VDL Groep annual report 2012

Transcription

1 VDL Groep annual report 2012

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3 VDL Groep Annual report 2012 VDL Groep bv Hoevenweg AW Eindhoven, the Netherlands Phone +31 (0) Fax +31 (0) info@vdlgroep.com

4 Contents 3 Financial highlights 4 Profile 5 Group structure 7 Report of the Board of Directors 39 Report of Supervisory Board 40 Auditor s report 41 Subsidiaries 53 Financial report

5 Financial highlights ( x 1,000 euro ) Combined turnover 1,756,354 1,718,724 1,472,373 1,162,233 1,562,111 Consolidated turnover 1,628,857 1,574,805 1,353,726 1,057,662 1,441,031 Gross profit 87,407 96, ,779 32, ,470 Profit before tax 75,679 83,377 97,447 25,432 77,262 Profit before tax / turnover 4.3% 4.9% 6.6% 2.2% 4.9% Net profit 56,755 66,014 76,762 18,047 54,379 Net profit / turnover 3.2% 3.8% 5.2% 1.6% 3.5% Depreciation of (in)tangible fixed assets 32,490 30,465 28,844 28,405 27,271 Cash flow 89,245 96, ,606 46,452 81,650 (Dis-)investments including acquisitions 213,072 52,100 29,445 20,292 57,517 Guarantee capital 788, , , , ,870 Total assets 1,403,669 1,062,228 1,017, , ,134 Guarantee capital / total assets 56.2% 54.4% 52.8% 50.3% 49.6% Net profit / equity 7.2% 11.5% 14.3% 3.9% 11.7% Employees as at 31 December 8,757 7,135 7,126 6,113 7,106 3

6 Profile VDL Groep VDL Groep is an international industrial company devoted to the development, production and sales of semi-finished products, cars, buses & coaches and other finished products. From its head office in Eindhoven (the Netherlands) VDL supervises its subsidiaries, which have a high level of autonomy and responsibility for results. The establishment in 1953 of Metaalindustrie and Constructiewerkplaats P. van der Leegte laid the basis for what today is VDL Groep. Partly through targeted acquisition - initially in subcontracting and since the nineteen nineties in buses and in the finished products division - the group now encompasses 82 subsidiaries, spread over 18 countries, and a workforce of 8,757. In subcontracting, VDL is a leader in the fields of metalworking, mechatronic systems and system supply, plastics processing and surface treatment. The car assembly division includes the production of passenger cars for third parties. The bus & coach division consists of chassis, chassis modules, coaches, public transport buses, mini & midi buses, special buses and second-hand buses. The finished products division is extensive: suspension systems for the automotive industry, heating, cooling and airtechnical systems, production automation systems, systems for the oil, gas and petrochemical industry, systems for the agricultural sector, sunbeds and roof boxes, container handling equipment, cigar-making and packaging machines, components for bulk handling and dust extraction installations and systems for explosion and fire protection. VDL Groep strives to achieve growth both through acquisitions and autonomous means. This entails a focus on making continuous improvements to its products and production processes. Such a vision imposes a number of preconditions: modern machinery, locations based on good logistics, a critical quality policy and, naturally, a high level of expertise amongst its workforce. Investments made by VDL Groep enable the group to meet customer requirements. VDL Groep has a flat organisational structure with short policy lines. The company culture is characterised by the shared VDL philosophy of human added value. This forms the basis for close cooperation between companies within the group. 4

7 Group structure VDL Groep VDL Nederland VDL Holding Belgium Subcontracting Car assembly Buses & coaches Finished products VD Leegte Metaal VDL Nedcar VDL Bus & Coach VDL Agrotech VDL Gereedschapmakerij VDL Bus Chassis (81%) VDL Industrial Products VDL TIM Hapert VDL Bus Modules VDL Steelweld VDS Technische Industrie VDL Bus Heerenveen VDL Steelweld UK VDL Laktechniek VDL Bus Venlo VDL Steelweld Deutschland VDL Belgium VDL Bus Roeselare Hapro International VDL Technics APTS (70%) Hapro Deutschland VDL Kunststoffen VDL Bus Valkenswaard VDL Klima Helmondse Metaal Industrie VDL Bus & Coach Nederland Klima Warmtetechniek NSA Metaalindustrie VDL Bus & Coach France VDL Klima Belgium NSA Apparatenbouw VDL Bus & Coach Italia VDL Klima France VDL MPC VDL Bus & Coach Belgium VDL KTI VDL Parree VDL Bus & Coach Polska VDL Delmas VDL Staalservice VDL Bus & Coach Deutschland VDL Containersystemen VDL Lasindustrie VDL Bus & Coach Suisse VDL Containersysteme RPI Componenten VDL Bus & Coach Czech Republic VDL Weweler VDL Rotech VDL Bus & Coach Norge Weweler-Colaert VDL Systems VDL Bus & Coach South Africa (70%) VDL Weweler Parts VDL Postma VDL Bus & Coach Serbia Truck & Trailer Industry VDL Industrial Modules VDL Bus & Coach Danmark PMB-UVA International VDL Konings VDL Bus Center Nederland VDL USA VDL Wientjes Roden VDL Bus Center Deutschland VDL Middle East VDL Wientjes Emmen VDL Bus Center France VDL Services VDL Busland VDL ETG Eindhoven VDL Parts VDL ETG Research VDL ETG Projects VDL ETG Almelo VDL ETG Singapore VDL ETG Suzhou VDL Network Supplies VDL Fibertech Industries 5

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9 Report of the Board of Directors 2012 was a special year for VDL Groep, as it will be remembered as the year we won the King Willem I Prize - the business owners price of the Netherlands - and acquired the car manufacturer plant NedCar in Born. Financially, 2012 was a pretty good year. In early 2012 we still hoped we would match our 2011 figures, but the downturn in the second half - and particularly in the fourth quarter - meant the figures, and particularly the result, were slightly lower than expected. Nevertheless, we can be satisfied, certainly considering the economic situation. The combined turnover rose by 2% from billion euro in 2011 to a record level of billion euro in This includes the 70 million euro in turnover from VDL Nedcar. Excluding this turnover, the total turnover of VDL Groep would have been 2% lower than in Consolidated turnover for 2012 amounted to billion euro, a rise of 3% compared to the billion euro in Net result fell from 66 million euro in 2011 to 57 million euro in The number of employees rose from 7,135 at year end 2011 to 8,757 at year end 2012, largely due to the acquisition of VDL Nedcar. Despite the economic crisis in Europe, VDL Groep continued its usual high level of investment and innovation in Looking back, we must conclude that this, together with our strategy of diversity in products and markets and the flexibility of our employees, were our greatest strengths in For us, as an industrial company in the Netherlands, a sound industrial policy with a level playing field across Europe is absolutely essential. These conditions are necessary if we are to continue manufacturing here. Lending, credit insurance, labour flexibility - with a structural part-time unemployment scheme - and technical education are of key importance. Our pursuit of a level playing field should also extend beyond the borders of Europe to the world at large. Many countries around the globe impose import duties, while Europe continues to believe in a free trade zone. We must treat our trading partners in the world the same way they treat us. Only then can employment opportunity in the European Union be maintained and can we form a strong block to maintain our position in the world economy. 7

10 CONSOLIDATED CONSOLIDATED TURNOVER TURNOVER NET PROFIT NET PROFIT (in million euro) (in million euro) 1800 (in million euro) (in million euro) Turnover Combined turnover for 2012 amounted to billion euro. Compared to the billion euro in 2011, this represents an increase of 2%. Internal deliveries decreased. million euro million euro Combined turnover 1,756 1,719 Internal deliveries Consolidated turnover 1,629 1,575 International turnover rose and domestic turnover fell. This is partly due to a number of large orders for the automotive market in Germany and United Kingdom million euro % million euro % International 1, , Domestic ,629 1,575 In 2012 we supplied products to 114 countries outside the Netherlands. International turnover, divided among the various continents, is as follows: Europe 852 million euro (41 countries), Asia 142 million euro (29 countries), North America 52 million euro (2 countries), South and Central America 39 million euro (21 countries), Africa 11 million euro (19 countries) and Oceania 2 million euro (2 countries). If turnover is broken down country by country, we see that our largest markets are, in addition to the Netherlands, our neighbouring countries Germany, United Kingdom and Belgium. 8

11 TURNOVER PER COUNTRY (in million euro) Netherlands 531 Germany 262 United Kingdom 138 Belgium 107 Singapore 81 France 65 USA 51 Sweden 44 Denmark 35 Norway 32 Finland 31 Jamaica 30 Switzerland 23 Poland 21 Italy 15 Czech Republic 14 Israel 12 Others 137 Divisions If the combined turnover of VDL Groep is broken down according to the divisions subcontracting, buses & coaches and finished products, we see that the decline in subcontracting was compensated by a rise in the contribution from the other divisions. With the acquisition of NedCar at the end of 2012, a new division was added: car assembly million euro % million euro % Subcontracting Car assembly Buses & Coaches Finished products ,756 1,719 Subcontracting Turnover in the subcontracting division fell from 918 million euro in 2011 to 788 million euro in This 14% decline in turnover was mainly due to the downturn in the semiconductor and solar energy markets. The result from the subcontracting division in 2012 was positive, but less so than in The order book shrunk from 235 million euro to 193 million euro as at year end. The turnover in the subcontracting division fell 17% in the first quarter of 2013, from the first quarter 2012 figure of 210 million euro to 175 million euro. The order book in week 13 was at 211 million euro, which is also significantly lower than for the same week last year (240 million euro). If we look at the development of the turnover and order book over the past half year, however, we see they have been fairly stable. The semiconductor market, which has been on the decline since the second half of 2012, now seems to be growing again. VDL expects the turnover of the subcontracting division to stabilize in

12 SUBCONTRACTING Mechatronic systems 53% Metalworking 38% Plastics processing 8% Surface treatment 1% million euro % million euro % Mechatronic systems Metalworking Plastics processing Surface treatment Mechatronic systems and system supply As expected, turnover in the mechatronic systems and system supply sector dropped, from 550 million euro in 2011 to 421 million euro in The market for semiconductor production equipment was stable at the level of the second half of 2011 for the first nine months, followed by a dip in the fourth quarter. This was partly a result of inventory correction by our customers. Fortunately this correction only lasted two quarters and the demand from this market currently seems to be recovering to a normal, healthy level. The recovery for capital goods in the LED market took two quarters longer than we expected, yet recovery has now begun in this area as well. The solar industry, however, is still in the doldrums, despite the very strong growth of the global market for solar installations. Supply and demand of production equipment for solar cells are still not in balance, and we do not expect this to happen until beyond Our efforts in the market for medical diagnostic systems have yielded the intended success and led to compensation for loss in other markets. Given the improving order book, we expect the turnover for the mechatronic systems and system supply sector in 2013 to be reasonably in line with that of

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15 Metalworking Turnover in the metalworking sector remained virtually unchanged: 296 million euro in 2012 compared to 303 million euro in Once again, diversification of our markets has proven to be one of our strengths. A slight decline was evident in some markets, such as the truck industry. In other markets, including the food industry, waste processing industry and energy market, there was clear growth. Over the past year we once again invested in advanced machinery and further automated and robotized production processes to maintain our international competitive position. The VDL companies in the metalworking sector serve increasingly as system supplier, with involvement in the entire process from design and production to delivery and maintenance. Collaboration with other group companies is one of the ways VDL demonstrates its added value. Prices are under tremendous pressure due to the economic crisis. Therefore new markets are being explored and new products developed that fit with the current product range. Despite rising raw material prices and a decline in some markets, the prospects for 2013 can be described as reasonable. The order book in the metalworking sector is currently stable, and we expect to be able to match the 2012 figures. Plastics processing Turnover in the plastics processing sector rose by 13%, from 56 million euro in 2011 to 63 million euro in The upturn in the automotive industry was a major factor in this rise. We also expanded our share in the market for consumer-related products. Due to the increasing demand for complete assemblies as well as larger products, we have again invested in new injection moulding machines with higher clamping forces. The new acquisitions include a 1,700-tonne injection moulding machine, which nicely complements the 2,000-tonne injection moulding machine we purchased in We have also introduced new techniques: in-mould labelling and in-mould foil. By making good use of the development capabilities, including 3D design, mould flow analysis and FEM strength calculations, we can serve the needs of new and existing customers seeking to develop new products. Investments have also been made in the mechanization of various processes and product manufacturing, and new robots have been purchased with which production will be further automated. This will enable us to better fulfil our role as system supplier and provide value added engineering, in which products are developed jointly with the customer. With the construction of new warehouses and the implementation of the warehouse management system, the foundation has been established for healthy growth in the coming years. In 2012, we further strengthened our position in the medical market with carbon- and glass-reinforced plastic, and identified a number of new selling areas. In 2013, a first biodegradable plastic product will be produced, emphasizing our commitment to sustainable principles and practices. The order book for the total plastics processing sector is currently reasonably well-filled. Despite the considerable rise in raw material prices, prospects for 2013 are fairly positive and we expect the turnover for 2013 to be on par with that of

16 Surface treatment Turnover in the surface treatment sector fell slightly, from 9 million euro in 2011 to 8 million euro in Last year we invested in a new cataphoresis paint installation that produces higher output. This system also makes it possible to vary the residence time for thick and thin products, which improves the quality of the painted parts tremendously. The order book in the first quarter of 2013 is shrinking, so it is expected to be a more difficult year, despite the fact that some new projects are being launched. Car assembly As of 14 December 2012, VDL Groep assumed control of the shares of the NedCar automotive manufacturing plant in Born. The company, renamed VDL Nedcar following the acquisition, contributed 70 million euro to the turnover in The acquisition costs are included in the result of VDL Groep. In 2013 work is underway on the procurement and installation of equipment for the new production lines at the factory in Born. Meanwhile, the press work for third parties continues uninterrupted. The result of VDL Nedcar for 2013 is included in the provisions million euro % million euro % Car assembly Buses & coaches Turnover in the buses & coaches division rose from 405 million euro in 2011 to 431 million euro in 2012 (6%). As in 2011, however, the result was negative. There is enormous price pressure due to the current fierce level of competition in Europe. Through 2013 we are also investing heavily in the cleaner Euro 6 engines and hybrid and electric systems. We have good quality products, but sales numbers are too low. Due to the austerity measures of the European governments fewer public transport buses are being purchased. Coach operators are also waiting longer to replace their coaches. Despite this declining demand in the European bus market VDL Bus & Coach has gained market share. This, accompanied by the prizes won for the Citea public transport bus and Futura coach, gives confidence for the future of our buses & coaches division. VDL sees the bus and coach activities as an important segment within the group and will continue investing in this product range. In the first quarter of 2013 the buses & coaches division saw its turnover increase by 8% compared to the first quarter of 2012, from 104 million euro to 112 million euro. The order book, however, is insufficiently filled: 138 million euro in week 13 of 2013 compared to 181 million euro in week 13 of In 2013 the focus will be on further intensification of both our domestic markets and export markets will still be a difficult year for the buses & coaches division, but from 2014 we expect the market to begin a slow climb again. It is a challenge to get through this period unscathed, and further cost reductions will therefore be necessary in

17 BUSES & COACHES Public transport buses 39% Coaches 30% Parts & services 13% Second-hand buses 9% Chassis & chassis modules 5% Mini & midi buses 3% High-quality Public Transport Systems 1% million euro % million euro % Public transport buses Coaches Parts & services Second-hand buses Chassis & chassis modules Mini & midi buses High-quality Public Transport Systems Public transport buses It was a rather good year for the public transport bus sector, with an upturn in both turnover (40%), from 120 million euro to 168 million euro, and the number of delivered buses. In 2012, we delivered 730 vehicles compared to 539 in This was mainly attributable to the Dutch market, in which many public transport operators chose VDL products, including a large order for 275 Citeas we won for concessions in Friesland and South Holland, regions of the Netherlands. Included as an integral part of this contract is the maintenance of the vehicles for more than eight years, for which we have established four workshops in the regions concerned. We now intend to roll out this full-service approach for our customers in Belgium as well. Outside our home markets of the Netherlands and Belgium we gained our first solid foothold in Germany in Several cities have chosen VDL buses, particularly due to the high fuel economy and correspondingly lower operating costs and emissions. We also received several orders for the Scandinavian market in In addition to the sales efforts in Europe, VDL Bus & Coach is also focusing increasingly on other areas in the world. We expect to reap the benefits in The serial hybrid variant of the Citea is ready for production. We are also working hard on the development of a fully electric bus, the first of which is expected to be ready in the course of The technology for electric vehicles was developed by VDL previously for the High-quality Public Transport vehicle, the Phileas. 15

18 This technology has also been used in our Automatic Guided Vehicle (AGV) for container handling in ports since 2012 and will be further developed for use in the Citea. We have seen great market acceptance of the Citea. In 2013 we have already received a number of significant orders from various Western European countries, including Germany. In the course of this year we will introduce Euro 6 variants on the market, and in the near future the Citea family will be rounded off with an articulated version. Coaches In 2012, both turnover and quantities delivered declined in the coach sector. Turnover fell from 152 million euro to 128 million euro. Whereas 599 coaches were delivered in 2011, the total was 557 in The coach sector is still suffering from the crisis. Despite the shrinking market, however, we managed to increase our market share. The New Futura has been fully accepted by the market. In the markets that have traditionally been important for us, Germany and the Unitede Kingdom, we saw an increase in our sales. In the United Kingdom, we introduced the right-hand drive model of the New Futura in This British version was well received in the market, and this has resulted in a number of important orders. We also saw growth in Germany and Eastern Europe. In the Southern European countries we have suffered greater impact from the crisis. And in our home markets, the Netherlands and Belgium, the numbers sold have dropped, largely because of the huge decrease in the size of the total market (40% in the past two years). The fact that we won the title International Coach of the Year 2012 for the Futura a year after having won the title International Bus of the Year 2011 for the Citea shows that we are fully capable of meeting the high expectations of our customers with our products. In 2013 we will present the Euro 6 programme. A new variant will also be added to the Futura family in the course of this year. Parts & services Despite the reluctance from the buses and coaches division, VDL Parts can look back on a relatively positive year, in which turnover rose from 47 million euro to 57 million euro. The introduction of the new ERP system within VDL Bus & Coach and optimization of internal processes led to further improvement in the performance of VDL Parts, in terms of both parts availability and vehicle information, which can now be consulted online using the VDL Parts Vehicle Information Portal (VIP). Alongside our specialist repair workshop VDL Busland, the repair workshops at the individual bus companies also performed well. This is due in part to various conversion orders for existing vehicles that were carried out for a number of customers last year. This included the conversion on 85 articulated Dutch buses to Swedish specifications, making these buses perfectly suited for public transport there. We also carried out life-extending maintenance, including for 26 completely renovated 30-metre trams. Expectations for the parts & services sector for 2013 are positive. 16

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21 Second-hand buses The slight improvement that started in the last quarter of 2011 has continued in 2012 in terms of the turnover and number of buses sold. Turnover rose sharply, from 25 million euro to 39 million euro, and the number of buses sold jumped from 439 in 2011 to 606 in This year public transport buses represent a much larger portion of this number. Growing demand for Euro 4 and Euro 5 vehicles, under pressure from ever more widely applied environmental requirements, caused a major downturn in the market for Euro 3 vehicles. This factor and the strong price pressure in general, has had a major impact on the achieved margin. At the end of 2012 a large number of young, second-hand city buses were once again taken in inventory. The challenge for VDL Bus Center is to sell these vehicles through expansion of the existing network, in close cooperation with other VDL Bus & Coach companies. VDL Bus Center expects stabilization of the turnover for Chassis & chassis modules External turnover for chassis and module builder VDL Bus Chassis fell from 38 million euro in 2011 to 23 million euro in Last year 251 modules were delivered to vehicle builders other than VDL Bus & Coach. This is a decrease from 2011 when 459 were delivered outside the group. This decline in turnover for products supplied to buyers other than VDL Bus & Coach was mainly due to declining demand for chassis and chassis modules for the public transport sector in export countries. The number of chassis and modules for bus & coach builders within VDL Bus & Coach rose from 1,138 in 2011 to 1,287 in Partly due to the uncertain market situation it is expected that sales in 2013 will be lower than in The product range is developed in close cooperation with VDL Bus & Coach. Alongside continuous quality improvements to existing products, the engineering focus was on the development of the following products: Citea public transport buses, Futura coaches and chassis intended for export. The engineering activities in 2012 have mainly been devoted to further expansion of the product range to include modules with lower emissions in accordance with the new legislation, with farther-reaching environmental benefits. In the area of the driveline technology, developments have been implemented on the basis of the Euro 6 regulations. The drive technologies for the hybrid and electric vehicles have also been developed further. These advances will be used to expand the product offerings to include a complete range of modules compliant with the latest developments and environmental requirements in the market. Mini & midi buses Turnover in the mini & midi buses sector rose from 10 million euro in 2011 to 11 million euro in 2012 (including police vehicles and damage repair). The number of vehicles delivered rose from 148 in 2011 to 162 in The focus we placed on the MidCity and international tenders in the public transport market in 2011 was continued through 2012 and this is expected to be an area of continued growth in Particularly in Germany, Belgium and the Scandinavian countries we expect to be able to increase our market share in this area. We delivered fewer police vehicles than expected, but the upgrade and modification of existing vehicles had a positive impact on the turnover. Turnover for the repair department rose slightly in 2012, and we feel the prospects for this department are generally good. The order book is reasonably well-filled and we therefore expect further growth in the course of

22 High-quality Public Transport Systems Turnover in the High-quality Public Transport Systems sector fell from 13 million euro in 2011 to 5 million euro in Last year, Advanced Public Transport Systems (APTS) completed most of the delivery of six 18-metre models of the hybrid Phileas to Haifa (Israel). These will be put in service this year. Fifty 26-metrelong Phileas buses are operating in Istanbul, Turkey, to the client s total satisfaction. The same applies to the vehicles in use in Eindhoven (the Netherlands), Douai (France), Cologne (Germany) and Amsterdam (the Netherlands). The fuel cell vehicles in Cologne and Amsterdam operate without any exhaust and are therefore emission-free. The safety certification process for fully-guided operation in Douai has encountered a significant delay. A start was made in 2012 on the development of an electric Phileas, charged via the induction method. This vehicle will undergo testing in In 2011, APTS signed contracts with Rimini in Italy (for 9 vehicles). The first vehicle will be delivered in At present, negotiations are still underway with a number of cities worldwide. Finished products Turnover in the finished products division rose by 18% from 396 million euro in 2011 to 467 million euro in In particular, the production automation systems and heat exchanger sectors have had a good year. The result for the finished products division was positive. The order book for this division also shrunk, from 169 million euro at the end of 2011 to 132 million euro at the end We expect stabilization of the growth for this division in The turnover in the first quarter of 2013 was nearly 138 million euro and that is an improvement of 35% compared to the figures for 2012 (102 million euro). This picture is distorted, however, by an advance of 35 million euro from a major customer in the production automation industry. Without this advance payment, the turnover would have remained virtually unchanged. This also had an effect on the order book, which is down significantly from a year ago: 136 million euro at the end of the first quarter of this year compared to 187 million euro at the end of the first quarter of This is mainly due to fluctuations in the order intake for the production automation systems sector. FINISHED PRODUCTS FINISHED PRODUCTS Production automation systems 28% Suspension Production systems automation 25% systems 28% Heat Suspension exchangers systems 23% 25% Systems Heat exchangers for the agricultural 23% sector 7% Cigar-making Systems for and the packaging agricultural machines sector 7% 6% Sunbeds Cigar-making and roof and boxes packaging 5% machines 6% Container Sunbeds handling and roof equipment boxes 5% 4% Systems Container for the handling industrial equipment sector 2% 4% Systems for the industrial sector 2% 20

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25 million euro % million euro % Production automation systems Suspension systems Heat exchangers Systems for the agricultural sector Cigar-making and packaging machines Sunbeds and roof boxes Container handling equipment Systems for the industrial sector Production automation systems 2012 was a very successful year for production automation system manufacturer VDL Steelweld. Major orders to supply production lines to various auto manufacturing plants for Jaguar, Land Rover, Volvo and Ford meant a record turnover of 132 million euro (compared to 72 million euro m in 2011). Once again in 2012, dozens of new jobs were created in Breda, Birmingham (United Kingdom) and Cologne (Germany). Due to continuing demand for bodywork production lines, 2013 is expected to be an outstanding year. The acquisition of VDL Nedcar and the resulting activities for VDL Steelweld are also expected to have a positive effect. Successes were achieved outside the automotive industry as well. Together with other VDL companies, an AGV was successfully developed for container transport in the ports; series production of this product will begin in The assembly line for series production of insulation panels used for air handling units is running well. The order book for 2013 is very well-filled and offers good prospects for the future. The main focus in 2013 will be on successful delivery of the new orders and further strengthening of the organization. We also intend to expand existing relationships with our customers. We will of course also continue to work on product innovations and the development and optimization of production methods. Suspension systems Total turnover in this sector fell from 127 million euro in 2011 to 118 million euro in There has been less demand for trucks and trailers. Despite this declining demand and the high price pressure, VDL Weweler managed to increase its market share. VDL Weweler holds at least 30% of the European market. Above all, German trailer builders make use of the suspension systems from Apeldoorn. To reduce dependency on the European market, the company is currently highly active in North America, Brazil and Southeast Asia, where although other suspension 23

26 systems are currently widely used, the VDL Weweler suspension system would be ideally suited. In Australia and South Africa, VDL Weweler is already market leader in its segment. We expect construction of the new plant in Apeldoorn to be completed in mid Here work will continue on optimization of the production process and the functionality of the suspension system, with a view to achieving an even more solid position in the market. The Belgian company Weweler-Colaert saw no further rise in the demand for replacement parts for trucks in Western and Southern Europe in In contrast, sales in Eastern Europe again rose during the past year. The company, market leader in the replacement market in Europe, also further strengthened its position outside the truck industry during the past year. In 2012, Weweler-Colaert began supplying leaf and parabolic springs for the rail industry and hopes to become an important player in this segment in the coming years. VDL Weweler Parts, our location in the Netherlands that supplies replacement parts for trucks and trailers, also had to contend with a negative economic situation in the Dutch market. There were signs of a slight recovery during the last quarter, however. Our sales office in Norway, Truck & Trailer Industry, had a fairly good year, with a stabilization of the turnover. Despite the gloomy media coverage, positive signals were seen in the transport sector and the growth expectations for 2013 are moderately positive. The order book for the total suspension systems sector is fairly well-filled, and slight growth is expected in Heat exchangers Turnover in the heat exchangers sector rose by 12% from 94 million euro in 2011 to 105 million euro in The overall market situation for VDL Klima is positive, with a gradual rise in the number of projects completed. The market for green power generation, for example wind energy, is clearly experiencing difficulties as a result of the almost complete elimination of government stimulation programmes, due to austerity measures. This makes it difficult for the more expensive, innovative green technologies to compete with conventional processes. On the other hand, the shipbuilding market is stable following a massive slump in recent years. Investment levels are slowly improving in the oil and gas market. The demand for energy is once again rising, and oil prices are high, encouraging further investments in energy generation and the offshore market. Partly as a result, VDL Delmas in Berlin (Germany) and VDL KTI in Mol (Belgium) enjoyed a positive year. VDL Delmas saw growth in both the engineering and production activities. The basis for this was laid in 2011, a year in which many large orders were won worldwide. VDL Delmas particularly saw its market share grow in the United States. Turnover at VDL KTI was achieved mainly in the oil and gas market. The production of high-voltage masts has slowed somewhat due to delays in the land-use planning procedures. Nevertheless, VDL KTI succeeded in offsetting this with new orders from the mining and quarrying market. Alongside the traditional markets, heat exchangers were also delivered to Brazil, Chile and South Korea in The order books have shrunk somewhat in almost all market segments and therefore we are expecting a slight decline for the entire heat exchangers sector for Systems for the agricultural sector VDL Agrotech enjoyed a good year. Turnover climbed by 15%, from 27 million euro in 2011 to 31 million euro in The sale of feed systems for the European market, where the transition from battery hen cages to alternative housing systems reached its conclusion in 2012, contributed significantly to the total. 24

27 Modest improvement was seen in the project market. There was also positive development in the Asian market. Additionally, VDL Agrotech succeeded in gaining a better foothold in the Middle East, progress that is now precarious due to the unstable political situation in many countries in the region. Expectations for 2013 are moderately positive. The project market is highly dependent on bank credit, and the conversion of the battery cages to alternative systems in Europe has been completed. The sale of several new products, including a manure drying tunnel and a new poultry feeding system, have had a good start in 2012 and these products are expected to show further growth in Product innovation and an even greater geographical market spread are the keys to further growth and success for the activities of VDL Agrotech. Expansion of the capacity of the product development and sales department in 2013 will further strengthen the position of VDL Agrotech. Cigar-making and packaging machines For PMB-UVA International, 2012 was yet another good year, with turnover up from 27 million euro to 29 million euro. Innovation is and remains the driving force behind the sales success. Both in the packaging machines and cigar-making machines departments, various new features were once again developed, resulting in machines with unique capabilities. Another reason for the success is the licensing of the proprietary features developed in-house to other OEM suppliers. This has contributed to a rapid return on investment for the cost of development. The strategy of spin-off products has also contributed to the rise in turnover. The average series size of the machines being built has remained at the same level as in the past two years. For 2013 the outlook is positive. PMB-UVA International is a preferred supplier to many multinationals, and that gives good grounds for confidence in the continuation of this growth. Efforts to achieve greater diversification in market segments and market areas are underway to achieve further growth. Sunbeds and roof boxes Turnover at Hapro International, manufacturer of sunbeds and roof boxes, rose slightly, from 24 million euro in 2011 to 25 million euro in The market for professional sunbeds is still under pressure. The continuing economic crisis, which is particularly acute in Southern Europe, is a major contributing factor. In addition, variations in the implementation of new EU regulations in the various member states has led to considerable confusion and reluctance among business owners to invest. The market for professional tanning equipment is expected to remain at a low level in The market for privately-owned sunbeds continues to remain stable. Sales of roof boxes have increased, particularly as a result of tapping into new sales markets in Asia. In 2013, sales of roof boxes are expected to remain at the same level as in Given the relatively low purchase price of a roof box, there is no real fear of a downturn in consumer demand, despite economic pressure. Container handling systems Turnover at VDL Containersystemen remained virtually unchanged relative to The truck-related turnover from existing products, such as hooklift, skiploader and cable systems, fell slightly, mainly due to the downturn in the construction and waste market. The turnover from spreaders was down a bit in The introduction of our new product for the port sector, the AGV, largely compensated. The prototype AGV built by VDL was released by a reputable global player in port container handling and is now in operational use. This gave us the opportunity to take on series orders in this segment: the first order is in. This order, among others, has led to the currently well-filled total order book. We have also launched an 25

28 initiative for more intensive marketing in Europe, the Middle East and Africa, from which we expect to pluck the first fruits in the course of For the year as a whole we expect to come out slightly above the 2012 level. Systems for the industrial sector The past year has gone well for VDL Industrial Products. Growth was realized both in turnover (from 7 million euro to 8 million euro) and in number of orders delivered. The downturn, which was certainly felt in the construction-related industries, was more than offset by sales in new segments and deliveries to the food industry in particular. In 2012, steps were taken to further expand the company s own product range through investment in development, and closer cooperation was begun with good partners and sister companies within VDL Groep. Results from these collaborations will be introduced in 2013 in the form of new products for the bulk solids industry as well as a number of new concepts for explosion protection of industrial processes. Due to the current cautious investment climate in some sectors and a slight decline in the order book, we expect no growth in this sector in New companies In terms of takeovers, it was a special year for VDL Groep. Following the acquisition of VDL Bus Danmark in June 2012, we completed one of our largest takeovers at the end of 2012, namely that of the NedCar car manufacturing plant in Born. VDL Bus Danmark (7 employees) is located in Glostrup, Denmark. As from June 2012, the company was renamed VDL Bus & Coach Danmark. With this acquisition VDL Groep affirms the importance of the Danish bus market. The company focuses on the sales, after sales and parts for all VDL Bus & Coach products in Denmark. VDL had enjoyed a strategic partnership with the company since 2004 and has now acquired all shares. On 1 October 2012 we announced the signing of an agreement with Mitsubishi Motors Corporation of Tokyo concerning the acquisition of NedCar in Born. The actual transfer of the shares from Mitsubishi to VDL took place on 14 December With this takeover VDL Groep intends to further strengthen its position in the international automotive market. Effective 1 January 2013, the company became an independent automotive manufacturer and will produce cars for third parties under the name VDL Nedcar. VDL Nedcar s first customer is BMW Group. After the conversion of the production lines, the MINI will be manufactured for BMW Group in Born starting in the second half of The activities of VDL Nedcar are a good match with the other activities of VDL Groep in the automotive industry. As a subcontractor, VDL has supplied the passenger vehicle and truck industry with a wide range of parts, complex assemblies and complete systems for many years. The group also produces automated production lines for many car manufacturers around the world. The automotive industry is therefore an important market for VDL Groep. The period from 1 January 2013 until the second half of 2014 will be spent converting, renovating and configuring the production lines at VDL Nedcar for production of the MINI. Therefore the approximately 26

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31 1,500 employees will initially receive unemployment benefits, which began on 1 January As the company ramps up its operating activities employees will return to work in phases (not later than 1 January 2015). The unemployment benefits will be supplemented by VDL Nedcar so that employees continue receiving 100% of their wages. All employees are therefore guaranteed full retention of their job and pay. In addition to the employees that will be needed for conversion of the factory and installation of equipment for the new production processes, some employees will also be trained at BMW in Germany and the United Kingdom. For the remaining employees work will be sought with companies inside and outside VDL Groep. Investments In 2012, VDL Groep invested 64 million euro (not including VDL Nedcar), half in business premises and the other half in machinery and other equipment. At VDL Nedcar, 152 million euro was invested in land and buildings, machinery and installations, and other fixed assets. At VDL Parree in Sevenum, after completion of the new warehouse, the old warehouse was adapted to house a huge new injection moulding machine, which was installed in the autumn of At VDL Wientjes Emmen the new 6,000 m 2 space to house production and a warehouse was completed in mid Both new warehouses, at VDL Parree and VDL Wientjes Emmen, are heated using residual heat from the injection moulding machines, a great example of sustainable energy policy. In early 2012, we purchased an additional building for VDL TIM Hapert. This building, located opposite the current building, was demolished, rebuilt and opened in late With the acquisition of VDL Nedcar in Born at the end of 2012, we also purchased the premises. The building encompasses approximately 300,000 m 2 of floor space and the land area is around 850,000 m 2. In 2013 we will be investing a lot in this building, both in terms of the building itself and the production equipment it contains. VDL ETG Singapore is currently being expanded with a newly constructed building of 20,000 m 2 on three floors. The entire project will be completed in the second half of Given the organic growth, we have begun investing again, which will make additional expansion possible. For VDL Weweler in Apeldoorn we started construction of a 24,000 m 2 factory in the first half of A completely new production line is being built there, which will open in mid We also purchased land for Klima Warmtetechniek in Hamont-Achel, Belgium. There, new construction of a 13,500 m 2 building will begin as soon as possible, and completion is expected in In total, VDL Groep owns more than 1,100,000 m 2 of commercial property. For 2013 we have construction plans for VDL Wientjes Roden, where we will build a new two-storey building. For VDS Technische Industrie in Hapert we plan to demolish and rebuild one building and raise the height of a portion of the existing building. At VD Leegte Metaal in Hapert we are going to renovate an existing building and add additional insulation. The same will be done at VDL Steelweld in Breda, where we are going to adapt the height to accommodate the AGV project, as well as improve the building s insulation. 29

32 VDL Groep also invested heavily in machinery and other equipment in At VDL, technical innovation is a part of innovative entrepreneurship, with creativity and courage to innovate setting the tone. Our employees play a great role in this, with continuing education taking them to an ever higher level. In 2013 we are going to invest around 47 million euro in new buildings, machines and optimization of production processes. This does not include the investment in the building and the production processes at VDL Nedcar. Employees The number of employees at VDL Groep has risen from 7,135 at year end 2011 to 8,757 at year end 2012 (including VDL Nedcar). Excluding the 1,464 employees of VDL Nedcar, the total was 7,293 employees at the end of 2012, which is 2% more than the end of In total, at the end of 2012, 562 temporary employees and 677 contract workers were engaged. As long as there is no structural part-time unemployment scheme in the Netherlands, this flexible shell is indispensible in times of economic EMPLOYEES (as at 31 December, including temporary employees) instability. Worker participation In 2012 we consulted the Joint Works Council on numerous occasions. As in previous years, these consultations were open, constructive and direct. The topics of discussion in the Netherlands were, of course, the acquisition of NedCar and the prognosis report. Despite a growth of turnover, net profit was lower than forecast for There was also discussion concerning the employer s contribution towards childcare and sustainable employability. The latter topic also encompasses identification of the benefit history (WAO/WIA) [disability insurance act/work and income act] of current and new employees. The purpose of this is to gain more insight into the employability of employees who have or are receiving benefits and the possibilities for grants. Another subject of discussion was the position of the training coordinator for vocational programmes. The social dialogue within the Belgian VDL companies was also conducted in a constructive manner. Partly due a number of government measures in late 2011 and early 2012, employer/employee meetings were held 30

33 EMPLOYEES BY GEOGRAPHICAL AREA (as at 31 December 2012) Netherlands 6,931 (79%) Belgium 893 (10%) Rest of Europe 343 (4%) Rest of the world 590 (7%) Total number of employees 8,757 EMPLOYEES BY DIVISION (as at 31 December 2012) Subcontracting 3,895 (44%) Car assembly 1,464 (17%) Buses & coaches 1,868 (21%) Finished products 1,398 (16%) Head office in the Netherlands and Belgium 132 (2%) Total number of employees 8,757 frequently. Within the works councils, as always, the socio-economic issues remain an important topic of discussion. The financial situation was good at all companies. At the end of the year some VDL companies saw their order book shrink slightly; customers remain cautious about placing new orders. Partly due to negative media reports about other companies in Belgium, worry is often just under the surface within the works councils. The Committees for Prevention and Protection at Work once again addressed important themes related to the safety and wellness in the workplace in a positive manner. The pensionable age continues to creep up in Belgium. Companies are expected to develop a plan to encourage and motivate older employees to continue working longer too. A plan of this type has been established in cooperation with the works councils or Committees for Prevention and Protection at Work. Labour market and education Unemployment in Europe and the Netherlands is on the rise, especially among the youth. This situation is especially dire considering the expected need for new skilled professionals within VDL Groep during the coming 10 years or so. Efforts in this area are sorely needed, because the number of young people in the Dutch population is on the decline and too few of the remaining youth are opting for technical careers. The outflow is greater than the inflow. 31