COMMODITIES REVIEW 22&23 June06 19/04/23 22:41 1

COMMODITY REVIEWCOMMODITY REVIEW

Buy out parts

Thierry Coumert

COMMODITIES REVIEW 22&23 June06 19/04/23 22:41 2

Buy out partsBuy out parts

CA FY 05K€

C/O in

FY 05

Q1 06 /

Q4 05

Q2 06 /

Q1 06

Q3 06 /

Q2 06

Q4 06 /

Q3 06

Total Inf 06

Avge 06

Inflation 06

Commentaires ActionsCA FY 06

K€C/O in

FY 06

Q1 07 /

Q4 06

Q2 07 /

Q1 07

Q3 07 /

Q2 07

Q4 07 /

Q3 07

Inflation 07

C/O Out FY 07

RLT ROULEMENTS ET

ACCESSOIRES8 359 0,4% -0,6% 0,1% -0,9% 0,0% -1,4% -1,0% -0,5%

Negociation contrat 3 ans

2007-200910 030 -0,4% -0,1% -4,0% -6,0% -1,0% -6,6% -4,9%

PMSPIECE MECANO-

SOUDEE,OXYDECOUP

EE

5 753 0,6% -0,1% 1,0% -0,2% -1,0% -0,3% 0,3% 0,9% 6 333 -0,6% -0,1% -0,2% -2,5% -2,5% -2,7% -3,2%

GAF GARNITURES DE

FRICTION ET FREINS1 789 -4,1% -0,1% -2,4% 0,1% 0,2% -2,2% -1,8% -5,9% 1 397 -0,4% -0,4% 0,0%

JOI JOINTS D'ETANCHEITE 1 423 -0,3% -0,1% -0,2% -0,8% -1,2% -0,7% -1,0% 1 490 -0,5% -1% -1,2% -0,3%

17 324 0,0% -0,3% 0,1% -0,5% -0,3% -1,1% -0,6% -0,6% 17 211 -0,5% -0,1% -2,5% -4,4% -1,5% -4,9% -4,0%

COMMODITIES REVIEW 22&23 June06 19/04/23 22:41 3

Bearings inflationBearings inflationBEARINGS INDEX

75

80

85

90

95

100

105

FY 95 FY 96 FY 97 FY 98 FY 99 FY 00 FY 01 FY 02 FY 03 FY 04 FY 05 FY 06 FY 07

COMMODITIES REVIEW 22&23 June06 19/04/23 22:41 4

Bearings OrganisationBearings Organisation

Lot FY05 Spend (k€) # of part numbers Remarks

Bearings LS base 5835 712 Corporate ManagedSlide Bearings LS base 976 B10 + B 30 Division Managed

Accessories and others LS base 376 307Not codified LS base 591

Total LS base 7778 1070 items codifiedNot in LS base 581 FZN/GTSA/CTD

Total RLT 8359

COMMODITIES REVIEW 22&23 June06 19/04/23 22:41 5

BearingsBearings

• Market Trend– Opportunities

• 100Cr6 steel market price decrease

• Increased productivity at bearing manufacturers lead to lighter labour impact on bearing manufacturing cost

– Risks• Zloty/Leu & Yuan rates to € are likely to grow

• Bottlenecks in production on some sizes lead to tensions on supply

580

600

620

640

660

680

700

720

740

760

780

Jan 04Mar 04May 04July 04Sep 04Nov 04Jan 05Mar 05May 05July 05Sep 05nov-05

$/t 100Cr6

Plant Bearing Range Production Growth Staff Growth Resulting Productivity GrowthNSK Kielce (Pl) Bore < 30 mm 15% (05/04) stable 15%NSK Fujisawa (J) Bore > 40 mm 8% (06/05) stable 8%SKF Fontenay (F) Bore < 30 mm 16% (05/04) stable 16%SKF St Cyr (F) 60/64/16xxx 20% (04/03) 4% 15%

COMMODITIES REVIEW 22&23 June06 19/04/23 22:41 6

Zloty / €Zloty / €

+ 22%

COMMODITIES REVIEW 22&23 June06 19/04/23 22:41 7

Bearings : SummaryBearings : Summary

Date : 14/06/2006

FY 00 FY 01 FY 02 FY 03 FY 04 FY 05 FY 06 (Mai)8 174 K€ 8 007 K€ 7 263 K€ 7 891 K€ 8 632 K€ 8 359 K€ 7 691 K€

-0,9% -2,2% -1,1% -4,4% -2,4% -0,5%

FY 00 FY 01 FY 02 FY 03 FY 04 FY 05 FY 06

Nombre Total articles achetés 967 1 018 1 007 1 053 1 112 1 146 1 089

Nombre articles = 80 % du CA 134 140 139 149 158 170 144

% achats sans code 2% 2% 3% 5% 11% 11% 18%

en K€ 513 K€ 529 K€ 466 K€ 689 K€ 1 248 K€ 1 493 K€ 1 959 K€

en % du Total 6,3% 6,6% 6,4% 8,7% 14,5% 17,9% 25,5%RLT000PL000 PAL.LIS:.,..,.,.,.,..-...,RENK 0 K€ 0 K€ 0 K€ 146 K€ 554 K€ 627 K€ 993 K€

RLT180RI002 6336-ISOL-MASS-C4-1000V- 0 K€ 0 K€ 0 K€ 91 K€ 60 K€ 284 K€ 437 K€

RLT075ET004 6315-2NBR-TOLE-C3-LUG4 158 K€ 161 K€ 164 K€ 148 K€ 264 K€ 269 K€ 239 K€

RLT100OU030 RLT RIG.OUV.1RB-6320/TOLE/C3 133 K€ 131 K€ 124 K€ 113 K€ 177 K€ 162 K€ 161 K€

RLT030HV020 6206ZZ-TOLE-C3-LUG2 221 K€ 238 K€ 178 K€ 191 K€ 193 K€ 150 K€ 129 K€

FY 00 FY 01 FY 02 FY 03 FY 04 FY 05 FY 06

Nombre Total Fournisseurs 46 39 38 39 39 30 42

Nombre Fournisseurs > 15 K€ 16 18 16 17 14 10 19

en K€ 2 856 K€ 2 532 K€ 3 551 K€ 5 154 K€ 6 061 K€ 7 138 K€ 6 484 K€

en % du Total 34,9% 31,6% 48,9% 65,3% 70,2% 85,4% 84,3%0 K€ 0 K€ 1 499 K€ 1 781 K€ 2 176 K€ 2 154 K€ 1 923 K€

2 856 K€ 2 532 K€ 1 928 K€ 2 249 K€ 2 195 K€ 1 973 K€ 2 013 K€

0 K€ 0 K€ 0 K€ 530 K€ 1 145 K€ 1 461 K€ 1 410 K€

0 K€ 0 K€ 0 K€ 0 K€ 309 K€ 1 226 K€ 1 030 K€

0 K€ 0 K€ 124 K€ 594 K€ 236 K€ 325 K€ 108 K€

ARTICLES

Top 5 Fournisseursbase FY 05

FOURNISSEURS

NSK FRANCE SA.

SKF FRANCE - C

RENK WERK HANN

FLT FRANCE SAS

FAG SALES EURO

CA en K€Inflation nette

SYNTHESE FAMILLE : ROULEMENTS

Top 5 Articlesbase FY 05

COMMODITIES REVIEW 22&23 June06 19/04/23 22:41 8

Bearings : KPIBearings : KPI

FY 05 FY 06 FY 07

Spend in K€ 8 359 K€ 9 827 K€Net Material Inflation -2,4% -0,5% -6,6%

LCCS (%) 52,0% 53,0% 65,0%

e-SourcingK€ (M) Bid 3 451 K€ 2 100 K€average Results 6,7%

Direct Material DPOTotal Averge Days 104 Days 102 Days 102 DaysK€ less than 30 days 0 K€ 0 K€ 0 K€

COMMODITIES REVIEW 22&23 June06 19/04/23 22:41 9

LS Bearing Spend per OriginLS Bearing Spend per Origin

44%

39%

8%

9%

East Eu

W Eu

Japan

Asia

53 % out of LCC

Total Spend : 6 M€

NSK/NTN/Koyo

SKF/NSK/FAG

FLT/NSK

NSK/SKF

COMMODITIES REVIEW 22&23 June06 19/04/23 22:41 10

Bearings : LCC FY 07Bearings : LCC FY 07

• Objectives FY 07

– Bearings : From 53 % LCC up to 65% LCC

• Larger share awarded to NSK and FLT Poland

• Extension of RBNV/Romanian source for taper/roller/spherical bearings

• Limited introduction of Peer on small DGBB

– Slide Bearings : 0% LCC (Renk – Germany)

COMMODITIES REVIEW 22&23 June06 19/04/23 22:41 11

Bearings : Reverse AuctionBearings : Reverse Auction

• FY 06– WS 9682 Wind mill Bearing 1125 k€* 7%– WS 4850 Slide Bearings 2362 k€**

0,12%– WS 12528 LS Eu Asia DGBB 1600 k€ 11,9%

• FY 07– Wind mill Bearing New contract– Slide Bearing Combined auction w Kato

*2years spend

**22 months spend

COMMODITIES REVIEW 22&23 June06 19/04/23 22:41 12

Bearings : Main ProjectsBearings : Main Projects

• FY 06– 2007-2009 Bearings LTAG negociation incl. RA

• About 800 k€ savings out of 7,2 M€ exposed• LT sharp reduction down to 5 WD for all suppliers• Packagings revisited to match weekly qties delivered

– Renk price increase ambitions stopped via RA

• FY 07– Implement LTAG at all LS plants involved– Find/Qualify/negociate an alternative reliable slide bearing source to

Renk for Orléans . • Consolidate w Kato on that project • Total spend Orléans + Kato : 1,9 + 1,2 = 3,1M$

COMMODITIES REVIEW 22&23 June06 19/04/23 22:41 13

Bearings : Other ProjectsBearings : Other Projects

• FY 06– Rationalisation of Parts codification

• FY 07– Improve Renk delivery performance thru standardization of

components at Orléans– Get 300 k€ additional spend codified

COMMODITIES REVIEW 22&23 June06 19/04/23 22:41 14

Stamping Parts OrganisationStamping Parts Organisation

Spend (KE)

LS FAMILY Commodity Team Famille DRI DRI Projection 06

W191 7 487 41%

W192 3 593 29%

W190 86 50%11 165 37%

CASTING: GREY IRON F023 6 461 28%CASTING: STEEL/SST F040 90 19%

CASTING: OTHER A140 74 34%CASTING: DUCTILE IRON F013 9 18%

A100 271 19%

A110 104 16%A101 3 -34%

CASTING: OTHER A170 105 -12%7 115 26%

PMS W230 6 333 10%W210 4 455 50%W211 6 -84%

4 461 48%

A100 1 361 17%

A110 43 22%1 404 17%

PUS MACHINED PART MACHINED PART

PUS

PMO

DIVISION MANAGED

NON FERROUS CASTINGSCASTING: ALUMINUM

PMO

PDESTAMPINGSTAMPING

PDE

PMA NON FERROUS CASTINGS CASTING: ALUMINUM

PMA

Variation 06/05

COMMODITIES REVIEW 22&23 June06 19/04/23 22:41 15

Buy out partsBuy out parts

CA FY 05K€

C/O in FY 05

Total Inf 06

Avge 06

Inflation 06

C/O Out FY 06

CA FY 06K€

C/O in FY 06

Inflation 07

C/O Out FY 07

RLTROULEMENTS ET ACCESSOIRES 8 359 0,4% -1,4% -1,0% -0,5% -0,4% 8 313 -0,4% -6,6% -4,9%

PMSPIECE MECANO-SOUDEE,OXYDECOUPEE

5 753 0,6% -0,3% 0,3% 0,9% -0,6% 5 806 -0,6% -2,7% -3,2%

14 112 0,5% -0,9% -0,4% 0,1% -0,5% 14 120 -0,5% -5,0% -4,1%

COMMODITIES REVIEW 22&23 June06 19/04/23 22:41 16

Sheet Metal parts inflationSheet Metal parts inflation

EVOLUTION INDICE MOYEN FAMILLE : PIECES MECANO-SOUDEES (PMS)

80

85

90

95

100

105

Q1

00

Q2

00

Q3

00

Q4

00

Q1

01

Q2

01

Q3

01

Q4

01

Q1

02

Q2

02

Q3

02

Q4

02

Q1

03

Q2

03

Q3

03

Q4

03

Q1

04

Q2

04

Q3

04

Q4

04

Q1

05

Q2

05

Q3

05

Q4

05

Q1

06

Q2

06

Q3

06

Q4

06

Q1

07

Q2

07

Q3

07

Q4

07

COMMODITIES REVIEW 22&23 June06 19/04/23 22:41 17

Sheet metal partsSheet metal parts

• Market Trend– Opportunities

• Raw material price decrease

– Risks

• Overload of Cz supply base

• LS CZ Supply base too dependant on LS

• Leu/€ rate trend +10% / year

• Welded part inflation in Romania

COMMODITIES REVIEW 22&23 June06 19/04/23 22:41 18

Sheet Metal Parts : SummarySheet Metal Parts : Summary

Date : 14/06/2006

FY 00 FY 01 FY 02 FY 03 FY 04 FY 05 FY 06 (Mai)2 067 K€ 3 863 K€ 3 740 K€ 5 815 K€ 5 117 K€ 5 752 K€ 4 956 K€

-0,8% -4,1% -3,6% -7,1% 6,5% 0,9%

FY 00 FY 01 FY 02 FY 03 FY 04 FY 05 FY 06

Nombre Total articles achetés 857 827 824 859 917 983 910

Nombre articles = 80 % du CA 162 82 85 62 87 84 89

% achats sans code 11% 5% 3% 8% 17% 24% 24%

en K€ 0 K€ 0 K€ 39 K€ 609 K€ 843 K€ 1 836 K€ 1 072 K€

en % du Total 0,0% 0,0% 1,0% 10,5% 16,5% 31,9% 21,6%PMS565CA003 CARCASSE G54 H565MM 0 K€ 0 K€ 0 K€ 0 K€ 9 K€ 468 K€ 131 K€

PMS000PV000 MODELE 0 K€ 0 K€ 0 K€ 227 K€ 345 K€ 456 K€ 503 K€

PMS000PO000 (vide) 0 K€ 0 K€ 3 K€ 34 K€ 42 K€ 412 K€ 88 K€

PMS270CA208 CARCASSE BRUTE PL.F442-0-16/B 0 K€ 0 K€ 13 K€ 159 K€ 217 K€ 255 K€ 209 K€

PMS225CA211 CARCASSE TOLE S235JRG2 EN10025 0 K€ 0 K€ 22 K€ 188 K€ 230 K€ 245 K€ 140 K€

FY 00 FY 01 FY 02 FY 03 FY 04 FY 05 FY 06

Nombre Total Fournisseurs 97 88 115 107 132 124 103

Nombre Fournisseurs > 15 K€ 23 29 29 33 43 37 37

en K€ 316 K€ 405 K€ 285 K€ 983 K€ 1 514 K€ 2 617 K€ 2 029 K€

en % du Total 15,3% 10,5% 7,6% 16,9% 29,6% 45,5% 40,9%12 K€ 29 K€ 34 K€ 406 K€ 526 K€ 763 K€ 514 K€

300 K€ 376 K€ 191 K€ 183 K€ 188 K€ 605 K€ 467 K€

0 K€ 0 K€ 60 K€ 393 K€ 780 K€ 527 K€ 544 K€

0 K€ 0 K€ 0 K€ 0 K€ 0 K€ 369 K€ 88 K€

3 K€ 0 K€ 0 K€ 0 K€ 20 K€ 354 K€ 415 K€

MORAVSKE POTRA

CLERC INDUSTRI

LETOVICKE STRO

ARTICLES

Top 5 Fournisseursbase FY 05

FOURNISSEURSBEARINGS MICHE

ZLKL LOSTICE S

CA en K€Inflation nette

SYNTHESE FAMILLE : PIECES MECANO-SOUDEES (PMS)

Top 5 Articlesbase FY 05

COMMODITIES REVIEW 22&23 June06 19/04/23 22:41 19

Sheet metal Parts : KPISheet metal Parts : KPI

FY 05 FY 06 FY 07

Spend in K€ 5 753 K€ 6 333 K€Net Material Inflation 6,5% 0,9% -2,7%

LCCS (%) 43,0% 48,0% 50,0%

e-SourcingK€ (M) Bid 2 000 K€ 700 K€average Results 48,4%

Direct Material DPOTotal Average Days 74 Days 63 Days 71 DaysK€ less than 30 days 1 534 K€ 2 198 K€ 147 K€

SHEET METAL PARTS

COMMODITIES REVIEW 22&23 June06 19/04/23 22:41 20

Sheet Metal Parts : LCC FY 06Sheet Metal Parts : LCC FY 06

East.Eur48%

Romania3,5%

Russia1%

Czech rep43,3%

West. Europe

52%

COMMODITIES REVIEW 22&23 June06 19/04/23 22:41 21

Sheet metal Parts : LCC FY 07Sheet metal Parts : LCC FY 07

• Objectives FY 07

– Reach : 50%+ LCC

– Complete transfer from France to Eastern Europe for PMS CA motor plants parts . Qualify new sources in Cz/H/Pl to unload current suppliers (Beran/Hanakov/Mopos/…)

– Negociate price decrease to offset impact of raw material price increase from FY 05

– Source/Qualify new ukrainian base for heavy welded parts from Orléans . Transfer 300 k€ from Ro to Ukr .

COMMODITIES REVIEW 22&23 June06 19/04/23 22:41 22

Sheet metal Parts : Reverse AuctionSheet metal Parts : Reverse Auction

• FY 06

– WS 4525 Welded Housing 3 MW 2400k$ *48,4%

• FY 07

– Large welded parts (Orléans)

* incl. Machining/Stator insertion/Tests

COMMODITIES REVIEW 22&23 June06 19/04/23 22:41 23

Sheet metal Parts : Main ProjectsSheet metal Parts : Main Projects

• FY 06– Transfer and sourcing in Eastern Europe of 3MW welded housing

– Set up of a supplier base in Romania for Orléans large welded parts as alternative to Privod (Ru) and Electroturris (Ro)

– > Vitimas/Faur/UMUC

• FY 07

– Set up of a new supplier base in Ukraina for large welded parts to contain price & currency exchange rate increase from Romania

COMMODITIES REVIEW 22&23 June06 19/04/23 22:41 24

Buy out parts : DPOBuy out parts : DPO

• Bearings– DPO : 102 days– No regular suppliers below 30 days

• Sheet metal parts

– DPO : 63 days

– 5 suppliers below 30 days : 3 czech / 2 romanian• Letovicke (Cz) 45 days from Jan 07

• Mopos (Cz) 60 days from FY07 (PS)

• Beran (Cz) Negociation on course

• Electroturris (Ro) 45 days from Sept 06

• Vitimas (Ro) 45 days from Sept 06

COMMODITIES REVIEW 22&23 June06 19/04/23 22:41 25

DPO : Suppliers < 30jDPO : Suppliers < 30j

CA en k€ DPO CA en k€ DPO CA en k€ DPO CA en k€ DPO CA en k€ DPO CA en k€ DPOMORAVSKE POTRAVINARSKE STROJIRNY (325752) 779 30 779 30LETOVICKE STROJIRNY SRO. (361031) 569 30 569 30EMIT SA. (425837) 485 45 485 45CLERC INDUSTRIE (268386) 476 90 476 90TDM AUTOMATION (224926) 396 90 396 90ELECTROTURRIS IME (387013) 387 30 387 30SOUMAGNE SA. (16500) 386 105 386 105ZAMECNICTVI - BERAN SRO. (350589) 319 5 319 5CCC (329957) 284 120 284 120SCHLIGLER (ETS.) (270796) 124 95 124 95OGIER (8104) 124 90 124 90BIGUENET (STE.NOUVELLE) (267000) 123 120 123 120SC VITIMAS SA TECUCI (426920) 119 30 119 30REYDELET DUMOULIN SAS. (67362) 116 120 116 120SFUP SERVIS SPOLKA Z.O.O. (426400) 106 50 106 50BAYARD SERVAL LASER SARL (363296) 75 120 75 120LASER TECH SPOL SRO. (375342) 52 45 52 45EUROTOL INDUSTRIE (264760) 51 75 51 75EURODECOUPE -2 (319614) 45 75 45 75ROUSSELET PASCAL (194461) 37 90 37 90SCODER (341158) 34 90 34 90ATMP 77 (236776) 28 120 28 120GRANDJEAN ASSOCIES SAS. (411741) 28 120 28 120PALIRNA KOVO SRO. (354874) 25 5 25 5

Total 344 5 1 855 30 537 45 202 62 1 139 90 1 252 113 5 329 63

SUPPLIERS

(4) 80 TO 90 DAYS (5th 3rd

Prox)(5) 91+ DAYS Total CA

en k€ Total DPO

(0) PAY ON RECEIPT

(1) 1 TO 30 DAYS

(2) 31 TO 49 DAYS

(3) 50 TO 79 DAYS (5th 2nd

Prox)