Bosch has reported a strong 6.7 per cent increase in sales and earnings in 2017. According to preliminary figures, the supplier of technology and services generated sales of 68 billion pounds last year. That represents an increase of 8.3 per cent, when adjusted for exchange rate effects, which negatively impacted the business by roughly one billion pounds.
Speaking at the press briefing on the preliminary figures in Ludwigsburg, Germany, Dr. Volkmar Denner, chairman of the board of management of Robert Bosch GmbH, said: “In 2017, our sales were higher than ever. We exceeded our growth forecasts and further improved our profitability.”
Bosch’s innovative strength and strategic focus on connectivity have played a significant part in securing the steady growth trajectory. Denner continued: “We recognised the potential of connectivity early on and are now converting it into real business success.”
Earnings from operations before interest and taxes (EBIT) rose to approximately 4.6 billion pounds in 2017. This equates to an EBIT margin from operations of 6.8 per cent.
Dr. Stefan Asenkerschbaumer, the CFO and deputy chairman of the board of management explained: “Bosch’s success in its core business finances its efforts to become a leading supplier of IoT technology and mobility solutions.”
Looking at the year ahead, the company sees a number of opportunities to extend the connectivity business into other areas such as factories, buildings, and cities. It will also continue with its focus on transforming the mobility sector.
New: an Industry 4.0 operating unit
A new operating unit, Bosch Connected Industry, began operations with 500 associates at the start of January 2018. It is here that Bosch will pool all its Industry 4.0 activities and expertise, especially concerning software and services. Bosch sees significant sales potential in connected industry, or Industry 4.0, and Bosch will now also contribute its expertise in Industry 4.0 implementation to an advisory service for third parties. Between now and 2020, the company aims to channel Industry 4.0 interest into a sales increase of almost one billion pounds. Bosch’s acquisition of a stake in the map provider HERE will allow Bosch to unlock further potential for projects in the Industry 4.0 domain.
Connectivity addresses fundamental challenges
At the briefing Denner emphasised the importance of connectivity over the internet of things: “Our planet can only provide a liveable home to billions of people if we find innovative solutions to pressing issues. We use the internet of things to connect the real world in a bid to improve quality of life.”
Bosch currently has some 170 IoT projects that address fundamental challenges such as population growth, urbanisation, air pollution, and climate change. In 2017, for example, the company introduced new solutions for smart farming, or connected agriculture, which it hopes will help feed eight billion people by 2025. Here, sensor-based solutions and artificial intelligence are being deployed in the cultivation of asparagus, strawberries, tomatoes, and grapes. Bosch technology is also helping achieve greater efficiency and sustainability in oyster farming and cattle ranching. The digital agriculture market is expected to grow more than 70 per cent by 2020.
Smart homes and smart cities: connected living for billions of people
In response to the increasing number of mobility and IoT applications for semiconductors, Bosch is building a wafer fab in Dresden and intends to invest almost one million pounds in the new facility by 2021. Smart home tech is one of the areas in which these chips can be applied. For the smart kitchen, Bosch will offer not just connected household appliances, but an increasing number of digital services as well. Its Home Connect ecosystem incorporates an app provided in twelve languages by the Kitchen Stories start-up. The app, which has already been downloaded more than 15 million times, contains over 1,000 recipes and uses videos or photos to demonstrate how to prepare them.
At CES in Las Vegas at the start of the year, Bosch introduced its comprehensive portfolio for connecting entire cities. Among its offerings is the “Climo” mobile air lab, which provides data on city air quality in real time. By 2025, 80 of the world’s metropolises will be smart cities, and even now, Bosch is pursuing 14 beacon projects in this field. The smart-city market will grow to 614 billion pounds by 2020.
Urban mobility: emissions-free, stress-free, and accident-free
Urbanisation goes hand in hand with a multitude of problems. By 2050, urban traffic will increase by 30 per cent. “We want to achieve urban mobility that is emissions-free, stress-free, and accident-free. To that end, we will automate, electrify, and connect road traffic,” Denner said. Starting this summer, the Coup sharing platform is bringing its e-scooters to the streets of Madrid.
Automation, too, will help relieve the burden of urban traffic – by the start of the coming decade, Bosch and Daimler will make fully automated and driverless vehicles a reality on city streets. Bosch and Daimler moved one step closer to fully automated driving in 2017: in the Mercedes-Benz Museum parking garage, the companies launched the world’s first solution for a fully automated valet parking service. The first test vehicles will be on the road as early as Spring 2018.
Powertrain of the future: alliances drive fuel cells forward
Bosch also made key advances in electrification in 2017. For hybrid vehicles, it started production of a newly developed 48-volt battery which is easy to integrate into new vehicle models. Established manufacturers and start-ups alike can thus dispense with long and expensive development processes. As of 2019, Bosch’s new electric axle drive, or e-axle, will increase electric cars’ range.
“Bosch is picking up the pace in electromobility. We acquired numerous orders in 2017, some worth billions of euros,” Denner said. Bosch is working with Nikola Motors, a US start-up, on developing a hydrogen-powered e-axle for heavy trucks. “By 2030 at the latest, fuel cells will play a key role in the powertrain mix. We are stepping up our development activities and gradually expanding our product portfolio,” Denner said. In China, the largest market for electromobility, Bosch is collaborating with the truck engine manufacturer Weichai on a state-funded pilot project to develop fuel cells for trucks. As Denner explained: “From bicycles to trucks – in the electromobility business, no automotive supplier is as broadly diversified as Bosch.”
A technologically viable vision: the carbon-neutral combustion engine
Denner stressed the importance and potential of the combustion engine: “It is unlikely that we will meet our CO2 targets in Europe without diesel.” Referring to the ongoing discussion about driving bans on diesel vehicles, Denner pointed out that efficient and resource-conserving diesel technology already exists. And not only that: “Our test vehicles meet 2020 limits even today. We are already developing and testing systems that are actually well below these limits,” said Denner, whose responsibilities include research and advance engineering. Bosch engineers have an ambitious goal: to design a combustion engine that “breathes out” only what it “breathes in.” With the exception of CO2, its emissions should be indistinguishable from the ambient air. When powered with synfuels, such engines would even be carbon-neutral.
Innovation culture: driving forward connectivity
Denner said that connectivity and digitalisation have become part of day-to-day business at Bosch. “The transformation provides us with a further opportunity to show that excellence is not only something that exists on paper at Bosch, but in practice as well – in both a technological and a commercial sense.”
“There can be no digital transformation without cultural change,” Denner continued. “We are rethinking leadership and collaboration, which in turn is strengthening our culture of innovation.” In many areas, Bosch is breaking down hierarchies and erasing the boundaries between departments and functions. The company has already phased out more than two-thirds of the red tape that is typical for large enterprises, and done away with individual bonuses. Denner believes the culture of innovation at Bosch offers a clear competitive advantage: “We are fortunate in having a workforce that is accustomed to continuously striving for improvement.”
Business developments in 2017: by sector and region
All business sectors played a role in the positive development of the company’s business in 2017. According to preliminary figures, the Energy and Building Technology and Consumer Goods business sectors reported moderate growth.
Mobility Solutions rose by 7.8 per cent – three times faster than global automotive production – to 41.6 billion pounds. Adjusted for exchange-rate effects, growth was 9.2 per cent. This success was driven primarily by strong demand for diesel injection systems, especially from the commercial-vehicle sector, for gasoline injection systems, as well as for driver assistance and infotainment systems.
The Industrial Technology business sector also saw powerful growth of 7.7 per cent, with sales rising to 5.8 billion pounds. This is equivalent to an increase of 8.5 per cent after adjusting for exchange-rate effects, an increase that was due mainly to the Drive and Control Technology division.
Europe performed strongly as a region for Bosch, particularly, as a more established market, with sales rising 5.5 per cent (6.3 per cent after adjusting for exchange-rate effects) to 35.7 billion pounds. One of the reasons for this was continuing growth in western and central Europe. South America, Asia-Pacific and Africa all reported double digit growth while North America was on par with the previous year, after exchange-rate adjustments.
Outlook for 2018: improved sales and results despite a weak economic environment
Bosch expects moderate global economic growth of roughly 2.5 percent in 2018. Overall, it predicts a negative impact from geopolitical developments such as the Brexit negotiations, unpredictable US foreign policy, and the tensions with North Korea. Bosch assumes economic momentum will slow down, particularly in China. Despite this difficult environment, Bosch plans to further increase its sales and boost results in 2018, and to continue advancing its transformation into a leading IoT company and provider of mobility solutions.