The car components unit of German engineering conglomerate Siemens aims to triple its sales in Asia and at least double its US revenues in the next five years, the head of the unit told a German newspaper.
According to Reuters, Wolfgang Dehen, head of Siemens VDO Automotive, told the Boersen-Zeitung that meant growing as least as fast as the Asian market – where the unit made about $US758 million in sales in 2002/03 – and faster than the US market.
The news agency noted that Siemens said earlier this month it had bought an American electronics plant from DaimlerChrysler to strengthen its US position and expand its range of products, which includes fuel-injection components, navigation systems and safety monitoring equipment.
The plant in Huntsville, Alabama, makes engine controllers, car body electronics and audio products and has annual revenues of around $1 billion, which will increase VDO’s American sales by around two-thirds, Reuters added.
Dehen reportedly said his next target was the high-quality-oriented Japanese market: “Of course, we will keep the US and European markets in focus, but they are already largely saturated,” he told the paper, adding: “Asia could be bringing in around 10% of our revenues by 2008.”
VDO’s 2002/03 revenues were $10.4 billion, Reuters said.
Dehen added that acquisitions were possible to round out the unit’s portfolio, and that by 2008, 90% of VDO’s products should be in first or second place in the global market. “Our radar screen is covering 360 degrees,” Dehen reportedly said.
According to Reuters, Dehen reiterated that he wanted to reach VDO’s operating margin target of 5% to 6% this fiscal year – it achieved 4.9% in the first quarter to December – but said his priority was to make the cost of capital.
“To earn the cost of capital is our measuring rod,” Dehen reportedly told the paper. Reuters said he did not elaborate, but a spokesman told the news agency that Siemens meant economic value added, or operating profit minus tax and capital costs – a measure that attempts to capture true economic profit, or shareholder value.
The spokesman added that this was VDO’s new focus, having achieved growth first in revenues and then in operating profit, but he declined to name a target figure, Reuters added.