Financial Overview

(in million EUR)

	FY ended Dec. 31, 2013	FY ended Dec. 31, 2012	Rate of Change (%)	Factors
Overall
Net Sales	2,458	2,369	3.8	1)
Net Income	81	99	(18.2)	-
Mechatronics Division
Sales	1,171	1,091	7.3	2)
Hardparts Division
Sales	1,085	1,087	(0.2)	3)

Factors
1) Net Sales
-In 2013, the Company achieved sales of EUR 2,458 million, a 3.8% increase compared to 2012. The Company's improved sales were mainly driven by growth in its Mechatronics division.

2) Mechatronics
-Sales in the Company's Mechatronics division grew 7.3% in 2013 to EUR 1,171 million. Much of the increase in sales was due to rising global demand for products that reduce carbon dioxide and emissions. Exhaust gas flaps and exhaust gas recirculation valves experienced the greatest increase in sales. In the solenoid valves product group, sales of electrical versions of switchover valves, divert-air valves and pneumatic converters increased significantly. Variable oil pumps also experienced an increase in sales compared to the previous year.

3) Hardparts
-The Company's Hardparts division recorded sales of EUR 1,085 million in 2013, a decrease of 0.2%. Increased sales of small-bore pistons were caused by rising demand in Germany. This was offset, however, by lower demand for large-bore pistons. Sales for engine blocks and plain bearings were also greater in 2013 compared to 2012.

Joint Venture

-Pierburg Pump Technology GmbH, a subsidiary of the Company, has formed a joint venture with Shanghai Xingfu Motorcycle Co., Ltd., a subsidiary of Huayu Automotive Systems Co., Ltd., to manufacture and market pumps for automotive applications. Each party holds a 50% stake in the new Shanghai-based venture, Pierburg Huayu Pump Technology Co., Ltd. (PHP). The lineup includes variable-flow oil pumps, electric oil pumps for transmissions, high-efficiency vacuum pumps, on-demand coolant pumps for the main circuits and electric recirculating water pumps for secondary circuits used for charge-air or recirculating exhaust gas cooling. The new company is building a 4,000-square-meter production facility in the industrial zone of Yuepuzhen in the northern Shanghai area. The first production lines and test systems for recirculating-water and vacuum pumps were scheduled to be installed in late 2013 to early 2014. (From a press release on April 22, 2013)

Contracts

-The Company was awarded several large contracts from American automotive manufacturers for mechatronic components. The orders are worth more than EUR 400 million over the entire term of the contracts for the Mechatronics division. Components supplied will include oil and vacuum pumps, exhaust gas recirculation modules, solenoid valves, throttle valves, and the combined oil and vacuum pump manufactured by the Company's Pierburg Pump Technology subsidiary. The new pump is scheduled to go into production at the start of 2015 and will be manufactured by Pierburg Pump Technology's new plant in Celaya, Mexico. (From a press release on June 26, 2013)

-The Company announced that as many as seven of Ward's 10 Best Engines come with its components. A table of engines containing the Company's components is listed below. (From a press release on January 17, 2013)

Company	Model and Engine	Parts Supplied
Audi	S5 - 3.0L V6	Water recirculating pump, Connecting rod bearing shells, Thrust washers, Tumble valve
BMW	328i - 2.0L T	Crankshaft bearings, Collar bearings, Electric divert-air valve for turbocharger
	135i - 3.0L N55	Electric coolant pump
Ford	Shelby GT500 - V8 88	Electric coolant pump
	Focus ST - 2.0T	Pistons
	Taurus - 2.0T	Pistons
Dodge	Ram 1500 - Pentastar 3.6L V6	Pistons
Cadillac	ATS - 2.0T 86.75	Charge-pressure valve, Bypass valve

R&D Expenditure

(in million EUR)

	FY ended Dec. 31, 2013	FY ended Dec. 31, 2012	FY ended Dec. 31, 2011
Total	152	147	130

R&D Structure

-As of December 31, 2013, the Company has 992 employees working in research and development.

R&D Activities

-The Company's New Drive Technology research division tested its range extender installed on an electric Fiat 500. The Fiat 500 was taken to various automotive manufacturers and tested by a number of drivers for its suitability for everyday use. Based on the results of testing, the Company determined that the range extender was able to successfully increase the range of the electric vehicle while also contributing very little to noise and vibration levels.

-Due to the carbon dioxide emission targets set by the EU Commission for 2020 and 2021, the Company has been prioritizing research and development in areas to reduce emissions. Specific areas of interest include the following:

• Turbocharging and downsizing
• Dethrottling
• Demand-based variabilization and electrification of auxiliary units
• Enhancing automatic transmission systems
• Optimizing combustion, friction and weight
• New thermomanagement techniques

Product Development

Steel alloy pistons
-The Company's Hardparts division completed development on the LITEKS piston design. Due to a new high-performance alloy KS 309, LITEKS pistons are approximately 14% lighter than conventional pistons. The use of steel in LITEKS pistons not only improves thermodynamic efficiency and performance, but also reduces fuel consumption up to 4%. The LITEKS pistons will enter series production in 2014.

Capital Expenditure

(in million EUR)

	FY ended Dec. 31, 2013	FY ended Dec. 31, 2012	FY ended Dec. 31, 2011
Total	142	148	104

<Mechatronics division>
-Capital expenditures in the Company's Mechatronics division totaled EUR 93 million in 2013. Most of the spending was due to the construction of a new plant in Neuss, Germany which is due to be completed in 2014. Over EUR 50 million is expected to be spent on the new plant, with EUR 32 million expended in 2013 alone.

Location	Investment Activity
Neuss, Germany	Plot of land and building construction for a new facility
Neuss, Germany	Machines and systems for capacity expansion of electropneumatic converters
Hartha, Germany	Assembly facilities and tools for capacity expansion of electric coolant pumps
Nova Odessa, Brazil	Assembly facilities and tools for new variable oil pump production

<Hardparts division>
-In 2013, the Company's Hardparts division invested EUR 47 million in capital expenditures, primarily in the area of pistons. Spending was directed towards the development of a facility in China to produce large-bore pistons, as well as capacity expansions in Germany, Japan and the USA.

Location	Investment Activity
Neckarsulm, Germany	Casting tools and processing machines for new die-cast engine block production
Marinette, USA	Processing machines and tools for capacity expansion of passenger car pistons
Celaya, Mexico	Machines and systems for capacity expansion to sinter primary materials
Nova Odessa, Brazil	Modernization of machines and systems in the areas of processing and coating to replace older equipment
Shanghai, China	Development of production facilities for large-bore pistons in China
Hiroshima, Japan	Processing line for capacity expansion of passenger car pistons

Investments Outside Germany

<China>
-Pierburg China Ltd., a member of the Company, opened a new production plant in Kunshan, Jiangsu Province, China. The new plant manufactures pneumatic exhaust-gas recirculation valves and electric throttle valves and will soon add the capability to manufacture solenoid valves. (From a press release on March 25, 2013)