Business/economy

Annual press conference 2012 Bosch: strong core business is basis for further development Long-term corporate strategy paying off

  • Position strengthened in all business sectors and regions
  • Bosch Group generates 5.1 percent return on sales in 2011
  • Sales up 5 percent in first quarter of 2012
  • Sales expected to grow between 3 and 5 percent in 2012, with improved result
  • Bosch further expands new growth areas
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  • April 26, 2012
  • Business/economy
  • Press releases

press release

Stuttgart – The Bosch Group expects global economic growth to slow. Accordingly, the technology and services company expects to see comparatively modest sales growth of between 3 and 5 percent in the current year. This was announced by Franz Fehrenbach, the chairman of the Bosch board of management, at the annual press conference held at company headquarters near Stuttgart. “There is still a great deal of uncertainty with regard to future economic developments, even though the sovereign debt crisis in the euro zone has been defused slightly,” Fehrenbach said. In the first quarter of 2012, sales increased year on year by some 5 percent, despite the cooling of the global economy and difficult developments in a number of European markets. The greatest relative growth was achieved in Industrial Technology, followed by Automotive Technology. Developments in the Consumer Goods and Building Technology business sector were more moderate.

With innovative products, cost improvements, and lower one-off burdens, Bosch wants to improve pre-tax result in the current year. “However, given the persistence of high raw materials prices and continued upfront investments in new areas of business, it will be difficult to achieve our target rate of return on sales of 7 to 8 percent this year,” Fehrenbach said.

At 9.0 percent, stronger sales growth than expected in 2011
In fiscal 2011, Bosch grew more strongly than expected, despite a weaker global economy. Its sales increased by 9.0 percent to 51.5 billion euros. Profit before tax stood at 2.6 billion euros, compared with 3.5 billion euros in the previous year. At 5.1 percent, return on sales thus remained below the target range. Bosch already named the additional burdens of increased raw materials prices and currency effects as reasons for this when it presented its preliminary figures in January. On top of this, there were considerable upfront investments in areas of future business such as electromobility or renewable energy, as well as a downward revaluation of assets in the Solar Energy division, amounting to 560 million euros.

Global headcount rises to 302,500
As a result of the good business developments, global headcount also increased in 2011, by 19,000 to 302,500 as of January 1, 2012. The greatest increase was in Europe, where 9,800 associates joined the company, 5,200 of them in Germany alone. An additional 8,000 associates were hired in Asia Pacific. In North and South America, Bosch headcount increased by 1,200 in all. The slower rate of growth will have an effect on the number of new hires in the current fiscal year. Depending on business developments, and including newly consolidated companies, global headcount is expected to increase to roughly 315,000 in the course of the year. Bosch intends to create most of these jobs in the Asia Pacific growth region. In Germany, the company expects to see a slight increase in associate numbers.

Climate protection means growth in Automotive Technology
In 2011, Bosch strengthened the market position of all three business sectors. With a view to sectoral results, the chief financial officer Dr. Stefan Asenkerschbaumer said: “The considerable efforts we made to strengthen our market position even during the financial and economic crisis paid off.” Automotive Technology, the largest business sector, generated sales of 30.4 billion euros last year, and thus grew by 8.2 percent year on year. Despite increased raw materials prices and considerable upfront investments in electromobility, the sector achieved EBIT of 2.3 billion euros, on a par with the previous year. Return on sales came to 7.7 percent.

The demand for products that help to raise vehicles’ fuel efficiency, safety, security, comfort, and convenience is developing especially well. These include gasoline direct injection, economical diesel systems, and the ESP® electronic stability program, which was developed by Bosch. Between 2011 and 2014, Bosch wants the annual unit sales of its systems to grow significantly: from 7.2 to 9.6 million for common-rail diesel systems and from 4 to 8.6 million for gasoline direct injection systems. “Bosch is making a significant contribution to climate protection. And once again, we see that climate protection means significant growth for Bosch,” said Dr. Bernd Bohr, the chairman of the Bosch Automotive Group. Worldwide, there is increasing demand for driver assistance systems such as video systems or predictive emergency braking systems. The share of new vehicles featuring radar sensors will grow fourfold between 2011 and 2016, to 16 percent.

All in all, Bohr sees further good growth opportunities for Automotive Technology: “This year, our sales revenue per vehicle manufactured worldwide will reach nearly 400 euros. And with the advent of electromobility, it will rise further over the long term.” In the promising field of electromobility, Bosch spends some 400 million euros each year. Even today, the company has a wide-ranging portfolio in this area, with five models of automotive electrical drives, three inverter variants for energy management, and lithium-ion battery systems. “This broad footing gives rise to our decisive advantage: our systems competence,” Bohr said. “Only a company that knows how to network systems will be able to integrate power electronics into the electrical powertrain.”

Industrial Technology grows strongly – difficult situation in photovoltaics
In 2011, the Industrial Technology business sector grew the strongest, by 21.0 percent to 8.0 billion euros. The Drive and Control Technology division recorded above-average growth. And Packaging Technology also developed positively. In Solar Energy, by contrast, result developed unsatisfactorily. Despite a more than 10 percent increase in unit sales of cells and modules, sales fell significantly. This is due to the dramatic drop in prices in the photovoltaics market, which was as high as 40 percent. In line with the industry as a whole, Bosch was unable to offset this decline on the cost side.

The currently difficult situation for photovoltaics and the resulting downward revaluation of assets meant that the Industrial Technology business sector closed the year with negative EBIT of 364 million euros. “In photovoltaics, we are working to significantly reduce our manufacturing costs in the crystalline segment. We want to achieve this by means of innovative technologies and optimized manufacturing processes,” Fehrenbach said. Fehrenbach stressed that the company's aim, as in all other Bosch businesses, is to achieve sustained profitability and competitiveness.

Especially successful with household appliances and power tools
The Consumer Goods and Building Technology business sector generated sales of 13.1 billion euros in 2011, an increase of 4.4 percent. EBIT in the business sector was on a par with the previous year, at 730 million euros. Bosch enjoyed particular success with its new, energy-efficient household appliances and innovative power tools. In the Security Systems division, the company grew globally, especially with video-surveillance systems, the fastest growing segment in the industry. In Thermotechnology, by contrast, business was very subdued. The market continued to be weak, especially in southern Europe, and this had a negative effect.

Global presence expanded – sales increased in all regions
In the past fiscal year, Bosch once again significantly expanded its international presence. Over the past three years, seven new regional companies have been set up: in Cambodia, Egypt, Georgia, Ireland, Morocco, Panama, and Peru. By 2013, it is planned to set up further companies in Bangladesh and Laos. The countries in which the company is now present account for 97 percent of global GDP.

Regionally speaking, sales growth was fairly equally distributed in 2011. In Europe, Bosch sales increased by 9.6 percent to 30.4 billion euros. This was mainly due to the excellent developments in Germany, where sales grew by 11.0 percent to 12.0 billion euros. In 2011, Bosch invested some 2.1 billion euros in Europe, 1.2 billion euros of this amount in Germany. Eastern Europe is a further focus of investment activity: in Romania, for example, the company is expanding its manufacturing facility in Blaj. In Hungary, Bosch is increasing the size of its engineering workforce to 700. And in Serbia as well, Bosch is rolling out production of windshield wipers, a move which is planned for 2013.

In Asia Pacific, Bosch sales grew by 8.9 percent to some 12.0 billion euros. In the future as well, Asia Pacific will remain an especially dynamic growth region. Last year alone, Bosch invested some 800 million euros in the region. In Vietnam, for example, Bosch set up a manufacturing facility for pushbelts for continuously variable transmissions, and opened its first software engineering center in southeast Asia. By 2015, the number of associates in Vietnam will more than triple, to 1,600.

The Americas also developed encouragingly in 2011. In local currency terms, Bosch was able to grow by 10.4 percent in North America, despite the region's subdued economic growth. Expressed in euros, sales rose by 5.7 percent to 7.0 billion euros. In South America, sales grew by 11.0 percent to 2.2 billion euros. All in all, Bosch still sees good prospects for growth in the Americas. In the U.S., for example, the number of passenger car brands with diesel engines is expected to more than double by 2015, and Bosch wants to participate in this growth with its diesel systems.

Core business provides sound basis for dynamic developments
Given these good regional and sectoral developments in 2011, Fehrenbach believes the company’s strategy has been vindicated: “Bosch is a company that orients to the long term. The three pillars of our strategy – broad global presence, focused diversification, and our high level of innovative strength – mean that our prospects for the future remain good.” He added that the company developed the thrust of its growth on the sound basis of its core businesses.

The company is thus continuing to expand its established divisions, and is at the same time making deliberate acquisitions to enhance its core competencies. One example is the expansion of the Automotive Aftermarket division. The pending acquisition of the Service Solutions business of the U.S. company SPX Corporation will strengthen the diagnostics business, an area which is important for Bosch. Bosch is also growing with new business areas that have come into being within the company, such as its activities in the e-bike industry. Bosch now supplies nearly 40 different cycle manufacturers with electrical drive systems. In a business it launched in 2011, the company aims to reach a market share of some 20 percent in Europe over the next few years.

Growing world market volume expected for energy services
Beyond the company’s traditional core business, Fehrenbach believes that additional opportunities can be seized in energy efficiency. Set up in 2011, the subsidiary Bosch Energy and Building Solutions specializes in services aimed to increase energy efficiency in the facilities of commercial clients. Such clients include industrial enterprises, hospitals, or facility management companies. “The services offered by Bosch Energy and Building Solutions allow average energy savings of 20 percent in existing buildings,” Fehrenbach said. For example, this can be achieved by a combination of individual energy concepts, of services, and of modern technologies such as combined heat and power. The services offered also include a management platform for energy applications, which is designed to monitor and control all the energy streams in a building. The company estimates that the global market volume for energy services such as these will grow by 12 percent annually, and reach as much as 40 billion euros by 2020.

Investments in the future: still in excess of 7 billion euros
In 2012, Bosch Group investments will remain on a high level: Bosch will once again spend more than 4 billion euros for research and development, and its capital expenditure will again exceed 3 billion euros. By the end of 2012, it is expected that 43,000 researchers and developers will work at Bosch. That is roughly 4,500 more than at the beginning of the year. Even now, one in four of these people work in software engineering. Bosch is systematically strengthening this area in order to develop new business models, such as those arising from the opportunities presented by web 3.0, the internet of things and services.

“Up to now, software has generally been embedded in our hardware. On the internet of things and services, however, technical devices of all kinds will themselves communicate with their environment, via IP interfaces,” said Dr. Volkmar Denner, the Bosch board of management member responsible for research and development who will succeed Franz Fehrenbach as chairman on July 1, 2012. “Technically, this requires that our products be web-enabled. We are now creating the conditions needed for this.” The Bosch Group's own software and systems unit, which is to be further expanded over the coming years, will play an essential role here. By 2015, the number of associates working there is to rise from its present level of 450 to 1,000.

Innovation clusters connect business activities
To ensure a close connection between development teams in the divisions on the one hand and the software and systems unit on the other, Bosch has set up “innovation clusters” for connected mobility, connected energy, and the connected building. In each of these clusters, the software and systems unit plays the role of an incubator. Far removed from the pressures of everyday business, it tests new business ideas. This is already making a more intensive exchange of knowledge possible. Denner remarked that this was leading to greater competitive advantages for the company. “In the future as well, Bosch will strengthen its core competence of combining precision mechanics and electronics, while enhancing its software expertise at the same time. In this way, we can secure further potential for the future.”

Further information
  Bosch key data
  Pressfolder Annual Press Conference 2012

The Bosch Group is a leading global supplier of technology and services. It employs roughly 375,000 associates worldwide (as of December 31, 2015). The company generated sales of 70.6 billion euros in 2015. Its operations are divided into four business sectors: Mobility Solutions, Industrial Technology, Consumer Goods, and Energy and Building Technology. The Bosch Group comprises Robert Bosch GmbH and its roughly 440 subsidiaries and regional companies in some 60 countries. Including sales and service partners, Bosch’s global manufacturing and sales network covers some 150 countries. The basis for the company’s future growth is its innovative strength. Bosch employs 55,800 associates in research and development at 118 locations across the globe. The Bosch Group’s strategic objective is to deliver innovations for a connected life. Bosch improves quality of life worldwide with products and services that are innovative and spark enthusiasm. In short, Bosch creates technology that is “Invented for life.”

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 is available online at www.bosch.com and www.bosch-press.com, http://twitter.com/BoschPresse.

PI7698 - April 26, 2012

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