Bosch increases innovation, cooperation and M&A - cost reduction remains the focus

Achieving growth targets requires high profitability and financial strength

• Business growth in fiscal 2023: sales of 91.6 billion euros and EBIT margin up 5.3% year-on-year

• Business outlook remains subdued in 2024: Sales growth is expected to be between 5% and 7%, with the EBIT margin ideally at the same level as last year

• Focus on growth areas and expansion: 300 million euros invested in medical technology with two new partners

• Dr. Stefan Hartung, Chairman of the Board of Management of Robert Bosch GmbH: “Despite the unfavorable economic situation, Bosch remains committed to innovation, cooperation and acquisitions to achieve business growth and to fully seize opportunities during the transformation period.”

• Dr. Markus Forschner, Chief Financial Officer of Bosch Group: “For 2024, we have set very challenging goals. The signs of economic recovery are still unclear, and Bosch will continue to cut costs to maintain its competitiveness.”

• Bosch China: Deepening local presence and driving innovation and sustainable development

Stuttgart and Renningen, Germany - In fiscal 2023, Bosch Group achieved growth in both sales and profits, successfully implementing its growth strategy in a difficult environment. "In fiscal 2023, Bosch achieved its business goals and further consolidated its market position in several business areas, such as semiconductors and building intelligent systems," said Dr. Stefan Hartung, Chairman of the Board of Management of Bosch Group. "Despite the unfavorable economic situation, Bosch continues to invest in innovation, cooperation and mergers and acquisitions to ensure growth during the transformation period." In the long term, as a leading global technology and service provider, Bosch plans to achieve an average annual growth of 6% to 8%, achieve a profit margin of at least 7%, and become one of the top three leading suppliers in key markets in all regions of the world.

Bosch is strategically expanding into several promising areas of innovation. In the field of medical technology, for example, Bosch announced that it will develop a new BioMEMS technology that combines molecular diagnostics with microsystems technology. This technology will enable the precise detection of up to 250 genetic features, such as pathogens or gene mutations, on a single chip and can be tested directly at the point of care, such as the doctor's office. "This new BioMEMS combines molecular diagnostics with the microsystems technology that Bosch uses in smartphones and the Electronic Stability Program (ESP®)," said Dr. Hartung. Bosch is currently promoting the first tests using this technology, which include the detection of various pathogens that cause sepsis or septicemia. To this end, Bosch recently established a partnership with Randox in the fields of research and development and sales, and further strengthened its strategic cooperation with R-Biopharm to promote the development of fully automated detection of multidrug-resistant bacteria. Bosch plans to invest around 300 million euros with the two partners by 2030.

Performance growth in fiscal year 2023, challenges remain in 2024

In fiscal 2023, despite the unfavorable economic and market environment, Bosch still achieved sales of 91.6 billion euros, an increase of 3.8%, and 8% after adjusting for exchange rate effects. Earnings before interest and taxes (EBIT) were 4.8 billion euros (3.8 billion euros in fiscal 2022). The EBIT margin was 5.3%, an increase of 1% year-on-year. Even though this increase was higher than expected, it was still below the long-term profit margin target of at least 7%. Bosch plans to achieve this goal by 2026. "We need to maintain high profitability and financial strength in order to achieve our growth targets as much as possible through self-financing," said Dr. Markus Forschner, member of the Bosch Group's board of directors and chief financial officer. "The hard sprint at the end of 2023 allowed us to achieve our full-year targets. However, the challenges in fiscal 2024 remain and are no less difficult than in 2023."

Given the current economic environment, Bosch believes that the business outlook will continue to be sluggish in 2024. "There are still unclear signs of economic recovery in 2024," said Dr. Forschner. The global economic growth rate in 2024 is only 2.3%, automobile production will stagnate, the mechanical engineering market will continue to be weak, and the consumer goods market may recover slightly after two years of consumption suppression. Bosch expects to maintain steady business development, and continuous innovation and global business expansion will help this. For example, Bosch is building new heating water boiler and refrigerator manufacturing plants in Egypt and Mexico respectively.

In the first quarter of fiscal 2024, Bosch Group's sales fell by 0.8% year-on-year, and after adjusting for exchange rate effects, it achieved a 2.7% increase. "It can be seen that our sales growth target for this year - 5% to 7% - is very challenging." Dr. Forschner also said that it would be very difficult to further increase the EBIT margin on the basis of last year. "We not only need to cope with the sluggish market environment, but also face the challenges of investment in strategic areas. At the same time, structural reorganization and process optimization will also have a negative impact in the early stage, and the positive impact will gradually emerge after some time." In addition, Bosch hopes to further cut costs and promote structural reorganization to remain competitive during the transition period. Dr. Forschner added: "We will implement the necessary measures in an orderly manner while maintaining appropriate considerations." Any necessary personnel adjustments will be made in consultation with social partners to avoid compulsory layoffs.

Growth area: Sustainable mobility

In the core business area of ​​smart mobility, Bosch is advancing strategic decisions to achieve growth. This year alone, Bosch will launch about 30 production projects related to electric vehicle technology. "Electric mobility is coming, and the only suspense is how quickly it will be popularized in all regions of the world," said Dr. Hartung. "The Bosch Group predicts that by 2030, up to 70% of new car sales in the European market may be pure electric. In the Chinese and North American markets, this proportion is expected to be between 40% and 50%." At the same time, Dr. Hartung also mentioned that for long-distance heavy-duty commercial vehicles, the market will have demand for solutions such as plug-in and extended-range hybrid in the future. The development of vehicle motion control technology will further drive the growth of the smart mobility business. For the new redundant braking system tailored for electric mobility and autonomous driving, Bosch will achieve faster than the market average annual growth of 10% in this business area. In addition, through the innovative vehicle motion intelligent control system, braking, steering, power and suspension are controlled in a coordinated manner. In the most recent winter test alone, Bosch equipped test vehicles of more than 20 mainstream brands with the vehicle motion intelligent control system. Dr. Hartung said: "Bosch remains a leader in this field. This year, the first order will go into mass production." Overall, Bosch expects to achieve sales of hundreds of millions of euros from this technology by 2030.

Growth area: Hydrogen

博世重申了在氢能这一增长领域的业务规划：预计到2030年，博世氢技术的销售额有望达到50亿欧元。“在2023年，博世已在德国斯图加特和中国重庆开始生产氢动力模块。”哈通博士表示。中国有望率先成为该领域的领先市场，而欧洲或北美市场预计要到下一个十年表现出显著增长。从技术角度而言，氢气内燃机搭载在商用车上会成为实现气候中和的最快途径之一。博世预计，到2030年，这技术的市场规模将达到近10亿欧元。正如哈通博士所言：“配备博世喷射技术的氢气内燃机最早将于今年在印度投入使用，同时，博世已接到来自全球三大经济区的知名卡车制造商的五份生产订单。”博世还计划涉足氢能生产这一快速增长的市场：到2030年，全球氢电解槽的安装容量将达到约170吉瓦，这是现有水平的约25倍。“博世的电解堆将于明年投入市场，”哈通博士表示，“未来，博世不仅将成为氢动力总成的代名词，还将是氢能源生产的代名词。作为供应商，我们将积极贡献，打造未来的市场。”

Growth area: heat pumps

博世正稳步开拓采暖技术领域的增长机遇。尽管2023年欧洲热泵市场增长放缓，但博世仍实现了近50%的业务增长。在未来数年中，博世将持续在这一领域内获得高于市场增速的发展。哈通博士表示：“博世不仅在产能方面进行了投资，还同步拓展了产品组合，其中便包括静音、高效且具有性价比的热泵产品。”哈通博士认为混动采暖系统具备更大的销售潜力。该系统整合了用于基础供暖的热泵和用于高峰负荷的冷凝式采暖热水炉，为现存数百万建筑的高效脱碳带来了可能。初期，博世面向拥有至多100个家庭的住宅单元的公寓楼推出该技术解决方案。哈通博士还提及了德国采暖系统相关法规的争议，该法规阻碍了长期购买决策，并导致供暖市场的显著下滑。“气候与能源政策相抵将会影响投资，投资者会暂停投资并选择观望。”哈通博士指出，“实现增长需要明确且可预测的补贴政策。”

Climate policy: Continued investment in support of carbon neutrality

Climate action has always been a focus for Bosch. Dr. Hartung believes that even if the growth rate of markets such as electric mobility is lower than expected, climate action will still create many opportunities. "However, in the current increasingly complex geopolitical and social development situation, climate action is no longer the only priority on the political agenda." Dr. Hartung said. Even so, Bosch will continue to invest heavily in carbon neutrality-related technologies to promote this transformation. Dr. Hartung said: "Despite the pressure brought about by the reduction of subsidies for low-carbon technologies, climate action still requires continued investment and support, including from governments, companies and each of us."

FY2023: Improved free cash flow and continued investment

Although the uncertainty caused by the coronavirus pandemic and the aftermath of the chip shortage affected Bosch's inventory levels in the previous year, they are now gradually returning to normal. Thanks to this, Bosch's free cash flow increased to 2.2 billion euros, accounting for 2.4% of sales, which is above the minimum benchmark of 1%. The debt-to-equity ratio fell to 44.2% (46.6% in 2022). R&D spending remained high at 7.3 billion euros (7.2 billion euros in 2022), accounting for 8% of sales (8.2% in 2022). Capital expenditures reached a new high of 5.5 billion euros (4.9 billion euros in 2022). As Dr. Forschner said: "Bosch's forward-looking investments in fiscal 2023 will exceed 12 billion euros. We will closely monitor their cost-effectiveness and will adjust projects if necessary."