Robert Bosch GmbH Business Report FY2008

Business Highlights

Financial overview (in million euros)
FY2008 FY2007 Rate of Change(%) Factors
Sales 45,127 46,320 (2.6) 1)
Operating Profit 1,515 3,170 (52) 2)
Automotive Technology
Sales 26,475 28,449 (6.9) 3)

-In total, sales were down 2.6 % on the previous year, at approximately 45.1 billion euros. The development of sales was also impacted by the appreciation of the euro against the dollar and other key currencies, which was substantial at times.
-Disregarding currency effects, sales were down 0.5 %.
-The first-time consolidation of some of its acquisitions and of already existing shareholdings had a positive effect on sales, to the tune of 460 million euros.

-In Total, the main reasons for this decline in result were the worsened profit situation in Automotive Technology, the burden of the - at times - sharp rise in the price of raw materials, and a negative financial result.
-The Automotive Technology business sector suffered the most significant decline, generating an operating result of 321 million euros, compared with 1.7 billion euros the previous year.
-In the Automotive Technology, the return on sales from operations was thus roughly only 1.2 %. This decrease was attributable to under-utilization of production capacity following the significant cuts in call orders by automotive customers, as well as to the steep rise in raw materials prices.

-Sales dropped by 6.9 percent to 26.5 billion euros. After adjusting for currency effects, sales were still down year on year by 5.1 percent.
-The main reason for this decline is to be found in North America. In the Company's business plans, the Company had expected automotive production there to shrink by some four percent. However, when it came, the contraction was significantly more severe, at 16 percent.
-The situation was made worse by the cooling of automotive business in Europe
from the middle of the year. In the fourth quarter, considerable cuts in production worldwide triggered by the escalation of the financial crisis also played a role.
-The divisions that are especially active in North America were particularly affected. This applies above all to the Chassis Systems Brakes division, which is also suffering as a
result of structural changes in the brakes market.
-In addition, demand for diesel technology was dampened by the rise in the price of diesel, in combination with the at times minor difference in the price of diesel and gasoline in Europe.
-The unsatisfactory situation in the Car Multimedia division was further exacerbated by economic developments.

In Feb. 2008, the BMW X5 offers active steering from ZF Lenksysteme, a 50:50 joint venture of the Company and ZF Friedrichshafen AG, as an option.

In Jul. 2008, the Company announced that its Japanese subsidiary will manufacture and provide engine control units (ECUs) for the Nissan X-Trail diesel sport utility vehicles (SUVs), launched in the autumn of 2008.

In Sept. 2008, the Company announced that its parking assistant is available in the latest Mercedes-Benz A and B class.

In Nov. 2008, the Company announced that it supplies diesel common rail system and piezo-electric injectors for Volkswagen of America's 2009 Jetta TDI which uses 2.0L turbocharged direct injection (TDI) engine.

In Dec. 2008, the Company announced that from March 2009, Fiat presents its first model to feature the Company's start/stop system: the Fiat 500.

In 2008, the Company acquired the following companies:
-Holger Christiansen A/S, Esbjerg, Denmark, a remanufacturer of starters and alternators
-The brake business of Morse Automotive Corporation in Chicago, IL (USA).

Joint Ventures
Bosch Mahle Turbo Systems GmbH & Co. KG
-In May 2008, the Company announced that it and MAHLE GmbH have founded a 50/50 joint venture, "Bosch Mahle Turbo Systems GmbH & Co. KG", headquartered in Stuttgart for the development, production, and sale of exhaust gas turbochargers. Initially, around 100 employees will work here, with half drawn from each of the parent companies. Series production of exhaust gas turbochargers will begin in 2011 at existing locations in St. Michael ob Bleiburg, Austria, and Blaichach/Immenstadt, Germany. Up to 500 employees will manufacture major parts and components of exhaust gas turbochargers. (From a press release on May 28, 2008)

SB LiMotive Co. Ltd.
-In Sept. 2008, the Company announced that the fifty-fifty joint venture "SB LiMotive Co. Ltd." of the Company and Samsung SDI, a company which develops, manufactures, and sells lithium-ion batteries for automotive applications, has started its operations on September 1, 2008. It is planned to start series manufacturing of highly efficient lithium-ion battery systems in 2011. The joint venture partners will jointly invest between 300 and 400 million dollars in the next five years. SB LiMotive is headquartered in Suwon, South Korea. In Germany, a subsidiary based in Stuttgart will be established. (From a press release on Sep 1, 2008)

Workforce Reduction
-The Company layed off approximately 3,000 associates in 2008.


R&D Expenditure (in million euros)
FY2008 FY2007 FY2006
Overall 3,889 3,583 3,348
Automotive Technology 3,250 2,899 2,743

R&D Structure

-Around the world, the Company has more than 32,600 research and development associates.
-Of this total, more than 1,400 were employed in the corporate sector Research and Advance
-The number of patents filed by the Group worldwide reached the record level of some
-Approximately 10,000 of its researchers and development engineers work in the Americas and in Asia Pacific, enabling the Company to focus on the specific requirements of its customers.
-The Company expanded the international research network in 2008 through the addition of new centers in Singapore and St. Petersburg.

New R&D and Testing Facilities
R&D Center in Singapore
-In 2008, the Company opened a new regional center for research and advance engineering in Singapore. The Research and Technology Center Asia Pacific analyzes technological trends and market opportunities in the Asia Pacific region and identifies and promotes issues with potential for further development.

Center for Cold Weather Testing
-In Dec. 2008, the Company announced that it held an opening ceremony at its new Bosch (Hulunbeier) Automotive Test and Technology Center Co., Ltd. in Yakkeshi, Inner Mongolia. This new Center will conduct cold weather testing activities. The company invested 150 million yen in the Center, which is 1.8 million square meters in size. The technology center has a polished ice track, a packed snow track, a testing workshop, and other facilities and has now become the Company's largest and the most advanced winter road test center in the world. (From a press release, December 1, 2008)

Technological Alliance

-In Dec. 2008, the Company announced that it and PSA Peugeot Citroen (PSA) have agreed on a strategic partnership for diesel hybrid technology. The agreement calls for the Company to co-develop, industrialize and supply electric motors and power electronics for PSA's four-wheel-drive diesel hybrid powertrain. This diesel hybrid technology will equip Peugeot and Citroen vehicles starting in 2011. As part of the agreement, the Company will supply the rear electric motor, the front-mounted high voltage alternator and the power electronics that will control them. It also will deliver to PSA specifications the interface between the electric and electronic components, ABS and ESP. (From a press release on Dec 9, 2008)

Product Development
Pressure-Generation System in the Injector
-In 2008 the Company started production of a new system for heavy commercial vehicles. Among other things, this features an additional pressure-generation system in the injector, which is currently capable of increasing injection pressure to 2,100 bar. As a result, fuel is burned even more cleanly and the injection process can be configured even more flexibly than before.

Variant of ESP(R) Brake Control System
-In 2008, the Company started production of a variant of its ESP(R) brake control system, in which the sensors for measuring the yaw rate and lateral acceleration are integrated into the control unit for the first time. This cuts the space required in the vehicle and reduces the assembly outlay for the entire system.

Application of Denoxtronic to Passenger Cars
-Denoxtronic technology, which injects the right amount of urea into the exhaust gas flow for exhaust-gas treatment, was first featured in production passenger cars. Thanks to this technology, it is already possible to meet future emissions limits such as Euro 5, Euro 6, and the emissions limits set by California, which are the world's most demanding.

Smaller Turbocharged Engines
In Europe and the U.S., the trend toward smaller, turbocharged engines continued. Direct injection and turbocharging make it possible to downsize gasoline engines, so that they deliver the same power with less displacement, and consume up to 15 percent less fuel at the same time.

A New Version of Night Vision Enhancement Systems
-The Company began manufacturing night vision enhancement systems in 2005. So far, they have been supplied for premium vehicles, where they are in great demand. Infrared headlights illuminate the road in front of a car, and the image captured on camera is digitally processed and presented to the driver on a display. A new version, which can interpret the captured data, identify pedestrians, and warn the driver in case of danger, will go into series production in 2009.

Automatic Parking Assistant
-Its automatic parking assistant, which has been available in two compact-class models since 2008, provides additional support. The system measures the parking space and performs the steering movements. All the driver has to do is accelerate and brake.

Instruments with User-Definable Color Displays
-Instruments with user-definable color displays are increasingly a feature of premium vehicles. They can replicate the traditional round instruments with astounding accuracy and, if necessary, incorporate the readings and warnings of new assistance systems. In 2008, the Company started production of this display for a further customer.

Dual View

-The Company is currently making "Dual View," a new type of display technology, ready for series production. This technology allows two different programs to be displayed on one monitor, with the viewing angle determining which of the two programs can be seen. For example, while the driver is shown navigation information, the passenger can watch a film. Series production is scheduled to start in mid-2009.

Investment Activities

Capital Expenditure (in million euros)
FY2008 FY2007 FY2006
Overall 3,276 2,634 2,670
Automotive Technology 2,195 1,808 2,040

Automotive Technology
-Automotive Technology accounted for roughly two- thirds of the total capital expenditure in 2008.
-In addition to the semiconductor factory in Reutlingen, the Company once
again, as in the previous year, invested heavily in production facilities for its common-rail diesel technology and gasoline direct injection technology in Germany, but also in India, China, and Turkey.

Investments outside Germany
-In Sept. 2008, the Company announced that Bosch Mahle Turbo Systems, a joint venture of the Company and Mahle, is starting construction work on a new production plant in Austria. From 2011, up to 1.5 million turbochargers per year will be manufactured and assembled in St. Michael ob Bleiburg in Carinthia. In 2011, more than 150 employees are scheduled to work for Bosch Mahle Turbo Systems in St. Michael. (From a press release on Sep 18, 2008)

-In May 2008, the Company announced that it is expanding production of high-performance fuel injection pumps for diesel engines whose demand is expected to grow as emissions regulations will become more and more stringent in China. At Japanese subsidiary's plant in Ota, Gunma Prefecture, a monthly production of high pressure pumps for common-rail injection devices installed in diesel engines for commercial vehicles, will be increased by one and half times to some 12,000 from this month, and by two times to some 16,000 gradually from July. Furthermore, local production in China will start at the end of 2008, boosting local supply capacity in China combined with imports from Japan to a monthly total of some 30,000. The Company intends to get an advantageous position of winning new businesses by quickly setting up a solid supply system for high performance diesel engines. (From an article in the Nikkan Jidosha Shimbun on May 30, 2008)