Financial Overview

(in million Euros)

	FY ended Dec. 31, 2013	FY ended Dec. 31, 2012	Rate of change (%)	Factors
Overall
Sales	6,941.3	6,159.5	12.7	-The increase was largely influenced by the first-time consolidation of the former Behr Group. Organic sales growth, however, remained short of expectations due to the weak business development in Europe and massively negative exchange rate effects.
Net profit	235.6	148.6	58.5	-
Sales by business unit
Engine Systems and Components	2,494.5	2,623.0	(4.9)	1)
Filtration and Engine Peripherals	1,946.4	1,925.5	1.1	2)

 

Factors
1) Engine Systems and Components
-In the year ended December 31, 2013, the Engine Systems and Components business unit posted a 4.9% decline in sales. The sales decrease was mainly due to negative exchange rate effects, the partly weak commercial vehicle and off-highway market, and the market weakness of some European passenger car manufacturers.

-As a measure to adjust capacities, passenger car piston production at the French location near Colmar was discontinued at the end of 2013.

2) Filtration and Engine Peripherals
-In the year ended December 31, 2013, sales of the Filtration and Engine Peripherals business unit grew by 1.1%. Adjusted for negative exchange rate effects, the business unit achieved solid sales growth of 6.7% in comparison with the previous year.

Acquisition of Behr Group

-In May 2013, the Company increased its holding in the Behr Group from 36.85% to approximately 51% with the acquisition of all shares in the BWK GmbH holding company (BWK). Furthermore, an integration agreement has been concluded with the family shareholders, who hold the remaining shares along with Mahle, enabling the full integration of the "Thermal Management" business unit into the Mahle Group. Mahle's acquisition of the majority share in Behr, which was originally planned for early 2013, was delayed as a result of investigation proceedings against manufacturers of thermal systems for automobiles, including Behr, in connection with suspected restrictive business practices. (From a press release on May 16, 2013)

Recent Developments Outside Germany

<China>
-In December 2013, Mahle Piston Rings (Yingkou) Co., Ltd. announced that it has produced over 10 million pistons during 2013. The company aims to increase its annual production volume to 18 million pistons by 2018, while increasing the production volume of piston rings and bearing bushes, too. The expansion is expected to boost the company's yearly sales to over CNY 1.7 billion. (From news releases issued by multiple sources on December 12, 2013)

-In October 2013, the Company will establish a new production base for automotive filters in Wuhan. The total investment in the plant will be EUR 75 million. The plant will start operations in July 2014. MAHLE plans to produce automotive filters and engine parts including air filters, intake manifolds, cylinder head cover modules, and engine oil coolers. These products will be supplied to various automakers including Dongfeng Peugeot-Citroën, Dongfeng Nissan, Dongfeng Honda, Renault, and General Motors. (From a press release on October 31, 2013)

<Thailand>
-In November 2013, the Company announced that it will establish a joint venture with Japan-based Kokusan Denki Co., Ltd. in Samut Prakan Province, Thailand in April 2014. In order to meet growing demand in the country, the new company will manufacture electric components and motors for automobiles, starting in the first half of 2015. It will be capitalized at THB 100 million (approximately JPY 300 million), of which 51% will be provided by Kokusan Denki and the remaining 49% will be provided by Mahle. (From an article in the Nikkan Jidosha Shimbun on November 29, 2013)

Awards

Month/Year	Presenter	Award
Dec., 2013	Mahle Metal Leve S.A (Brazil)	Volvo "Cars Quality Excellence Award"
Dec., 2013	Mahle Behr GmgH & Co. KG	GM "Supplier Award"
Dec., 2013	Mahle Tri-Ring Valve Train (Hubei) (China)	Dongfeng Motor "Excellent Supplier"
Dec., 2013	Mahle Tri-Ring Valve Train (Hubei) (China)	SAIC "Excellent Supplier"
Dec., 2013	Mahle Engine Components (Yingkou) Co., Ltd. (China)	Changan Ford Mazda "Preeminent Achievement Supplier"
Oct., 2013	Mahle Sistemas de Filtracion de Mexico S.A.	Nissan "Regional Supplier Quality Award Finalist"
Oct., 2013	Mahle Filter Systems North America, Inc.	Nissan "Regional Supplier Quality Award Finalist"
Oct., 2013	Mahle Ventiltrieb GmbH	GM "Supplier Quality Excellence Award"
Sept., 2013	Mahle Components de Motor de Mexico, S. de R.L. de C.V.	Ford "Q1"
Sept., 2013	Mahle Engine Components Japan Corporation	Mitsubishi Heavy Industries "Special Award"
Aug., 2013	Mahle Tri-Ring Valve Train (Hubei) Co., Ltd. (China)	FAW-VW "Excellent Supplier"
Jun., 2013	Mahle Engine Components Japan Corporation	Hino "Excellent Quality Management Award"
Jun., 2013	Mahle Behr Mexico, S. de R.L. de C.V.	Ford "Q1"
May, 2013	Mahle Components de Motor de Mexico, S. de R.L. de C.V.	GM "Supplier Quality Excellence Award"
May, 2013	Mahle Metal Leve S.A. (Brazil)	Ford "World Excellence Award Go Further"
Apr., 2013	Mahle Metal Leve S.A. (Brazil)	Toyota "Logistic Excellence Performance Award"
Apr., 2013	Mahle India Pistons Limited (Mahle IPL)	Toyota "Certificate Appreciation - Best Effort in the Area of Innovative Technology"
Mar., 2013	Mahle Filter Systems Japan Corporation	Hino "Quality Control Award for Special Effort"
Jan., 2013	Mahle Engine Components USA, Inc.	GM "Quality Excellence Award"
Jan., 2013	Mahle Behr Korea Inc.	GM "Quality Excellence Award"
Jan., 2013	Shanghai Behr Thermal Systems Co., Ltd.	China Machinery Industry Quality Management (CMQMA) "Quality Excellence Award"
Jan., 2013	Mahle Tri-Ring Valve Train (Hubei) Co., Ltd. (China)	China National Heavy Duty Truck Group (CNHTC) "Excellent Supplier"

New Orders

Model	Engine	Mahle Products
Audi "A6"	3.0L TFSI Supercharged DOHC V6	Pistons, piston rings, piston pins valves, CVTS-flanges
BMW "135is"	3.0L N55 Turbocharged DOHC I-6	Bearings, intake manifolds, intake systems, air filters, cylinder head covers
BMW "328i"	2.0L N20 Turbocharged DOHC I-4	Oil pumps
Chrysler "Ram 1500"	3.6L Pentastar DOHC V6	Pistons, piston rings, connecting rods, intake manifolds, oil mist separators
Ford "Focus ST"	2.0L EcoBoost DOHC I-4	Piston rings, bearings, camshaft castings
Ford "Shelby GT500"	5.8L Supercharged DOHC V8	Pistons, piston rings, piston pins, connecting rods
GM "Cadillac ATS"	2.0L Turbocharged DOHC I-4	Cylinder liners, piston rings, bearings
Honda "Accord Sport"	2.4L DOHC DI I-4	Piston rings
Honda "Accord Touring"	3.5L DOHC V6	Piston rings and cylinder head covers

R&D Expense

(in million Euros)

	FY ended Dec. 31, 2013	FY ended Dec. 31, 2012	FY ended Dec. 31, 2011
Overall	336	289	323

 

R&D Structure

-At the end of 2013, over 4,500 people were employed in the field of research and development worldwide.

-The Company operates 10 R&D centers in seven countries:

•     Stuttgart-Bad Cannstatt, Germany
•     Stuttgart-Feuerbach, Germany
•     Northampton, UK
•     Farmington Hills/Detroit, USA
•     Troy/Detroit, USA
•     Jundiai/Sao Paulo, Brazil
•     Shanghai, China
•     Kawagoe/Saitama, Japan
•     Okegawa/Saitama, Japan
•     Pune, India

Capital Expenditure

(in million Euros)

Business Units	FY ended Dec. 31, 2013	FY ended Dec. 31, 2012	FY ended Dec. 31, 2011
Overall	397	324	319
Engine Systems and Components	173	144	159
Filtration and Engine Peripherals	110	99	104

 
<Investment Plans>
-The Company plans to increase its share in Japanese mechatronics specialist Kokusan Denki from 30.82% to 38.87% at the start of 2014.

-In 2014, four new plants in China and Indonesia will commence production. In Mexico, preparations for new plants are also progressing..