THE WORLDWIDE MARKET FOR RAILWAY TECHNOLOGY 2010

SCI Verkehr GmbH / Hamburg Office / +49 (40) 50 71 97-0 / September 2010

THE WORLDWIDE MARKET FOR RAILWAY TECHNOLOGY 2010

MARIA LEENEN, HAMBURG, SEPTEMBER 2010

2SCI Verkehr GmbH / Hamburg Office / +49 (40) 50 71 97-0 / September 2010

OUTLINE

I:

METHODOLOGY OF SCI VERKEHR

3

II:

WORLDWIDE MARKET FOR RAILWAY TECHNOLOGY –

RESULTS OF THE STUDY 10

III:

STRATEGIC CHALLENGES 19

OUTLINE


OUR SCOPE: STRATEGIC ADVICE FOR INTERNATIONAL CLIENTS

•

SCI is an independent consultancy company for the transportation

sector with activities and projects around the world

•

SCI is specialised in strategic advice to the railway and logistics industry

STRATEGIC EXPERTISE

MARKET-, ENTERPRISE-

AND PORTFOLIO-ANALYSIS

•

Competition analyses

•

Market analyses

•

Product analyses

•

Market entry strategies

•

Transport and sector analyses

•

Sector-related economic consulting

•

Strategy development

•

Portfolio assessments

•

Mergers & acquisitions

•

Due diligences

•

Asset value assessments

STRATEGY CONSULTING

4

WORLDWIDE CUSTOMERS ASK FOR SCI’S EXPERTISE

•

AAE Ahaus

Alstätter

Eisenbahn

AG

•

ABB Schweiz

Ltd. •

AEG SVS Power Sypply

Systems •

Alcan Composite Structures •

Allco

Leasing GmbH •

Alstom Transportation

•

Amtrak

Office of Inspector General•

Angel Trains Cargo •

Ansaldo Signal N.V. •

AnsaldoBreda spa •

Arriva International UK •

Auctus

Management GmbH & Co. KG •

Axtone

GmbH •

Babcock Brown London •

BAE Systems Ltd. •

Balfour Beatty Rail GmbH

•

Bank of America

•

Bayer Material Science AG •

Bayerische

Landesbank

•

Bearing Point SAS •

Behr Industry GmbH & Co. KG •

Bochumer

Verein

Verkehrstechnik

GmbH •

Bombardier Transportation

•

Bonatrans

a.s. •

Calyon

•

Cargocare AG •

China South Locomotives & Rolling Stock Corp. Ltd.

•

CKD Vagonka

a.s. •

Connex

•

Cummins •

Dellner

Kupplungen

GmbH •

Deuta-Werke

GmbH •

Deutsche Bahn

AG

• Deutsche

Beteiligungs

AG •

Deutsche Binnenschiffreederei

•

Deutsche Messe

AG •

Deutscher

Gewerkschaftsbund

•

Dimetronic

S.A. •

DuPont Performance Coatings GmbH & Co. KG •

Durtrack

AG •

ELIN EBG traction GmbH • ESW GmbH • EWS Railway LTD • Extel Systems Wedel • Fahrleitungsbau

GmbH •

Faiveley Transport

• Ferrostaal AG • Fooke GmbH • Furrer+Frey AG • GE Transportation Systems

•

Greenbrier Equity Group LLC •

Group Ermewa

SA •

Gutehoffnungshütte Radsatz

GmbH •

Hanning

& Kahl

GmbH •

Hans Böckler

Stiftung

•

Heitkamp Rail GmbH •

Hitachi Europe Ltd. •

HSH Nordbank

AG •

Hübner

GmbH •

I.T.I. Finanziaria

S.P.A. •

ING Bank N.V. •

Interpipe

•

INVEST Financial Corporation •

KfW

IPEX-Bank GmbH

•

Knorr-Bremse

•

Korea Railroad Research Institut

•

Lavoisier SAS •

Lease Valuation International Inc. •

Leonhard Moll Betonwerke

•

Liebherr

Transportation Systems GmbH •

LLOYDS TSB Bank PLC •

MAN •

Marubeni Corporation

•

Microelectrica

Scientifica

Spa •

Mitron

OY •

Mitsui & Co. •

Molinari Consulting AG •

MTU Friedrichshafen •

Nahverkehr

Rheinland

GmbH •

National Australia Bank

• NedTrain Consulting •

Nexans

•

Odenwald

& Compagnie

•

ÖBB •

One Equity Partners Europe GmbH •

Ox-traction N.V. •

Oxford Analytica

Ltd. •

Paribus-SK-Rail Management • Parsons Brinkerhoff Pte Ltd • Patentes Talgo S.A. • Pfleiderer

Infrastrukturtechnik

GmbH & Co. KG •

Phoenix Dichtungstechnik

GmbH •

Pintsch

Bamag

GmbH •

Plasser

& Theurer

Export von Bahnbaumaschinen

GmbH •

Prover

Technology AB •

Prysmian

Spa •

Rail Cargo Austria •

Rail Interiors S.p.A. •

Rail One GmbH

•

Rexwal

Services SA •

Rexxon

Services SA •

Rotem

Company

•

Royal Bank of Scotland •

Sabler

Consult GmbH Wien •

SAFOP SAP •

Saft‘s

Industrial Battery Group •

SBB Cargo AG

•

Schalker

Eisenhütte

GmbH •

Schaltbau

AG •

Scheidt & Bachmann GmbH •

Schreck-Mieves

GmbH •

Schweizer

Elektronic

AG •

Secheron

SA

•

Serco-NedRailways

•

SGL Carbon SE •

Siemens AG

• Sika Schweiz

AG •

SIRTI S.p.A. •

SKF Group •

Skoda Transportation s.r.o. •

Société

Générale

Group

• Solaris Bus & Coach S.A. • Stadler

Rail AG •

Steer Davies Gleave

•

Stemmann-Technik

GmbH •

Stinnes

AG •

Stratorg

S.A. •

Strukton

Systems •

SüdLeasing

GmbH •

Sumitomo Mitsui Banking Corp. Europe Ltd.

•

Syndex

•

Synosys

Inc. •

Tatravagonka

a.s. •

Terra Firma Investments 2 Ltd. •

Telenor

Sverige

AB •

TFK Transportforschung

GmbH •

Thermo King Deutschland •

Thyssen

Krupp GfT

Gleistechnik

GmbH •

Tiefenbach

GmbH •

Toyo Engineering Corporation •

Traktionssysteme

Austria GmBH

•

Tram S.A. •

Transpetro

GmbH •

Transtechnik

GmbH & Co. KG •

Transwerk

South Africa •

Trinity Rail GmbH •

TÜV Rheinland

•

U.S. Government

•

Universal de Productos

Electricos

S.A. •

VAE GmbH •

Valspar Industries GmbH •

Veolia Transport •

Verband

der

Bahnindustrie

Germany •

Verkehrs

Industrie

Systeme

GmbH •

Verkehrsbetriebe

Zürich •

Voestalpine

Bahnsysteme

GmbH •

Voith

Turbo •

VolkerRail

•

Vossloh AG

• Vossloh Kiepe GmbH • VR Leasing AG • VTG AG • Wagony Swidnica S.A. • Walter Bau AG • Wacosa AG • Weilburg Coatings GmbH •

Westfracht

•

WestLB

AG •

Wincanton GmbH •

Wirtschaftsministerium

Baden-Württemberg •

ZAO Transmashholding

• ZF Sachs AG • Zuken GmbH

CUSTOMERS


5

STRATEGIC ADVICE NEEDS SOUND FACTS AND FIGURES

TOOLS AND PRODUCTS

STRATEGIC CONSULTING

SKILLS



GENERATED FROM DETAILED STUDIES WE PROVIDE THE AGGREGATE STUDY “THE WORLDWIDE MARKET FOR RAILWAY TECHNOLOGY”

STUDY “WORLDWIDE MARKET”


4 STEPS OF THE SCI MARKET FORECAST

FORECAST METHODOLOGY

•

Awarded and documented projects

•

Periods (delivery known)Contracted

•

Established and announced projects

•

OptionsAnnounced

•

Expected projects

•

General announcementsVirtual

•

Replacement purchase and maintenance demand (based on installed base)

•

Development of railways and transport

•

Megatrends

•

Macroeconomic development

•

Railway affinity

Long-term drivers

Project-based

8

SCI MARKET FORECAST TOOL CALCULATES MARKET VOLUME OF THE WORLD MARKET FOR RAILWAY TECHNOLOGY

©

SCI Verkehr GmbH

Schematic Illustration of SCI Market Forecast Tool

Mar

ket v

olum

e [E

UR

bill

ion]

ContractedAnnounced

Virtual

Long-term drivers

FORECAST

METHODOLOGY



OUTLINE

I:


3

II:



III:


OUTLINE


THE MARKET FOR RAILWAY TECHNOLOGY CONTINUOUS TO GROW

TrendsTotal market volume [EUR billion]

TOTAL MARKET VOLUME

102

131

160

2006* 2010 2015

©

SCI Verkehr GmbHLegend: * Methodology change in 2008

•

4.1% annual growth in the world market by 2015 (including increase in prices)

•

General drivers–

Globalization–

Urbanization–

Environmental protection–

Safeness

•

Current drivers–

Stimulus packages–

Recovery of freight transport market

11

100

150

200

2000 2003 2006 2009 2012 2015


RAIL TRANSPORT MARKETS RECOVERING FASTER THAN EXPECTED

TRANSPORT MARKETS

©

SCI Verkehr GmbH

Passenger: global rail transport development [Index 2000 = 100]

100

150

200

2000 2003 2006 2009 2012 2015

100 = 2 380 billion Pkm

Mar

ket p

erfo

rman

ce

[Ind

ex 2

000=

100

]

Trends

•

Railway market recovered quicker than expected from world economic crisis: 4.5% growth in 2010

•

2008 freight level is going to be reached again in 2011

•

Rail passenger transport more sustainable: 1.0% growth in 2009

Freight: global rail transport development [Index 2000 = 100]

100 = 6 930 billion tkm

Mar

ket p

erfo

rman

ce

[Ind

ex 2

000=

100

]


REGIONAL MARKETS GROWING DIFFERENTLY

Market volumes 2010 and market growth in the period up to 2015 by regions

MARKET VOLUMES AND MARKET GROWTHS

©

SCI Verkehr GmbHLegend: CAGR = compound annual growth rate

Africa/Middle East:

-

MV: EUR 5.7 bn

-

CAGR: 4.0%

Australia/Pacific:

-

MV: EUR 2.9 bn

-

CAGR: 2.3%

North America:

-

MV: EUR 19.5 bn

-

CAGR: 5.0%

South/Central America:

-

MV: EUR 3.3 bn

-

CAGR: 6.8%

Western Europe:

-

MV: EUR 39.8 bn

-

CAGR: 3.3%

CIS:

-

MV: EUR 13.7 bn

-

CAGR: 4.9%

Asia:

-

MV: EUR 36.5 bn

-

CAGR: 4.3%

Eastern Europe:

-

MV: EUR 9.6 bn

-

CAGR: 2.9%


COUNTRIES’

RANKING CHANGE: CHINA NO. 1

TrendsTop ten countries by market volume [EUR billion] (average 2009–2011 p.a.)

TOP TEN COUNTRIES

•

China ranks top in the world for the first time, replacing the US market

•

Currently, all global players benefit from Chinese market

•

The Russian market is the third-largest in the world and has to invest heavily to replace its vehicle fleet

•

Germany asserts its rank and remains the only European country within top five

(2009 ranking)

(2)

(1)

(3)

(4)

(7)

(6)

(5)

(8)

(10)

(9)

©

SCI Verkehr GmbH


THE ROLLING STOCK SEGMENT REMAINS INVESTMENT AREA NO. 1

TrendsMarket volume and market growth by product segment[EUR billion/%]

PRODUCT SEGMENTS

©

SCI Verkehr GmbH

Mar

ket v

olum

e [E

UR

bill

ion]

Gro

wth

rat

e [%

]Market growth [%]

Legend: Growth rate corresponds to the compound annual growth rate CAGR

Market volume [EUR billion]

•

Rolling stock segment with highest market volume–

2010: EUR 74.3 billion–

2008: EUR 73.8 billion

•

Increasing share of passenger vehicles–

2010: 67%–

2008: 50%

•

Infrastructure has grown due to the economic stimulus programmes

•

2010: EUR 42 billion–

2008: EUR 39.5 billion

•

Trends will continue around 2013 and apply to systems technology as well


AFTER-SALES MARKET WITH SLOWER GROWTH RATE THAN OEM - BUT LESS VOLATILE

OEM After-Sales-Service

©

SCI Verkehr GmbH

Share of OEM and after-sales-service in product segments 2010

Systems TechnologyRolling Stock Infrastructure

49% 42% 53%

51% 58% 47%

Trends

•

After-Sales market grows more slowly than OEM market–

OEM: 4.6%–

After-Sales: 3.6%

•

After-Sales markets volatility is much lower–

OEM: 4.9%–

Total After-Sales: 0.1%

•

Step by step the After-Sales markets are becoming more accessible

SHARE OF OEM AND AFTER SALES


MARKET ASSESSMENT NEEDS A VIEW IN DETAIL

Market volume and market growth by rolling stock segment and region [EUR billion/%]

Mar

ket g

row

th 2

010–

2015

[%

]

©

SCI Verkehr GmbHLegend: Growth rate corresponds to the compound annual growth rate CAGR

Market volume [EUR billion]

MARKET DETAIL

17SCI Verkehr GmbH / Büro

Hamburg / +49 (40) 50 71 97-0 / September 2010

.... SOME EXAMPLES OF “STARS, CASH COWS AND LOSERS” WITHIN THE MARKETS AND SEGMENTS

Market volume and market growth by rolling stock segment and region [EUR billion/%]

Mar

ket g

row

th 2

010–

2015

[%

]

Market volume [EUR billion]©

SCI Verkehr GmbHLegend: Growth rate correspond to the compound annual growth rate CAGR

LRV Australia

EMU Western Europe

HST AsiaFW North America

LRV CIS

PC Eastern Europe

MARKET DETAIL

D-Loco Asia


OUTLINE

I:


3

II:



III:


OUTLINE


CHINESE MANUFACTURERS ARE ON THE FAST TRACK

New rolling stock: top ten rolling stock manufacturers by turnover 2009 (estimation)

Turnover 2009 [EUR billion]

(1)

(2)

(4)

(3)

(5)

(7)

(10)

(*)

(8)

(6)

Legend: * not in the ranking 2008

(2008 ranking)

Trends

•

Bombardier extended market lead in 2009

•

Alstom still is in the second place

•

Both, CNR and CSR out-

compete Siemens regarding market volumes

•

CAF entered the top ten for the first time

•

Freight wagon manufacturer Trinity left the top ten after the sharp fall of sales in 2009

TOP TEN MANUFACTURERS


GROWTH RATES OF ESTABLISHED AND CHINESE MANUFACTURERS DRIFT APART

Trends

Turn

over

new

rol

ling

stoc

k [

EU

R b

illio

n]

New rolling stock: turnover development by manufacturer [EUR billion]

+108%

+17%

Alstom/Bombardier/Siemens CNR/CSR

•

Between 2005 and 2009 turnover of both Chinese manufacturers more than doubled–

Yearly growth rate: 20%

•

In the same period, turnover of the “The Big Three”

had a 17% growth–

Yearly growth rate: 4%

•

The Chinese manufacturers’

share in the worldwide market grows very dynamically

ESTABLISHED VS. CHINESE MANUFACTURERS


PROFITABILITY MAKES ALL THE DIFFERENCE

Total: revenue and EBIT comparison top railway manufacturer 2009

[EUR billion/%]

PROFITABILITY OF RAILWAY MANUFACTURERS

©

SCI Verkehr GmbH

Turn

over

[E

UR

bill

ion]

EB

IT M

argi

n [%

]

1

Financial year ending 31 Jan, ²

Financial year ending 30 Sept, ³

Financial year ending 31 Mar,* Gross profit

Trends

•

The Big Three gained a higher profitability than Chinese companies

•

Up to now state owned Chinese manufacturers are more focused on increasing volumes –

but they are catching up

•

Highest profitability is found in specialised and/or medium sized companies with two digit EBIT Margins

Bom

bard

ier

Tran

spor

atio

n1

Sie

men

s M

obili

ty²

Als

tom

Tra

snpo

rt³


CHINESE MANUFACTURERS ARE “AT THE GATES”

PKP Cargo and CNR to create joint venture, CNR’s

first plant outside China

CNR exports trams to Malaysia / CSR receives major order from MalaysiaCNR builds for the Rio

de Janeiro metro

CNR exports locomotives to Belarus

CSR supply metro coaches for Rapid Metro Rail Gurgaon

in India / Mumbai Metro to receive CSR trains

CNR exports freight wagons to Vietnam and Mongolia

Major contract for CNR from Argentina

CSR Zhuzhou

delivers first 14 locos to Iran

Delivery of CSR multiple units for Georgia

CSR will exports DMUs

to Tunisia

CNR exports metro coaches to Saudi Arabia / CSR signs Saudi locomotive contract

CHINESE MANUFACTURERS’

WORLDWIDE PRESENCE

23

WHAT ARE THE CONSEQUENCES FOR THE ESTABLISHED MANUFACTURERS?

CONSEQUENCES

NEW DEVELOPMENTS

•

More and more, Chinese market is served by strong Chinese domestic industry

•

Therefore, global players will lose relevant market shares in China and elsewhere

•

New markets in USA, South America and India may not be able to compensate those losses

ESTABLISHED ADVANTAGES

•

Established players still have–

Advantage in technology–

Advantage in profitability–

Efficiency of production

•

Specialists can deal more flexibly with the highly fragmented markets in Europe

24

OUR CLIENTS ADAPTATION TO CHALLENGES –

SOME EXAMPLES OF OUR PROJECT WORK

•

A supplier wants to adjust their product prices and production costs regarding the target costs in the different regional markets

Costs / efficiency

•

A component manufacturer wants to consolidate the international bogie market and intended to acquire an European bogie manufacturer. SCI has to cross-check the market situationPositioning

•

An international Investor wants to acquire a rolling stock leasing company. SCI has to evaluate the business plan and the expected market position of the target. We

estimated the fair market value of the assets and the target.

Financing

•

Asian technology group seeks possibilities for a market entry in

Russia (including a roadmap for suitable products as well as entry strategies and cooperation partners)

Suitable new markets

CHALLENGES

•

A vehicle manufacturer is looking for market opportunities, partnerships and targets to increase their maintenance business Maintenance


UNDERSTANDING OF THE SPECIFIC MARKET REQUIREMENTS MAKES THE DIFFERENCE

Stable market with long-term growth opportunities -

but...

.... changing market environment...

•

European home markets come under fire

•

Asian companies try to take advantage from home market experience

•

Expected next waves of M&A and consolidation processes

....requires different market intelligence

•

Continuous observation and understanding of the markets

•

Monitoring of projects and positioning of competitors

SUMMARY


CONTAKT

Andreas Wolf

Project Manager

SCI Verkehr GmbH

Vor

den Siebenburgen

2

50676 Cologne

Tel.: +49 (221) 931 78-16

Fax: +49 (221) 931 78-78

E-Mail: [email protected]

Maria Leenen

CEO

SCI Verkehr GmbH

Schanzenstraße

117

20357 Hamburg

Tel.: +49 (40) 50 71 97-0 / September 2010

Fax: +49 (40) 50 71 97-20


Christian Bessler

Marketing & Sales

SCI Verkehr GmbH

Vor

den Siebenburgen

2

50676 Cologne

Tel.: +49 (221) 931 78-20

Fax: +49 (221) 931 78-78


CONTACT

Documents

THE WORLDWIDE MARKET FOR RAILWAY TECHNOLOGY 2010