kuka systems

kuka Systems offers automotive, aircraft and solar industry customers comprehensive automated solutions for their manufacturing plants. With 3,781 employees as of December 31, the company’s European, American and Asian offices plan, design and build robot-based systems for welding, gluing, sealing, metal forming, assembling, testing and handling metals, glass or other materials in accordance with their customers’ unique specifications.

New customers in markets such as the aircraft and solar industries attest to the division’s ability to compete. The aircraft industry uses kuka systems to manufacture and join outer shell components of aircraft and propulsion systems. kuka’s automation expertise can be applied in the solar industry to rationalize manufacturing at all value added stages of the process. With a market share of 25 percent, kuka Systems is the market and technology leader in the automotive industry in terms of private sector tenders.

kuka Systems’ contribution to the integrated business model is application engineering. Acting as a general contractor, kuka Systems plans and builds complete manufacturing systems for our internationally active customers. The division relies mainly on three regional centers: Augsburg for Germany and Europe, greater Detroit for the North American business, and Shanghai for the emerging Chinese market. 25 subsidiaries that are close to the customer support these centers and independently process small orders.

In the automotive industry, kuka Systems focuses on building flexible assembly systems, which can be used to manufacture several different car body models or types. The division also offers press tools for stamping car parts and automated assembly lines for engines, transmissions and axles. These businesses are based in Schwarzenberg / Erzgebirge and Dubnica / Slovakia, as well as Bremen and greater Detroit / Michigan.

high capacity utilization

In fiscal 2008, the Systems division’s overall capacity was very highly utilized, even though postponed orders in the second half year were already leading to lower sales. Sales revenues came in at € 837.5 million, 6.9 percent lower than last year’s € 900.0 million. However, after adjusting the result by € 35.0 million to changes in input material purchasing by us subsidiary ktpo, plus € 10.1 million for the revised posting related to the redemption of the financing for this company, plus € 16.8 million for the changed € / usd exchange rate, the division’s sales revenues were about the same as last year.

Orders received were also down from last year’s € 937.7 million and came in at € 854.9 million. Adjusted for non-operative effects totaling € 62.5 million, orders received were slightly under last year’s level. Order backlog was up accordingly, rising from € 434.7 million in 2007 to € 450.3 million as of December 31. The order backlog therefore notionally secures the present level of activity for over six months.

The division’s operating result (ebit) went from € 37.2 million in 2007 to € 26.8 million during the period under review because of the one-time charge associated with the cancellation of a systems order from a North American automotive supplier. Return on sales declined accordingly, going from 4.1 percent in 2007 to 3.2 percent in 2008. The one-time charge of € 20.8 million was booked against the fourth-quarter operating result. Excluding the one-time charge, the division’s operating result (ebit) for 2008 would have come in at € 47.6 million, equivalent to an ebit margin of 5.7 percent of sales revenues, thanks to the excellent loading and the improved profitability of the orders delivered.

At the end of the reporting period, kuka Systems had 3,781 employees. This represents an increase of 5.6 percent over the 3,582-person workforce at the end of last year. The additional staff was hired primarily to expand the activities in China and in manufacturing.

new orders from the automotive industry

In the second half of 2008, various kuka Systems automotive industry customers shelved their plans to purchase new assembly systems or postponed the purchases until 2009. The need for new capital spending was examined even more closely than before, while customers were even more prepared to refurbish and continue to use existing systems. Plant upgrades and refurbishments increased accordingly.

Despite the difficult economic climate, kuka Systems was able to pull in numerous major automotive industry orders in 2008. For example, the division received an order from carmaker Ford for the complete B Car body shop. This is a key strategic project for Ford. The B Car is a successful European model, which the carmaker is introducing to the North American market. It is equivalent to the European Ford Fiesta. The new assembly line will be installed at the Cuautitlán assembly facility in Mexico.

Volkswagen too entrusted kuka Systems with supplying automation technology that will be used to expand its production capacity in India. The German carmaker ordered car body door and hatch assembly systems for its new factory in Chakan near Pune. The lines will be used for the Skoda Fabia and two Polo models destined for the emerging markets. The equipment for the order will be delivered over a period of two years. The division also won orders from the Indian carmakers tata, Mahindra & Mahindra and tal during the fiscal period.

Other major orders came from European carmakers vw, bmw, Opel and Volvo, as well as us manufacturers Ford and Chrysler.

rising demand from the solar industry

Interest in renewable energies remained high last year in view of the sharply higher prices for energy from conventional sources. The increase in new solar system installations in Germany was greater than anywhere else in the world. However, experts forecast that over the long term, only suppliers able to rapidly cut the costs of solar systems and at the same time improve their efficiency will be successful in this market. As a result, the sector’s capital spending plans remain high, which leads to increasing demand for automation expertise.

Last year, demand for kuka Systems’ products and services was strongest in the photovoltaics, thermal solar systems, energy storage and conversion systems segments. Several important orders were received. For example, robot-based assembly systems for manufacturing photovoltaic modules were delivered to the us solar company Evergreen. kuka Systems also successfully entered the Swiss solar market.

systems division – key figures

(in € millions)

		2007		2008		Change in %
Orders received		937.7		854.9		– 8.8
Sales revenues		900.0		837.5		– 6.9
ebit		37.2		26.8		– 28.0
% of sales		4.1		3.2		– 0.9 %-points
% of capital employed (roce)		51.0		20.2		– 30.8 %-points
Capital employed		73.0		132.7		81.8
Employees (Dec. 31)		3,582		3,781		5.6

first aircraft industry reference installations

The recession has also noticeably impacted the international aviation industry, causing a drop in orders for new aircraft and cancellations of existing orders for planes. In spite of this, the major aircraft makers Airbus and Boeing have a backlog each of more than 3,700 airplanes as a result of the booming demand over the past number of years. With annual shipments estimated at 400 to 500 planes, the backlog will keep these two companies busy for over six years. At the same time, the manufacturers are pressing ahead with converting their mainly manual and partly automated assembly systems. Robot-based automation contributes considerably to this effort. kuka Systems won reference-worthy orders from both Airbus and Boeing in 2008 for assembly systems for components made of the newly developed carbon fiber reinforced material (cfrp).

engineering services from a single source

kuka’s us subsidiary ktpo operates an assembly line in North America on a pay-on-production basis. The system is located at Chrysler’s site in Toledo / Ohio and is used to build Jeep Wrangler car bodies. In the first quarter of 2008, kuka redeemed the financing for this assembly system. In view of the significant slump in the passenger vehicle market in North America, the number of bodies produced for this off-road vehicle in 2008 remained relatively stable.

The Harbour Report, the leading indicator of North American carmakers, named the Toledo supplier park for the Jeep Wrangler North America’s most efficient and productive factory. The throughput time per vehicle is on average 13.6 hours, a full two hours less than the nearest competitor.

kuka Systems’ press tool manufacturing unit builds cutting and metal-bending tools that come in all sizes and complexities. The press tools to manufacture large quantities of sheet metal components are used as single presses, automated press lines and large scale transfer presses. In addition, customers are asking for field service more and more frequently. The press tools are manufactured in Schwarzenberg / Erzgebirge and Dubnica / Slovakia. The press tool business unit supplies products to carmakers in Germany and the European Union, and increasingly also to customers in China and India. Important orders for 2008 were received from vw (Polo successor), Audi (Q5 China), Volvo (V 50 successor), Jaguar (xj successor) and Magna (Porsche Cheyenne / vw Touareg).

The assembly technology business unit plans, designs and builds automated assembly lines, primarily for car engines, cylinder heads, transmissions and axles. It also builds test stands for engines and transmissions. The assembly technology business unit is located in Bremen and greater Detroit / Michigan.

Important orders were placed in 2008 by zf Saarbrücken (first eight-speed automatic transmission), gft Kosice / Slovakia (double-clutch transmission), Porsche (Panamera), fiat (two-cylinder engine), Cummins (cylinder head and engine block) and Ford Coyote (cylinder head). Test stands were also delivered to vw, Ford and General Motors in Mexico, as well as to Caterpillar.

kuka Systems offers general industry customers planning, design and construction of special machines, welding cells and manufacturing lines, including subcontracted welding.

regional shifts in orders received

kuka Systems’ project business was impacted by major regional shifts during the reporting year. While orders from German customers in 2007 totaled € 308.7 million, almost one-third of the total orders received of € 937.7 million, in 2008 domestic orders dropped substantially, to € 150.2 million. Instead, German manufacturers placed more orders for their European plants. As a result, the Systems division’s orders received from Europe (excluding Germany) went from € 134.7 million in 2007 to € 276.7 million in 2008. In North America, orders received from automotive industry customers came in at € 329.5 million, down from last year’s € 395.6 million. The largest order received from the region during the reporting year was an order from Ford for a car body assembly line in Mexico for the B Car, the equivalent of the European Ford Fiesta. In Asia and the remaining regions, orders received of € 98.5 million for 2008 were almost the same as the prior year’s € 98.7 million.

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