Mahle GmbH Business Report FY ended Dec. 2016

Financial Overview

(in million EUR)
FY ended Dec. 31, 2016 FY ended Dec. 31, 2015 Rate of
change (%)
Sales 12,321.8 11,486.1 7.3 1)
Net income 63.0 122.4 (48.5) -
Sales by business unit
Engine Systems and Components 2,683.4 2,698.1 (0.5) 2)
Filtration and Engine Peripherals 2,190.5 2,196.0 (0.2) 3)
Thermal Management 4,293.3 3,761.2 14.1 4)


1) Sales
-The Company’s sales in the fiscal year ended December 31, 2016 increased by 7.3% over the previous year to EUR 12,321.8 million, reaching a record high for the second consecutive year. Changes in the Company’s scope of consolidation, including the full-year inclusion of Delphi Thermal and Kokusan Denki, contributed a gain of EUR 529 million. Negative exchange rate effects decreased sales by EUR 104 million. The Company had organic growth of 3.4%.

2) Engine Systems and Components
-The Engine Systems and Components business unit had sales of EUR 2,683.4 million in the fiscal year ended December 31, 2016, a decrease of 0.5% from the previous year. Excluding exchange rate effects, sales remained stable year-to-year. The Company was able to make substantial gains in the assembled camshaft business, which were attributable to production ramp-ups in China and the USA as well as production expansion in Europe. The demand for valves and power cell units, for both passenger cars and commercial vehicles, also developed positively. For cylinder liners, bearings, and heavy-duty steel pistons sales declined slightly.

3) Filtration and Engine Peripherals
-Sales for the Filtration and Engine Peripherals business unit in the fiscal year ended December 31, 2016 totaled EUR 2,190.5 million, a decrease of 0.2% from the previous year. Among the products generating the highest sales were air intake modules as well as air and oil filter modules. The biggest growth was achieved with cylinder head covers, oil pumps, and oil coolers. In Santa Catarina/Mexico, the Company has merged three locations into one plant and has expanded the plant in Timisoara/Romania.

4) Thermal Management
-The Company’s Thermal Management business unit grew by 14.1% in the fiscal year ended December 31, 2016, to EUR 4,293.3 million. The primary factor of growth is due to the first full year of inclusion of the Delphi Thermal acquisition in 2015. Despite this, the business unit achieved organic sales growth of approximately 6%.
-Integrating the Delphi Thermal units acquired in 2015 was a priority for the business unit in 2016. This involved, location consolidations and the relocation of projects in the USA, Brazil, and India.


-In December 2016, the Company signed an agreement for the acquisition of Nagares SA, a Spanish company which specializes in developing and manufacturing electronics for the automotive industry. Nagares manufactures control units and power electronics for electric auxiliary components and thermal management systems, as well as power converters for e-mobility solutions. With 435 employees, the company achieved sales of approx. 70 million euros in 2015. It operates four production plants and a development center in Spain.


-Iran Khondro (IKCO) signed a contract with the Company to design and develop three-cylinder engines ranging in power output from 120 hp to 160 hp, with 285 Nm of torque. "We will design and develop four powertrains that can mostly cover our need for our future cars," said IKCO CEO Hashem Yekehzare. "These powertrains will meet the world's latest technologies and the contract includes full technology transfer, while the second powertrain onwards will be designed and manufactured by IKCO experts." While stating that the value of the contract is EUR 125 million, Yekehzare said, "57 million euros of the whole project will be accomplished by IKCO." Design of the engines will take between 30 and 33 months. After the pre-production phase, 350,000 powertrains will be produced annually. (From IKCO press release on August 3, 2016)


-Received the 2016 Volvo Group Purchasing Supplier Award in the category of “Innovation and Fuel Efficiency" for Mahle Monoweld steel piston
-MAHLE Behr Charleston Inc. USA received Ford Q1 Awards.
-The plant of MAHLE Metal Leve S.A. in Itajuba/Brazil received the PSA Peugeot Citroen supplier award LATAM.
-MAHLE Donghyun Filter Systems Co., Ltd./Korea received the GM Supplier Quality Excellence Award for its plant in Ulsan and Hwasung.
-MAHLE Izmir A.S./Turkey received Renault Nissan Supplier Achievement Award for starting production of steel pistons both quickly and efficiency

R&D Expenditure

(in million EUR)
FY ended Dec. 31, 2016 FY ended Dec. 31, 2015 FY ended Dec. 31, 2014
Overall 753 657 552

-The EUR 753 million invested in research and development during the fiscal year ended December 31, 2016 is approximately 6.1% of the Company’s sales that year.

R&D Structure

-As of December 31, 2016, the Company has 5,996 employees working in research and development across 15 development locations and 12 competence centers.

-Mahle Powertrain, a subsidiary of the Company, announced that it is opening a new North American headquarters in Plymouth, Michigan later this year as part of a USD 16 million expansion that will accelerate a variety of advanced engine-development programs. Mahle Powertrain will move from its current headquarters in Farmington Hills, Michigan to a 45,000-square-foot building in Plymouth. The official opening of the new facility will take place in early November. The Plymouth location is equipped with a four-wheel-drive chassis dynamometer, seven vehicle lifts, five powertrain test cells and a wiring-and-instrumentation laboratory. Further expansion plans include two additional powertrain test cells; upgrades to engine and vehicle test beds for gasoline, diesel, hybrid, propane and natural gas powertrains; and additional equipment to support hybrid-electric vehicle testing. (From a press release from August 16, 2016)

-Mahle Powertrain opened the VEC ( Vehicle Engineering Center) in Northampton/UK. in July.

R&D Activities

Systemic engine optimization
-In order to improve fuel efficiency and reduce emissions, the Company approached the optimization of an engine systemically. The Company focused on two primary concepts: the reduction of frictional loss within the mechanics of the engine, and the reduction of power consumption of auxiliary drives by designing them to meet demand. Through systemic engine optimization, the Company was able to achieve overall efficiency gains in commercial vehicle powertrains of up to 3%.

Product Development

World's first R744 air conditioning system
-Starting in 2017, all new EU vehicles are required to use a refrigerant with Global Warming Potential (GWP) below 150. The Company has developed an air conditioning system which uses R744 as a refrigerant, which has a GWP of one, thus offering an environmentally friendly alternative. The use of R744 as an air conditioning refrigerant requires specific technical solutions compared to current refrigerants. For example, the R744 air conditioning system was designed to withstand comparatively higher pressures of up to 130 bar.

Downsized CNG-exclusive engine
-The Company is researching the capabilities of a downsized engine designed specifically for use with CNG. The engine features a 13:1 compressions ratio and has a natural gas consumption rate under 200 g/kWh. Combined with a VTG exhaust gas turbocharger and stop-start functionality, the downsized engine can reduce CO2 emissions by up to 31%. This is an improvement compared to the 24% reduction in CO2 emissions in CNG engines based on conventional gasoline engine designs.

Controllable pendulum-slider oil pump for commercial vehicles
-The controllable pendulum-slider oil pump generates pressure and volume flow on demand, thus decreasing the power required to a minimum. Based on its usage, the pump can result in fuel savings of up to 1.5% compared to standard oil pumps. The Company has already received orders for the controllable pendulum-slider oil pump from European and American automakers both in the passenger car and commercial vehicle segments.

Map-controlled thermostat for commercial vehicles
-The Company has developed a map-controlled thermostat which adjusts the coolant temperature based on the driving situation when first encountered. This increases the efficiency of the engine. Benefits provided by the map-controlled thermostat include quicker coolant temperature changes and pre-actuation at lower temperatures. When used in long-distance hauling applications in commercial vehicles, the thermostat can reduce fuel consumption by 0.5%. When used in conjunction with the Company’s E-Visco coolant pump and cooler, the map-controlled thermostat can reduce CO2 emissions by up to two percent. The map-controlled thermostat will be ready for series production by 2018.

ECO air conditioning system for commercial vehicles
-The Company, together with the Behr-Hella Thermocontrol joint venture, developed the ECO air conditioning system for heavy-duty commercial vehicles. The ECO system requires 83% less energy than comparable air conditioning systems.


-In 2016, the Company filed 350 patent applications.

Capital Expenditure

(in million EUR)
FY ended Dec. 31, 2016 FY ended Dec. 31, 2015 FY ended Dec. 31, 2014
Overall 563 564 488

-The Company’s capital expenditure on tangible fixed assets in Europe amounted to 47%, or approximately EUR 265 million of the total capital expenditures during the fiscal year ended December 31, 2016. The investment in Europe was primarily focused on Eastern Europe, with expansions of plants in Poland, Czech Republic, and Romania.

-Capital expenditures in North America during the fiscal year ended December 31, 2016 consisted of 25%, or approximately EUR 141 million of the Company’s total capital expenditures. Spending focused on the expansion of various Mexico locations, as well as the integration of locations in the U.S. that were acquired in the previous year.

-Approximately 20%, or EUR 113 million, of the Company’s total capital expenditure was invested in the Asia Pacific region. Investments were focused in China and Japan, specifically for the new plant in Changshu, China for the Compressors profit center, and for the modernization of the plants in the Mechatronics division in Japan.