Financial Overview

(in million Euros)

	FY2009	FY2008	Rate of change (%)	Factors
Sales	3,864.0	5,013.7	(22.9)	-
Net Income	(379.3)	21.8	-	-
Sales by business unit
Engine systems and components business unit	1,678.6	2,594.5	(35.3)	See note 1) below
Filtration and engine peripherals	1,131.2	1,303.5	(13.2)	See note 2) below

 

Factors
1) Engine systems and components business unit:
-The collapse of the automotive industry led to a massive drop in sales of the Engine Systems and Components BU in all regions. Following the sudden decline in sales in the fourth quarter of 2008, there were still no signs of recovery during the first half of 2009. Sales only showed considerable improvement in the course of the second half-year.
-Decisive factors for the increase in sales in the second half-year were the slight recovery in North America after conclusion of the legal restructuring of Chrysler and General Motors, the positive market development in Brazil and some countries of Asia, as well as the slightly improved business development of the premium car manufacturers.

2) Filtration and Engine peripherals Business Unit
In comparison to the previous year, sales in this business unit saw a drop in all regions.
North America and Europe were affected most severely by the decreasing vehicle demand, the regions of Asia and South America recorded improved sales levels in the second quarter already, after less favorable months at the beginning of the year. However, the increasingly positive development in these regions in the course of the year was not sufficient to offset the marked global downturn at the beginning of 2009 and the consistently lower sales in North America over the course of the year.

 

Contracts

-Bosch Mahle Turbo Systems received the first orders for exhaust gas turbochargers. The turbo technology will be applied in a gasoline downsizing engine and a common-rail diesel engine. Bosch Mahle Turbo Systems holds the development location in Stuttgart (Germany) as well as the production locations in Blaichach/Immenstadt (Germany) and St. Michael (Austria). Currently, turbocharger systems for engines in passenger cars and light commercial vehicles are being developed. The company plans to start production for the approximately one million turbochargers per year at the end of 2011. (From a press release on March 29 2010)

Acquisitions

-The Company signed an agreement with Austria-based KTM-Kuhler GmbH to acquire KTM's automotive business in the Mattighofen plant, Austria. The unit producing oil/water heat exchanger at the location generates sales of approximately 15 million euros. (From a press release on October 26, 2009)

-Behr GmbH & Co. KG and the Company agreed upon the acquisition of 60 percent of the shares in Behr Industry GmbH & Co. KG by Mahle. The German division of Behr, with five locations in Germany and the USA, manufactures products such as cooling and air conditioning systems for buses. In 2008, it achieved sales of approximately 206 million euros. In future, Behr Industry will operate under the name Mahle Behr Industry. (From a press release on February 4, 2010)

 

Restructuring

-The Company plans to close the plant in Alzenau, Germany, at the end of June 2009 as part of restructuring of production in the Piston Systems product line. From 2005 to 2009 inclusive, the operating profit of the plant has shown a cumulative total loss of around EUR 70 million. At this location, pistons for passenger car diesel and gasoline engines are coated and machined. (From a press release on Mar 26, 2009)

R&D Expense

(in million Euros)

	FY2009	FY 2008	FY 2007
Overall	246.5	285.9	277.7

 

R&D Structure

The Company holds 8 R&D centers worldwide:
-Stuttgart, Germany
-Northampton, UK
-Farmington Hills/Detroit, USA
-Novi/Detroit, USA
-Jundiai/Sao Paulo, Brazil
-Kawagoe/Saitama, Japan
-Okegawa/Saitama, Japan
-Shanghai, China

-A new Tech Center in Jundai(near Sao Paulo) in Brazil was opened. The newly built complex for research and development houses laboratories and test cells on a constructed area of 16.800 m2. This new Tech Center provides for the Company the complete research and development as well as engineering and sales departments for South America. Customers are local and international vehicle and engine manufacturers. Approximately 260 employees work in the Tech Center. (From a press release on Jun. 26, 2008)

Product Development

MAHLE Downsizing engines
Thirty-percent fuel consumption and emissions savings potential of demonstrator engine. Installation in demonstration vehicle planned

Turbocharger
Exhaust gas turbocharging enables improved performance and torque of
downsizing engines.

Wastegate actuator
High actuation speeds and more precise control in electric wastegate actuators for turbochargers enable lower consumption.

CamInCam® camshaft
MAHLE CamInCam® allows for a reduction in fuel consumption of three to five percent and increases torque and performance by approximately ten percent.

Cylinder deactivation
MAHLE cylinder deactivation systems for fuel savings of up to ten percent without negative effects on performance.

MONOTHERM® steel piston, lightweight valve
MAHLE technologies reduce frictional losses and the drive power of engine accessories.

Camshaft with roller bearings
Less friction using needle bearing with the camshaft and smaller bearing diameters.

Controlled MAHLE pendulum-slider oil pump
Reduction in fuel consumption achieved through demand-based control of pump performance.

MAHLE all-plastic transmission oil filter module
Combination of plastic oil filter with transmission oil cooler.

Full-load EGR valve for gasoline engines
Cooled exhaust gas recirculation minimizes nitrogen oxide emissions and reduces full-load fuel consumption.

Rotating charge air valve
Reducing nitrogen oxide emissions by means of exhaust gas recirculation with MAHLE's newly developed rotating exhaust gas flap.

Capital Expenditure

(in million Euros)

Business Units	FY2009	FY2008
Engine systems and components	87	266
Filtration and engine peripherals	55	85

 

Investments

by Business Unit
<Engine systems and components business unit >
-Capital expenditure on fixed assets related to restructuring projects, new customer programs, advanced technologies, and rationalization measures.In response to the deteriorated market situation, the capital expenditure was limited to 4.5 percent of sales. Investments in restructuring measures were particularly made in Mexico with regard to the production of piston rings, bearings, and cylinder liners. For the growing Chinese market, further capacities were added for the production of pistons and connecting rods. Moreover, the equally growing Indian market required an expansion of capacities for camshaft production.

<Filtration and engine peripherals business unit>
-With EUR 55 million and a proportion in sales of 4.4 percent, capital expenditure of the business unit focused on project-specific facilities, tools, and equipment for new and existing customer projects. A further focus of capital expenditure was on Asia, where investments were made in specific customer projects and building expansions. In Europe, only disproportionate investments were made due to the stagnating Western European markets. The major part of these investments was used for the plant in St. Michael/Austria; the investments largely went toward equipment for the manufacture of new products in the startup phase. In addition, investments were made toward process optimization in production and logistics. The expansion of activities in Mexico constituted the focus of capital expenditure in North America, where apart from investments in newly initiated customer programs, the plant in Santa Catarina was extended in order to facilitate the integration of product programs from the rest of the NAFTA region in the context of the
optimization of the production network in North America.

MAHLE Filter Systems India Ltd (MFSI) has inaugurated second plant in Parwanoo, India, with the investment of Rs 60 million. The new plant will manufacture the PU moulded filter elements, plastic embedded filter elements and lube oil spin-on filters. The annual production capacity is expected to be 22 million filters. These products will be supplied to such customers like Tata Motors, Mahindra & Mahindra, GM and Bosch. The facility will become operative by February 2010 and will generate annual revenue of Rs 500 million. MFSI, a joint venture between MAHLE Group and Anand Automotive Systems, already has three plants at Parwanoo, Gurgaon and Pune. (From a press release on Aug 22, 2009)