The competencies and businesses of Oerlikon are organized in four segments. One core technology, is the surface/interface technology. This is represented by the Segments Surface Solutions and Vacuum. Other core competencies are textile and drive technology, these are represented by the Segments Manmade Fibers and Drive Systems.
Following the acquisition of Metco in 2014, Oerlikon merged Metco with Oerlikon Balzers to form the new Surface Solutions Segment and created a global technology leader for surface solutions. Oerlikon Balzers and Oerlikon Metco complement each other perfectly in terms of their technologies, competencies, industry and geographics. Customers are now able to take advantage of a unique range of products and services for surface treatment, thin-film and thicker-layer coating technologies, specialized machining services and components, as well as a global infrastructure spanning over 145 sites in 35 countries. The acquisition led to an additional 2 500 employees joining the Oerlikon Group. With a workforce of over 6 000 and annual sales of CHF 973 million, the Surface Solutions Segment was the second-largest Segment within the Oerlikon Group in 2014, with Metco consolidated for seven months. In 2015, it will become the largest Segment of the Group
In 2014, the launch of three new layers of the revolutionary BALIQ™ family for wear protection and the rollout of the environmentally friendly ePD™ process for the metallization of plastic parts underline the innovative strength of Balzers and represent further techno-logical milestones for the Segment.
With the opening of a new coating center in Austria, extensions at several existing sites and the rollout of regrinding services at four additional coating centers in 2014, the Segment is pushing ahead with its regional expansion, bringing it closer to its customers.
Winning a large 10-year long-term agreement for the supply of LEAP (Leading Edge Aviation Propulsion) engine components for the aviation industry underscores the leading position of Metco in this important growth market.
|in CHF million||2014||2013||▲ %|
|Sales (third parties)||973||510||90.8%|
|− as % of sales||18.8%||29.2%||–|
|− as % of sales||10.0%||20.5%||–|
|Research and development expenses||56||34||64.7%|
Sandvik Machining Solutions: 20.0 % operating margin (2014).
The Surface Solutions Segment, with the brands Oerlikon Balzers and Oerlikon Metco, is a global technology leader for innovative surface solutions. The coatings of Oerlikon Balzers are extraor-dinarily thin, extremely hard and reduce friction and wear. These high-end coatings improve the surface properties of precision parts, as well as cutting and forming tools and thus extend their service life. One of the core businesses of Oerlikon Balzers is its coating services provided at its own centers. Oerlikon Metco offers a wide range of surface technologies, equipment, materials, services, specialized machining services and components.
The innovative range of coating solutions from Oerlikon Metco increases the efficiency and reliability of its customers’ products. To offer customers the best possible services and solutions, the Segment operates a dense network of more than 145 sites, of which over 140 are service and production centers, in 35 countries, supported by over 6 000 employees. In 2014, a site in Austria was added to the network, while the products, services and capacities at various locations were expanded to meet increasing customer demand and cater for additional technologies that have been added to existing services.
With the acquisition of Metco, the Surface Solutions Segment now has an addressable market of some CHF 9 billion. In the markets in which the Segment operates – namely aviation, power generation, oil and gas, automotive, metal and plastics processing, as well as other specialized markets – growth is likely to
range between 4 % and 6 %. Thanks to its unique technology portfolio and service offering, the Surface Solutions Segment expects to outperform this growth rate. The Segment operates sites in all of the key markets in Europe, the Americas, Asia and Australia.
The Surface Solutions Segment achieved a successful financial year in 2014. Sales increased significantly by 90.8 % to CHF 973 million (2013: CHF 510 million). The order intake totaled CHF 965 million (2013: CHF 510 million). This increase is attributable primarily to the acquisition of Metco, which was consolidated in the 2014 annual financial statements for seven months. Organic growth was also recorded in the operating business.
EBITDA amounted to CHF 183 million, corresponding to an EBITDA margin of 18.8 % (2013: 29.2 %). EBIT totaled CHF 98 million (2013: CHF 105 million), which equates to an EBIT margin of 10.0 % (2013: 20.5 %). Both EBITDA and EBIT were impacted by the one-time integration and the acquisition-related accounting effects connected with the Metco transaction.
The integration of Metco into the Segment, which began after the closing of the Metco transaction on June 2, 2014, has been progressing well on all fronts. The growth potential identified and cost synergies confirmed the underlying rationale for the transaction. Around 400 key employees are involved in eleven major integration workstreams. The rebranding has been completed at the 50 Metco sites around the world, and the systems for legal, finance, IT, health and safety and HR reporting are in operation. In addition, joint R&D technology programs have been set up. The opportunities offered by the new Surface Solutions Segment have been evaluated together with key customers, and the Segment has received positive feedback and interest. To establish a common culture and team spirit, a virtual gathering took place for the over 6 000 employees worldwide.
In 2014, Oerlikon Balzers added three new layers to the revolutionary BALIQ coating product family, which was introduced in 2013. Customers can thus use this coating family for a broader range of applications. With the extraordinarily smooth BALIQ coatings, which are characterized by their extreme hardness, resistance to wear and adhesive strength, customers are also able to improve their productivity, increase process reliability and reduce costs. Oerlikon Balzers presented a further innovation in 2014 with its ePD™ technology. The process enables coated plastic parts to be given a chrome look, is environmentally friendly and thus offers a clean alternative compared to traditional chrome-plating methods. The launch of the MetcoClad™ system for laser cladding met with positive responses. The first unit sold is used to add corrosion-resistant coatings to hydraulic drill rods used in salt water in the oil and gas industry.
Introduced in Asia in 2014 by Oerlikon Barmag, WINGS POY 1800 set a new benchmark for the energy-efficient and sustainable production of polyester threads. The highly energy-saving winder achieves a 20% increase in productivity by winding twelve yarn spools of 15 kilograms each simultaneously, instead of ten with the predecessor model over the same production area. The new WINGS PA HOY winder concept was also introduced in 2014, developed to meet the special requirements of cost-efficient nylon HOY production. Another innovation presented was a new staple fiber system solution – a compact machine that allows for greater flexibility in production, faster product color changes and less material wastage. In the growth market of technical textiles, a next-generation solution for high-modulus low-shrinkage (HMLS) polyester yarn for tire cord was launched in 2014, featuring improvements in enabling filaments’ dimensional stability.
With its extensive technological expertise, the Segment has been expanding its leading position for manmade fibers systems and maintaining its Best-in-Class position in its market.
In 2014, the Segment continued to utilize its competence in manmade fibers production and completed a turnkey facility for the manufacture of granulates for PET bottles for a customer in Egypt, from planning through to commissioning.
The Segment has long-standing customer relationships and experience in developing business in growth markets. In 2014, the Segment celebrated its 50th anniversary of successful partnership with the Chinese textile industry.
|in CHF million||2014||2013||▲ %|
|Sales (third parties)||1073||1130||–5.0%|
|− as % of sales||20.3%||18.4%||–|
|− as % of sales||18.4%||16.6%||–|
|Research and development expenses||33||31||6.5%|
Oerlikon Manmade Fibers Segment: 18.4 % EBIT margin (2014); followed by Andritz AG: 4.3 % EBIT margin (Q1– Q3 2014).
The Manmade Fibers Segment, with its brands Oerlikon Barmag and Oerlikon Neumag, is a world market leader for systems used in the manufacture of manmade fibers. Synthetic textile fibers are processed into functional clothing, carpets and furnishings, and increasingly also into technical textiles for airbags and safety belts, as well as into geotextiles for road construction and other industrial applications. The Segment offers end-to-end systems, covering every step in the entire process of manmade fiber production, from melt to yarn. Oerlikon Barmag specializes in largescale filament spinning and texturing
systems for the manufacture and processing of polyester, polyamide and nylon. Oerlikon Neumag’s core competencies lie in high-tech production systems for the manufacturing of bulked continuous filament (BCF) carpet yarns, synthetic staple fibers and nonwoven fabrics. In addition, the Manmade Fibers Segment also offers comprehensive engineering and maintenance services, as well as the construction of complete polycondensation solutions. Over 2 500 employees work for the Manmade Fibers Segment at eleven sites worldwide.
Oerlikon Barmag’s key markets are located in Asia, in particular in China, with India as well as the Middle East playing an increasingly important role. Oerlikon Neumag focuses primarily on the markets in the USA and Turkey. Out of the world’s 25 largest manmade fiber producers, which cumulatively account for more than 60 % of the annual production of filaments and fibers, 22 are customers of the Manmade Fibers Segment. These include global companies such as Shenghong, Tongkun, Newfengming, Indorama and Wellknown Polyesters Ltd.
The addressable market for the Manmade Fibers Segment was valued at around CHF 2.2 billion in 2014. The Segment succeeded in increasing its market share
for newly delivered systems and solutions in filament spinning. Chemical filament spinning/texturing is the most important market for the Segment. The anticipated market normalization took effect during the year, notably in Asia, where investments in recent years have resulted in a decrease in demand and delay in further investments in 2014. The market for plastics processing and carpet yarn systems remained stable at a high level, and projects were won in the market for staple fibers and nonwoven fabrics.
The Manmade Fibers Segment reported another strong year, with high profitability and sales close to its historical high level despite market normalization effects. Sales was at CHF 1 073 million in 2014, corresponding to a decline of 5.0 % compared to the previous year (2013: CHF 1130 million). Order intake declined by 16.0 % to CHF 901 million (2013: CHF 1073 million).
EBITDA amounted to CHF 217 million (2013: CHF 207 million), which corresponded to an EBITDA margin of 20.3 % (2013: 18.4 %), while the EBIT of CHF 197 million was 4.8 % above the prior-year level (2013: CHF 188 million; 16.6 %). With these results, the Manmade Fibers Segment has succeeded in retaining its Best in Class position compared to peers.
In 2014, the foundation stone was laid in Chemnitz, Germany for a new pilot plant for extrusion systems and a variety of specialist winders. At the three German locations – Remscheid, Neumünster and Chemnitz – as well as in Suzhou, China, engineers and technicians are developing and researching new solutions for energy-efficient processes in the spinning and texturing of filaments, as well as for the cost-efficient production of staple fibers and nonwoven fabrics.
The Manmade Fibers Segment continued to utilize its competence in manmade fiber production to penetrate further into the PET beverage bottling business in 2014. A turnkey facility for the manufacture of granulates for PET bottles was completed for a customer in Egypt. Light, shatterproof and recyclable PET bottles are the first choice when it comes to packaging liquids safely and the technology to produce PET granulates is almost identical to that used in the manufacture of manmade fibers.
With the innovative technologies provided by the Segment, customers benefit from significant savings in energy consumption, and hence lower operating costs. For this project, Oerlikon was tasked as the general contractor with overseeing and managing the construction of the plant, from planning through to commissioning, all provided from a single source.
As part of the Oerlikon operational excellence program, the Segment implemented process improvements at all production locations. In Remscheid, the newly designed one-piece-flow concept was used both for the new WINGS POY 1800 assembly line and for the production of the change bars, resulting in a 15 % increase in production capacity. In Chemnitz, capacity was increased by over 30 % thanks to retrofitting work on the warehouse, with new high-rack storage and automated storage space management helping to improve production procedures. Neumünster has optimized its shop floor management and reduced processing times for the assembly of BCF systems by around 30 %.
At the end of 2014, only one year after the groundbreaking ceremony, the Drive Systems Segment’s third production site in India was already partially operational. The plant is scheduled to be running at full production capacity in phase one in the third quarter of 2015. This new factory in the state of Gujarat will primarily provide the rapidly growing domestic market with a range of products from transmission synchronizers, for which India is already recognized as a competence center, to shifting solutions for transmissions used in commercial vehicles, off-road applications and passenger cars, to complete axle and transaxle assemblies for utility and recreational vehicles such as golf carts. Being in close proximity to customers through the local production facilities enables the Segment to further strengthen its customer relationships and improve operational efficiency.
In 2014, innovative driveline concepts for electric and hybrid vehicles were extended to off-highway vehicles and include technologies such as the 2SED and 4SED e-drive solutions, and the hybrid transmission OGeco with its patented drive technology.
2014 saw sales growth in the energy sector, thanks to new products for offshore drilling platforms, wind tower installation vessels and lift boats, as well as to the expansion into new geographical markets and applications for energy exploration, drilling and extraction.
Significant progress was made in 2014 toward achieving world-class operational excellence: productivity and occupational safety were improved and the production reject rate was reduced.
|in CHF million||2014||2013||▲ %|
|Sales (third parties)||779||734||6.1%|
|− as % of sales||10.5%||9.1%||–|
|− as % of sales||5.3%||3.5%||–|
|Research and development expenses||14||13||7.7%|
BorgWarner: 11.6 % operating income margin (2014).
The Drive Systems Segment, with its brands Oerlikon Graziano and Oerlikon Fairfield, is a leading provider of gear, drive and shifting solutions. With over 90 years of experience, one of the Segment’s core competencies is its in-house engineering and manufacturing expertise in developing innovative solutions, which can be anything from a custom-engineered synchronizer ring to a seamlessly integrated powertrain from the engine to the wheel. The Segment’s high-tech products can be found in a wide range of applications for operating
machinery and equipment used in agriculture, construction, energy, mining, transportation and high-performance sports cars. Examples include tractors, trucks, on-/off-highway vehicles such as city buses and airport towing tractors, power plants, oil and gas platforms and underground mining machines. The Segment’s latest innovations for electric and hybrid vehicles are targeted at reducing emissions and environmental pollution, while still providing the desired vehicle performance and engine efficiency.
As one of the largest manufacturers of precision gear components and assemblies, the Segment provides technologies for the agricultural, construction, energy and transportation markets. Around 70 % of all agricultural machinery manufactured worldwide contains shifting solutions (e.g. synchronizer assembly and clutch units), making the agricultural industry the most important market for the Segment, followed by the construction industry. Customers include well-known brands that manufacture construction and agricultural machinery.
In the high performance automotive sector, complete systems from the Drive Systems Segment are used in premium sports car brands, as well as in environmentally friendly electric and hybrid vehicles. The Segment has an addressable market of CHF 15 billion, with the main geographic markets being Europe, the Middle East, Africa and Russia (EMEAR), the Americas, India and China.
The Drive Systems Segment posted sales of CHF 779 million in 2014, corresponding to an increase of 6.1 % year-on-year (2013: CHF 734 million), while order intake remained around prior-year level (–1.4 %) at CHF 781 million (2013: CHF 792 million). Thanks to ongoing measures to increase operational efficiency, the Segment’s profitability continued to improve compared to the previous year, with EBITDA up 22.4 % to CHF 82 million (2013: CHF 67 million), and an EBITDA margin of 10.5 % (2013: 9.1 %). EBIT amounted to CHF 41 million (2013: CHF 26 million), which corresponds to an EBIT margin of 5.3 % (2013: 3.5 %).
In 2014, the Drive Systems Segment signed long-term agreements for high-precision gears and transmissions with leading manufacturers of agricultural and construction machinery. During the same period, customers also ordered innovative new products such as all-wheel drive gearboxes, high-performance gears and shifting solutions for tractors and commercial vehicles, axles for low-floor buses and planetary drives for oil and gas platforms. Several of these orders have enabled the Segment to gain access to new geographic markets.
In 2014, the Drive Systems Segment expanded its range of innovative drive concepts for electric and hybrid vehicles. With the 4SED (4-Speed Electric Drive), the Segment launched an innovative, compact and lightweight transmission that delivers smooth seamless shifting and enables over 90 % powertrain efficiency over the full speed range. With the 4SED technology, automobile manufacturers are able to build more efficient and better-performing electric vehicles with a higher range, enabling them to successfully differentiate themselves from competitors. A further innovation is the new hybrid transmission OGeco with integrated electric motor – a technology fully developed in-house by Oerlikon Graziano and its subsidiary, VOCIS. The powerful 120 kW electric motor can be connected to the input or output shaft, either serving as an energy recovery system or adding torque over a variable speed range. The hybrid technology reduces fuel consumption and emissions by up to 30 %, especially at frequently used low speeds, where the vehicle noise levels are also significantly reduced.
At the same time, the system provides a boost in performance whenever needed. Further innovations in 2014 include a new patent-pending hybrid electric drivetrain technology for off highway equipment, with an innovative energy recovery system. Under the global Oerlikon operational excellence program, the Segment launched its operational excellence deployment plan in mid-2013, starting in India at the two key sites in Belgaum and Greater Noida. The initiatives continued to be implemented through the year under review. Targeted training was provided for the plant managers and other managerial staff, as well as for around 200 employees. A review carried out in mid-2014 revealed that significant progress had been made, including higher levels of engagement, increased productivity, greater safety awareness and lower scrap rates. The Segment will roll out their operational excellence initiatives in 2015 at further locations.
To obtain the high-quality steel needed for applications in the automotive and aviation industries, steel is subjected to a range of finishing and refining processes. One such process is vacuum-based degassing, where unwanted elements such as carbon, hydrogen, sulfur and phosphorus are reduced. This increase in quality can be achieved with a cost-effective and low-emission approach by means of mechanical vacuum pumps. Compared to conventional systems, where a vacuum is generated using steam jets, mechanical vacuum pump technology can result in energy savings of up to 90 %. In 2014, several systems were sold, including one to Siemens for an end customer in Mexico. With a pumping speed of almost 600 000 m³/h, it is the biggest vacuum system that Oerlikon Leybold Vacuum has built in its over 160-year history.
Launched in 2014, the new generation of TURBOVAC i/iX pumps for analytics, R&D and the process industry achieved Best-in-Class performance level, 60 % above that of comparable products.
Thanks to the internationalization of manufacturing capacities, the restructuring of the service organization and network and other measures implemented in 2014, operating efficiency improved as planned and in line with the goal of achieving 44 % efficiency gains by 2017.
A large order was won in 2014 for the construction of the world’s biggest cryopumps in China. These sophisticated high-vacuum pumps will be applied to simulate on earth the atmospheric conditions in space and used in the complex field of research and testing of space components and equipment.
|in CHF million||2014||2013||▲ %|
|Sales (third parties)||390||396||–1.5%|
|− as % of sales||10.3%||13.5%||–|
|− as % of sales||6.8%||10.3%||–|
|Research and development expenses||26||21||23.8%|
Atlas Copco: 18.2% operating profit margin (2014).
Under the Oerlikon Leybold Vacuum brand, the Vacuum Segment offers a broad range of fore- and high-vacuum pumps and related accessories. In addition to single vacuum pumps, the core competencies of the Segment range from delivering standardized vacuum systems through to the engineering of tailor-made vacuum solutions for industrial applications with complex performance parameters. The product portfolio is rounded off by vacuum technology
accessories and measuring instruments, as well as the vacuum technology expertise, which is also passed on at the Leybold Academy. With three production locations of its own, over 30 branches, an international after-sales management team and more than 80 dealers and representatives spread globally, the Segment offers its customers one of the densest distribution and service networks in the industry.
Vacuum pumps and vacuum systems from Oerlikon Leybold Vacuum are in use all over the world, creating the necessary clean production conditions for the manufacture of semiconductors, displays, coated architectural glass and solar cells for a wide range of customers. Vacuum systems are also used for refining steel and for the processing and packaging of food. Notable customers in the area of R&D include CERN in Geneva, ETH Zurich and the Karlsruhe Institute of Technology (KIT), which is home to the world’s largest vacuum chamber.
The overall market for vacuum technology amounts to a total of CHF 6 billion worldwide, within which the Vacuum Segment addresses a market of around CHF 2.7 billion today. Based on sales recorded in 2014, the Segment has a market share of around 11 %. Average annual market growth is forecasted at 3 % globally. The Segment is extending its expertise in the food industry and also looking at developing new applications for adjacent growth markets to increase its sales and profitability.
The Vacuum Segment posted sales of CHF 390 million in 2014, which corresponds to a slight decline of 1.5 % compared to the previous year (2013: CHF 396 million). Order intake totaled CHF 381 million, versus CHF 404 million for 2013. This decline was attributable primarily to the postponements in large-scale projects in the energy sector as well as industrial and glass coating applications. EBITDA amounted to CHF 41 million (2013: CHF 54 million),
corresponding to an EBITDA margin of 10.3 % (2013: 13.5%), while the EBIT of CHF 27 million resulted in an EBIT margin of 6.8 % (2013: CHF 41 million; 10.3 %). The Segment's profitability was mainly impacted by investments in organizational and operational effectiveness as well as in the optimization of footprint and logistics.
The most important market launch in 2014 involved the new pump generation TURBOVAC i/iX, which offers extremely high pumping capacity. The pumping speed of the TURBOVAC i/iX models for light gases is 60% faster than those of comparable products. The new pumps were developed specifically for applications in analytics, R&D and the process industry. Oerlikon Leybold Vacuum’s modular pump concept for vacuum technology in steel degassing systems has proven to be successful with the sale of several systems in 2014. These customizable solutions can be adapted to the required production volume.
For a customer in China, the Segment has built the world’s largest high-vacuum pumps of the COOLVAC series. These cryopumps are built to evacuate the air, including all molecules, from very large vacuum chambers, within a short time and to an extremely low pressure. The vacuum chambers will be used to facilitate research and testing in the area of aero- and astronautics, whereby rocket elements, satellites, space shuttles and parts of space stations will be studied in these huge simulation chambers.
A further highlight for the Segment was winning the Red Dot Award in 2014 for its intelligently and innovatively designed leak detector, the PHOENIX L500i. This detector offers a symbiosis of design and functionality thanks to ease of use and the userfriendly visualization via a high-resolution color retina display. Notably, the integrated data storage and the production of test reports help to ensure that the documentation is efficient and reproducible and of a high quality.
As part of the Oerlikon operational excellence program, the Segment restructured its service organization and improved its distribution and service network to establish smaller, more customer-oriented units, thereby creating a basis for stronger after-sales businesses. Cost management was also strengthened by diverse means, including systematic procurement in “best-cost countries”, optimization of production processes and value analysis. The opening of the new logistics center in Cologne in January 2014 entailed the comprehensive restructuring of operating processes, in view of the building’s role as the logistics hub for production supplies and the flow of goods from the Segment to customers and subsidiaries worldwide.