Changing global weather patterns are putting pressure on the automotive industry to reduce the footprint of its many millions of customers, as emissions from vehicles are seen to be a major contributor to global warming.
This, in turn, is providing both threats and opportunities to companies in the OEM supply chain.
Automotive Industries (AI) asked Bernd Kleinhens, Chairman of the Management Board, NORMA Group, how the company is meeting the demand to provide both products and technology.
Kleinhens: Alternative drives are on the rise and emission regulations are becoming stricter around the world. Our strategy is to offer our customers solutions that help them adapt to these changes and solve the challenges that come with them. We see huge potential here for our products. For example, our urea transport systems help vehicle manufacturers meet emission standards by helping to reduce nitrogen in the exhaust gas. And our solutions for thermal management help batteries in electric vehicles operate in the most suitable temperature-time profile, thereby extending the batteries’ lifespan.
AI: What are the trends for the automotive business and are there any differences between APAC, AMERICAS and EMEA?
Kleinhens: We certainly see some regional differences in the automotive industry. For example, diesel vehicles have a relatively sizable market share in Europe, but a relatively small share in Asia and the Americas. While according to market data the production of diesel vehicles is likely to decrease in the upcoming years especially in Europe, in Asia rising production numbers are expected especially in the truck business. At the same time, emission regulations will become stricter worldwide as the automotive industry is influenced by the challenges that come along with climate change and scarcity of natural resources. As a result, continuously reducing emissions will stay a major focus of the industry. For instance, markets like India that did not require exhaust gas after treatment systems will search for solutions to help them meet future legislation requirements.
AI: If we look at the automotive trends from the past what would be most important for the automotive industry next?
Kleinhens: Further emission reduction and alternative drives are certainly the most important trends right now. However, it is not clear yet which alternative technology will prevail. Whether it’s a hybrid, a battery or a fuel cell powered drive, all vehicles will require joining technology and fluid handling solutions to reliably connect systems that are vital to the vehicle’s functionality and safety. It is up to us as development partners to help our clients in this transition period to explore solutions that are unconventional. For instance, many OEMs use thermal management systems for batteries that are partially made of elastomer. We develop thermal management systems that are made entirely of thermoplastic materials, thus contributing to further reducing weight of electric vehicles.
AI: How are these developments reflected on your bottom line?
Kleinhens: 2017 was a very strong year for NORMA Group, with continued growth in EMEA, Americas and APAC. For the first time, annual sales surpassed the one-billion-euro mark. This is a milestone in our history of growth. Our sales in 2017 rose by 13.7% compared to the previous year to about 1.02 billion euros. We grew organically by 8.6% in fiscal year 2017. In addition, the companies Autoline, Lifial and Fengfan that we acquired contributed 57 million euros to our growth. Adjusted earnings before interest, taxes, depreciation and amortization of intangible assets rose by 10.8% to 174.5 million euros. At 17.2%, the adjusted EBITA margin declined slightly due to higher commodity prices, but still remained in line with the forecast of over 17%.
AI: How will you continue driving growth?
Kleinhens: NORMA Group’s strategic goal is the sustainable and profitable increase of the company value. We aim to remain a market leader for joining and fluid handling technology. Basically, there are three pillars to drive our future growth: First, we increase our market share through regionalization. To achieve this, we look at best practices and try to implement them in all suitable regions and markets. Secondly, we keep on diversifying our product portfolio, especially in the areas of water management and electro mobility. And last, but not least, we also look into achieving the first two aspects through suitable acquisitions.
AI: Are you prepared and how would you react to the new trends?
Kleinhens: We already have various solutions suitable for vehicles with alternative drives, including hybrids. This year, a French automotive manufacturer will equip around 47,000 hybrid vehicles with our thermoplastic lines and quick connectors for cooling water systems. In China we recently won a contract for a battery electric vehicle. That vehicle’s batteries will be equipped with a thermal management system from NORMA Group that is made entirely of thermoplastic materials. Apart from using our existing product solutions and offering weight-reduced thermoplastic systems, we are also tapping other potentials, e.g. by pilot projects such as providing joining technology for e-trucks or hydrogen cars.
AI: Where do you see the biggest growth opportunities?
Kleinhens: What drives our business are the technological changes that are necessary to address climate change and the scarcity of resources. On that basis, for the next few years we see especially two growth areas: e-mobility and water management. However, we still see huge potential in expanding our market share in areas in which we have a long-proven expertise, e.g. in systems for urea, fuel and cooling water transport as well as clamps for turbochargers. Apart from the growth opportunities in the automotive business, we also see potentials in our distribution business.
AI: What can we expect next from NORMA Group?
Kleinhens: We have been developing more and more into a system supplier. Not only do we sell a single quick connector for a cooling water line, but a complete thermal management system like the one we have developed for our customer in China. Thinking in systems applies to both vehicles with and without internal combustion engine. This is an approach that reduces the complexity of the system, and saves assembly time and costs for our customers. We will also develop new materials and new, smart joining solutions designed especially for e-mobility applications.
AI: And what is your strategy for the rest of the business?
Kleinhens: As mentioned before, one pillar of our strategy is the diversification of our business to reduce dependence on single markets. This includes regional diversification, as well as growing our business in new areas. While the automotive sector will continue to be an important growth area, we are also looking into expanding into and strengthening other
Electric vehicle charging system – where electrons replace carbon fuel.
Water cooling system with quick connector.