Strengthened OEM profile and new products for the aftermarket
SBS Friction develops, manufactures and distributes brake parts and friction technology for motorcycles, scooters and other ATV/UTV vehicles as well as for a number of specialised areas that apply friction technology, including wind turbines.
The product portfolio includes self-developed and self-produced brake lining as well as goods for resale in the form of brake discs, brake shoes, brake parts and clutch parts.
SBS Friction holds a strong market position based on high technology know-how within friction technology, innovation, own production and high reliability of supply, and products, which meet market demands for performance, security and wearability.
The division operates globally and has business activities within the OEM market and the free spare parts market. The European aftermarket for motorcycle parts makes up the primary market on which SBS Friction is a leading supplier of brake pads to distributors all over the continent. Italy, France, Germany and Spain make up the most important individual markets. In addition, SBS Friction sells its product on a number of markets outside Europe. The OEM market includes brake systems developers, manufacturers of vehicles, wind turbines or other machines using friction technology.
In 2018, the European aftermarket was characterised by modest demand. In the first months, sales were affected by an unstable and cool spring in particular on the southern European markets. The warm and long summer did not entirely counterbalance the lacking sales as inventories in the distribution chain were high following the low spring sales.
SBS Friction realised revenue of DKK 125 million in 2018 against DKK 130 million in the record year 2017. Despite the decrease, revenue is still at a high level. EBITDA was DKK 21 million against DKK 24 million in 2017, which is attributable to the development in revenue as well as increasing investments in future growth-stimulating measures.
SBS Friction’s brake discs and clutches added new product groups to the aftermarket assortment. Brake discs represent the second largest product group within brake parts.
In the year under review, SBS brake discs were taken up by several distributors who find it an advantage to be able to market a complete programme of wear parts for brakes under the SBS trademark, which is well-known and reputable all over Europe. The clutch programme was launched in November. Several distributors are expected to take up the programme under the SBS trademark. Also in 2018, SBS Friction introduced a new product concept for the racing market, which is expected to further strengthen the market position in this attractive segment.
SBS Friction's strategic focus area is to expand on the aftermarket outside Europe. The process of establishing a strong position on the US market is slower than expected. Therefore, changes were made to the distribution and the sales office in Daytona.
In the year under review, new distributor agreements were concluded on growth markets in Southeast Asia. According to the strategy, SBS is to be positioned as a high-end brand directed at owners of high-priced motorcycles.
Revenue on the OEM market was in line with the year before. In 2018, supplies for new OEM projects were initiated, and at the same time, the pipeline with new projects for motorcycle models that are to be launched in 2020 and ahead increases.
OEM customers look for partners with strong qualifications within product development, test, production and quality management. In recent year, SBS Friction has directed its focus on qualifying the company for the OEM requirements within these areas. In 2018, new specialists were hired for the development department. The production programme is continuously being updated with new technologies - in 2018 i.a. in the form of a new robot press for sinter production, which has increased the capacity and made important improvements to the process. The quality systems have been adjusted to the OEM customers’ high demands and a compression test has subsequently been performed based on several customer audits during the year.
STRATEGIC FOUNDATION AND DEVELOPMENT
SBS Friction is an entity with development, production, sale and branding as value-creating activities.
The Company's strategy is based on two-stringed growth - the aftermarket focussing on assortment, delivery capacity and branding as well as the OEM market focussing on innovation, technology and quality management.
On the aftermarket, SBS Friction is one of the leading suppliers of brake lining in Europe, partly under its own brand SBS and partly as supplier of private labels. Despite a high market share, there is still a growth potential on the European market. The growth is to be driven by new products within brake lining and an expansion of the product range to include related product types from which the division may derive advantage from the strong SBS brand.
Efforts outside Europe are mainly directed at growth on one of the largest motorcycle markets, the US. In 2018, adjustments were made to the distribution approach on that market. The market development strategy outside Europe will moreover focus on the establishment of distributor agreements on national markets, where SBS is not yet represented, e.g. South-east Asia. SBS is positioning itself on those markets typically as supplier of brake lining for the large motorcycles and where there is a potential for high-end quality products.
The OEM market includes vehicle and brake system manufactures within motorcycles, scooters and ATV vehicles. Moreover, the market includes wind turbine manufacturers, mountain bike manufacturers, specialised vehicles and a number of other niches in need of friction technology.
The market is project-oriented and is characterised by being resource-demanding having long implementation periods for new projects. On the other hand, project wins give access to a considerable potential in the form of supplies of brake lining for factory assembly as well as the motorcycle manufacturers’ aftermarket programmes.
In recent years, SBS Friction has made considerable investments in establishing a strong position on the OEM market among others in development, production and quality assurance. The Company is now reaping the fruits in the form of an increasing number of projects and inquiries from the world’s leading systems and vehicle manufacturers.