT (earnings before interest and taxes), which was lower in the year under review, as well as the increase in fixed capital, mostly caused by currency exchange and consolidation effects.
The companies ambitious acquisition targets in the premium, high-volume, and commercial vehicles sectors, as well as with engine manufacturers, were met. In Japan, Behr succeeded in winning its first high-volume orders.
Outlook: Foundations laid for further growth
“Thanks to our success in securing new contracts, the progress made in expanding our market position in America and Asia, and our new products, we will achieve a sales figure of 3.5 billion EUR in 2009“, remarked Markus Flik.
Business in the first few months of the current business year has been good. In 2006 the company expects sales and profit to be roughly at the same level as in the previous year. However prices for raw materials have gone up once again this year, calling for consistent implementation of the cost-saving program.
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Progress made with internationalization in America and Asia
After having secured several contracts to supply automobile manufacturers’ plants in Mexico, Behr intends to build a new plant there this year for engine cooling modules and components. 11 million EUR will be invested in infrastructure and production equipment. Behr is thus increasing its capacity in North America and moving closer to its customers’ plants in Mexico.
In India, where Behr has been active with its partner, the Anand Group, since 1997, a second plant is being built to create additional capacity for further growth and to extend the company’s product program.
In China, at the end of 2005, production started in two new plants belonging to Behr’s joint ventures Shanghai Behr Thermal Systems (SBTS) and
Dongfeng Behr Thermal Systems (DBTS) in Shanghai and Wuhan, respectively.
Cooperation with Hella expanded
Through the founding of another joint venture with Hella, Behr Hella Service, the company has further strengthened its spare parts business. The first few months already show a favorable interim result: wholesalers in Europe reacted positively to the extended product range and improved customer service.
Growth through product innovations
As an innovation leader, Behr is actively pursuing its mission of being the first supplier to launch the majority of new products and methods in the air conditioning and engine cooling sector onto the market.
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Current examples from the air conditioning division:
- The PHYSIO-CONTROL® system, produced in series for the first time in the new S-
Class Mercedes-Benz, sets new standards for climate control technology:
passengers can choose between three different air flow setting styles: diffuse,
medium, or focused air flow. This automatic climate control system is the largest
joint system project Behr and Behr-Hella Thermocontrol (BHTC) have undertaken to
- Behr is taking things a step further with its new development, the comfort vent: As
well as the air quantity, the type of air flow can also be adjusted: focused air jet or
- Behr plays a leading role in the development of the new air conditioning system
using R744 (carbon dioxide) as a refrigerant. The system provides for better cooling
performance, improved fuel economy, the option of heat pump operation (depending
on design level), and benefits in terms of servicing and recycling. The components
and control system for this product are now ready to go into series development.
Current examples of engine cooling innovations:
- Behr is working to produce cooling systems that will contribute to meeting emissions
regulations for diesel engines with the lowest-possible fuel consumption. An
example of this is our cooling system for low-pressure exhaust gas recirculation,
which is particularly attractive as far as reducing nitrogen oxide emissions is
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- The integration of Behr’s former sister company, Behr Thermot-tronik, acquired by
the company in 2005, is running according to plan. The resultant growth in
competence led to the development of a new generation of valves that improve the
control of the new cooling systems.
- At the 2005 Frankfurt Motor Show, the joint venture between Behr, Hella, and Plastic
Omnium, HBPO, unveiled its innovative front-end project, iFP, which offers
considerable benefits: enhanced pedestrian protection, smaller gap dimensions,
and reduced packaging space, costs and weight.