CHANGE BORN FROM RESPONSIBILITY Annual Report 2016 MAHLE GROUP FIGURES in EUR million 2016 2015 2014 2013 2012 Sales 12,322 11,486 9,942 6,941 6,159 EBITDA 1,079 1,093 1,022 771 725 EBIT 473 511 514 422 401 Result from business activities 228 309 401 307 267 Net income 63 122 279 236 149 Tangible fixed assets 3,029 2,888 2,446 2,167 1,561 Capital expenditure on tangible fixed assets (without first consolidation) 563 564 488 397 324 Equity 2,722 2,667 2,555 2,207 1,775 Dividend paid by MAHLE GmbH 6.0 6.0 8.5 7.1 5.0 Headcount (as at Dec. 31) 76,632 75,635 66,234 64,345 47,662 THE MAHLE PRODUCT PORTFOLIO ENGINE SYSTEMS AND COMPONENTS FILTRATION AND ENGINE PERIPHERALS As a global market leader in our key market segments, we have MAHLE manufacture filters, pump systems, and oil coolers for en- decades of systems and development expertise and extensive pro- gine and transmission applications—all of which are designed to duction experience to build on. Since our company’s early days, increase the engine’s efficiency and service life and reduce emis- the development of piston systems and cylinder components has sions. We are thus contributing to clean air and preventing engine been a core competence of MAHLE. Because we understand damage resulting from oil and fuel contamination. Engine periph- the interaction of all engine components, we can deliver opti- erals often vary due to different regional emissions regulations, in- mal solutions to our customers. Products such as pistons, piston dividual car body shapes, and various power classes—even for rings, cylinder liners, bearings, as well as valve train systems and identical basic engines. To address this diversity, we have part- components are used around the globe in two-wheeled vehicles, nered with our customers in recent years to develop modular sys- passenger cars, commercial vehicles, and large engines. And tems for every major product group. Here again, we are one of the the range is continuously being expanded, so that emissions and global market leaders. fuel consumption in combustion engines can be further reduced in the future. THERMAL MANAGEMENT MECHATRONICS An increasing electrification of the powertrain calls for superior Mechatronic components are playing an increasingly crucial role in innovative capacity in thermal management—for batteries and enhancing the efficiency of the powertrain and advancing e-mobil- the entire electric powertrain alike. As engines are downsized for ity. That is why, in early 2016, MAHLE merged the group’s mecha- the purpose of lowering emissions, thermal management plays tronics expertise in a new division, along with the product groups an even greater role in improving the combustion engine’s per- of electric drives and auxiliaries as well as actuators. This division formance. What’s more, air conditioning is expected to provide is infused with our R&D and manufacturing expertise in electric comfort inside the cabin while keeping energy consumption low. motors and electronics. Although these are used in a wide variety When it comes to the thermal management of batteries, MAHLE of applications, their technology is closely related, which affords is a technological pioneer. Our solutions ensure constant tem- synergies and economies of scale—two highly relevant factors in perature levels and an even distribution of temperature between the automotive industry. battery cells, producing long-lasting storage systems that deliver high performance. MAHLE AT A GLANCE As one of the world’s 20 largest suppliers and a development partner as in the development of new vehicle generations, not to mention to the automotive industry, MAHLE offers innovative mobility solutions the continuous improvement of series production applications. that stand for clean air, fuel efficiency, and driving pleasure.O ur product Proof of our technological leadership is not least to be seen in our portfolio for passenger cars and commercial vehicles demonstrates successes in motorsport—be it in Formula 1 or in Le Mans. Moreover, our unique systems competence, as it addresses all crucial issues our innovative products are used in stationary applications, mobile related to the powertrain and air conditioning technology—from machinery, as well as in railroad, marine, and aerospace applications. engine systems, filtration, and electrics/mechatronics through to And of course, we also supply workshops and engine repair thermal management. The group supports manufacturers as early workshops with MAHLE products in original equipment quality. SALES BY SEGMENT MAHLE MAHLE AT A GLANCEAT 22 % 18 % Engine Systems Filtration and and Components Engine Peripherals business unit business unit Total 15 % EUR 12.3 billion Profit centers 3 % Mechatronics division 35 % 7 % Thermal Management Aftermarket business unit business unit For details on the organizational structure, see page 85 OUR SELF-PERCEPTION The MAHLE Group is a leading global development partner to the automotive industry and offers its customers complete systems from a product range that is unrivaled in breadth and depth. Our new developments are geared toward the further optimization of combustion engines and thermal management solutions as well as the expansion of e-mobility. We also want to set new future standards with our innovative solutions by consistently using and expanding our knowledge and innovative strength. With our strategic orientation, we are addressing megatrends such as population growth, urbanization, globalization, connectivity, or limiting emissions to promote climate protection. We not only see these as an opportunity for further growth, but as an obligation to design our technologies so that mobility on our planet is as environmentally friendly as possible. The Mahle brothers have bequeathed us a company structure that secures our independence and the long-term orientation of the group. In accordance with their specifications, we want to continue to successfully develop MAHLE as a leading company and attractive employer. “Change born from responsibility” summarizes the course we are on. We are thus explicitly committed to fairness, legality, cultural diversity, and equal opportunities. Our relationship with our employees, customers, and suppliers is based on these values. Assuming social responsibility is a corporate objective set by our founders. It is always incorporated into all of our decisions—now and in the future. CONTENTS You will find the report online on: www.annualreport.mahle.com Whenever you see this QR code in the report, there is a video with further information on that topic. Step 1 › Install Download a QR code scanner. This is available free of charge from the appropriate iOS and Android app stores. Step 2 › Open Open the app and scan the QR code. Step 3 › Scan Simply hold your device over the QR code (as depicted above) until the Annual Report website appears. 4 THE COMPANY 4 Editorial 6 Management Board 8 Report of the Supervisory Board 10 Impressions of 2016 14 MAHLE—a worldwide network 16 In dialog 20 MAGAZINE 20 Power from a small displacement 26 Only the team wins 32 Love of perfection 38 Think big. And electric. 44 Indispensable helpers 50 Toward new markets 56 A global network that is years ahead 62 Reliable endurance runner 68 RESPONSIBILITY 68 Human resources 74 Corporate Social Responsibility 78 MAHLE Foundation 82 GROUP MANAGEMENT REPORT 82 Detailed index 106 CONSOLIDATED FINANCIAL STATEMENTS 106 Detailed index 138 FURTHER INFORMATION 138 Supervisory Board 139 Management Board 140 Imprint/Contact 4 THE COMPANY MAHLE GROUP // ANNUAL REPORT 2016 Editorial EDITORIAL Over the past few years, the MAHLE Group has been decisively shaped by far-reaching change like never before. The company has become considerably bigger and, above all, notably more diverse. Technological deve lopments and, above all, changes in the automotive industry are the main driving forces behind this all. Our sector is undergoing a fundamental transformation that will last for many years to come. This is attributable to the use of new drive concepts, connected mobility and networked pro- duction technologies, and the growth in other emerging markets. From both an economic and technical standpoint, these factors call for widespread presence, great flexibility, and above all: continuous change. A few years ago, we therefore started to broaden our company’s position in terms of portfolio and regional presence. We pursue a dual strategy: On the one hand, we are convinced that the combustion engine will remain an important drive for a long time to come. This is why we are continuing to work intensively on new solutions to raise the efficiency of these engines while lowering their emissions. At the same time, we want to be a driver of e-mobility, just as we already are in the conventional market today. In order to carry out the next step of this ongoing development, we need to assert our economic success and further enhance profitability, in particular. Because only by consistently expanding our financial strength are we able to invest in research and development, establish new business areas, make stra- tegic acquisitions, and position ourselves as a resilient company. In the magazine section of this Annual Report, we provide you with a few examples of how we are managing change in our day-to-day activities and which technical solutions we are offering our customers. You will discover how broadly positioned MAHLE is and how special people stand behind our company’s products and services. Because they are the real drivers of change with their enthusiasm for new solu- tions, contagious vigor, deep knowledge, and team spirit. Many of the changes in our company are aligned with our strategic reorientation. We have divested some of our previous activities, and added new ones, such as vehicle electronics, for example. Such a pro- cess always involves changes for our employees and their environment.