Ladies and gentlemen,

  • As the year begins, we would like to present to you the preliminary figures from the last business year. One thing is clear: despite the challenging environment, Bosch is continuing to grow – in the automotive business, in connectivity, in consumer goods. That said, we feel it is much more important to look ahead. What new topics will 2017 bring? How will we manage the challenges of which we are all aware? We hope to provide a few answers to these questions in the course of this evening. Without further ado, let me welcome you to the 2017 press briefing on our preliminary figures.
  • Allow me to start the evening with a look at the United States, and more specifically, San Francisco and Las Vegas. In San Francisco, following December's agreement in principle between Bosch and civil claimants, negotiations are currently under way on the details of how to settle their claims. The settlement will be presented in court and then to the general public at the end of the month. Until then, the court has ordered strict confidentiality.
  • At the beginning of the year, Las Vegas was once again the center of the connected universe. Numerous companies – including Bosch – presented product innovations in the field of connectivity. And connectivity is definitely a topic that we will go into in more depth this evening.
  • For instance, in the future we will be applying our combined human R&D intelligence to the question of how to make the most of artificial intelligence. In doing so, we are confidently going head to head with the big software companies and IT providers – and we are determined to make an impact in this promising field.
  • But first let us turn to our business figures: looking back at 2016, it is not without pride that I can say that we achieved our growth forecast. And we did it without any economic tailwind and despite considerable negative exchange-rate effects.
  • This evening's review will show that in 2016, too, Bosch grew faster than the relevant markets – significantly so in some cases. It brought many new products and innovations to market, launched a number of new business models, and entered completely new markets. This success is thanks to the joint efforts of Bosch associates, who now number around 390,000 overall.
  • But before we go any further, Mr. Asenkerschbaumer will present the preliminary figures for 2016.
1) Business year 2016 – success in a difficult climate
Ladies and gentlemen, allow me to echo Mr. Denner in welcoming you to the Robert Bosch Villa.
  • Last year, Bosch successfully continued on its growth course – despite modest global economic growth of only 2.4 percent.
  • According to the preliminary figures for 2016, Bosch Group sales rose from 70.6 billion euros to around 73.1 billion euros.
  • Sales developments were negatively impacted by exchange-rate effects of some 1.3 billion euros. After adjusting for these effects, growth was around 5.4 percent.
A look at how our business sectors developed
  • How did the individual Bosch business sectors develop? Mobility Solutions had a good year, with sales rising 5.5 percent (7.0 percent after adjusting for exchange-rate effects) to 44.0 billion euros. In other words, this business sector once more outpaced global automotive production, which grew by roughly 3 percent in 2016. Drivers of this sales growth were once again gasoline injection systems, driver assistance and infotainment systems, parking assistance systems, and the business with freely programmable displays.
  • The Consumer Goods business sector also grew, with sales revenue increased by 2.8 percent to 17.7 billion euros, or by 6.2 percent adjusted for exchange-rate effects. Both Power Tools and BSH Hausgeräte GmbH presented many connected products in 2016. On an especially encouraging note, BSH achieved record sales and earnings in its new ownership structure.
  • Last year, the Energy and Building Technology business sector achieved sales of 5.2 billion euros. This equates to an increase of 0.8 percent, or 3.2 percent after adjusting for exchange rates. The Service Solutions business developed at a sustained rapid pace. Thermotechnology and Security Systems grew thanks to smart and connected solutions.
  • The Industrial Technology business sector continues to face a challenging environment. On aggregate, the business sector saw its sales revenue decline 5.1 percent to 6.3 billion euros, or by 4.5 percent adjusted for exchange-rate effects. The Drive and Control Technology division is still struggling with developments in key markets such as China, Brazil, and Russia. Business developments in Packaging Technology remained roughly on a par with the previous year.
  • To sum up, we can say that our business sectors – with the exception of Industrial Technology – experienced some strong growth, both in nominal terms and after adjusting for exchange rates.
Development of Bosch in the regions
  • This brings me to how our sales developed in the regions. Against the backdrop of a sluggish economy, our business in Europe developed well. Bosch sales rose 3.4 percent (4.8 percent after adjusting for exchange-rate effects) to 38.6 billion euros. The United Kingdom and Poland developed especially positively.
  • As expected, sales developments in North America did not match the previous year's strong growth. At 12.4 billion euros, sales were roughly on their previous-year level. This was a nominal drop in sales of 2.0 percent, or 1.8 percent after adjusting for exchange-rate effects.
  • The distortion caused by exchange rates is at its most obvious when we consider how sales developed in South America. Bosch Group sales stabilized here, showing an increase of 2.1 percent after adjusting for exchange rates. In nominal terms, however, sales fell by 5.7 percent to 1.3 billion euros. The most encouraging news in the region was how Brazil's economy developed in the second half of the year.
  • In Asia Pacific, Bosch even generated double-digit sales growth of 12 percent after adjusting for exchange-rate effects. These exchange-rate effects mean that nominal sales grew by 8.1 percent to 20.8 billion euros. Toward the end of the year, business picked up significantly.
  • In many African countries, too, we expanded our presence in 2016.
  • Ladies and gentlemen, the success of our business ensures that we are able to actively shape our future and our future success. In particular, connectivity and electromobility demand considerable upfront investments. Investments of billions of euros, which must be financed by a strong, successful business.
  • Besides start-up financing for new projects, these investments also include increasing research and development expenditure. In 2016, this came to some 6.6 billion euros.
  • This has an impact on our 2016 result. Overall, preliminary figures show we generated an EBIT from operations – that is, earnings from operations before interest and taxes – of some 4.3 billion euros, compared with 4.6 billion euros in the previous year. The future costs us money today, money that we must earn ourselves.
  • The way our result from operations developed in 2016 was affected not only by the upfront investments I mentioned, by increasing capital expenditure, and by the difficult economic environment, but also by exchange-rate effects and restructuring costs. In addition, EBIT was impacted by extraordinary negative effects resulting from the consolidation of Automotive Steering and BSH.
Development of headcount
  • As of December 31, 2016, the Bosch Group employed some 390,000 associates worldwide.
  • This means there are some 15,000 more associates working for us than in the previous year.
  • In 2016, new associates were taken on above all in Asia Pacific and central and eastern Europe. In Germany, headcount grew by 2,100 associates.
2017: ambitious targets for a challenging environment
  • Before I turn to the current year, I would like to give a brief assessment of how our business developed in 2016. Despite a difficult environment, the Bosch Group did not stray from its growth trajectory. Sales growth in 2016 was within the forecast range of 3 to 5 percent. The absence of any economic tailwind had a negative impact on sales developments, as did considerable exchange-rate effects.
  • Developments varied widely, both by region and by business sector. Our business sectors experienced some strong growth in 2016, both in nominal terms and after adjusting for exchange-rate effects – with the exception of the Industrial Technology business sector. In all regions except North America, sales growth was positive after adjusting for exchange-rate effects, and in some cases reached double digits.
  • What are the prospects for this year? In advanced economies, business confidence has been high for some months now. But it remains to be seen if and how this trend will continue. Overall, for 2017 as before, we are not expecting any economic tailwind. At present, we are planning for global economic growth to reach just 2.3 percent in the current year, which is even lower than in 2016.
  • In Europe, we have yet to see how the economy will be affected by Brexit and by the upcoming elections in the Netherlands, France, and Germany. Then there is the continuing weakness of reforms in a number of European countries.
  • Messages from the United States are currently mixed. On the one hand, some indicators suggest a weakening of the economy. On the other, the new U.S. administration is signaling that it will pursue an expansive fiscal policy, which might provide a temporary stimulus.
  • After several years of recession in South America, we are expecting a return to growth, albeit weak.
  • In China and India, however, we are expecting growth to be slightly lower than in 2016, which will slow growth for Asia Pacific as a whole.
  • The geopolitical situation in 2017 will be just as complex and bound up with uncertainties as it was in 2016: Brexit, the U.S. election, the close result in Austria's presidential election, and the security situation in Germany and other European countries.
  • We are expecting weaker growth in automotive production in our core markets, especially in Europe and Asia Pacific.
  • In mechanical engineering, we are expecting the segments relevant for Bosch to stabilize. Still, we expect growth in construction investment to be lower than in 2016.
  • We also do not expect to see a boost to private consumption in 2017.
In light of these conditions, our business targets for 2017 – which brings me to the end of my presentation – are ambitious:
  • In 2017, we again want to grow faster than the relevant markets.
  • Despite – or perhaps precisely because of – the major financial challenges we face, we want to improve both our result and our margin in 2017.
  • This is another reason for us to continue to strengthen the competitiveness of all our units.
  • For 2017, we are once again pinning our hopes on the success of a number of modified products and innovations. Mr. Denner will now elaborate on what that means in concrete terms.
2016 – change in all areas
Thank you, Mr. Asenkerschbaumer.
  • Bosch has achieved a lot over the past year. The year 2016 saw a great deal of change. The number and dynamism of these changes are without precedent. Bosch is in the midst of its most fundamental transformation process ever:
  • ... from being a manufacturer of automotive components to also being a provider of mobility solutions.
  • … from being a technology expert on cars, household appliances, and power tools to being a driver of connectivity on the internet of things.
  • Adjusting to changing market requirements is nothing new for Bosch. But the internet of things and the transformation of mobility are making today's changes both faster and harder to predict.
  • Allow me to mention just a few examples that demonstrate the important decisions Bosch made in 2016.
In 2016, Bosch continued to drive new mobility forward
  • We launched Coup, our e-scooter sharing service, in Berlin. In its first few months, this service was far more successful than expected, with 1,000 users booking over 20,000 rentals. Once winter is over, we will further expand the fleet in Berlin. The example of Coup shows that innovations are no longer just about new products, but also about clever ideas and business models.
  • In 2016, we truly revolutionized a 130-year-old idea: parking. We are testing community-based parking in Stuttgart together with Mercedes, and plan to also launch pilot projects in the U.S. this year. We are currently turning automated valet parking into reality with Daimler and Car2Go. A new study demonstrates the economic and social benefits of connected mobility. Connected parking-space functions could save 70 million hours of driving in China, Germany, and the United States – equivalent to the annual working hours of 40,000 people. That is 70 million hours of valuable time for living.
  • Secure truck parking is another new take on parking. Since October, we have been testing the new service at the Bosch location on the A5 freeway in Karlsruhe, Germany. Over the course of the year, the service will be officially available in the market, for instance at the Tiersheim truck stop in Bavaria. In Germany alone, there is a need for 14,000 secure parking spaces. Freight worth 16 billion euros is stolen each year in Europe.
  • One important acquisition was of ITK, the Ingenieurgesellschaft für technische Kybernetik. ITK has 900 software specialists offering development services – a market that is growing worldwide as vehicles become more automated, more connected, and hence more complex.
  • We recently set up an important partnership in the area of vehicle automation. With the chipmaker Nvidia, we are working on a self-learning system for automated vehicles.
In 2016, Bosch continued to make its voice heard among major IT players
  • Bosch is also driving connected manufacturing forward with new partners. In 2016, Bosch began collaborating with the likes of SAP and General Electric.
  • Bosch is now a software supplier to SAP, the world's leading provider of software solutions for business process management. We provide our IoT microservices to SAP on the company's HANA cloud platform. This enables the machines and devices in a factory to be connected digitally. The aim of this strategic partnership is to optimize manufacturing and logistics processes and to improve product quality and safety.
  • In our collaboration with GE, the focus is on developing common standards to improve communication between machines and devices. We will also collaborate in the area of cloud services.
  • Both partnerships show how Bosch is making connected industry a reality: as a leading provider and leading user, we are establishing universal standards and supporting the widespread introduction – also at small and medium-sized enterprises – of the necessary connectivity technologies. For instance, in 2016 we presented our IoT gateway. The gateway can connect existing machines – of which there are some ten million in Germany alone – and make them compatible with Industry 4.0. This retrofit solution combines sensor technology and software with IoT-enabled industrial control.
  • Bosch is now working on connectivity topics in over 60 partnerships and strategic alliances.
In 2016, Bosch continued to break new business ground
  • Bosch is also using its core competencies in sensor technology, software, and services to open up new areas of business. Since fall 2016, Bosch Healthcare Solutions GmbH has been offering customers connected products and services at the intersection of healthcare and medical technology.
  • Vivatmo is a world-first that you had an opportunity to see in the exhibition. It is the world's first breath analysis device that allows more than 330 million asthmatics to measure the severity of airway inflammation themselves, even from the comfort of their own home. This means they can deal with their illness more confidently. Patients can share their readings online with their doctor, who can tailor their treatment to their individual needs.
  • At the IFA, we presented product innovations for smart homes. The Twin-guard smoke alarm emits a signal when it detects fire, and monitors air quality. Combined with other Bosch products, it can even take the place of an alarm system. You see, connectivity can also mean taking a product and turning it into three. Both the reliable fire alarm and the measurement of air quality are based on algorithms Bosch developed in-house, as well as on the company's many years of experience in these fields.
  • The interior camera with 360° monitoring of its surroundings is also more than just a security camera. With a built-in microphone, it is also an intercom. Smart connectivity with motion sensors and image analysis ensures that only relevant incidents are recorded. As always with Bosch products, high priority is given to privacy. When people come home, all it takes is a push of a button to switch the camera to privacy mode. All data is stored locally. Connectivity is what makes these kinds of solutions possible. The ideas for them come from systematically implementing the user experience approach in product development.
  • As you can see, Bosch still has plenty of innovative strength. Our innovations are shaping tomorrow's world. Customers, associations, and other business partners honored Bosch's innovative strength with over 200 awards last year.
  • Most recently, Bosch solutions received a total of four CES Innovation Awards. One award went to a newly developed rider information system for motorcycles. Another went to a water heater; while this might be a more conventional product, adding connectivity makes it more efficient and user-friendly.

  • This quick review of 2016 shows that a lot is happening at Bosch – and that Bosch is making lots of things happen. I will devote the rest of my time to two topics.
    First, the personalization of connectivity. In other words, how the internet of things will detect users' personal needs and preferences even more accurately, and what role artificial intelligence will play in that and at Bosch in general.
    Second, the transformation of mobility, especially the switch to electric driving.
2) The IoT is getting personal – tailoring connectivity
  • Ladies and gentlemen, the internet of things is getting personal. We are now seeing the next level of connectivity: personalization through personal assistants and personalized services.
  • In business terms, smart assistants are the interface to customers. At present, a company's direct relationship with a customer often ends with the sale of the product. In the future, connectivity will mean that Bosch will maintain a direct relationship with customers. With connected services, Bosch will become its customers' everyday companion. The better Bosch knows individual users, the better and more personalized the service we will be able to offer. In the same vein, the more capable an assistant is of learning, the more useful it will be for its owner.
  • The key to this is artificial intelligence. With its sensors, Bosch has made things capable of feeling. Now Bosch is making them capable of learning and of behaving intelligently.
Bosch Center for Artificial Intelligence – teaching things to learn
  • That is why we launched the Bosch Center for Artificial Intelligence, or BCAI, at the start of this year. The BCAI brings together our existing expertise in the field of artificial intelligence and will further enhance it.
  • Initially, the BCAI will employ some 100 experts at our Bengaluru, Palo Alto, and Renningen locations. By 2021, we will have invested some 300 million euros in the center. Over the same period, the BCAI will grow its workforce several times over.
  • In addition to research, the BCAI will make artificial intelligence available for all Bosch units and turn it into something they can apply. Bosch will not only put artificial intelligence to work in its products, but also use it to improve processes in connected manufacturing.
  • Within just five years, products featuring artificial intelligence are expected to account for 10 percent of Bosch sales. Ten years from now, scarcely any Bosch product will be conceivable without artificial intelligence. It will either possess that intelligence itself, or AI will have played a role in its development or manufacture.
  • Artificial intelligence is not a new topic for Bosch. For instance, we apply machine learning to image recognition in automated driving. We are convinced that our existing expertise will enable us to make quick progress in the field of AI.
Digital assistants – a market worth billions
  • Here, too, our competitive advantage is our expertise in a wide range of technologies and industries. What other company has built itself such a presence with products in so many areas of everyday life? Bosch serves the needs of smart living with an unparalleled breadth of expertise.
  • The market research organization Tractica forecasts that the number of people using digital assistants will grow by more than 350 percent between 2015 and 2021. According to Frost & Sullivan, the IoT market will be worth 1.7 trillion dollars just two years from now.
  • Intelligent assistants will help people in every area of their lives. Take Mykie for instance, our kitchen elf. It helps people with the cooking and knows what is in the refrigerator, and so can independently add items to the digital shopping list.
  • At the end of 2017, the Bosch start-up Mayfield Robotics will launch the home robot Kuri in the U.S. market. This 50-centimeter-tall robot is equipped with a loudspeaker, microphone, camera, and various sensors. But Kuri is more than just a loudspeaker that plays music or forecasts the weather, and more than simply a robot designed to perform repetitive tasks. Kuri is not a "device"; instead, Kuri has been designed to be a member of the family, a mobile companion who will move around the house with you. When developing the robot, Bosch focused on personalization: that is to say, its ability to interact with people. This can also be seen in its childlike, anthropomorphic design. It reads children bedtime stories and lets parents know when their children get home from school. Here, too, user experience played a decisive role in product development.
  • Another thing Bosch will achieve by the end of this year is the technical basis for communication between cars and homes. Cars are also becoming digital assistants. Giving cars connectivity will enable their users to put around 100 hours per year to more effective and more relaxing use.
3) The future of mobility – "Vision Zero"
  • Ladies and gentlemen, this brings me to the second key point I wish to discuss, namely how Bosch's vision for the traffic of the future is stress-free, accident-free, and emissions-free.
  • Zero accidents, zero emissions, and zero stress – these are our targets for the mobility of the future. In technical terms, we want to achieve these objectives through automation, electrification, and connectivity.
  • In this area, too, the objective we have set ourselves is clear: we will actively shape the change in mobility, and we will attain a leading position in the fields in which we are active. This also applies to the transformation taking place in the field of vehicle powertrains and drive systems. Today, Bosch is a leader in this field – and we will be in the future as well. Bosch will enable electric driving to achieve a breakthrough.
  • Bosch has already invested some 1.6 billion euros in electromobility, at a rate of 400 million euros per year, and has 1,800 associates working in this area. We have all the key components for electric driving: electric motors, power electronics, and batteries.
  • Bosch already stands for electromobility. So far, we have delivered 30 production projects, for customers both inside and outside Germany – including in the promising Chinese market – and for both traditional automakers and new providers such as the DHL subsidiary Streetscooter.
  • Batteries are still the decisive factor. By the end of the decade, we will more than double their energy density and halve their cost. To this end, we are the only traditional automotive supplier to be working both to refine existing cell technologies and to research solid-state cell technology, which is the post-lithium technology. Electrified powertrains must be made affordable for the general public.
  • In this respect, our battery campus in Stuttgart-Feuerbach is a new development. We pooled our German battery development activities there some months ago. The 300 associates at the campus are also working on making solid-state cell technology ready for mass production. One thing is clear: only with manufacturing technologies and processes that are better than those of our Asian competitors can we hope to manufacture battery cells competitively.
  • The fact is, no other supplier addresses electromobility as comprehensively as Bosch. And no other supplier is in a comparable technological position.
The powertrain of the future – a mix of electromobility and combustion engines
  • Despite the focus on electromobility as a long-term alternative, combustion engines – both standard and partly electrified – will continue to play an important role in the near future.
  • What are the facts? By 2025, the number of newly manufactured vehicles will rise further to 105 million worldwide. This means the number of newly manufactured vehicles with combustion engines will rise as well, to 85 million units. As a result, demand for components for gasoline and diesel engines will also rise.
  • In its efforts to bring about a breakthrough in electromobility alone, Bosch invests 400 million euros annually. Nonetheless, in the future as well, we will invest in further improving the classic combustion engine.
  • After all, a combustion engine can also save resources and be CO2-free, provided it runs on decarbonized, synthetic fuels. Like batteries, this is another area that calls for more research and development work.
  • We should not try to forcefully bring about a paradigm shift in technology before we have thoroughly evaluated and considered all the ecological and economic effects. Besides all the technical considerations, a change of powertrain also has implications for the economy and for society.
  • The effects of this shift on employment at Bosch are currently very hard to predict, because there are simply too many variables and uncertainties. As I mentioned, the number of vehicles with combustion engines will continue to increase until the industry reaches the tipping point it is expecting – currently projected for the middle of next decade. At the same time, there will be a growing need for workers in electromobility.
  • And yet, how will the market for electric vehicles develop in actual fact? What kind of order volumes will we see, and from which customers? How will individual vehicle manufacturers position themselves? How will value-added be divided up in the field of drive systems? As things stand, there are no conclusive answers to any of these questions. We will prepare for new eventualities, then act as soon as they become predictable. Until then, we will continue to achieve technological progress and translate it into commercial success.
  • Our objective is clear: we want to be a leader in electromobility, both in technical and in commercial terms.
Ladies and gentlemen, I now come to the close of my presentation. Bosch is in the midst of its most fundamental transformation process ever. This change is being driven by massive disruptions in industries, markets, and technologies. Our advantage lies in the fact that we are actively helping to shape each of these changes.

In this volatile environment, Bosch can rely on constants that keep the transformation on a stable footing. These constants are our technological strengths, our specialist expertise, our broad presence, our great innovative strength, our distinctive corporate culture, and above all the excellent motivation and unfaltering passion of our worldwide team.

Thank you very much. We now look forward to talking with you and hearing your questions.