Tognum Group: growth in first quarter continues trend of strong prior year

Posted on April 19, 2007

Friedrichshafen - The Tognum Group, a supplier of large diesel engines, complete propulsion systems and generator sets, continued last year's successful development with high growth rates in the first quarter of 2007.
Friedrichshafen - The Tognum Group, a supplier of large diesel engines, complete propulsion systems and generator sets, continued last year's successful development with high growth rates in the first quarter of 2007. All of Tognum's subsidiaries posted higher unit sales in the three months of January through March, with very strong growth at the mtu Engines division. mtu gained new orders for powerful and economical engines particularly in Australia, Indonesia, Singapore and Turkey. These engines will be used for example in coastguard patrol boats as well as car and passenger ferries. Tognum CEO Volker Heuer: "An important factor for our ongoing market success in this segment is that we have an exact knowledge of our customers' needs and have developed suitable products to meet their requirements."

Due to the continuation of strong demand, MTU Friedrichshafen plans to expand its annual output of the mtu Series 2000 and Series 4000 from around 6,000 to nearly 8,000 engines by the end of 2007. As the limits of capacity have been reached with present resources, the high levels of customer demand for diesel engines will be satisfied this year with Sunday work for the first time: In line with agreements reached with the Employee Council and the local municipality, about 60 mtu employees will take turns working additional shifts on 35 Sundays this year.

"Thanks to this agreement, we are now able to react quickly to customer demand," pointed out Tognum CFO and Labor Director Joachim Coers. "Furthermore, this exemplary collaboration with our Employee Council is evidence of our high entrepreneurial flexibility."

Due to the high level of customer satisfaction, in the first quarter of 2007, mtu once again continued its successful relationship with Austal, Australia's biggest shipyard. At present, 28 Series 4000 engines are being delivered to Austal, most of which will be installed in large catamaran car ferries with a length of up to 88 meters. Austal uses mtu engines almost exclusively in its new ferries. "This is impressive proof of a key customer's high satisfaction with our products," stated Rainer Breidenbach, the Group's Executive Vice President for Sales and Marketing.

But Tognum has further improved its market position not only in the segment of diesel engines, but also with alternative propulsion systems. The current debate about climate protection has boosted the business of the two divisions MDE Dezentrale Energiesysteme GmbH, one of Germany's market leaders in the field of environment-friendly decentralized gas energy systems up to 500 kW, and CFC Solutions GmbH, whose hightemperature fuel cells generate environment-friendly power and heat.

As a result of the ongoing boom in alternative energy systems, MDE is expanding its production facilities in Augsburg. A new 1,600-square-meter assembly hall will be completed by the end of June. "With two new assembly lines, we will be able to increase our capacity significantly, enabling us to satisfy the demand for our products," explained Dirk Naujokat, Chief Executive of MDE in Augsburg. The additional systems will primarily be used as cogeneration plants, producing economical and environment-friendly energy more and more with biogas.

The Tognum subsidiary CFC Solutions is active in another very attractive growth area as the market leader for high-temperature fuel cells. Such a fuel-cell system, a so-called HotModule, will soon supply electricity to the servers at the T-Systems data center in Munich. CFC Solutions received the order to install the system from Power & Air Solutions, a subsidiary of Deutsche Telekom.

The advantage of the HotModule is that the source of the fuel gas with a high methane content is irrelevant. For example, since the beginning of this year, for the first time worldwide a plant of the local municipality in Leonberg has been running at full load receiving its gas completely from composted waste. This biologically sourced gas protects the environment because no fossil carbon is released into the atmosphere in the form of carbon dioxide. A HotModule running on biogas can therefore produce energy with neutral climate effects. "This makes the use of this technology not only pioneering but also economical," pointed out Christof von Branconi, Head of Tognum's Systems and Components division.

Tognum's subsidiary L'Orange also continued its successful trend of the prior year in the first quarter of 2007. The new generation of injectors launched by L'Orange profit on the one hand from the outstanding success of mtu's Series 4000 diesel engines: within a short time more than 10,000 of the newgeneration injectors have already been delivered. On the other hand, additional customers have contributed to the growth of L'Orange. The L'Orange injection system used in marine applications by British customer Rolls-Royce has been improved so that the emission requirements of the International Maritime Organization (IMO) are complied with by a significant margin. "With its continuous technical progress, L'Orange has thus once again set a new standard in the field of environmental protection," emphasized Dr. Ralph-Michael Schmidt, Chief Executive of L'Orange.

Since last year the former business segment of the DaimerChrysler corporation "Off-Highway" signed under the name of Tognum. The business group integrates two business segments, "Engines and After-Sales" and "Systems and Components". The "Engines and After-Sales" division center around mtu's engine manufacturing business (located in Friedrichshafen, Detroit/USA and Suzhou/China) and the sale of Mercedes-Benz industrial engines. The division also incorporate Tognum's comprehensive service activities which are available worldwide throughout the entire life-cycle of its products. The "Systems and Components" division encompass the product brands MDE Dezentrale Energiesysteme (Augsburg), CFC Solutions for stationary fuel cells (Munich), L'Orange for injection systems (Stuttgart and Glatten/Schwarzwald) and "Rotorion", the new product brand for drive shafts. With facilities in Friedrichshafen and Charleston/USA, Rotorion produces drive shafts for a range of automobile and commercial vehicle manufacturers.