Annual Report 2010 - Knorr-Bremse AG.

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Outlook
In 2011 the Knorr-Bremse Group expects to see the positive
development of its business continue, albeit in an environment
that remains highly volatile. Following the
worldwide market recovery that set in during 2010, we are
currently expecting that trend to persist, although the
pace of recovery will vary considerably from one region to
the next. In Europe a divided picture will likely emerge. On
the one hand the export-oriented countries – and Germany
in particular – will show strong growth driven by the
recovery of global trade. On the other hand the countries
of Southern Europe and Ireland will remain burdened by
high levels of national debt. In the USA, the world‘s largest
economy, levels of consumer spending which are being
depressed by prevailing high levels of unemployment are
still considered extremely critical.
The emerging Asian markets will probably continue to
make a significant contribution to economic growth in
2011.
In the European rail vehicle market there are currently no
signs of any decisive growth drivers for 2011. The locomotive
sector is expected to make a modest recovery while
the freight car market remains stagnant. A stable market
environment is anticipated for the passenger sector. The
postponement or cancellation of major procurement projects
in 2010 was a key factor in the continued depressed
state of the market. In Russia, large-scale projects associated
with the 2014 Winter Olympics in Sochi and the 2018
World Cup are revitalizing the market.
In the European commercial vehicle sector the recovery
that has set in is expected to continue in 2011. The volume
of trucks built in 2011 will probably be up on the prior-year
level. However, the record level of 2008 will not be repeated
in the medium term.
In fiscal 2011, the main challenge for the Commercial Vehicle
Systems division in Europe will be posed by the increasing
globalization of its business. Further expansion
into markets of the future, such as Russia and China, and
the shipments this calls for from Europe, along with the
introduction of products that meet specific local requirements,
and selective penetration of new fields of activity
should drive the growth of the company‘s business in the
medium term. In all growth projects, the focus is on increasing
customer benefits and extending our technology
leadership, with the quality and reliability of all products
being assigned top priority.
In the North American rail vehicle sector, Knorr-Bremse anticipates
that 2011 will bring a moderate market recovery
for equipment manufacturers for freight cars and locomotives
compared to 2010. In both of these segments, however,
growth will be at relatively low levels. To offset the
weak state of the domestic market, North American locomotive
manufacturers are stepping up their export activities,
bringing new challenges for market players. In the
passenger transportation sector in North America the anticipated
investments failed to materialize in 2010, leading
to a marked deterioration in the mood of the market, so
that the outlook for 2011 is for zero growth.
The commercial vehicle market in the North American region
is expected to continue its modest recovery in 2011.
The sharp drop in unit sales anticipated for 2010 on account
of the new emissions regulations will probably not
happen in 2011 either. Owing to increasing market shares
in the OEM sector, aftermarket business is set to grow in
2011 as well as in subsequent years.
In the South American region the rail freight sector is expected
to show a recovery, driven by the ongoing rise in
demand for raw materials. In particular, the infrastructure
projects associated with the 2014 World Cup in Brazil and
the 2016 Olympics in Rio de Janeiro are exerting a positive
influence on the market. The Knorr-Bremse Rail Vehicle Systems
division will also be involved in the expansion of the