The Sapa Group is the world's largest manufacturer of aluminium extrusions, with market shares of 26 % in North America and 19 % in Europe. The extrusion industry is still small in Asia owing to a lack of extrusion capacity, although there are processing facilities in China. After the end of the year, however, Sapa signed a letter of intent to acquire the Chinese extrusion company, Kam Kiu, thereby also establishing a presence on the extrusion market in China. The transaction is expected to close in the second quarter of 2008 after a satisfactory due diligence process and after approval by relevant Boards and authorities. With a market share of 16 %, Sapa Heat Transfer ranks second in the world in aluminium strip for heat exchangers for the automotive industry. Sapa Building System, which has a 5 % market share, ranks fourth in Europe in aluminium building systems.
Performance
Operating revenues increased by 55 % to NOK 25,335 million in 2007. This can largely be ascribed to the establishment of a joint venture with Alcoa in the extrusion business. The delivered volume totalled 740,381 metric tonnes, an increase of 68 %. The EBITA was NOK 1,187 million, an increase of NOK 348 million. The EBITA margin came to 4.7 %, compared with 5.1 % in 2006. The decline in the margin is mainly due to reduced profitability for the extrusion business in the US and to certain specific restructuring projects in the same field in Europe.
Profiles
Profiles is a leading independent manufacturer of aluminium extrusions and engages in extensive processing operations, including surface treatment, hydroforming, friction-stir welding and CNC treatment. Production takes place in 15 European countries, the US and China. Aluminium extrusions are used for design solutions in virtually all sectors.
At mid-year 2007, Sapa and Alcoa formed a joint venture, making Sapa the premier supplier in the industry. In particular, a better geographical balance was achieved when Sapa Profile's market share in North America rose from 3 % to 26 %.
Sapa Profiles has three business units: Sapa Automotive, Sapa Mass Transportation and Sapa Thermal Management. These units coordinate Sapa's resources to meet the needs of customers in the automotive, railway, shipping, and telecom industries in an optimal manner. The integration of the corresponding activities at Alcoa has opened new doors, especially in the automotive segment.
The global market required 11.4 million metric tonnes of extruded aluminium products in 2007. A large proportion of that demand was generated in Western European and North American markets, which account for a total of 39 % of the global market. While the Western European market has shown slow growth over the past two years, the North American market has however diminished significantly. In terms of growth, China outpaced other markets in 2007, and Chinese demand now accounts for 18 % of global volume.
A restructuring programme has been launched in the southeastern US to separate the bath enclosure business from extrusions, and thus enable both activities to focus more intently on building up their market shares. Late in the year it was decided to close the plant at Banbury, England, to better match capacity to the demand in the British market.
Sapa Profiles continued to improve its utilisation of resources and production capacity in order to further enhance its ability to supply processed products. At the same time, considerable effort was invested in preparing for the joint venture with Alcoa, including a great deal of focus on integration issues aimed at etablishing a stable platform in 2008.
Building System
Building System delivers aluminium solutions to the European building industry. The products consist of extrusion systems for windows and doors, advanced facade systems, glazed roofs and sun screening. Building System successfully developed a new generation of facade systems in 2007.
Building System is one of Europe's largest suppliers of aluminium building systems and encompasses five companies, each with specific tasks and specialities. In close cooperation with customers, the companies develop products and services for each individual market. Building System operates under the brand name Sapa and its goal is to be Europe's preferred supplier of environment-friendly, energy-efficient solutions for aluminium building systems. Building System is renowned for its service, reliability, technology and innovation.
Good market conditions prevailed in 2007 on most of the European markets in which Building System has extensive activities (the Nordic countries, Benelux, France, the UK and Portugal). During 2007 operations in the main market, France, were reorganised to adapt to Building System's new structure. The long-term process of expanding project activities has made significant headway in most parts of Building System.
The goals for 2008 are to further establish and develop the company's new business concept and to enhance the product portfolio's competitiveness, as well as increasing the company's presence in new markets. Energy-efficient building systems will be one of the areas of focus for technical development. The logistics system will be improved to raise the level of customer service in existing and new markets.
Heat Transfer
Heat Transfer manufactures heat transfer strip for use in different types of heat exchangers in the automotive industry, including radiators (cooling elements), oil coolers and charge-air coolers. Over the past few years, the manufacture of strip for use in air conditioning systems has accounted for a growing percentage of operations.
In 2007, Heat Transfer achieved good profit growth and higher productivity. Heat Transfer further consolidated its posistion as one of the world's leading suppliers of aluminium strip for heat exchangers for the automative industry. The trend in Europe was favourable and the operations in Asia continued to make strong progress. Demand in North America declined due to a weaker automotive industry.
In addition, various measures have been implemented to develop the promising new segment for stationary air conditioning systems based on Sapa's core competency. In late 2007, it was decided to invest a further NOK 450 million to double capacity in China. The new capacity will be available in 2010. For the first time, Heat Transfer organised a two-day seminar in Mumbai, India, primarily for Indian customers. The seminar was well attended and Heat Transfer presented its new product portfolio, consisting of rolled heat transfer strip, and welded and extruded tubes. The company has fortified the organisation substantially at the global level, primarily in research and development, technical user support and process development, with a view to promoting growth and adding more value for customers.
Products and areas of application |
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Profiles
Aluminium extrusions are used by many different industries, e.g. construction, telecommunications and transportation. The extrusions can be adapted in form and function, and are used in a large number of products. For example, there are aluminium extrusions in cars, wardrobes and base stations for telecommunications.
Building System
Building System supplies aluminium solutions, mainly to the European building industry. The products vary from relatively simple extrusion systems for windows and doors to advanced facade systems, glazed roofs and sun protection systems. In 2007, Building System successfully developed systems for use in large constructions and for advanced solar shade systems
Heat Transfer
Rolled aluminium products are used in different types of heat exchangers for the automotive industry. The product can be customised for use in, for example, radiators (cooling elements), vaporisers, capacitors, charge-air coolers and oil coolers. All the major heat exchanger manufacturers are Sapa customers, including Denso, Calsonic, Behr, Delphi, Visteon, Modine, Showa, T-Rad and Valeo. |