· Business with products for utilizing renewable energy is being significantly expanded

Stuttgart – In 2006, the Bosch Group reached the growth targets it set itself, increasing its sales revenue by 5.4 percent. All in all, sales rose to 43.7 billion euros. The pre-tax return on sales stood at 7.1 percent, just within the target corridor of between seven and eight percent. "We are on the right path with our long-term strategy. This applies both to our international orientation and to our broad sectoral presence," said Franz Fehrenbach, chairman of the Bosch board of management, at the annual press conference in Stuttgart. For 2007, the company expects growth to be slightly lower than in the previous year, mainly as a result of the strong appreciation of the euro. After adjusting for currency effects, sales growth is likely to be a strong five percent. In terms of profit before tax, the aim is once again to achieve a return of seven percent. "We will have to work hard for this result, " Fehrenbach said. The first three months of the year had begun modestly, he said. Apart from the weaknesses in the automotive markets in North America, he cited exchange-rate effects as the main reason for this. By the end of the year, however, Bosch expects these to be offset by stimuli from a globally positive economic development, which is likely also to have a positive effect on the automotive industry.

2006: sound financial data, varied developments in the business sectors, strong growth in Asia

Looking at the financial statements for 2006, CFO Gerhard Kümmel concluded: "The equity ratio stands at 48 percent. The Bosch Group balance sheet is fundamentally sound." In the Automotive Technology business sector, sales rose by 3.4 percent to 27.2 billion euros. In Industrial Technology, sales increased by 5.1 percent to 5.5 billion euros, and in Consumer Goods and Building Technology by nearly 11 percent to 11 billion euros. This meant that the share of business accounted for by these two sectors once again increased, by one percentage point to 38 percent. "This is a further step toward the balanced structure we want to achieve," said Gerhard Kümmel.

Once again, Asia Pacific was the regional growth motor, and once again it generated double-digit growth, with sales increasing by 12 percent. China and India led the field, growing by 30 percent and 24 percent respectively. The share of sales accounted for by Europe fell by one percentage point to 65 percent, North and South America remained constant at 19 percent, and Asia Pacific's share rose by one percentage point to 16 percent. It was also in the emerging markets that most new jobs were created in 2006. At the beginning of 2007, the Bosch Group employed some 261,300 associates – 10,300 more than a year previously. At some 110,500, the number of associates in Germany remained nearly constant.

Expanding presence in growth markets, further reducing costs

"We shall establish an even stronger presence than before in the world's growth markets, and this is only possible if we have more manufacturing and development activities in these countries," Fehrenbach said. At Bosch, total capital expenditure came to some 2.7 billion euros in 2006. Expenditure on a similar level is also planned for 2007. New plants are currently being built above all in Asia, and the planned amount of investment for this region alone is some 440 million euros. Bosch intends to invest more than a billion euros in its German locations in 2007. This summer will see the start of construction work for a new semiconductor manufacturing facility in Reutlingen. It is planned to spend roughly 600 million euros on this project by 2015.

Profit before tax stood at 3.1 billion euros in 2006, down slightly from 3.2 billion euros in the previous year. Operating result developed correspondingly, and at 2.4 billion euros was slightly down on the prior-year figure of 2.5 billion euros. Result was significantly affected by the increased pressure on prices in automotive technology, by the persistently high cost of raw materials, and by the situation in the U.S. automotive market. The positive developments in the Industrial Technology business sector, as well as in Consumer Goods and Building Technology, were not able to compensate fully for the pressure on earnings in Automotive Technology. "We have already achieved a lot with cost cuts and improved processes, but we have to further improve our cost structures," Fehrenbach said.

More technology for the efficient utilization of wind and solar energy

It is especially in ecological globalization that Bosch sees long-term opportunities for all its business sectors. "With our core competence in the areas of metering, governing and control, we provide technological answers to ecological questions," Fehrenbach said. "Here, a forward-looking strategy is called for – one that adds urgency and pace to our developments for less energy consumption." This was, he said, a challenge for Bosch's innovative potential. In 2006, the company spent 3.3 billion euros on research and development. This is equivalent to 7.7 percent of sales. More than 40 percent of this expenditure relates directly to environmental protection and resource conservation. For 2007, Bosch plans to keep its research and development expenditure on this high level.

Above all, its business with systems that exploit renewable energies is to be significantly expanded. Bosch plans to increase its sales with these products to more than one billion euros by 2010. This is twice the sum generated in 2006. "It is no surprise that our ecological solutions beyond the automotive sphere come above all from Bosch Thermotechnology and Bosch Rexroth – in other words, from divisions we have significantly strengthened through acquisitions in recent years," Fehrenbach said. Following its acquisitions of IVT Holding in Sweden and of FHP Manufacturing Company in the U.S., Bosch has become the market leader in the still young, yet dynamically growing market for electrical heat pumps. In addition, the company is investing heavily in additional capacity: in the next few years, Bosch Rexroth will invest some 300 million euros in expanding its production of transmissions for wind turbines. Moreover, it is planned to increase Bosch Thermotechnology's sales of solar collectors to more than 300,000 units in 2009 – more than three times the 2006 figure.

More technology in the car for less consumption and reduced pollutant emissions

Fehrenbach also sees further ecological potential for automotive technology, "on the one hand, by making available internationally our innovations that are successful in Europe and, on the other hand, by means of technological developments that offer new potential economies." For example, the company is developing diesel engine management further, which will result in a further reduction in carbon-dioxide emissions of up to 10 percent in an engine that is already economical as it is. In addition, Bosch is using the second generation of its gasoline direct injection as a basis for work on "downsizing concepts." This means a smaller engine and fewer cylinders, but thanks to turbocharging the same power. The result is a 15 percent reduction in carbon-dioxide emissions compared with conventional injection concepts. Bosch is also actively working on the development of further drive systems – from the hybrid drive to vehicles powered by natural gas or ethanol.

A series of technological solutions also contribute to less consumption and lower CO2 emissions – solutions such as thermal and vehicle electrical system management, variable valve control, or especially efficient alternators. Each of these developments can reduce CO2 emissions by between two and four percent. Indeed, the "start-stop" system allows a saving of up to eight percent in urban traffic. "Together with automakers, our aim is to find integrated solutions and technology packages that can be applied to the respective classes of vehicle," Fehrenbach said.

As a technology and services company with a global presence, Bosch believes it is on the right course to meeting the challenges of economic and ecological globalization. Franz Fehrenbach: "First, our regional and sectoral base is so broad that we can provide technological answers to the challenge of climate change that go beyond Europe and the automobile. Second, we will broaden our business even further, beyond the diversity we already have – also in order to make the most of renewable energies."

 The Bosch Group Worldwide: Key Data at a glance

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The Bosch Group is a leading global supplier of technology and services. In the areas of automotive and industrial technology, consumer goods, and building technology, some 275,000 associates generated sales of 38.2 billion euros in fiscal 2009. The Bosch Group comprises Robert Bosch GmbH and its more than 300 subsidiaries and regional companies in over 60 countries. If its sales and service partners are included, then Bosch is represented in roughly 150 countries. This worldwide development, manufacturing, and sales network is the foundation for growth. Each year, Bosch spends more than 3.5 billion euros for research and development, and applies for some 3,800 patents worldwide. With all its products and services, Bosch enhances the quality of life by providing solutions which are both innovative and beneficial. The company was set up in Stuttgart in 1886 by Robert Bosch (1861-1942) as “Workshop for Precision Mechanics and Electrical Engineering.” The special ownership structure of Robert Bosch GmbH guarantees the entrepreneurial freedom of the Bosch Group, making it possible for the company to plan over the long term and to undertake significant up-front investments in the safeguarding of its future. Ninety-two percent of the share capital of Robert Bosch GmbH is held by Robert Bosch Stiftung GmbH, a charitable foundation. The majority of voting rights are held by Robert Bosch Industrietreuhand KG, an industrial trust. The entrepreneurial ownership functions are carried out by the trust. The remaining shares are held by the Bosch family and by Robert Bosch GmbH. Additional information can be accessed at www.bosch.com.

PI5822 - April 25, 2007