Industrial & Automotive
“Industrial & Automotive generated a solid operating margin of 11.1%.”
Results from continuing operations
Sales in Industrial & Automotive were £2,155.5 million (2006: £2,172.8 million) and adjusted operating profit was £238.2 million (2006: £240.7 million).
Power Transmission
Power Transmission had another solid year with strong underlying organic growth in most industrial and automotive original equipment and replacement markets. This growth was offset by the weakness in the North American automotive original equipment market. During 2007, we opened a new Power Transmission facility in Chennai, India supplying local customers with belts and tensioners for the industrial and automotive sectors. We were awarded record automotive OE programmes of $186 million in 2007, with customers such as Audi, Nissan, Hyundai and Chery. 70% of these programmes were outside of North America. The integration of Stackpole into Gates is progressing well with Stackpole returning to profitability in 2007.
Fluid Power
Fluid Power, which serves primarily the industrial original equipment and replacement markets, produced good results in most of its geographic markets, although the North American business was negatively impacted by the continued weakness in US residential construction. Fluid Power capitalised on the strong growth of many of its end markets including agriculture, oil and gas and mining. The relocation of manufacturing from the St. Neots facility in the UK to Karvina in the Czech Republic is expected to be completed in early 2008 and will position Fluid Power for improved performance and a stronger competitive position in Europe. In order to support the high-growth hydraulic market in India, we increased the manufacturing capacity at our Fluid Power facility in Chandigarh, India and established a manufacturing capacity in China in order to grow our business in Asia.
Fluid Systems
Fluid Systems had a strong year primarily due to the successful ramp-up of RTPMS at Schrader Electronics. The business had contract wins for its snap-in RTPMS with Mahindra & Mahindra, Mitsubishi and General Motors. The business was also awarded a fuel level-sensing programme from a German OEM. Sales of RTPMS retrofit kits to the aftermarket started to come through in the second quarter of 2007 and the business saw good growth over the balance of the year. During the fourth quarter, Schrader Electronics acquired Swindon Silicon Systems for £6.0 million, thereby accelerating Schrader’s product development capability based on ASIC technology with a view to expanding the product offering into new industrial applications.
Other Industrial & Automotive
Other Industrial & Automotive includes the Dexter Axle, Plews and Ideal businesses. The Gates Fleximak and Gates Winhere water pump businesses, which are also part of this Group and were acquired in 2006, made a positive contribution in 2007 and demonstrate the successful expansion of the Gates platform into new markets in the year. The Dexter Axle business was impacted by weaker volumes in the manufactured housing and recreational vehicle markets in 2007. The Ideal Clamp business continues to expand its small but growing presence in Europe and China.
Industrial & Automotive revenue bridge
Industrial & Automotive adjusted operating profit bridge
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