Annual Report 2010 - Knorr-Bremse AG.

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Two pillars provide mutual support
A key role here is played by the fact that the Group’s two separate business areas, rail vehicles and
commercial vehicles, are subject to different economic cycles that can take very different courses – in
terms of time and from one region to the next. Thus in times of crisis the two pillars provide mutual
support and mitigate the overall impact of the cyclical global market. The fact that the company’s
product portfolio has been expanded beyond the core field of braking also helps to safeguard its longterm
future. Its innovative products in the areas of engine management, HVAC, power electronics or
automatic door systems stand for reliable leading-edge technology at its finest.
International strategy a stability factor
In 2010 Knorr-Bremse maintained its global strategic focus with a broad-based position in numerous
markets. Knorr-Bremse invested not only in product development but also in strategically important
production facilities such as the new Rail Vehicle Systems plant in Budapest, Hungary, or the new
Commercial Vehicle Systems plant in Liberec, Czech Republic. The agencies rated this diversification in
terms of both regions and product groups as an additional stability factor in mitigating the effects of
cyclical crises.
Dependable planning
Knorr-Bremse’s documented continuity in meeting or exceeding agreed targets over a long period of
time was considered by the rating agencies proof of a solid and consistent management performance.
A moderate financial policy is key to this management approach. The Group’s balance sheet structure
and cash flow generation are geared to stability and sustainability and supported by an appropriate
volume of short and medium-term committed lines of credit that are by no means taken up in full.
Should the need arise, however, these credit facilities could bridge the gap between cash flow generation
and cash requirements, ensuring the flexibility that the company needs if it is to generate a
rapid response.
Appropriate level of debt
The rating agencies both affirm that Knorr-Bremse’s credit facilities are strictly aligned with the company‘s
core business and in keeping with its economic capabilities. No speculation takes place.
Through their ratings, Moody’s und Standard & Poor’s confirm that in times of crisis and of larger external
acquisitions, the Group is always capable of generating sufficient cash flow to ensure that its level
of net debt remains appropriate or, as was the case in 2010, can be transformed into net liquidity.