Highlights - business and strategy

Business Overview

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Hansen is an established global wind turbine and industrial gearbox designer, manufacturer and supplier, with a leading position in the wind turbine gearbox market. Founded in 1923 to supply the industrial gearbox market, Hansen has since 1979 increasingly focussed on the supply of gearboxes to the growing wind energy generation sector. According to BTM, Hansen was the second largest manufacturer of wind turbine gearboxes in 2005 with an estimated market share of 25 per cent. (by MW shipments). In 2006, Hansen estimates that its share of the gear-driven wind turbine market was approximately 27.2 per cent, and that its market share in the segment for gear-driven wind turbines with capacity in excess of 1.5MW was more than 50 per cent. Hansen’s principal manufacturing facilities are located in Belgium and include a wind turbine and industrial gearbox plant at Edegem and a fully integrated state-of-the-art dedicated wind turbine gearbox manufacturing facility at Lommel.

Hansen supplies gearboxes to four of the five largest manufacturers of gear-driven wind turbines, Vestas, Gamesa, Siemens Wind, and Hansen’s parent company, Suzlon Energy (who together supplied 68.1 per cent. of the gear-driven wind turbine market (by MW supplied). The company is also developing a customised gearbox with REpower, the seventh largest supplier of gear-driven wind turbines in 2006 according to BTM and a subsidiary of Suzlon Energy. In order to respond to increased demand from its wind turbine customers and the forecast increase in global demand for wind energy generally, and in particular within the Asian markets, Hansen is taking steps to increase its wind turbine gearbox manufacturing capabilities from 3,800MW per annum (as at 31 March 2007) to 14,300MW per annum by 2012, as follows:

Lommel, Belgium

Hansen is currently undertaking an expansion project at its state-of-the-art manufacturing facility in Lommel to significantly increase the facility’s manufacturing capabilities to up to 6,000MW from 2,200MW. Work on the project, which will increase the factory surface from 45,000m² to approximately 85,000m², commenced in 2006 and is expected to be completed in April 2008 at a cost of approximately €180 million.

Coimbatore, India

Hansen has recently leased a site in a Special Economic Zone in Coimbatore, India, and has commenced a €270 million project to build an integrated manufacturing plant for the manufacture of wind turbine gearboxes which is expected to reach full capacity in April 2011. Hansen expects to leverage its strong experience in the construction and expansion of its Lommel plant by mirroring its efficient process flows, and to leverage the regional knowledge and expertise of its parent company, Suzlon Energy.

The new plant will cover a factory surface of approximately 95,000m²; and will employ more than 800 people. The site at Coimbatore is expected to have a yearly production capacity of up to 5,000MW (representing 2,500 to 3,000 gearboxes). The first gearbox shipment is expected to be made in September 2008.

China

Hansen is also planning the construction of a €200 million integrated manufacturing plant in China for the manufacture of wind turbine gearboxes which is expected to be completed in April 2011. As with the construction of its Indian facility, Hansen expects to leverage the experience gained during the construction and expansion of its Lommel plant. Hansen also expects to leverage the regional knowledge and expertise of its parent company Suzlon Energy, which recently completed the construction of a 250,000m²; wind turbine manufacturing facility in Tianjin, China.

Hansen’s new plant, which it is expected will employ approximately 600 people, will commence assembly and testing of gearboxes in September 2008, and is expected to have a yearly production capacity of up to 3,000MW.

BTM “International Wind Energy Development - World Market Update 2006” (March 2007) adjusted to reflect the difference between BTM’s estimate of capacity installed and of total MW delivered to the market in 2006.

Strategy

Hansen’s strategy is to build on its success to date through the global expansion of its operations, while maintaining its commitment to high quality products. Hansen has the following strategic objectives, which it believes will create value for shareholders:

To maintain and enhance its strong market position in the wind turbine gearbox sector through technological leadership, in particular in the multi-MW wind turbine sector;
To increase manufacturing capacity to satisfy growing customer demand across the globe;
To intensify existing customer relationships and strengthen its customer base;
To continue to leverage operational excellence and further optimise production processes;
To further develop its service business, which represents an attractive potential source of revenues;
To leverage its expertise in industrial gearboxes to capture strong growth potential; and
To retain high quality personnel in existing facilities and recruit and train skilled personnel to achieve similar levels of employee know-how in new facilities.