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Segment reports

Oerlikon engineers materials, equipment and surfaces to enable customers’ products to have high-performance functions and an extended lifespan. The Group is committed to continually investing and delivering valued technologies, products and services for customers to meet challenges in their markets. For instance, Oerlikon helps cars and airplanes use less fuel, makes tools last longer and saves energy in the manufacturing of textiles. A Swiss company with over 100 years of tradition, Oerlikon operates its business in three Segments Surface Solutions, Manmade Fibers and Drive Systems. It has a global footprint of around 15 000 employees at 186 locations in 37 countries and sales of CHF 2.8 billion in 2017.

A leading global provider of high- precision gear, drives and shifting solutions. Over 95 years of experience in developing power transmission solutions for electric, mechanical and hydraulic drive applications and one of the world’s largest independent full-service gear suppliers.

Drive Systems Segment
  • Order intake: +29.7 % increase CHF 778 million
  • Sales: +19.3 % increase to CHF 730 million
  • EBITDA margin: 10.6 %
  • Sites: 15
  • Employees: 5 164
  • R&D expenses: CHF 12 million

In 2017, the Drive Systems Segment delivered its technologies to an addressable market of CHF 11.4 billion, encompassing agriculture, construction, transportation, automotive, energy (oil & gas) and mining markets worldwide. These markets combined have an expected CAGR of 3.6 % through 2022. The Segment is targeting a growth rate that exceeds growth in each of its markets over the same period.

Development in industrial markets

The agriculture market is the Segment’s most important sales market in 2017. Although the market continued to be challenged by weak commodity prices, which impacted US equipment sales, Segment sales were up in Canada, Brazil and India. The business climate was also positive in China and in Europe as farming strives to become more efficient. In 2017, the Segment partnered with its customer, CNH, to develop the new synchronizers for the CNH APH dual clutch transmission for premium agricultural tractors – the first dual clutch transmission in the agricultural market that offers more durability and reduces shifting time.

Sales in the construction market were strong in 2017, led primarily by the USA, due to much-improved and growing construction equipment gear demand. The spending on construction increased in Western Europe due to infrastructure investments. In India, a temporary slowdown in growth for construction equipment was noted in the second half of 2017, mainly due to the increase in tax rates.

In the transportation market, sales were also strong in 2017. Favorable market dynamics were noted in North America, where demand was high for both medium and heavy duty trucks, and in China, where commercial vehicle units volume was up 76 % from 2016. Through the joint venture with Kenway, the Segment doubled its sales to the China transportation sector, where it is becoming a market leader in city bus low-floor axles.

Sales to the automotive market, where the Segment delivers technologies for AWD and high-performance cars, as well as for electric and hybrid vehicles, also increased in 2017. Globally, e-drives and hybrid automotive markets are developing positively, as reflected by the 48 % increase in sales of global plugin vehicles in 2017. In China, the Segment is seeing a sharp increase in demand for electric vehicles due to the China government's subsidies and regulations, mandating more measures, such as electric and hybrid powertrains, so as to reduce pollution. In 2017, e-vehicles sales volumes in China jumped more than 70 % in 2017, albeit starting from a low level. The trend is also noticeable in Europe, where alternative solutions are sought after in order to reduce emissions. Additionally, high-performance sports car drivelines also contributed to Segment growth in 2017, which were up 7 % from 2016.

In the energy market, the Segment saw some improvement in sales, driven by the slight increase in activity and investments in the US energy market, particularly for shale oil and gas.

Development in regions

Europe remained the largest market in terms of sales for the Segment, representing 44 % of 2017 Segment sales. North America followed, generating 32 % of its 2017 sales. In China, the Segment increased its sales significantly compared to the previous year, mainly propelled by business in the transportation market. China contributed 10 % of the 2017 Segment sales. The Segment derived 10 % of its sales in India partly due to the introduction of new products for agriculture and automotive markets, while extending product applications from agriculture into commercial vehicles. The Segment plans to expand the Sanand facility in India for agriculture and leisure vehicles customers and is also ramping up production for electric vehicles applications.

Strengthening technology portfolio

In 2017, the Segment launched diverse innovative technologies and solutions. Among them is the EMR3, an innovative single-speed transmission for battery electric vehicles, and the HRAM (hybrid rear axle module), which is a scalable rear differential module primarily conceived for high performance RWD/ AWD cars and allowing hybridization in P3 configuration. Another market introduction was the new Compact Slotless Synchronizer – an innovative shifting solution for passenger cars, trucks, and agricultural, industrial and construction equipment that improves overall transmission performance and efficiency.