Annual Report2012. Using the present to build for the future

Transcription

1 Annual Report2012

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3 Annual Report2012

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5 Annual Report2012 Using the present to build for the future 5

6 Power, Control & Green Solutions 6

7 Annual Report Message from the Founder 9 Message from the Chairman 10 Worldwide attitude Events & Milestones Power, Control & Green Solutions 40 Social Responsability 49 Financial Highlights 55 Management Report 75 Consolidated Financial Statements 83 Notes to the consolidated financial statements 121 Independent Auditors Report Contents 7

8 Clementino Bonfiglioli, Founder of Bonfiglioli ( ). 8 So it s still full speed ahead!

9 Annual Report2012 I must admit that we have made great progress in just fifty years. Our company has seen impressive growth and our products have won recognition for their quality worldwide. If I had to do it all again, I d do it exactly as I did the first time round, because I had the full backing of management, my employees and my family. My wife and my children have always given me their full support, even in the most difficult times. They have always encouraged me to carry on. I have built up this company not just for my own satisfaction but for the future, for my family and for my employees, and to see our name, our brand, succeeding. So it s still full speed ahead! Clementino Bonfiglioli April 2006 on the occasion of company s Fiftieth Anniversary. Message from the Founder 9

10 CONTINUOUS AND CONSISTENT INNOVATION 10

11 Annual Report was an important year for Bonfiglioli, as it clarified the nature and the trends of the global market we shall have to deal with in future had left us thinking that a rapid and stable recovery was on the way, but these hopes were dashed as the global market settled down to a condition of constant uncertainty and complexity. This complexity stems from a large number of interconnected but little understood variables. Classical economic models can no longer be applied to the world economy. National market trends cannot be forecast with any accuracy and experts are becoming increasingly aware that actions and events in one part of the world can (and indeed do) have knock-on effects in other regions. Industry as a whole has to change tactics, and companies are therefore adapting their business models and processes to deal with markets characterised by continuous evolution and even dramatic change. Efficiency and productivity alone are no longer sufficient and success yesterday does not promise prosperity tomorrow. It is becoming increasingly important for us to develop a set of intangible assets to carry us into the future. Such assets include the ability to adapt and evolve, the ability to develop new competences, the ability to improve the level and frequency of customer satisfaction, and the ability to innovate continuously and consistently. The need to develop these abilities guided our actions throughout 2012, a year in which results were heavily influenced by a contracting market but also one in which new activities and projects played a major role. We have done and are still doing a great deal of work to consolidate our capacity for long term change and growth. I wish to thank all our employees and partners who have contributed to progress on this front, and encourage everybody to keep up the good work. As my father used to say, Full speed ahead! Sonia Bonfiglioli Message from the Chairman 11

12 Business Unit Power Control Green Solutions Business Wind Solutions Mobile Solutions Industrial Solutions Regenerative & Photovoltaic Solutions Products logo Products 12

13 Annual Report2012 In 2012, Bonfiglioli consolidated its position as global market leader thanks to consistently improving product quality and continuously expanding in its offer of advanced solutions. Excellence in products and solutions was also complemented by a complete range of expert services covering every corner of the globe. This global excellence has been the driving force behind 50 years of prosperity and growth. It also embodies what we mean by the term Worldwide Attitude. Worldwide Attitude derives from the mindset and mission of a great company and the people who work in it, people driven by a perfect mix of competence and passion. Today, Bonfiglioli is proud to be active in over 80 countries and on all 5 continents, with a presence that covers all fields of industry and offers competent, effective and sustainable solutions tailored through constant dialogue to meet real customer needs. Our organisation today is also strengthened by global synergies and local partnerships that enable us to turn our long history of success into a clear vision for the future. In that future, our customers will play an increasingly central role and our solutions will be ever more significantly tailored to match their needs. WORLDWIDE ATTITUDE 13

14 EMEA (Europe, Middle East & Africa) Bonfiglioli Riduttori S.p.A (Italy) Bonfiglioli Mechatronic Research S.p.A. (Italy) Bonfiglioli Vectron GmbH (Germany) Bonfiglioli Slovakia s.r.o (Slovakia) Bonfiglioli Transmissions France S.A. (France) Bonfiglioli Deutschland GmbH (Germany) Bonfiglioli Österreich GmbH (Austria) Bonfiglioli UK Ltd. (United Kingdom) Bonfiglioli Italia S.p.A. (Italy) Bonfiglioli South Africa PTY. Ltd. (South Africa) Bonfiglioli Turkey Jsc. (Turkey) Tecnotrans Bonfiglioli S.A. (Spain) APAC (Asia Pacific) Bonfiglioli Vietnam Ltd. (Vietnam) Bonfiglioli Transmission PVT. Ltd. (India) Bonfiglioli Transmission (Aust.) Pty. Ltd (Australia/NZ) Bonfiglioli Drives (Shanghai) Co.Ltd. (China) Bonfiglioli South East Asia (Singapore) AME (America) Bonfiglioli do Brasil Ltda. (Brazil) Bonfiglioli Canada Inc. (Canada) Bonfiglioli USA Inc. (USA) 14

15 R&D (Research & Development) Bonfiglioli Innovation Center (Germany) Power electronic solutions competence center (Germany) Regenerative & Photovoltaic Solutions competence center (Germany) Mechatronic Drive Solutions competence center (Italy) Power Transmission Solutions competence center (Italy) Planetary Technology competence center (Italy) Electromobility competence center (Italy) WORLDWIDE Annual Report

16 The Group as of the 31 st December % 100% PRODUCTION PLANTS 100% 80% 100% COMMERCIAL SUBSIDIARIES IN EUROPE 100% 100% 100% 99,9% Bonfiglioli Riduttori S.p.A. 100% 100% 66,67% Production plants Commercial subsidiaries in Europe Commercial subsidiaries overseas Associated companies Other participations % Participation COMMERCIAL SUBSIDIARIES OVERSEAS ASSOCIATED COMPANIES OTHER PARTICIPATIONS 100% 96,67% 100% 75% 33,33% 10% 10,05% 16

17 Annual Report2012 Bonfiglioli Mechatronic Research S.p.A. (ITALY) 1% Bonfiglioli Transmission Pvt. Ltd. (INDIA) Bonfiglioli Slovakia S.r.o. (SLOVAKIA) Bonfiglioli Vietnam Ltd. (VIETNAM) Bonfiglioli Vectron GmbH (GERMANY) 100% Bonfiglioli Deutschland GmbH (GERMANY) Bonfiglioli Österreich GmbH (AUSTRIA) 100% Bonfiglioli Transmission S.A. (FRANCE) Bonfiglioli UK Ltd. (UNITED KINGDOM) Bonfiglioli Italia S.p.A. (ITALY) Bonfiglioli Power Transmision & Automation Tecnologies JSC (TURKEY) 0,1% Bonfiglioli Canada Inc. (CANADA) Bonfiglioli USA Inc. (USA) Bonfiglioli Drives (Shangai) Co. Ltd (CHINA) Bonfiglioli Transmission (Aust.) Pty. Ltd (AUSTRALIA) Bonfiglioli Reductores do Brasil Industria e Comercio Ltda. (BRAZIL) Bonfiglioli South East Asia Pte Ltd (SINGAPORE) Bonfiglioli Power Transmission Pty. Ltd. (SOUTH AFRICA) Bonfiglioli South Africa Pty. Ltd. (SOUTH AFRICA) 75% Tecnotrans Bonfiglioli S.A. (SPAIN) B.E.S.T. Hellas S.A. (GREECE) SKS Sweden A.B. (SWEDEN) 17

18 Organization chart as of December 31,

19 Annual Report2012 Board of Directors Chairman Sonia Bonfiglioli Vice Chairman Luisa Lusardi Director Luciano Bonfiglioli Director Roberto Megna Director Tommaso Tomba Director Siegfried Stadtfeld Local Management Bonfiglioli Vectron GmbH (Germany) Olaf Donner Frank Schramm Bonfiglioli Transmission PVT Ltd. (India) Andrea Genuini Kaippally Kennady GA Balaji Bonfiglioli Slovakia s.r.o. (Slovakia) Marek Kolarik Bonfiglioli Vietnam Ltd. (Vietnam) Stefano Callegati Statutory Auditors Chairman Monica Marisaldi Member Alessandro Gualtieri Member Giacomo Iannelli Bonfiglioli Mechatronic Research S.p.A. (Italy) Gilbert Khawam Bonfiglioli Transmission (Aust.) Pty. Ltd (Australia/New Zealand) Malcolm Lewis Bonfiglioli do Brasil Ltda (Brazil) Manfredi Ucelli Di Nemi Bonfiglioli Canada Inc. (Canada) Greg Schulte Independent Auditors PriceWaterhouseCoopers S.p.A. Bonfiglioli USA Inc. (USA) Greg Schulte Bonfiglioli Drives (Shanghai) Co. Ltd. (China) Saverio Gaggero Fabrizio Paterlini John Liou Bonfiglioli Transmissions France s.a. (France) Nicola Boni Gilbert Khawam Pascal Froment Top Management CEO Sonia Bonfiglioli CFO Tiziano Pacetti BUInS PTS Div. General Manager Giovanni Scarlini BUInS MDS Div. General Manager Gilbert Khawam BUMWS General Manager Fausto Carboni BURePvS General Manager Massimo Sarti Bonfiglioli Deutschland GmbH (Germany) Giorgio Bombarda Jürgen Weber Bonfiglioli Osterreich GmbH (Austria) Giorgio Bombarda Bonfiglioli UK Ltd. (United Kingdom) Mike McCann John Adair Bonfiglioli Italia S.p.A. (Italy) Andrea Pecorai Pietro Gintoli Bonfiglioli South Africa Pty Ltd (South Africa) Robert Rohman Bonfiglioli Turkey Jsc (Turkey) Murat Güracar Bonfiglioli South East Asia Pte Ltd. (Singapore) Yong Peh Richard Chew Tecnotrans Bonfiglioli s.a. (Spain) David Bassas 19

20 Events & Milestones The 2011 Clementino Bonfiglioli Degree Prize The CtoC and PdP projects in BUInS Lean R&D JANUARY JANUARY MARCH The CtoC (Customer to Customer) project and the PdP project to develop new products, demanding the reorganisation of the entire process through which we serve our customers. The new lean product development process inside our Mobile & Wind Solutions Business Unit. Electromobility Competence Centre JULY Bonfiglioli Group s Finance & Corporate Services meeting JULY Opening of our new subsidiary, Bonfiglioli South East Asia AUGUST Next generation yaw drive. Inverter directly integrated in the gearmotor SEPTEMBER Release of the RPS TL-UL Series OCTOBER The RPS TL-UL (AME) series of inverters, developed and UL certified specifically for the North American market. 20

21 Annual Report2012 Bulgaria Solar Park APRIL Completion, in partnership with SunEdison, of a 60 MW photovoltaic plant in Bulgaria, equipped entirely with Bonfiglioli inverters. The new BMD series of brushless motors APRIL Formation of our Mechatronic Drives & Solutions (MDS) Division APRIL The new RPS Endurance inverter for photovoltaic applications JUNE The International Meeting JUNE MDS Expert Forum OCTOBER The meeting of MDS team members from Germany, Italy, France, Spain, Turkey, China and India, held at Bonfiglioli Mechatronic Research on the 16th and 17th October, to share the vision of the MDS project and discuss strategies for future development. New products for Mining NOVEMBER Bonfiglioli s entry into the market for heavy duty track drive gearboxes with the new sizes 722C4H, 724C4H and 726C4H. Formation of the SCM Club DECEMBER The club is currently open to people directly involved in Supply Chain management, but the intention is to expand it to include anybody in the Bonfiglioli organisation (in HQ or the subsidiaries) who can contribute and manage important information on supply chain issues. 21

22 THE FUTURE: SUSTAINABILITY AND INNOVATION 22

23 Annual Report2012 Bonfiglioli is committed to improving global industry as a means to future prosperity for the planet and for mankind, and therefore develops and delivers solutions that maximise production while minimising energy consumption. This is achieved through innovative and advanced solutions capable of integrating different technologies, ideas and experiences to create solutions that serve mankind. Tireless research and development, supported by strategic partnerships with leading universities around the world, have allowed us to develop an excellent global network focused on the common objective of industrial sustainability. This objective applies to all our areas of business, including wind and photovoltaic energy generation solutions, industrial power transmission and energy recovery applications, mobile machinery for earth-moving, construction and agriculture, and finally, electromobility. Power, Control & Green Solution 23

24 A ONE-STOP SHOP FOR ALL INDUSTRIAL APPLICATIONS 24

25 Annual Report2012 Bonfiglioli has been a leading name in power transmission since Nearly 60 years of experience as well as an in-depth understanding of the industries we serve have led to global success. Our main strengths include our extensive international network, our complete range of gearboxes, electric motors, inverters and energy recovery systems and our excellent service. All Bonfiglioli solutions benefit from rapid and reliable technical service delivered by specialist personnel with a thorough knowledge of the market they serve. To guarantee efficient and fully customer-oriented service, our Industrial Business Unit has established two divisions to serve its reference markets with specialist competence and care: the Power Transmission Solutions (PTS) and Mechatronic Drives & Solutions (MDS) divisions. Bonfiglioli s offering covers the needs of all areas of industry. Bonfiglioli really is a one stop shop, with integrated and special solutions that can be tailored to match customers needs. Bonfiglioli s product range spans heavy duty gearboxes, water treatment and biogas processing, mining, packaging and all aspects of raw material processing. Quality and performance in all areas are delivered through three distinct brands. Bonfiglioli Riduttori specialises in the production of high technology, high performance gearboxes and electric motors for light and heavy duty applications. Bonfiglioli Vectron produces globally acclaimed, high efficiency inverters and servo-systems. Bonfiglioli Tecnoingranaggi produces low backlash planetary gearboxes that satisfy highly specific needs in a wide range of industrial contexts. INDUSTRIAL Solutions 25

26 Power Transmission Solutions Safe, reliable products Vast distribution network Co-engineering Original Equipment Manufacturer Mining Plastics Sugar cane Ceramics On-time delivery Pick to order service 26

27 Industrial Solutions Annual Report2012 Our Power Transmission Solutions Division offers integrated solutions tailored to meet the needs of individual customers. The division offers the highest level of customisation for all areas of industry, with the ambitious but achievable objective of minimising TCO (Total Cost of Ownership). Bonfiglioli Riduttori s constant and targeted investments in R&D, performed at centres of excellence around the world, have established our group as a global leader for product quality, innovation and performance. Today, Bonfiglioli offers all areas of industry a complete range of products including gearboxes, gearmotors and electric motors capable of creating fully integrated solutions. Thanks to optimised, lean, and fully automated production processes, Bonfiglioli Power Transmission Solutions can produce over 2,000,000 units a year in 5 nations around the world. Add to these figures the presence of subsidiaries and distribution networks in over 80 countries, all working in close collaboration with customers on a daily basis, and it is easy to understand how Bonfiglioli guarantees the highest standards of service quality and efficiency. In 2012, Bonfiglioli s strength lays in the consistent implementation of a local for local strategy to provide total customer support through the delivery of excellent products and solutions combined with the practical expertise needed to support all areas of industry with competence, flexibility and speed in a customer-oriented and needs-oriented manner. KEEPING THE CUSTOMER IN MIND 27

28 Mechatronic Drives & Solutions Energy saving System integration Productivity Costs CO 2 Expertise Energy recovery 28

29 Industrial Solutions Annual Report2012 The objective of the Bonfiglioli Group is to become a global player in the field of industrial automation by providing customers with integrated solutions rather than individual products. Our mission is to guarantee improved profitability by acting as a riskless partner and a provider of energy-efficient solutions in the field of industrial automation. This demands the convergence of mechanical, electrical and electronic competences. Bonfiglioli has implemented a precise and detailed strategy to precisely achieve this objective. Our Mechatronic Drives & Solutions (MDS) Division is the result. MDS perimeter of action in terms of products encompasses brushless motors, low backlash gearboxes and inverter drives. The division s aim is to develop new products that make a greater use of electronic competences, and to deliver vertical and mechatronic solutions to customers. The production plants serving the MDS Division are Bonfiglioli Vectron (Krefeld, Germany) and BMR (Rovereto, Italy). Within our Sales Network, a number of Bonfiglioli subsidiaries have been identified and a team of experts with specialist engineering skills created to develop international markets. Our MDS Division benefits from synergy not only with our Industrial BU but also with dedicated sales, R&D, supply chain and operations functions. MDS, THE RISKLESS PARTNER 29

30 Bonfiglioli: the oem s partner 30

31 Annual Report2012 The Bonfiglioli Group is the preferred supplier of leading OEMs around the world. OEMs choose us for the superb power transmission solutions developed and produced by Bonfiglioli Trasmital, a name with over 50 years of experience, know-how and competence in the design and manufacture of gearboxes for earth moving, construction and agricultural machinery. With its offering of planetary gearboxes with hydraulic and electric motors for excavators, road surfacing machinery, farm and forestry machinery and many other applications, Bonfiglioli Trasmital is the global leader in power transmission for mobile machinery. Our ability to offer exactly the right solutions for customers by understanding their needs and preferences, and developing efficient, effective and innovative solutions to match them has always been one of our key strengths. Lean, flexible and on-time production satisfies the needs of machine manufacturers, minimises overheads and keeps down the Total Cost of Ownership of our applications. Bonfiglioli s worldwide network provides prompt and all-round support even for international customers. MobiLe Solutions 31

32 Electromobility Electric powertrain solutions Productivity Costs Customised solutions 32

33 Mobile Solutions Annual Report2012 Sima Innovation Award 2012 saw our group earning another star of excellence for our development of innovative ideas in support of sustainable electromobility solutions. The application of Bonfiglioli s highly efficient power transmission systems to hybrid and electric mobile plant led to the development of various high productivity machines offering the ultimate in energy saving. These ground-breaking developments have established Bonfiglioli as a true leader in sustainable technology and projected our group towards new, high-tech business horizons. Bonfiglioli achieved special recognition as part of the Sima Innovation Awards, an international showcase for advanced mobile machines. The Sima-Simagena agricultural exhibition recognises and rewards the most advanced technological products. In the electromobility market, being number two is simply not good enough. Bonfiglioli has therefore developed methods to satisfy the needs of all customers and to accompany them into a new, more prosperous future. Ever since the 1980s, Bonfiglioli has been developing new, more energy-efficient solutions and has successfully designed and produced planetary gearboxes especially for mobile applications. Our Mobile Solutions Business Unit has consistently increased its investments in personnel, tools and technologies dedicated to electromobility, and in 2012 offered a range of products designed specifically for hybrid and electric mobile machines, representing a major step forward for the construction, material handling and agricultural sectors. DRIVING THE INNOVATION 33

34 Welcome to the New Generation 34

35 Annual Report2012 Wind Solutions 35

36 Wind solutions Turbine management Costs 36

37 Wind Solutions Annual Report2012 Today, one wind turbine in four around the world incorporates a solution designed and developed by Bonfiglioli. In its constant quest for advanced solutions, our group has also achieved excellence through its complete range of gearboxes and drives for blade pitch and nacelle yaw control. In 2012, Bonfiglioli further consolidated its renewable energy know-how by becoming a strategic partner to the world s leading wind turbine constructors. Extensive research and development has enabled Bonfiglioli Trasmital to design and produce an inverter for turbine yaw control that is completely integrated in the gearbox. This new system has been developed specifically for the wind sector. The integration of the inverter inside the gearbox represents a brand new development in wind turbines and offers unquestionable benefits in terms of reduced dimensions, fewer components, easier installation, reduced weight and effective plug & play functionality. Bonfiglioli s advanced solutions minimise TCO (Total Cost of Ownership) by optimising turbine control and reducing operating costs, and clearly demonstrate the innovative power of our group. Your PARTNER FOR RENEWABLE ENERGY 37

38 Over 1.4 GW installed in THE WORLD BY

39 Annual Report2012 Regenerative & Photovoltaic Solutions 39

40 Advanced technologies for photovoltaic systems Customised solutions Scheduled maintenance Customer service The Bonfiglioli warranty 40

41 Regenerative & Photovoltaic Solutions Annual Report2012 Courtesy of SunEdison Bonfiglioli s worldwide network serves leading players in the design and construction of large scale photovoltaic plants. By the end of 2012, Bonfiglioli had installed 1.4 GW of power around the world, confirming its reputation as preferred partner for the supply of inverters and turnkey solutions for solar energy conversion. The RPS Series of inverters developed by Bonfiglioli Vectron s centre of excellence in Germany includes a wide range of indoor and outdoor models. Outputs go up to 3 MW, making these inverters the ideal choice for industrial and large scale installations. Bonfiglioli inverters can also be controlled over the web, and service personnel alerted in real time to ensure prompt and targeted interventions anywhere in the world. Top quality components and advanced technology guarantee a useful product lifetime of over 20 years and ensure an excellent return on investment. The presence of Bonfiglioli inverters in some of the world s largest photovoltaic parks, in Europe, Asia and the United States, has established our Group as a leader in advanced technology for renewable energy sources. By guaranteeing energy saving and recovery, Bonfiglioli solutions benefit the customer and the planet. Unrivalled expertise and reliability, combined with a direct presence on all major markets through dedicated subsidiaries make Bonfiglioli a winning partner for high value investments. Location: Rovigo (Italy) Type of installation: Solar park Plant size: 70 MW Inverter type: RPS TL Courtesy of Renovalia Location: Puertollano (Spain) Type of installation: Solar park Plant size: 50 MW Inverter type: RPS 450 Compact Outdoor Courtesy of Enfinity Location: Tielt (Belgium) Type of installation: Roof plant Plant size: 3.3 MW Inverter type: RPS 450 Compact Your BEST CLEAN ENERGY PARTNER 41

42 A GLOBAL COMMITTMENT 42

43 Annual Report2012 There can be no real leadership without responsibility towards the community. That is why Bonfiglioli has always been involved in social projects and has always been committed to developing sustainable technologies for the industries it serves. Social commitment dates back to the earliest days of Bonfiglioli, and stems from the faith that our founder, Clementino Bonfiglioli, had in young people s ability to innovate and renew, for the benefit of the company and of the planet as a whole. Bonfiglioli s horizons have always extended well into the future and our company has always been committed to offering young people opportunities for employment and learning. The innovative solutions that Bonfiglioli develops clearly target the future that today s young people will build. Bonfiglioli s feels an even stronger commitment to the local community in countries where it has subsidiaries and production plants. Our group is determined to make a tangible contribution towards creating a better future by helping those most in need and by offering development opportunities to young people. Bonfiglioli has put this policy into practice through a number of excellent projects around the world, including the Cheerfutureland children s village in India, support for the Pho Cap School in Vietnam, joint projects with the Leonardo Committee and Assiot association in Italy, sponsorship of a hockey team in Germany and cooperation with the Warrington Wolves Charitable Foundation in the UK to promote social integration, and many other initiatives besides. In 2012, our commitment assumed a global profile precisely because we see social responsibility as the best way to invest in the future and in our company. Social responsibility 43

44 PROFESSION: THE FUTURE January The 2011 Clementino Bonfiglioli Degree Prize 44

45 Annual Report2012 Bonfiglioli s support for excellence, innovation and research begins at home in Italy and extends worldwide through various high-value initiatives and projects. Collaboration with leading universities has established the Bonfiglioli Group as one of the best sources of education and training for students and graduates. In 2012 Bonfiglioli, in collaboration with the Leonardo Committee and Assiot industry association, began setting up grants and prizes in the name of its founder, Clementino Bonfiglioli, for students who achieve excellence in the fields of industrial automation, power transmission and mechatronics. Bonfiglioli has been organising seminars and work placements for students at the Aldini Valeriani technical institute in Bologna (where Clementino Bonfiglioli himself went to school) for many years in another clear expression of our group s determination to promote the education of young people as future professionals for our sector. Italy: EDUCATION FOR EXCELLENCE 45

46 BUILDING FOR TOMORROW 46

47 Social responsibility Annual Report2012 Children are a direct path to the future and Bonfiglioli sees helping them as the best possible way of building for tomorrow. This was our conviction back in 2000, when we helped set up the Cheerfutureland community for homeless and partly disabled children in Arakkonam, two hours outside Chennai, India, where Bonfiglioli has one of its key production plants. Through the Indian Prema Vasam association, founded by child psychologist Anto Selvyn Roy, Bonfiglioli supports around 150 boys and girls, including a number of disabled youngsters. Since Anto Selvyn Roy rescued his first homeless child from the streets of Chennai, his adventure has been able to continue also thanks to aid provided by Bonfiglioli, who owes so much to the exceptional people of India. Thanks to generous contributions from friends and other companies, we have been able to open the new Home For Children, a modern and practical residential centre for Prema Vasam s children. This is just the first step in an ambitious long term project that aims to build a number of residential, recreational, medical and teaching centres and to generate new job opportunities. Cheerfutureland is a tangible sign of Bonfiglioli s determination to share in all aspects of social, economic and cultural life in the countries that host its operations, and to lay foundations for a future of universal growth and development. India CHEERFUTURLAND BONFIGLIOLI 47

48 THE VALUE OF CHILDHOOD 48

49 Social responsibility Annual Report2012 Pho Cap School was founded in 2001 by three Vietnamese teachers (Doan, Trang and Khanh) with the help of the city authorities, an Italian company manager and the Italian consulate. The school provides free education for the underprivileged children of Ho Chi Minh City. The school is located in an old abandoned house which was refurbished entirely by the teachers themselves, with the help of volunteers and students from the local neighbourhood, and with funding from voluntary contributions. Until 2010, teaching at Pho Cap only took place for a couple of hours in the morning and a couple of hours in the early afternoon. For most of the time, the children had to play on the road outside with nothing to eat. In 2011, a school canteen was opened to provide the children with decent food and to extend care throughout the day. Then, in 2012, in a substantial redevelopment project, the upper floor of the building was refurbished as a kindergarten. Both the canteen and the kindergarten were funded by private sponsors and Italian institutions in Vietnam. Bonfiglioli Vietnam has long supported the school s work and has sponsored both refurbishing work and teaching activities. We are now promoting training programs for teachers as well as further restructuring work to improve the provisions for children. Pho Cap School caters for underprivileged children, especially those from poor families, orphans and children with psychological and socialisation problems. The school now provides education and nourishment for over 90 children (16 from 4-5 years in the kindergarten; 45 from 6 to 10 years in the primary school; and 30 from 11 to 18 years in the secondary school). Vietnam PHO cap school 49

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51 Annual Report2012 financial Highlights 51

52 Group sales (euro / million) % % % % Sales by Geographical Area (euro / million) EMEA AME APAC 52

53 Annual Report2012 Business Unit Sales (euro / million) % % Industrial Solutions % % % % Mobile Solutions % % Wind Solutions % % % Regenerative & Photovoltaic Solutions % Financial Highlights 53

54 EBITDA (euro / million) Net Capital Expenditure (euro / million) Net Cash Position (euro / million)

55 Annual Report2012 Group shareholders equity (euro / million) Number of employees Parent company Subsidiaries Financial Highlights 55

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57 Annual Report2012 This section has been translated into the English language solely for the convenience of international readers MANAGEMENT REPORT 57

58 FOREWORD This management report, drawn up in compliance with the provisions of the Italian Legislative Decree 127/1991, integrated and interpreted on the basis of CNDC (Italian National Councils of Chartered Accountants) accounting principles, updated by the OIC (Italian Accounting Authority), is submitted as a comment on the results recorded in the consolidated financial statements of the Bonfiglioli Group. Unless otherwise indicated, data are shown in Euro/millions. REFERENCE ECONOMIC SITUATION The overall economic trend of 2012, whose growth is still strongly tied to the emerging economies, recorded a sharp slow-down compared to the previous two-year period. The growth rate settled at +3.3% at year-end, compared to +3.8% in 2011 and 5.1% in The insecurity linked to the instability of the U.S. economic situation and the recession inside the Euro zone (which recorded a 0.4% drop in GDP in 2012) weighted heavily. A climate of uncertainty sharpened by tensions on the sovereign debt markets still hovers over the Euro Zone, in a situation of economic crisis aggravated by the simultaneous process of adjusting public accounts and restrictive tax policies, especially in the Southern European countries. The shrinkage of demand of families and companies together with a distinct decline in confidence and decreased foreign demand and intra-eu trade sketch an overall picture of crisis unprecedented since the post-wwii era. In the latter part of the year the negative economic situation also struck the economies of France and Germany, which sustained a downturn in industrial production. The associated collapse in imports in the Euro zone had negative repercussions on the trend of the world economy. Despite the poorer economic performance of China and India, the emerging Asian countries once again represented more than half of world growth in A slow-down in growth was recorded in China during the first nine months of 2012, and it was mainly due to poor foreign demand and weakness in the real estate sector. Investments, which historically represented the driving force of China s growth, contributed less to growth than during the previous three-year period, when they had benefitted from the government s measures put into effect to fight the 2009 financial crisis. Nonetheless, the stimulus triggered by important measures the Beijing government took, including cutting interest rates and approving a strong infrastructure plan, led to a revival in industrial production. The slow-down in China s growth, which should have touched its lowest point in 2012 (at 7.8% versus +9.2% and +10.4% in the previous two years, respectively), should come to a standstill and give way to a slight recovery starting in 2013 (+8.2%). As far as the BRIC countries are concerned, the growth rates continue to be positive, even if sharply down compared to the previous period for India (+4.9% compared to +7.4% and +9.9% of the previous two years, respectively) and Brazil 58

59 Annual Report2012 (+1.5% versus +2.9% and +7.5% of the previous two years, respectively), whereas a fainter decline is recorded in Russia (+3.7% versus a constant +4.1% recorded during the previous two-year period). The other emerging countries slowed down in 2012 as well because their export component was affected by the European recession as well. The expansive policies adopted displayed their first stimulus effects only during the fourth quarter of the year. The U.S. grew (+2.2% GDP versus 1.8% in 2011) driven by exports, increased public spending and a built-up inventory that compensate the drop in fixed production investments and the slow-down in private consumption. The overall economic picture was however still influenced by strong uncertainties tied to the danger of dropping over the fiscal cliff without the political parties coming to an agreement on reducing the deficit. This danger would appear to have been averted by the agreement that re-elected President Obama and the Republicans reached in extremis at the beginning of the new year. It prevented sparking off a mixture of new taxes and public spending cuts detrimental to the future growth of the U.S. economy and hopes that the advanced economies would recover. As far as the Italian economic situation is concerned, in 2012 the recession phase that started in 2011 took a turn for the worse. Economic indicators marked the sixth consecutive fall in GDP (-2.3% annual), which was dragged downward by another shrinkage of the already weak domestic demand and investments made by businesses. What above all weighed on domestic family consumption was a reduction in income due to greater tax pressure and the rising unemployment rate, which was already 11.3% in December and increased even further in early The situation was aggravated by further tightening of the credit system, no longer essentially tied to difficulty in deposits as much as a worsening of the conditions and costs of granting loans caused by the negative forecasts on the economy. Since November 2011 the technical government in office in Italy was able to reduce the spread between Italian securities and German bunds. In view of the extremely high level of Italian public debt, an increased spread deteriorated the already too onerous interest costs. This result, however, was achieved with austerity manoeuvres that, as already pointed out, further depressed the domestic demand. A general situation of recession and instability aggravated by the uncertainty of the political scene following the result of the February elections remained at the beginning of 2013, despite the forecast that the GDP s decline would come to a halt at 0.7%. The vigorous resumption of international trade boosted by the emerging economies during the last quarter of 2013 and the improved economic indicators perspectively indicate that the world economy will gradually become stronger in Nevertheless, there are still considerably different rates in the different countries and economic areas. The Euro zone will stabilize at a growth rate close to zero (+0.2% forecast for 2013), with recession continuing in the Southern European countries. Although the recession will abate, It will not end before 2014 in Italy and Spain. On the other hand, it is expected that the United States may maintain a constant growth rate (+2.1%) while the emerging countries - where a particularly pronounced growth rate is expected in India (+6%) - will continue to grow at a definitely higher rate (+5.6%). AREA OF CONSOLIDATION: The area of consolidation as at 31 December 2012 covers a total of nineteen subsidiaries, including: five manufacturing companies (located in Italy, India, Germany, Slovakia and Vietnam), which produce the various products in Bonfiglioli s extensive range. thirteen sales subsidiaries that manage promotion, sales, pre- and after-sales assistance, logistics and customisation, and final assembly of the Group s products, together with Bonfiglioli Power Transmission Pty Ltd, the South African company that has a 75% majority holding in the local subsidiary. The only associated company of the Bonfiglioli Group is a sales office that has been operating on the Spanish market for more than 40 years, Tecnotrans Bonfiglioli S.A., in which the Group holds a 33.33% stake. With reference to the changes that took place during the year, please note the set-up of the company Bonfiglioli South East Asia Pte Ltd. with registered office in Singapore. MANAGEMENT REPORT 59

60 ANALYSIS OF 2012 RESULTS In keeping with art of the Italian Civil Code, the layouts for the Balance Sheet and Income Statement are set out below, reclassified with regard to the last five years operations conducted by the Group. The layouts presented hereunder show the figures in millions of Euros and in percentage, as well as the main economic-financial indicators. Values (M ) Reclassified income statement Sales Cost of sales (493.0) (556.9) (469.3) (335.3) (513.2) gross margin Structure and operating expenses (107.3) (112.2) (103.2) (84.5) (103.1) ebit (20.0) 47.3 Financial income and (expenses) (12.5) (11.8) (11.4) (9.5) (10.9) Exchange rate differences (3.4) (1.8) 0.5 (1.2) (1.8) Associated companies result (0.9) (0.4) 0.9 Extraordinary income and (expenses) 0.3 (4.2) (5.3) (7.3) (1.8) ebt (38.4) 33.7 Current taxes (4.8) (12.0) (11.0) (3.3) (16.5) Prepaid and deferred taxes CONSOLIDATED PROFIT (LOSS) (31.8) 22.2 Minority (0.9) (1.0) (0.8) (0.2) (1.3) NET GROUP PROFIT (LOSS) (32.0) 20.9 PERSONNEL COSTS (114.1) (114.6) (108.8) (88.0) (101.6) AMORT./DEP. AND PROVISIONS (30.6) (34.4) (32.2) (29.1) (25.7) EBITDA

61 Annual Report2012 % of Sales Reclassified income statement Sales 100.0% 100.0% 100.0% 100.0% 100.0% Cost of sales (79.0%) (78.4%) (78.2%) (83.9%) (77.3%) gross margin 21.0% 21.6% 21.8% 16.1% 22.7% Structure and operating expenses (17.2%) (15.8%) (17.2%) (21.1%) (15.5%) ebit 3.8% 5.8% 4.6% (5.0%) 7.1% Financial income and (expenses) (2.0%) (1.7%) (1.9%) (2.4%) (1.6%) Exchange rate differences (0.6%) (0.3%) 0.1% (0.3%) (0.3%) Associated companies result (0.2%) 0.0% 0.0% (0.1%) 0.1% Extraordinary income and (expenses) 0.0% (0.6%) (0.9%) (1.8%) (0.3%) ebt 1.1% 3.3% 1.9% (9.6%) 5.1% Current taxes (0.8%) (1.7%) (1.8%) (0.8%) (2.5%) Prepaid and deferred taxes 0.0% 0.2% 0.9% 2.5% 0.8% CONSOLIDATED PROFIT (LOSS) 0.4% 1.8% 0.8% (7.9%) 3.3% Minority (0.1%) (0.1%) (0.1%) (0.1%) (0.2%) NET GROUP PROFIT (LOSS) 0.2% 1.7% 0.7% (8.0%) 3.2% PERSONNEL COSTS (18.3%) (16.1%) (18.1%) (22.0%) (15.3%) AMORT./DEP. AND PROVISIONS (4.9%) (4.8%) (5.4%) (7.3%) (3.9%) EBITDA 8.7% 10.6% 10.0% 2.3% 11.0% MANAGEMENT REPORT 61

62 Values Average rotation days (base 360) Reclassified balance sheet Net Working Capital Fixed assets Other invested capital (11.6) (33.2) (14.6) (12.5) (23.1) (7) (17) (9) (11) (13) Minority (9.1) (4.9) (5.1) (4.0) (4.1) (5) (2) (3) (4) (2) CAPITAL EMPLOYED Group shareholders' equity Net Cash Position FUNDS Values % of Sales Sales by geographical area EMEA % 59.2% 59.0% 59.6% 69.9% AME % 13.4% 13.1% 11.7% 9.0% APAC % 27.4% 27.9% 28.7% 21.1% TOTAL SALES % 100.0% 100.0% 100.0% 100.0% 62

63 Annual Report2012 Indicators Description ECONOMIC Net ROE 0.6% 5.3% 2.0% (15.8%) 9.0% (Net profit/shareholders equity) ROI 6.5% 10.6% 7.1% (5.4%) 11.5% (EBIT/Capital Employed) ROS 3.8% 5.8% 4.6% (5.0%) 7.1% (EBIT/Sales) EBITDA/Net Financial income and expenses EQUITY AND STRUCTURAL Primary structural balance ratio (Shareholders equity/fixed assets) Financial indebtedness ratio (NCP/Shareholders equity) NCP/EBITDA ratio (NCP/EBITDA) Shareholders equity tangibility ratio (Equity-Intangible assets/equity) OTHER Average number of employees Annual mean Sales per employee Data expressed in millions of Euro MANAGEMENT REPORT 63

64 In 2012 the Group further pursued its Business segmentation project by creating the Mechatronic Drives & Solutions (MDS) division within the Industrial Business Unit. This means that today the Industrial Business Unit is split into two divisions: G&G (Gearboxes & Gearmotors) and MDS. The mission of the newborn MDS division is to become the zero-risk partner in the high energy efficiency power transmission market. To reach this goal, the Group reinforced the strategy it has been successfully applying with a certain number of key customers for years: supply integrated solutions in the field of industrial automation with an important applied co-engineering activity. The range of MDS Division products consists of brushless motors, low backlash gearboxes, inverters, servo-drive systems and other mechatronic tools. The combination of these products, together with its comprehensive offer in the industrial market, makes the Group a One-Stop-Shop whose objective is to develop targeted electronic products, mechatronic and vertically integrated solutions. Two centres of excellence guide the MDS organisation. The first is Bonfiglioli Vectron in Germany, which has a sizeable R&D organisation and production capacities for electronic products, inverters and servo-drive systems. The second is BMR (Bonfiglioli Mechatronic Research), located in Rovereto (Trento), Italy. It is Bonfiglioli s new site created ad hoc to support the MDS Division. BMR, which also boasts considerable R&D resources and a production plant able to make sophisticated products, will concentrate on brushless motors and low backlash gearboxes. Overall Group performance in 2012 dropped compared to the previous year. It recorded turnover of M 623.7, down M 86.6 (12%) from Turning to an analysis of the main figures in the Income Statement, on a consolidated level, Group gross operating margin (EBITDA) stood at M 54, accounting for 8.7% of sales. Please also note that: the cost of sales at year-end 2012 had a 79.0% incidence on turnover, slightly worse than the percentages of last year (78.4%). Despite a partial saving on purchases, the slight decrease in margins is mostly due to the mix of turnover that, among other things, resulted in substantial decline in Photovoltaic Business sales that normally have higher margins; structural costs dropped M 4.9 in absolute value, with an increasing percentage incidence on turnover (from 15.8% to 17.2%) due to fixed costs and despite the saving realized on the variable costs level; the total costs of labour remained all but unchanged (from M to 114.1), with a percentage impact on turnover going up from 16.1% to 18.3%; depreciation, amortisation, write-downs and other allocations decreased in absolute value by approximately M 3.8 and their incidence on turnover remained nearly unchanged from 4.8% in 2011 to 4.9% at year-end 2012; net financial expenses and income increased in terms of incidence on turnover, rising from 1.7% in 2011 to 2.0% in In terms of absolute value, net financial charges increased by M 0.7, and this was also due to the increased interest rates in the market; the downward trend taken by the exchange rates on the currencies of some countries (above all India, China, Brazil and Vietnam) took the losses on exchange rates to M 3.4 in absolute value, with -0.6% incidence on consolidated turnover (-0.3% in 2011). Please note that a good portion of these exchange rate losses were caused by the sharp exchange rate trend recorded on 31 December, so they were not actually sustained (actual accrual takes place following collection of credits in foreign currency or at the time debts in foreign currency are actually paid); the equity posting of the associated company Tecnotrans Bonfiglioli S.A. comes from a M 0.9 write-down with a negative percentage impact of 0.2%; extraordinary income and expenses recorded a positive balance of M 0.3 with practically no incidence at all on turnover compared to -0.6% of last year. With regard to the Group s asset and liability structure, Net Working Capital decreased in absolute value compared to 2011, dropping from M to M in connection with the reduced volumes and measures taken to rationalise inventory. Average rotation improved in line with this decrease in terms of absolute value of M 33.5, dropping from 114 to 110 average days. Net Financial Position recorded a significant increase from M to M 137.2, a positive sign of a good generation of cash by management of net capital employed (CapEx included) and by current economic performance. 64

65 Annual Report2012 Net investments amount to M 16.6 with details given below: Values in Euro/millions Land and buildings Plant and machinery Equipment Other assets Assets in progress 0.9 (0.1) (3.2) (3.1) (4.3) Tangible fixed assets Software, trademarks, patents Goodwill Other Intangible fixed assets Total Investments The major investments made by the Group are listed below: investments in land and buildings regarded the Parent Company, which introduced improvements to several plants; investments in plants, machinery and equipment related to the Parent Company, which strengthened its production with new investments totalling M 1.8, and the Indian (M 1.0), Chinese (M 0.5) and BMR (M 0.5) companies; investments in intangible fixed assets mostly refer to acquisition of the right to use a plot of land purchased in China, in the Shanghai area, for future expansion of activities in this important country enjoying strong growth, and to implementation of application software concerning development of the SAP project throughout the entire group. To the investments already made, investments in progress on 31 December 2012 involving a total of M 3.7 divided between the various group companies must be added. They mainly regard renewals and replacements of machinery and plants. MANAGEMENT REPORT 65

66 RISK MANAGEMENT An analysis is set out below of the main risks to which the Group is exposed, these risks being represented by events capable of producing negative effects on the pursuit of the company s objectives and which therefore restrict the creation of value. Risks connected with general economic conditions The economic and financial standing of the Group, as well as its assets and liabilities, are influenced by a number of factors that make up the macro-economic picture in the various countries in which the Group operates: increase or decrease in GDP, consumer and business confidence, currency and interest rate fluctuations, the cost of raw materials and the unemployment rate. Risks connected with the market sectors served As previously explained, the Group operates based on a structure of three Business Units: Industrial, Mobile & Wind, Photovoltaic & Regenerative, each responsible for its own sectors. The wide range of outlet markets and applications supplied has always provided refuge from economic slumps, by allowing the Group to shift the product offering from sectors in decline to those in growth. The Group is still exposed to financial and systemic crises, such as the world economic crisis of Risks connected with financial resource requirements Group performance depends, among other factors, on its ability to meet the needs arising from maturing debts and the investments scheduled through the cash flows coming from operations, available liquidity, the renewal or refinancing of bank loans and the possibly necessary recourse to other sources of funds. In order to keep the Net Financial Position under constant check and to monitor the business short-term capacity to meet its commitments, short-term and mid-term cash flow estimates were drawn up in order to make the most appropriate decisions. Credit risk Credit risk is represented by the Group s exposure to potential losses that may stem from the failure by customers to meet their obligations. Customer credit risk is constantly monitored with the use of information and customer assessment procedures and this type of risk has historically had very little physiological scope. Risks connected with exchange and interest rate fluctuations Operating in more than one market at a worldwide level, the Group is naturally exposed to exchange rate and interest rate fluctuations. Exposure to exchange rate fluctuations is linked mainly to the geographical distribution of production and sales activities which generate import/export flows in foreign currency different from that of the production countries. In particular, the Group is exposed through its exports from Italy to the USA, Great Britain, Australia and other minor currencies. Whereas on the level of incoming flows, risks concern imports from Japan in Yen and, for those production companies based in India and Vietnam, imports of goods from countries having strong currencies. In keeping with its risk management policies, the Group tries to tackle risks relating to exchange and interest rate fluctuations with the use of short-term hedging financial instruments. Risks connected with the use of derivative financial instruments The Group uses financial instruments to hedge the interest/exchange rate risk as pointed out in the foregoing section for minimising the import-export operational risks. The companies in the Group do not use speculative-type derivative financial instruments. 66