IMI plc Fluid Power

IMI plc
Fluid Power
October 2010
IMI Fluid
Fl id Power
P
Roy Twite
President and IMI Executive Director
Gordon Scott
Global Sector Head - Commercial Vehicles
Richard Edwards
UK Technical Director
Kelvin Austin
Global Sector Head – Rail
Frank
F
k Gevers
G
Technical Director – Rail Sector
Agenda
• Norgren Overview
Roy Twite
– Strategy
– Growth Drivers
– Margin
M i D
Drivers
i
• Sector Presentations
– Commercial Vehicles
– Life Sciences
– Rail
R il
Gordon Scott
Richard Edwards
K l i A
Kelvin
Austin
ti
Norgren Strategic Focus
• Sectors
– Aggressively grow through Engineering Advantage
– Strong
gg
growth in sales and margins
g
– KAM / customer insight / engineer solution
• Aftermarket
Factory Automation
25%
Sectors
42%
– Grow through Norgren Express
– Attractive margins and more resilient end market
– Availability is the key sales driver
Aftermarket 33%
• General market / factory automation
– Selectively grow
– Growing end market: labour productivity, consistent quality
– Focus on niche areas of higher margin business
Norgren Sector Sales
Rail
2%
Other
7%
Commercial Vehicles
16%
Energy
4%
Food & Beverage
6%
Lif S
Life
Sciences
i
7%
Norgren Major Global Customers
F
Focused
d sectors
t
S t
Sector
Commercial
Vehicles
Life Sciences
Market
growth
++
+++
Market
Share*
20-25%
10-15%
H1 growth
th
C
Competition
titi
50%
Parker, Voss,
W b
Wabco,
R f
Raufoss,
Bosch
25%
Tecan, Hamilton,
T
H ilt
Parker, Burkert
Food &
Beverage
+
10-15%
50%
A
Asco,
F t Bosch,
Festo,
B
h
SMC
Energy
++
10-15%
7%
Asco, Parker
30%
Parker,
P
k B
Bosch
h
Rexroth, Festo, SMC
Rail
+
10-15%
* IMI management estimates - market share within addressable market.
Norgren Strategy: Engineering Advantage
Customer
value
Sales Sales
Uplift
Life Cost
Acquisition Cost
IMI
margin
Engineering Advantage: Commercial Vehicle
Sales Sales
Uplift
Life Costs
Acquisition Cost
E i
Engineering
i Ad
Advantage:
t
R
Railil
Sales
uplift
Life cost
Acquisition cost
Norgren Express – Growth Channel
Focused on the Aftermarket
Aftermarket Buying Behaviour
General Market /
Factory Automation
25%
Sectors
42%
» Key customer requirements
» Part identification
» Easy to order
» Reliable and rapid
p delivery
y
Aftermarket
33%
2010 YTD Sales
N
Norgren
E
Express: G
Growth
th Programs
P
• New
N
C
Customers:
t
– Web based lead generation activities e.g. email, catalogues
• Attractive margins, not price sensitive
Fl id P
Fluid
Power M
Margin
i D
Drivers
i
• Increased new product sales, engineering advantage
– From 12% to 20%
• Further expansion of low cost manufacturing
– From 35% to 50%
• Increased low cost procurement
p
– From 20% to 45%
• Improving
I
i product
d t margins
i
Sales Growth and Margin Development
Organic Growth
g
40%
31%
20%
-9%
9%
-5%
5%
2001
2002
5%
8%
4%
6%
2005
2006
2%
3%
31%
-31%
2007
2008
2009
13.2%
13.7%
0%
2003
2004
2010 H1
-20%
-40%
Operating Margin
17.0%
15.0%
15.0%
12.2%
13 0%
13.0%
10.1%
11.0%
9.0%
7.0%
13.0%
6.7%
6.7%
2001
2002
7.6%
6.3%
5.0%
2003
2004
2005
2006
2007
2008
2009
2010 H1
Fl id P
Fluid
Power F
Future
t
Prospects
P
t
• Clear
Cl
strategy
t t
ffor Fluid
Fl id P
Power iin each
h market
k t area
• Growth Drivers
– Emissions control, healthcare, rail infrastructure, automation
• Margin
g Drivers
– Increased new product sales, engineering advantage
– Further expansion
p
of LCM/LCP
– Improving product margins
Agenda
• Commercial Vehicle Sector
• Asia
• Engineering
E i
i Ad
Advantage
t
Long Term Drivers
•
•
Legislation driving industry globally.
•
•
Globalisation of industry – Norgren well positioned
Engineering Advantage - differentiated product
solutions, using proven core building blocks
Commercial Vehicle sector outlook improving
» Key
K iindustry
d t drivers
di
indicating
i di ti strong
t
growth
th
Short Term Drivers
•
Key industry drivers indicating strong growth
- Freight requirements increasing
- Over capacity
p
y reducing
g
- Age of fleet
- Truck inventory 6 year low
CV Sector - Global Customers
 HD Truck
 Transmission
 Engine
Norgren Commercial Vehicle Sector …
Powertrain
Chassis & Cab
Air Management & Vehicle Dynamics
Fluid Management & Transmission Controls
»
IMPROVE Fuel Economy
»
IMPROVE Fuel
F l Economy
E
»
REDUCE Emissions
»
REDUCE Air Wastage
»
IMPROVE Reliability
»
IMPROVE Total Cost Ownership
Other Drivers – Minimal Cost, Minimal Engineering Impact to Customer
Powertrain
» IMPROVE Fuel Economy
» REDUCE Emissions
» IMPROVE Reliability
Air and Gas Management
After Treatment
Aft
T t
t
Components
Pressure
P
Control Valves
Customized
Solenoid Valve
Application
Fuel Efficiency & Performance
Charge Air
Management
Subsystem
Fully
F
ll IIntegrated
t
t d
Control System
Chassis / Cab
» IMPROVE Fuel Economy
» REDUCE Air
Ai W
Wastage
t
» IMPROVE Total Cost Ownership
Air Management
Connectors &
Accessories
Control Valves
Valve Arrays
Vehicle Dynamics
System
Controls
Suspension
Tire Inflation
Differentiated solutions - Building Blocks
Temperature
T
t
range
-40°...+130°C
Vibration
2,500 Hz
A
Acceleration
l
ti 50 g
Engine
Solutions
Voltage
Tolerance
-10% / +20%
Transmission
Solutions
Euro 2
Euro 1
Soot PM g/kW
Wh
Po
ollution
E
Euro
1
Legislation – Transformed Industry
Euro 2
Euro 3
E
Euro
3
Euro 6 Euro 5
0
1
2
Euro 4
Euro 4
3
4
5
6
7
NOx g/kWh
E
Euro
5
E
Euro
6
92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14
8
Engineering
g
g Advantage
g
Existing Customer Solution
Valve
• Multiple Individual Valves
• Remote Sensing
• Complex Electrical Installation
• Complex Pneumatic Installation
• Multiple Mounting
• Difficult Diagnostics
• Multiple Suppliers
• High Warranty cost
V l
Valve
Valve
Regulator
Sensing
Engineering
g
g Advantage
g
Norgren - New Solution
• Single Unit
• Improved Reliability
• Better Performance
• Smaller Footprint
• Reduced
R d
d Installation
I t ll ti Ti
Time
• Single Mounting
Sales
Uplift
Life Cost
Acquisition Cost
Engineering Advantage
Multi-Function Control Valve
•
Engine 11L and 13L - 3 Valve solution
– Timing: In production
•
WasteWastegate
Engine 15L – 2 valve solution
– Timing: February 2011
Sensors
Sales
Uplift
•
Exhaust
Brake
Engine
E
i 24 V (Gl
(Global
b l Eagle
E l World
W ld Truck)
T
k)
– Timing: April 2012
WasteWastegate
t
WasteWastegate
Life Cost
Acquisition Cost
Sensors
Amplification
Exhaust
Brake
Asia
•
Asia – Truck technology / requirement developing quickly
- Legislation following Europe / USA
- Asia
A i P
Potential
t ti l 900k T
Trucks
k – larger
l
th
than EU and
d USA
- Government Investment – Road Infrastructure
- Significant Efforts Global Truck OEM (World Truck)
- Norgren – Well positioned
Global Truck Production
Europe 391k trucks
Asia 894k trucks
America 358k trucks
Asia Region – India
Customer - Ashok Leyland
• Project – New Neptune Euro IV Engines.
Customer unable to find reliable, accurate control for EGR system. High vibration
and difficult environment. Timing, ready for 2010 launch
Solution
• Norgren Proportional Technology.
Used proven western technology.
P
Proven
“on
“ vehicle”
hi l ” reliability,
li bilit performance
f
and
d reall “t
“truck
k mileage”
il
”
Significant Amplification Potential - Technology
Sales
Uplift
Life Cost
Acquisition Cost
Summary
•
•
•
•
•
Legislation driving industry globally
Asia – Significant potential – Norgren well positioned
positioned.
Economic outlook improving
A lifi ti
Amplification
Engineering Advantage
– Technology, differentiation
ENGINEERING ADVANTAGE
In CV Sector
Richard Edwards
UK Technical Director
Norgren Life Sciences
Why is Life Science Attractive?
• Long
g term g
global g
growth
• Long program life (Instrument life & MRO)
• Significant
Si ifi
t barriers
b i
tto entry
t
• High margin
Life Science Sector - Markets
Analytical & Diagnostic A
l ti l & Di
ti
Instrumentation
Medical Devices
Anaesthesia
Ventilation
l
Respiration
Infusion
Dialysis
Drug Discovery
Patient Diagnosis
G
Genomics
i
Bio Detection
35
Market Size
•
National healthcare spending:
– North America: 14% of GDP ( @ 1.2 times GDP)
– Europe: 9% of GDP (
( @ 1.4 times GDP)
– BRIC: 5% of GDP ( @ 2 times GDP)
•
Respiratory disease accounts for
10% of the total healthcare burden
•
80 ventilator manufacturers
worldwide
•
250,000 new machines produced
each
h year
Source: growth statements are IMI management estimates based
on various external sources
Norgren Available Market - £500M
Growth Drivers
•
Emerging Markets
– Large population centers entering healthcare
•
Technology/targeted therapies
– Innovation,, genomics,
g
, and drug
g discovery
y
•
Point of care/point of use
•
Increase in chronic diseases worldwide
•
Aging
g gp
population
p
– 65 and older (500m to 1bn in next 20 years)
Market Growth
• Global Respiratory Markets:  12% p.a.
p a to 2016
• Global
Gl b l Analytical/Diagnostic
A l ti l/Di
ti M
Markets:
k t  9% p.a. tto 2020
Emerging markets will lead growth
China 18% over the last 15 years,
increasing to 25% through to 2015
India growing at 16% p.a. (85% of
devices are imported)
Source: growth statements are IMI management estimates based
on various external sources
Respiratory Disease
•
Chronic Obstructive Pulmonary Disease (COPD)
– Currently the 6th leading cause of death
– Predicted to be the 3rd leading cause of death by 2030
•
500M people affected globally, 25M require advanced treatment
– Mechanical Ventilation
– Oxygen Therapy
– Drug intervention
•
COPD is incurable
– Patients require treatment for life
Engineering Advantage
•
•
•
Solving
S
l i critical
iti l application
li ti challenges
h ll
with
ith
engineered solutions
Value proposition - making our customers
more successful
Foundations
– Customer intimacy
– Differentiation
– Strong regional technical centres
– Expertise
– Rapid response
Sales
Uplift
Life Costs
Acquisition costs
Platform
Integrated Solutions
Bespoke Designs
Proportional Valve
• The Norgren “Flatprop” – A world beater…
• Design optimised for critical ventilation and
pp applications
pp
life support
• Highest flow, lowest power, lightest weight,
most accurate proportional valve in the
world
• Enabling technology that has allowed the
development of truly portable ventilators
• Released
R l
d iin 2004
• 200,000 valves sold since launch
• The heart of many integrated solutions
44
Genome Sequencing
•
Completed
p
in 2003,, the human genome
g
mapping project took almost 13 years and
cost $3B
•
It is now possible to have individual whole
genome profiling within a week for less than
$10,000
•
Both leading
g manufactures of this
technology use integrated fluidic manifolds
and syringe pump arrays developed by
Norgren
45
Anaesthesia & Ventilator Manifolds
•
There are three main ventilator manufacturers
in China and Norgren has developed solutions
for each of them
•
In 2007, we started supplying an anaesthesia
gas control module for Mindray, manufactured
locally at our Shanghai facility
•
The success of the project and the close
working relationship between the engineering
t
teams
lead
l d thi
this year, tto a d
development
l
t
partnership for Mindray’s new flagship
intensive care ventilator
46
Infusion Pump
•
In-Patient care in US/European hospitals can
often exceed £1,000 per day
•
p
is therefore a
Earlyy de-hospitalisation
significant driver for both national services
and private healthcare providers
•
Astra Tech (a subsidiary of Astra Zeneca),
have developed a portable, disposable,
infusion pump which helps to achieve this aim
•
At the core of this solution is a bespoke
pressure regulator developed and
manufactured by Norgren
47
Life Science Sector Summary
•
Consistent double-digit annual growth
•
Fragmented and innovative market
•
True supply partnerships
•
E i
Engineering
i Ad
Advantage
t
solutions
l ti
•
Re arding
Rewarding
Rail Sector
October 2010
Kelvin Austin
Frank Gevers
49
» Whyy is Rail Attractive?
»Market Analysis
»Engineering Advantage
Global Megatrends
g
– shaping
g
tomorrow's markets
Urbanization
» Today: 280 million people in megacities (>10 million)
» 2007: First time in human history more people living
in cities than in rural areas
» 2015: 350 million people in megacities
 Challenges for Transportation
Energy Consumption
Rail is on average 2 – 5 times more energy
efficient than road, shipping and aviation
Final Energy Consumption in Europe
1.4%
14%
2.5%
Railways’ share of
transport energy
consumption is
less than 3%,
while
hil itits market
k t
share is between
6% ((passenger))
and 10% (freight).
0.1%
82%
Road
Air
Railways
Inland Water
Other
Energy Consumption
-57%
R d
Road
R il
Rail
Waterway
Climate change and CO2 emissions
GHG Output in Europe
2%
1%
12%
15%
70%
Road
Sea
Air
Railways
Other
Due to its use of electricity, rail is the only motorised mode of transport which is capable
of shifting from fossil fuels to renewable energy without any separate investment in the
propulsion units, simply by changing the energy sources in the electric energy
production. Electric traction accounts for 80% of rail production in Europe.
Climate change and CO2 emissions
With 6-10% market share, rail still
contributes
ib
lless than
h 2% off the
h EU
transport sector’s CO2 emissions.
Travelling by rail is on average 3
310 times less CO2 intensive
compared to road or air transport
-74%
Is it Safe to Travel?
Fatality Risk as a Multiple of Rail
571
600
500
Rail travel
i 15 titimes
is
safer than
a car!
400
300
201 189
200
100
15
18
1.8
1
15
1.5
ai
lw
ay
ir
R
us
/
B
per km basis
A
co
ac
h
ar
C
e
yc
l
C
n
tr
ia
de
s
Pe
M
ot
or
cy
cl
e
0
From this….
57
Beyond this….
To this….
Siemens - Deutsche Bahn ICE3
Energy consumption is 0
0.33
33 litres per 100 km per seat
seat, 75% less emissions than an aircraft
Tangshan (CNR) China Railways CRH3
Norgren
g
components
p
in Brakes,, Doors and Pantographs
g p
Velaro – Germany, Spain, China, Russia
Market Analysis
Global Rail Market Share
15%
10%
Parker
Norgren
Festo
SMC
53%
3%
8%
Bosch
Others
8%
6%
Source: IMI management estimates
Average
g Growth ’08 – ’13 = 5%
£ bn
Rail Market Forecast
(sci Verkehr / IRJ Oct 08)
140.0
120.0
100 0
100.0
80.0
60.0
40 0
40.0
20.0
0.0
100
2007
2008
122.5
2009
2010
2011
2012
Year
Openness of a country’s markets to foreign goods and services. Market access reflects the
government’s economic policies regarding import substitution and free competition.
2013
Study commissioned by the European Railway Industry Association - UNIFE
W ld R
World
Railil - Accessible
A
ibl M
Market
k t - Key
K Segments
S
t
Rolling Stock pne
pneumatic
matic potential = £200m
World Rail Market = £74bn
9
Rolling Stock Pneumatics Market = £200m
7.6 2.6
20.5
27
15
22.6
23
Rolling Stock
Services
Infrastructure
146.7
Train Control
Coaches
Wagons
Multiple Units
Others
Locomotives
Global Top Ten Vehicle OEMs
Bombardier
Alstom
CNR
CSR
Siemens
Transmash
GE
Trinity
EMD
Kawasaki
CNR = China Northern Locomotive & Rolling Stock Industry
Electro-Motive Diesel, Inc
Norgren Railine – Dedicated Rail Products
Our strategy is to deliver value to
vehicle OEMs and end-users
Tactics – Top 30
REGIONAL RAIL SALES ENGINEERS
Engineering Advantage
Technical solutions
Service
Se
ce d
differentiation
ee a o
Global support
= Sales Uplift
Tactics Top 20
BRECKNELL WILLIS
GLOBAL RAIL KAM’s
Products which are:
More reliable
More durable
More efficient
Integrated supply partners
= Life Cost Advantage
Rail Sector Strategy
KEY APPLICATIONS
KEY ATTRIBUTES
Brakes
References
Doors
Couplers
Pantographs
Durable
Experience
Proven
Reliable
Global Reach
Engineering Advantage
for the Rail Sector
Opportunity:
pp
y Reduce Complexity
p
y
The Problem
•
The customer wants to build Coupling Systems,
Systems not pneumatic circuits.
circuits
– Increase his capacity
– Retain flexibility
Solution: Customised Manifold
Application:
» Manifold to control the nose cone door system
Customer:
» Coupler OEM
Advantage:
» Compact unit,
unit easy to install
» Modular system - flexibility
» Reduced installation time
» Reduced re-work time
» Less inventory handling
» Less purchasing & accounting administration
Key:
» The customer had confidence in Norgren from our
existing relationship
» Designed
D i
d th
the circuit
i it tto suit
it diff
differentt variants
i t
» -40°C capability = global standardisation
Sales uplift
Life Cost
Acquisition cost
Opportunity: Ergonomic Access Systems
Designed for maximum comfort, efficiency, safety, and ease of use
•
Automatic compartment
p
and body
y
end door systems
•
Fire protection options
•
Automatic opening
p
g
•
Entrapment protection
•
Programmable motion
Opportunity: Ergonomic Access Systems
Challenges on Automatic Rail Door System Applications
•
Rigorous safety and quality standards
•
Low temperatures, down to –50°C
•
Demanding voltage ranges and high tolerances
– 24 – 110 VDC +/- 30%
•
Low lifecycle costs
ISO 16750
EN 45545
VDE 0435
DIN - EN60529
EN 16509
IEC 61508
EN 12015 und EN 12016
DIN 5510
EN 14752
EN 50125 -1
DIN EN 50155
DIN EN 50126
DIN EN 50128
DIN EN 50129
Solution: Engineering Advantage
Differentiation on Automatic Door Systems
y
•
Obstruction detection with memory function
•
Robust guiding system – capacity 150kg
•
Plug and play actuator – no cabling work
•
Proven lifecycles >2.5 million
•
Modular, flexible component layout
Solution: Engineering Advantage
Electric Door Actuator
Guiding System
I/O-board
Controller
Opportunity: Ergonomic Access Systems
Designed for maximum comfort
comfort, efficiency
efficiency, safety
safety, and ease of use
•
Some markets require less complex systems
•
Maintenance is problematic
•
Long refurbishment intervals are required
•
Manual door systems are sufficient for some applications
Opportunity: Ergonomic Access Systems
Challenges on Manual Rail Door System Applications
Can we bring Engineering Advantage to manual doors?
Solution: Engineering
g
g Advantage
g
Differentiation on Manual Door Systems
Yes!!
•
S
Stops
in
i any open position
i i – no entrapment!!
•
Adjustable dwell
•
Closes automatically
y
•
Integrated speed control
Solution: Engineering
g
g Advantage
g
Smart Manual Door Actuator
Engineering Advantage in Action!
In Norgren Brno, we have set up:
•
A demonstration of 3 Door Systems
– Automatic
– Manual
– Smart Manual
•
We will give you an opportunity to try them!
•
We have excellent references
and global reach
•
The sector is resilient
•
The sector is growing
•
There are market
Th
k t share
h
opportunities for Norgren
•
Our target is to double our
business every 3 – 4 years
•
Engineering Advantage is
delivering
g attractive margins
g
Fl id P
Fluid
Power S
Summary
• Attractive long term growth drivers
– Emissions legislation
g
for trucks
– Engineering solutions in growing healthcare segment
– Increased government investment in rail
• Opportunities to improve margins further
– New Products, g
growing
gp
proportion
p
added value sector business
– Increasing aftermarket through development of Norgren Express
– Further expansion of low cost manufacturing capacity / LCP
– Product margin optimisation
Questions?
Summaryy
1.
Highly cohesive group with shared
fundamentals
2.
Significant exposure to high growth
end markets
3.
Continuing margin momentum
4
4.
L
Long
tterm sustainability
t i bilit