Annual Report 2001 - KSPG AG

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32 Management report on the Kolbenschmidt Pierburg Group Executive Board report Performance risks Kolbenschmidt Pierburg intends to continue to outpace the international automotive industry by generating better-than-average growth rates. The steep organic growth budgeted in Financial risks Due to the international nature of the Kolbenschmidt Pierburg Group’s business, certain currency and interest rate risks may arise which are profiled centrally by Kolbenschmidt Pierburg AG's Treasury and hedged by means of currency futures and forwards, as well as caps wherever possible. It is a fact that the progressing globalization of procurement, production and financing will gradually curb the effect of parities, especially between the dollar Legal risks Sufficient insurance contracts have been taken out to adequately cover risks from loss or damage by natural forces and the resulting business interruption, as well as warranty, product liability, and callback risks. The existing insurance cover is regularly reviewed for adequacy and, where necessary, adapted. At the same time, ongoing projects for process reliability as well as extensive quality assurance programs aim at avoiding the occurrence of such risks. In the 2001 balance sheet, adequate accruals provide for such risks where covered not at all or not fully (deductible loss). the sales plans for fiscal 2002 calls for a large number of complex and technologically advanced new-product start-ups which because of their number, extent and in some instances the limited availability of skilled labor, inherently involve risks. A comprehen- and the euro, on the financial result. Because of the nature and mix of our customers, credit risks are very low. The auto assemblers will continue to download value-adding and engineering development functions to the industry vendors. This, in turn, premises the considerable financial resources required by the vendors if they are to prefinance their R&D and fund the cost input caused by the necessary additions to tangible assets. Any investment resources deployed by A certain tax risk emanates from unexercised option rights under the warrant bond issue floated by Kolbenschmidt AG. However, Kolbenschmidt Pierburg AG assumes, supported by the prevailing view of tax law pundits and in jurisprudence publications, that bond redemption is unlikely to entail any tax burden; however, the final judgment in a comparable case has not yet been passed. Moreover, certain risks exist from proceedings pending before the court of competent jurisdiction which have been instituted by 10 stockholders for review of the share exchange ratio under the merger of Kolbenschmidt Pierburg (Rheinmetall shareholdings), as well as for additional cash compensation. Kolbenschmidt Pierburg con- sive project management scheme is being applied through all the phases, from conceptualization, invitation to bid through to series start-up and mass production to ensure that these new products translate into profitable growth. any of the Kolbenschmidt Pierburg Group’s divisions are therefore subject to a particularly strict scrutiny in terms of efficiency both during the budgeting and PIA approval stages in order thus to relieve cash flows. In view of the gloomy economic prospects, further possibilities of cutting back on capital expenditure are presently being explored. tinues to believe in the underlying share exchange ratio fairly reflecting corporate value relations and that therefore the proceedings still underway represent only a slight risk. An additional provision in 1999 still allows for the fees and charges associated with such court proceedings. From today’s vantage point, potentially ruinous material risks do not exist for Kolbenschmidt Pierburg AG or its divisions, nor do any other risks that might have a long-term significant adverse effect on either the Company’s or the Group’s net assets, financial position or results of operations. Final inspection of the steplessly variable intake manifold on the BMW V8 at the Nettetal plant
Final assembly of the variable intake manifold on the GM V6 at the Nettetal plant Prospects At the start of 2002, production and car sales were somewhat down in the global automotive industry. In the United States and following the financial incentives of the final quarter of 2001, fewer vehicles were sold than a year ago. In Western Europe, the first two months of the current year failed to match the year-earlier production and sales figures. There is still vast uncertainty regarding what lies ahead in 2002. So far, the markets have not collapsed as feared. In all, we expect production figures in 2002 to show a worldwide decline, most steeply probably in the United States, whereas Europe and, especially, Germany will only suffer slight losses. As to the remaining markets important to Kolbenschmidt Pierburg such as Brazil and China, we expect 2002 to show growth. In terms of units sold, the heavy-duty vehicles have suffered much more than the light-duty. Among the lightduty, it is the cars that are least affected by the shrinkage. Kolbenschmidt Pierburg managed to contain its sales decrease in the first two months of 2002 to less than 1 percent, this being solely due to the deconsolidation of the MotorEngineering division, which this year is no longer providing the Group with sales revenues. Despite the further contraction in the United States, the OEM markets of Air Supply & Pumps, Pistons, Plain Bearings, and Aluminum Technology all showed marginal sales rises. On the basis of orders and products already placed or scheduled by our customers for the months ahead, we expect sales for the first half of 2002 to approximate the magnitude of the previous year. For the year as a whole, we expect, and contrary to market trends, to show a slight uptrend versus the 2001 level thanks to gains through soon-to-be-launched products. Once again, Kolbenschmidt Pierburg will achieve this sales growth in 2002 through extensive investments in R&D and additions to tangible assets. Nevertheless and in view of stalling business, special attention will be paid to the cost efficiency of such investments in 2002. Our top priority in 2002 is to maintain and enhance our own organic profitability. This is a target we have set ourselves in particular in view of the lackluster market expected in 2002. And this is why restructuring programs, substantial productivity enhancements and process improvements, in particular with new-product start-ups, will have to largely compensate for increasing costs and heavier price pressure. For 2002 and assuming only slight increases in sales, the Kolbenschmidt Pierburg Group is targeting earnings of the magnitude of the previous period. Production figures declining worldwide in 2002 Same earnings level envisaged 35
Page 1 and 2: Kolbenschmidt Pierburg AG Rheinmeta
Page 3 and 4: Kolbenschmidt Pierburg at a glance
Page 5 and 6: Contents Agenda of the annual stock
Page 7 and 8: 6 Kolbenschmidt Pierburg AG Supervi
Page 9 and 10: 10 Kolbenschmidt Pierburg AG Letter
Page 11 and 12: 14 Management report on the Kolbens
Page 13 and 14: 18 Management report on the Kolbens
Page 15 and 16: Tool setting prior to machining the
Page 17 and 18: Coating unit for high-duty plain be
Page 19: Production line for car engine bear
Page 23 and 24: Assembly of the steplessly variable
Page 25 and 26: Alfinizing of diesel piston ring mo
Page 27 and 28: 46 Lagebericht und Konzernlageberic
Page 29 and 30: Testing an engine block for leakage
Page 31 and 32: The PLU 401/121 for continuous fuel
Page 33 and 34: Ecotec test rig at the Neckarsulm p
Page 35 and 36: 62 Kolbenschmidt Pierburg AG Balanc
Page 37 and 38: Consolidated financial statements 2
Page 39 and 40: 70 Consolidated financial statement
Page 55 and 56: 102 Consolidated financial statemen
Page 61: 114 Consolidated financial statemen

Annual Report 2001 - KSPG AG

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