2 ZEPPELIN worldwide Strategic Business Units Construction Equipment EU 64 locations Germany / Austria / Poland / Slovakia / Czech Republic / Hungary Construction and Agro Equipment CIS 57 locations Armenia / Russia / Switzerland / Tajikistan / Turkmenistan / Ukraine / Uzbekistan / Belarus Rental 132 locations Germany / Austria / Russia / Slovakia / Czech Republic Power Systems 27 locations Armenia / Germany / Austria / Russia / Slovakia / Tajikistan / Czech Republic / Turkmenistan / Ukraine / Uzbekistan / Belarus Plant Engineering 20 locations Belgium / Brazil / China / Germany / France / UK / India / Italy / Russia / Saudi Arabia / Singapore / South Korea / USA ZEPPELIN GmbH Headquarters: Graf-Zeppelin-Platz Garching/Munich Germany Registered office: Leutholdstraße Friedrichshafen Germany Tel Fax Tel Fax
4 ZEPPELIN at a Glance Revenue SBU Construction Equipment EU EURm 1, SBU Construction and Agro Equipment CIS EURm SBU Rental EURm SBU Power Systems EURm Subtotal (former Trade division) 1) EURm 2,195 1,797 1,558 2,208 2,080 SBU Plant Engineering EURm Group total 2) EURm 2,429 2,046 1,796 2,447 2,257 Employees (year average) SBU Construction Equipment EU 2,660 2,597 SBU Construction and Agro Equipment CIS 1, SBU Rental SBU Power Systems Subtotal (former Trade division) 3) 5,485 4,962 5,088 5,271 4,497 SBU Plant Engineering 1,122 1,115 1, Group total 2) 6,647 6,113 6,268 5,973 5,121 Fixed assets Additions EURm Changes in consolidation group EURm Depreciation EURm % of additions of which rental assets Additions EURm Changes in consolidation group EURm Depreciation EURm Results from ordinary activities EURm Group net income EURm Net cash flow EURm Group equity EURm of which Subscribed capital EURm Capital reserves EURm Revenue reserves EURm Group net retained profits EURm Minority interests EURm ) consolidated; 2) incl. ZEPPELIN GmbH; 3) prior-year figures amended
5 Zeppelin Contents Supervisory Board and Management Board Supervisory Board Report Management Board Report Strategic Business Units Construction Equipment EU Construction and Agro Equipment CIS Rental Power Systems Plant Engineering Zeppelin Holding Sustainability Group Management Report Group Financial Statements
6 Zeppelin Supervisory Board and Management Board Supervisory Board and Management Board Supervisory Board The Supervisory Board, whose membership complies with Sec. 7 MitbestG ( Mitbestimmungsgesetz : German Code termination Act), comprises the following members: Shareholder Representatives Andreas Brand (Chairman) Mayor of the City of Friedrichshafen Dipl.-Ing. Werner Baier Chairman of the Supervisory Board of Webasto AG Fahrzeugtechnik Dr. Reinhold Festge Managing partner Haver & Boecker OHG Dr. Werner Pöhlmann Attorney-at-law, tax consultant, certified accountant, insolvency administrator Univ.-Prof. Dr.-Ing. Dr.-Ing. e.h. Dieter Spath Head of the Fraunhofer Institute for Industrial Engineering IAO and the Institute for Human Factors and Technology Management at the University of Stuttgart Univ.-Prof. Dr. Dr. h.c. mult. Horst Wildemann Chair for business studies, management, logistics, and manufacturing at Munich University of Applied Sciences Employee Representatives Heribert Hierholzer (Deputy Chairman since July 29, 2011) Foreman, Chairman of the General Works Council of Zeppelin Systems GmbH Manfred Enger Service technician, Zeppelin Baumaschinen GmbH Roswita Feineis (since May 20, 2011) Head of Personnel, ZEPPELIN GmbH / Zeppelin Baumaschinen GmbH, management representative Ludwig Maier (since February 14, 2011) Head of Economics Department at the German Federation of Trade Unions (DGB), Bavaria region Ralph Misselwitz (Deputy Chairman until July 28, 2011) Field services master craftsman, Chairman of the General Works Council of Zeppelin Baumaschinen GmbH Vincenzo Savarino Second representative and treasurer of IG Metall Friedrichshafen-Oberschwaben Sibylle Wankel (until January 31, 2011) Lawyer at IG Metall, regional manager for Bavaria Dipl.-Ing. Eckhard Zinke (until May 19, 2011) Sales Director, Zeppelin Baumaschinen GmbH 2
7 Supervisory Board and Management Board Zeppelin Management Board Jürgen-Philipp Knepper, Peter Gerstmann, Michael Heidemann, Christian Dummler (left to right) Peter Gerstmann Chairman of the Management Board Company Development, IT, Audit, Corporate Communications SBU Plant Engineering, SBU Construction and Agro Equipment CIS Michael Heidemann Deputy Chairman of the Management Board Sales, Marketing, Service SBU Construction Equipment EU, SBU Rental Christian Dummler Managing Director Finance, Controlling, Real Estate Management Jürgen-Philipp Knepper Managing Director HR (Labor Director), Law, Compliance SBU Power Systems SBU = Strategic Business Unit 3
8 Zeppelin Report of the Supervisory Board Report of the Supervisory Board of ZEPPELIN GmbH Andreas Brand Chairman of the Supervisory Board Mayor of the City of Friedrichshafen The Supervisory Board was informed in detail about the operations of the organization and Zeppelin Group via regular discussions with the Management Board and via monthly written reports from the Management Board throughout Three board meetings were convened, at which the Supervisory Board with input from various decision papers, reports, and presentations consulted with the Management Board on strategy and planning, on the income and net asset position of the Company and its participations, its operating finances, risk exposure, and compliance aspects, and also exercised supervisory control over the Management Board on this basis. The Supervisory Board discussed in detail the annual strategic investment and financial planning. Following comprehensive consultation with the Management Board, the Supervisory Board took decisions on a range of initiatives which by law, statute, or the Rules of Procedure for the Supervisory Board require Supervisory Board approval. These primarily related to the acquisition of a participation to round out the Group s portfolio, the sale of land not required for operations, and appointments as well as reappointments of managing directors at ZEPPELIN GmbH and the participations. The Supervisory Board consulted on the strategies and measures adopted by the Management Board to ensure stability and future growth in the areas of developing and attracting employees, developing Group-wide finance and currency management, and managing the Group via five strategic business units. In addition, the Supervisory Board was informed at a strategy meeting about the ongoing development of the strategic business units and the implementation status of the major strategic initiatives. On June 1, 2011, Christian Dummler was appointed as a managing director, taking over responsibility for Finance, Controlling, and Real Estate Management from Peter Gerstmann. In connection with this change, the Supervisory Board decided to revise the allocation of responsibilities accordingly for the four managing directors. At its three meetings, the personnel council discussed important issues concerning the Management Board and succession planning in Group management, and adopted the relevant resolutions for decision recommendations to the Supervisory Board. 4
9 Report of the Supervisory Board Zeppelin The annual financial statements and management report, and the Group financial statements and management report of ZEPPELIN GmbH as per December 31, 2011, were audited by Pricewaterhouse- Coopers AG, Munich, the auditors elected by the shareholders meeting on May 19, 2011, and commissioned by the Supervisory Board. The auditors issued an unqualified opinion on each of the statements and reports. The annual financial statements, management reports, and auditors report were presented to the Supervisory Board in due time. Prior to the accounts presentation and review meeting of the Supervisory Board, there were two additional, explanatory meetings concerning the audit of accounts, attended by the auditors and members of the Supervisory Board. At the accounts review meeting of the Supervisory Board on May 4, 2012, the auditors reported on key findings and results of the audit, which also encompassed the Group s early-warning risk identification system as agreed. The Supervisory Board has reviewed and endorsed the 2011 annual and Group financial statements submitted by the Management Board, as well as the management report and Group management report. The annual financial statements and Group financial statements of ZEPPELIN GmbH as per December 31, 2011, have been endorsed and therefore approved. The Supervisory Board elected to follow the proposals of the Management Board regarding the use of the net retained profits. The Supervisory Board thanks the Zeppelin staff, employee representatives, and the members of the Management Board for their high level of dedication in 2011, which closed very successfully with revenue and profit significantly above the prior year. Friedrichshafen, May 4, 2012 For the Supervisory Board Andreas Brand Chairman of the Supervisory Board 5
10 Zeppelin Management Board Report Management Board Report Peter Gerstmann Chairman of the Management Board The fiscal year was a very successful one for ZEPPELIN GmbH. We were able to increase our revenue by 18.7 percent on the prior year. Despite problematic economic factors such as the euro crisis, we managed to build on the success we achieved in 2010 with the help of our employees. The global economy continued to grow in 2011, albeit at a slower pace, with a growth rate of 3.8 percent. The considerably greater uncertainty, due to the inadequate attempts to resolve the European debt crisis, and the as yet unclear future fiscal policy of the USA restricted growth in the euro zone. The growth rate of the gross domestic product reached just 1.5 percent, having amounted to 1.9 percent in With a growth rate of three percent (prior year: 3.7 percent), it developed much more positively in Germany thanks to noticeable increases in exports and gross fixed capital formation. Very low base rates in almost all developed economies limited the central banks scope for monetary measures. Substantial production increases and rising imports in emerging countries had a stabilizing effect on the global economy. In the regions of the strategic business unit (SBU) Construction Equipment EU, the recovery of the construction industry progressed in a very country- and sector-specific way. Germany s construction business developed positively in Revenue in the construction industry rose by 12.5 percent, with residential construction (17.7 percent) and commercial construction (13.9 percent) experiencing particularly strong expansion. In contrast, below-average growth of 5.8 percent was recorded in public construction. The Austrian construction industry saw construction output grow 1.4 percent on the prior year as at September 2011, while construction output in the Czech Republic and Slovakia declined for the third consecutive year with a decrease of five to six percent. The market for new construction machinery within our European sales territories increased from 23,500 units in 2010 to around 32,000 units in 2011, which corresponds to growth of 37 percent. The German market made a relatively strong contribution to the growth, with a rise of 42 percent. In the past fiscal year, the SBU Construction Equipment EU increased its revenue by 14 percent to around EUR 1.1b. This was due, in particular, to sales of new machinery, with 4,215 new construction machines (+ 21 percent on prior year) and 1,706 new lift trucks (+ 17 percent on prior year) sold. The service division was able to further expand its revenue by focusing on providing benefit to our customers. The number of employees rose by 93 on the prior year to 2,718, with the increase relating primarily to the service division. 6
11 Management Board Report Zeppelin In 2011, Zeppelin Straßenbautechnik GmbH was unable to fulfill the revenue and profit expectations outlined for the rental of road construction equipment business model. Consequently, stocks of equipment were sold off as much as possible and the remaining activities taken over by other Group companies. The economic environment in most countries of the SBU Construction and Agro Equipment CIS improved in For instance, the gross domestic product in Russia and Ukraine increased by around four percent, while Belarus recorded a decline because of the unstable political situation. In 2011, the construction industry grew by around seven percent in Russia and by around eleven percent in Ukraine. The SBU sold 41 percent more machines in the course of 2011 than in the prior year, with a total of 1,741 units. Revenue increased 53 percent on the prior year to EUR 515.9m. As at year-end, 1,294 people were employed (prior year: 1,007). The personnel capacity was increased in our service and operational divisions because of the increased volume of business. In 2011, the prevailing conditions in the markets for our SBU Rental were outstanding. We were able to respond promptly to the significant rise in demand by making appropriate capacity adjustments. The market entry in Russia was successful and is already developing very well after the first year. The expansion of our range of services and construction equipment has stabilized the Rental business model, which tends to be rather sensitive to economic trends, for the long term. All in all, 2011 was the most successful year in the history of the SBU Rental. Total revenue rose 14.4 percent on the prior year to EUR 254.1m. Russia contributed to this increase by doubling its revenue to EUR 10.6m. As at year-end 2011, the number of employees in the SBU totaled 939 (prior year: 754), with the machine operators in Russia now included in the figure, in contrast to the prior year. For the SBU Power Systems, demand for engines in the industry, locomotive, and energy sectors recovered in 2011, while ship construction remained at a low level. Offshore wind farms, which are expanding rapidly in connection with climate goals and require the use of special ships, currently represent a growth market in the ship construction industry. In Russia, demand increased in the gas, petroleum, decentralized energy supply, and emergency power application segments. The project situation for gas applications in Germany improved following the decision to move toward alternative energy sources. The antitrust authorities approved the purchase of Motorenwerke Mannheim GmbH by Caterpillar Inc. Zeppelin Power Systems subsequently obtained the sales rights for the Czech Republic, Slovakia, and the seven CIS countries in which Zeppelin operates. At EUR 365.2m, the pleasing revenues of the SBU Power Systems exceeded the prior-year figure by 16 percent. The personnel capacities were increased by 52 to 736 employees in line with the strategic orientation. Thanks to strong domestic and foreign demand, the manufacturers of plastics and rubber machines recorded a revenue increase of 23 percent in The chemical industry increased its production by five percent and its revenue by ten percent during the past year. The order intake levels recorded by manufacturers of food industry and packaging machinery rose by around seven percent in 2011, with revenue increasing by around eleven percent in comparison with At EUR 233.6m, the revenues of the SBU Plant Engineering were only just under six percent below the strong level of the prior year, which was characterized by the billing of various large orders. As at the end of 2011, the SBU had 1,141 employees (prior year: 1,106 employees). 7
12 Zeppelin Management Board Report Management Board Report In 2011, Zeppelin invested EUR 32.2m in buildings, plant, and equipment. Investments in buildings related to the construction of the new headquarters in Banska Bystricá, Slovakia, and the construction of the new Ostrava branch in the Czech Republic, as well as the expansion and modernization of the infrastructure in Germany. This included, for example, the completion of the new Böblingen branch. Caterpillar installed new, environmentally friendly engines in the new generation of wheel loaders (K series) and hydraulic excavators (E series), becoming one of the first suppliers in the European market to fulfill the requirements of the new IIIB exhaust gas standard. With the participation in Sitech Deutschland GmbH, Zeppelin further strengthened its activities in the area of electronically controlled machinery and satellite-based monitoring and optimization tools with the systems partner Trimble Navigation Ltd. and extended its problem-solving capabilities for customers. The acquisition of GSL Gerätevermietung, Service, Logistik GmbH enabled us to enter the growing market of industrial services. The Caterpillar Active Power product expansion, which offers an uninterruptible power supply, strengthened the capability of the SBU Power Systems to offer complete systems. Our ability to satisfy the requirements connected with the change in energy policy and realize flexible, local energy supply concepts was underlined by the supply and commissioning of two combined heat and power plants in Reutlingen (10 MW) and Saarbrücken (6 MW). Entry into the attractive market of polyester plastics was made possible by a new pipe-in-pipe transportation technology and corresponding developments in transportation components. With the innovative Panel-Tec silo technology, were able to satisfy our customers demand for easy-to-install warehouse concepts and thus improve our market positioning. In 2011, the Zeppelin Group was financially restructured for the long term. To safeguard our financial flexibility in the long term, the Group financing was restructured and the asset and working capital management intensified; in addition, nonoperating assets were reduced. As a result of the structural improvements and economic development, the rating from Creditreform Rating AG was raised to A-. In fiscal 2011, Group revenue was up EUR 383m or 18.7 percent on the prior year to EUR 2.429b (prior year: EUR 2.046b). A sustainable increase in profit was achieved thanks to revenue growth, the overall stable price situation, and the structural improvements on the assets side. The Group s earnings before income taxes amounted to EUR 81.8m (prior year: EUR 24m). Return on revenue before taxes improved to 3.4 percent (prior year: 1.2 percent). As at year-end 2011, the Group employed 6,873 people ( percent), of which 332 were trainees (prior year: 6,212 employees incl. 270 trainees). Our conviction that social responsibility, legal integrity, and ethical action are the key to sustainable success for the Company led to the drafting of the Code of Conduct for Business Ethics and Compliance. Our employees were informed comprehensively about our corporate values and the content of our code of conduct via computer-aided learning programs. In the context of our People initiative, the focus at our service company was placed on training and promoting our employees. Group-wide qualification programs, uniform management training, and activities to attract young people to a career at Zeppelin via a dual study course were started in Thanks to our own training centers and vocational school classes, our industrial training was strengthened and the number of trainees increased to 332 (prior year: 270). At our foreign subsidiaries, suitable specialists 8
13 Management Board Report Zeppelin were trained following the German model. As a result of the change in requirements, we succeeded in attracting more women to the predominantly technical training activities. Our measures to promote family-friendly workplaces, health programs, and a diverse range of social commitments led to an increase in Zeppelin s attractiveness as an employer, which is important for recruiting and retaining good employees within our Company. Our risk management systems were expanded to include our financial systems and now make use of an early warning system. The growing complexity was addressed by increasing capacities in our internal audit department. Investment and acquisition processes were substantially revised with the creation of new guidelines. The Group strategy GPS (Growth, Profitability, Stability) formulated in 2010 was assessed at a Groupwide management meeting and optimized with regard to the strategic target corridor in In view of the faltering economy, the forecasts for the new construction machinery market and our rental business for 2012 are more restrained. We only anticipate slight gains in our sales territories. For the CIS territories, we see good growth opportunities for construction and agricultural machinery on account of the political stability and continuing high level of demand for raw materials. As worldwide capacities for plastics production will reach their limits by 2015, new investments will be made in production capacities. Stable polymer prices also offer a favorable environment for investment. Because of the high order backlog and healthy business situation at the beginning of 2012, our assessment for the full year is positive. However, the extent to which the European debt crisis is resolved and the increasing uncertainty on the real markets will be crucial. The economic prospects are also directly affected by the American economy s return to growth and the stability of the Asian economic area. All these factors could dampen our positive assessment for the full year in the second half of We would like to thank our customers, the Supervisory Board, and the shareholders for the trust they place in us, for their farsighted support, and for their backing during the changes we initiated. Special thanks must be extended to our employees for their commitment, their tireless efforts, and their willingness to support the necessary changes. With their strong motivation, our employees have allowed Zeppelin to absorb the impact of the financial crisis in just a short period of time and achieve a stronger position in the market than ever before. Zeppelin is a modern service company for sales, service, and engineering. We focus on formulating solutions to create maximum benefit for our customers. These services are provided by people our employees. That s why, to safeguard our future success and maximize the benefit to our customers, we retain a Focus on our people. For the Management Board Peter Gerstmann Chairman of the Management Board ZEPPELIN GmbH 9
14 I want to work for the best in class. Christian Kielmeyer at Zeppelin since 2004 Workshop mechanic Zeppelin Baumaschinen GmbH, Ulm branch
15 Focus on our People SBU Construction Equipment EU Zeppelin I was fascinated by mechanics from a young age. Cars were a bit on the small side for me. I was impressed by the size and power of construction machinery. Not just any construction machinery, though only Caterpillar s. Now, after eight years at Zeppelin, I m still proud to deal with these products every day, because they really are one step ahead of the rest. Like the new K and E series, for example. My fascination with the product is just as strong as on my first day, when I was still looking at construction machines from a distance. You can only learn the rest by working at Zeppelin. The freedom to carry out my tasks, the importance of self- organization, the unconditional support from the team at a branch and the great feeling of knowing that our work hasn t been in vain and that we ve been able to solve a problem for the customer. You don t see that from outside at first, but it s precisely what makes Zeppelin special. We want to stay top of the class.
16 Zeppelin SBU Construction Equipment EU SBU Construction Equipment EU The strategic business unit Construction Equipment EU operates in Germany, Austria, the Czech Republic, Slovakia, Hungary, and Poland, comprising sales and service for Caterpillar construction machinery and Hyster lift trucks. Zeppelin and Caterpillar have worked together since In the lift truck business, the U.S.-based NACCO Materials Handling Group has been a partner to Zeppelin since 2001 with its Hyster brand. Successes in 2011 A focal area for Zeppelin Baumaschinen GmbH was the introduction of new products that comply with the new EU Stage IIIB exhaust gas emissions standard. This standard has again substantially reduced the permissible pollutant emissions of nonroad machines with engines in the kw performance class. Caterpillar was one of the first manufacturers on the market to introduce a new generation of machines across Europe with engines that comply with the more stringent requirements the K series of wheel loaders, the E series of tracked excavators, and the B series of dump trucks. The new products were presented at Zeppelin s 3,500 m² stand at steinexpo, the demonstration fair for the building materials industry in Germany. Customers of Zeppelin Österreich GmbH were able to learn even more: at the Caterpillar demonstration site in Malaga, they listened to presentations on the new machine and engine technology. The fundamental differences between the new and old series affecting the cab, hydraulics, steering, and servicing were covered. The innovative technology also presents challenges for Zeppelin s service activities. In order to guarantee reliable service, the Zeppelin employees receive regular training. The Company was designated as an international training partner for Stage IIIB within the Caterpillar organization. The Zeppelin training center in Kaufbeuren, Bavaria, is one of three training centers in the Caterpillar region Europe, Africa, Middle East, and CIS. A product information event for the sales organization was held at the Allianz Arena in Munich at the start of the year. The sales team was informed about the new products and the changes in the machine technology. In 2011, Zeppelin invested once again in property, plant, and equipment as well as the expansion of its infrastructure. In Böblingen, the new branch of Zeppelin Baumaschinen GmbH was officially opened following a twoyear construction period. Zeppelin has been established in the town for 47 years. The foundation stone for the new building was laid during the economic crisis and, for this location in the region surrounding Stuttgart, was a sign that Zeppelin s sustainable business policy could be relied upon even in the crisis period. The complex comprises an office building, a workshop building with six service halls and central oil supply, and an additional workshop building with two welding halls, a wash hall, and a three-story parts store. At the end of April 2011, Phoenix-Zeppelin opened a new headquarters in Banská Bystrica, Slovakia. This site with 12
17 SBU Construction Equipment EU Zeppelin an area of 27,000 m² offers modern work stations and more space to present our machines. In 2011, Zeppelin Baumaschinen GmbH launched an online portal for customers that allows them to order replacement parts seven days a week. The GPS system for tracking the availability of service technicians, which is initially being deployed in the lift truck business unit, aims to improve response times and thus increase customer satisfaction. In 2011, the lift truck business was realigned to focus on customer segments. At the CeMat trade fair in Hanover, various new lift trucks with improved engine technology were presented. These vehicles offer lower operating costs without compromising performance or reliability. Prospects for 2012 In 2012, Zeppelin will significantly increase the number of service consultants in Germany in order to enhance the advisory services provided to our customers. Service consultants show the customers how the servicing of construction equipment can be optimized. For example, they check the condition of wear parts and determine whether it is economical to carry out a refit or a replacement. They also clarify under what conditions a repair using replacement parts can be made more cost-effective and when a new purchase or complete overhaul is worthwhile. Besides improvements in our service and replacement parts activities, the Construction site of the future has a high priority and will remain an important topic in 2012 in the area of sales and service for construction machinery. ProductLink is the fleet management solution for Caterpillar equipment as well as construction machinery and vehicles from other manufacturers. The system helps to increase productivity and improve processes on the construction site as well as processes connected with the use of machinery. As a result, operating costs are minimized, operations can be more reliably planned, customers are supported in their logistics activities, and data on operational analyses, maintenance, and repair is provided. With the help of ProductLink and the web-based application VisionLink, customers can obtain wide-ranging and vital information about their machinery. They can find out where the machine is and how much fuel it is consuming, and are informed when problems occur with the machine or when the next service is due. The SBU Construction Equipment EU has set itself ambitious goals for The objective is to further increase revenue while also expanding the market share in all business areas. In particular, a substantial increase is planned in compact construction machinery. In 2010, Caterpillar named Zeppelin the most successful sales and service partner for compact machines worldwide. Zeppelin also aims to achieve further growth in sales of standard and large-scale machines, as well as in its service activities ,126 2,625 2,718 Facts about the SBU Construction Equipment EU Revenue consolidated; employees as at Dec Revenue in EURm Employees 13
18 Trust is the cornerstone of our culture. Ilona Prykhodko at Zeppelin since 2003 Director of Finance Zeppelin Ukraine LLC, Kiev
19 Focus on our People SBU Construction and Agro Equipment CIS Zeppelin Confidence in colleagues, employees, and the management is what really counts. And because they place their confidence in us, too, the career opportunities at Zeppelin are excellent. Employees start off as mechanics and, after a few years, develop into branch managers. This is not least due to the fact that there is a great deal of scope for personal responsibility and employees who want to learn are always encouraged and nurtured. Whoever has found the best solution shares it with others, whether it be colleagues at the same location or colleagues in other countries. There are no limits. Even after nine years, I am always finding new areas that challenge me. Changes within a company as rock solid as Zeppelin help me improve not only professionally but also as a person.
20 Zeppelin SBU Construction and Agro Equipment CIS SBU Construction and Agro Equipment CIS The SBU Construction and Agro Equipment CIS* specializes in sales and service for construction and agricultural machinery of globally leading manufacturers. The products are characterized by high performance, quality, safety, flexibility, and outstanding operating conditions. Around 1,200 employees manage trade and service in Russia, Ukraine, Belarus, Armenia, Uzbekistan, Turkmenistan, and Tajikistan. Zeppelin has exclusive sales rights in these territories for Caterpillar construction machines and engines as well as large excavators from Bucyrus. This range was recently expanded to include construction machinery from the Chinese manufacturer SEM, a Caterpillar company. For the customers from agriculture and forestry, Zeppelin offers state-of-the-art machinery from the Italian manufacturer New Holland and the Finnish manufacturer Ponsse. These partnerships allow Zeppelin to cover a variety of customer and market segments within the CIS. Successes in 2011 In 2011, the seven countries of the SBU Construction and Agro Equipment CIS continued to coalesce to form a strong customer-oriented unit. They sustainably improved their services by implementing high standards in the operational business and investing in employee development and branches. Despite a tougher competitive field and the volatile economic situation, the market position in the world class machines segment was further expanded. Zeppelin was able to successfully increase its fleet of machinery in the Armenian market by a further 300, including machines that have not previously been deployed in Armenia. One example is the AD 30 off-highway truck for underground mining operations. Zeppelin supplied the leading copper-molybdenum mine in Armenia with its entire fleet of mining machinery and also constructed a new service branch there in order to meet the high level of demand from the customers. Zeppelin Ukraine continued its cooperation with the mining company Ferrexpo. Besides the supply of 140 mining machines, it also comprises a team of 100 employees that performs a number of services to ensure smooth operation of the mine. For the opening of a second mine as part of a greenfield project for a Ukrainian customer, Zeppelin supplied 16 type 789C heavy-duty trucks, eight type D10R dozers, and other mining machines, including accessories. The first five 793D off-highway trucks were also commissioned, forming an ideal * Commonwealth of Independent States 16
21 SBU Construction and Agro Equipment CIS Zeppelin complement to the RH200 large hydraulic excavator from Bucyrus supplied by Zeppelin. In September 2011, a contract was concluded in connection with the strategic partnership between Ferrexpo, Caterpillar, and Zeppelin based on the Mining Partnering program. This contract governs the continuous coordination and improvement of the collaboration between the three partners in relation to machine supply and service. Since June 2010, Zeppelin Russia has been the exclusive dealer of special equipment from the Chinese manufacturer SEM for the European part of Russia. This gives the company the opportunity to be successful in market segments previously dominated by Chinese suppliers. The new equipment was presented for the first time at the 12 th international trade fair Construction Equipment and Technology 2011 in Moscow. At the fair, Zeppelin presented two SEM construction machines in the important segment of wheel loaders with operating weights of three and five tons. Prospects for 2012 The SBU anticipates stable revenue growth of three to four percent, an increase in profitability, and a further expansion of the market share. Efforts will be made to strengthen the position as a market leader in the world class segment, with particular attention given to replacement parts supply and service. In Petrozavodsk, a new Component Rebuild Centre (CRC) was opened to supply our mining customers with reasonably priced replacement parts. Similar service facilities are to be set up in Armenia and Ukraine over the coming years. Other plans include investment in the area of employee training and development as well as the construction of new training centers, such as the one in Stavropol, which opened in Since 2011, the product portfolio of Zeppelin Russia has also included paving equipment. The rapid development of the transport infrastructure in Russia, accelerated by the efforts to attract investors from industry, ensures a bright future for this business unit. In the second half of 2011, numerous fairs were held to showcase new technologies for road construction. Zeppelin presented Caterpillar road construction equipment as well as automatic control systems (ACS) from Trimble. Modern methods for repairing the road surface were also exhibited, with automatic 3D control systems for road milling machines ,007 1,294 Facts about the SBU Construction and Agro Equipment CIS Revenue consolidated; employees as at Dec Revenue in EURm Employees 17
22 Being a pioneer isn t always easy. Marco Neuendorf at Zeppelin since 2008 Head of the Berlin-Westend rental branch Zeppelin Rental GmbH & Co. KG, Garching
23 Focus on our People SBU Rental Zeppelin What satisfies me most of all is when the team and I are able to implement something exactly the way we planned. Zeppelin is the ideal breeding ground for pilot projects such as the rental branch for construction equipment. No one is wrapped in cotton wool. People who aren t afraid to tackle new things are given full support, while also bearing the responsibility for their work. Even though they might fall flat on their faces sometimes. No customer is too small for us, no event too big. From allotment gardeners to fashion events in Berlin we have our sights on everything. Our area of responsibility is complex because, at our branch in the Westend district of Berlin, we are not involved in the traditional core business of construction machines. This special knowledge is our main asset. It s often about equipment that is rarely requested and therefore does not need to be available everywhere. But when it s needed, there are enough professionals at the Company to deal with the requests. For me, success means earning respect in new fields, internally as well as externally.
24 Zeppelin SBU Rental SBU Rental The SBU Rental active in Germany, Austria, Russia, the Czech Republic, and Slovakia supplies rental solutions that are individually tailored to the varying project requirements and needs of its customers. The product portfolio is characterized by a broad spectrum of state-of-the-art technology. It comprises construction machinery and equipment, modular space and sanitary systems, traffic and construction site safety systems, work platforms, lift trucks, agricultural machines, vehicles, and trailers. In addition, the SBU Rental supports its customers with a variety of services including needs assessments and planning, deployment advice on transport, assembly, service, and insurance, and highly specialized, country-specific services. These include, for example, project planning for turnkey modular buildings, expert planning and implementation of traffic control and safety measures, outsourcing services in the area of pipework and plant construction, and rentals with operating personnel. Successes in 2011 In 2011, by diversifying in terms of the range of services and industries, the SBU Rental pursued greater independence from the highly seasonal core business of construction as well as from the very strong competitive and price pressure in construction machinery rental. Growth in the area of allied equipment (construction equipment, traffic and construction site safety systems, modular space systems, work platforms, and vehicles) and the expansion of its rental activities, particularly in the industry segment, will safeguard the growth and stability of the Company for the long term and further increase the competitiveness of the SBU Rental. The customers benefit from an integrated range of systems and are offered solutions that add value in their specific situation. In 2011, the rental of equipment and tools was actively promoted. The construction equipment offensive, aimed at the medium term and initially only launched in Germany, led to a significant increase in rental revenue in just its first year. The first successes were also achieved in construction equipment rental in Austria, while work platforms were positioned successfully on the market in the Czech Republic. The acquisition of GSL Gerätevermietung, Service, Logistik GmbH, Hünxe, optimally enhanced the activities in the industry segment from a strategic perspective and brought further additions to the service portfolio. The company is a leader in rentals of special equipment and tools for industrial applications, particularly in construction and in maintenance of power plants and other industrial systems The rental business sent out a clear signal about its energy efficiency and sustainability aims with the introduction of the environmental brand ecorent. This brand offers economical and ecologically sound alternatives for environmentally friendly construction and operations in (environmentally) sensitive areas. With state-of-the-art engine technology, machine Revenue in EURm 20 Employees Facts about the SBU Rental Revenue consolidated; employees as at Dec. 31
25 SBU Rental Zeppelin control systems, and special equipment, customers are able to reduce fuel consumption, exhaust gas emissions, and noise while working much more economically. As an attractive and strong partner to its customers, the SBU Rental already offers solutions to future market requirements and creates real competitive advantages. In order to permanently safeguard the high quality of the rental service, it is continuously put to the test. Particular focus is placed on issues such as safety, occupational health, and environmental protection. As a member of the International Powered Access Federation (IPAF), the SBU Rental promotes the safe and effective use of height access systems and supports its customers by providing valuable information on legal and technical developments. Since 2011, it has also maintained four training centers, where operator training certified by the German TÜV in accordance with ISO and recognized in numerous countries is offered for a variety of equipment categories. In Germany, the requirements for a systematic and effective internal system to safeguard occupational health and safety as well as environmental protection are also satisfied by an occupational health and safety management system. In 2011, the professional association Berufsgenossenschaft Handel und Warendistribution (BGHW) confirmed the system s high standards and compliance with the safety standard NLF/ILO-OSH 2001 by awarding the quality label Sicher mit System (systematic safety). Prospects for 2012 of the SBU Rental adopted a uniform name. They now trade under the name Zeppelin Rental in order to further increase awareness, visibility, and recognition in the market and to underline the national and international growth strategy. Obtaining an even more balanced ratio of machinery to equipment rentals and expanding the allied equipment activities remain top priorities for In addition, the SBU plans to achieve further growth in the area of construction machinery. The computer-based planning and availability tool that is already being used very successfully in Germany and Austria is being refined further to allow even more flexible asset management. The portfolio is also being broadened in the areas of ecorent, intelligent machine control (Accugrade), and satellite-based fleet management. The construction equipment offensive launched in 2011 will continue to be pursued intensively. Positive impetus is expected to come from the projected increase in energy modernization measures and the necessary expansion of the energy infrastructure. In Russia, the primary focus for 2012 will be the expansion of the range of services for large-scale and special machines with operating personnel. For the SBU Rental, with its broad-based and continually growing network of locations, the tasks of training and promoting young talent from among its own pool of employees will be decisive for the long-term success of the Company, as well as an important aspect in allowing it to fulfill its social responsibility. In order to get young people enthusiastic about the rental business and make them aware of the prospects offered by this exciting working environment, a new training program as well as intensified recruiting measures in this business area will commence in The ongoing consolidation on the rental market offers further growth opportunities for Zeppelin. The investment volume for new purchases to replace machinery and equipment as well as to expand the fleet remains at a similarly high level to As of the start of 2012, the companies 21
26 We speak to the customer with one voice. Jonny Al-Saiegh at Zeppelin since 2000 Technical Manager Caterpillar Industrial Engines Zeppelin Power Systems GmbH & Co. KG, Hamburg
27 Focus on our People SBU Power Systems Zeppelin Every employee has a face. No one hides away. We are always on hand to support and assist one another. Our customers know that because they expect solutions that are tailor-made, not off the shelf. To achieve this, our managers have the task of encouraging employees to make decisions and show initiative, as well as ensuring they re not afraid of making the wrong move. For me, supporting employees isn t about standing over them, it s about standing with them. Everyone should be aware of his or her contribution to creating value at Zeppelin. No one is just a face in the crowd. Of course, specialist knowledge is a prerequisite, otherwise we would not be able to offer the customer a complete solution, the perfect application of a product in its specific environment. However, technical knowledge isn t enough. An engineer also needs to be a good firefighter.
28 Zeppelin SBU Power Systems SBU Power Systems With more than 700 employees, the SBU Power Systems is a leading systems supplier for solutions relating to propulsion and energy. An exclusive partner for Caterpillar engines (CAT and MaK) for more than 50 years, Zeppelin Power Systems offers the customer individual and highly efficient systems solutions with comprehensive services for the shipping, locomotive, oil, and gas industries as well as for power and thermal plants and for mobile and stationary propulsion systems with ratings from 15 kw to 16 MW. The service and sales locations are situated in Germany, Austria, Ukraine, the Czech Republic, Slovakia, Belarus, Turkmenistan, Tajikistan, Armenia, and Uzbekistan. In 2011, it was decided that the network of locations in Moscow would be expanded further. The sales rights for MaK engines also cover Switzerland, Poland, Hungary, Romania, Bulgaria, Russia, Kazakhstan, and Cyprus. Successes in 2011 In the fields of locomotives, industry, power, and used engines, expectations were greatly exceeded in The main driver of revenue and profit was the locomotive and industrial engine business. In the industrial engines segment, the growth was generated by orders from customers operating in the fields of logistics, transshipment technology, construction machinery, environmental technology, and pump and transmission applications. The locomotive business segment achieved a technological edge in the market with the handover of the Dual Mode ALP45 project to the customer, Bombardier, for deployment in North America. In the future, the environmentally friendly technology will be used in locomotives for suburban trains in New Jersey and Montreal. In the energy segment, the turnkey combined heat and power plant projects for the Reutlingen and Saarbrücken public utilities were particularly successful. Once again, this allowed the SBU Power Systems to underline its competence as a supplier of complete solutions in impressive style. By providing a special package of services during the drying phase, Zeppelin Power Systems played an important role in the commissioning of the Baltic Sea pipeline between Russia and Germany to secure Germany s gas supply. In 2011, the shipping business segment received the top Platinum award for exceptional services for Caterpillar ship engines. This makes Zeppelin Power Systems one of three dealers worldwide to have received a platinum award from Caterpillar, and the second supplier in the area of marine services to be certified as platinum quality by the independent company Germanischer Lloyd. What makes Zeppelin Power Systems 24
29 SBU Power Systems Zeppelin particularly special is its employees: all technicians within the company are Caterpillar-certified Marine Analysts who continuously keep their knowledge up to date by means of annual training. At the end of 2011, the rollout of the Scandline ferry Berlin was successfully completed. This project incorporated the first Zeppelin Power Systems common rail propulsion system with the option of a dual fuel retrofit. The environmentally friendly, efficient propulsion concept includes compliance with the emission limits for sulfur levels in exhaust gas applicable from In Russia, the first Tier 3 data centers were commissioned. In the Czech Republic, Zeppelin Power Systems implemented a gas compression project to store natural gas underground for a large energy supplier. Prospects for 2012 In December 2011, the shipping business secured a major order for three special ships. A crane ship, a heavy cargo ship, and a special ship for deep sea operations are being fitted with propulsion systems from Zeppelin Power Systems. The latter is being used for deep sea mining off Papua New Guinea. power supply units and an emergency diesel generator. This will therefore act as a reference project for further wind farms and offshore platforms. Efficient cogeneration of heat, cooling, and power is a hot topic for large energy suppliers. Zeppelin Power Systems, with its 30 years of experience in power plant construction, is seeing increased demand for its services. The topic of uninterruptible power supplies (UPS) will also play a significant role. Critical locations such as airports, hospitals, data centers, and many industrial enterprises require a power supply that offers maximum reliability. It is vital that operations are not disrupted in the event of power failures. If a power failure or fault occurs, the Zeppelin UPS system provides an uninterrupted supply, in combination with diesel generators, to the cooling system and connected consumers. For mobile and stationary systems, the new emissions guideline will be implemented in 2012 with the introduction of new engines compliant with Stage IIIB / Tier 4. We expect these engines to be introduced across the board and also anticipate a more intense focus on power generators, which make use of a system concept including engine and transmission design. Thanks to the high order backlog, promising projects for the oil and gas industry and power plants, in particular, and the implementation of the internal measures to optimize processes, efficiency, and costs, the SBU expects the results of operations to develop positively in At the Nordsee Ost wind farm, which several companies helped to set up, 40 wind energy plants are being constructed. The wind energy generated will be fed into the German electricity grid via transformer platforms. In order to guarantee the operational reliability of the wind farm, the transformer platforms have been fitted with an elaborate emergency power concept. Zeppelin Power Systems will supply the fallback system with two auxiliary Revenue consolidated; employees as at Dec. 31 Facts about the SBU Power Systems Revenue in EURm Employees 25