Bosch expects sales growth of 3-5 per cent in 2016

At the 2016 annual press conference on April 27, the company said it wanted to continue growing faster than the company’s key markets. If the first quarter’s slowdown continues in certain regions and markets, sales growth will be at the lower end of the forecast scale. In the subdued market environment of the first quarter of 2016, Bosch saw a year-on-year sales increase of just under 3 per cent, or roughly 4 per cent after adjusting for exchange-rate effects. This growth was achieved despite the very strong nominal growth of the first quarter of 2015.

“We plan to grow not only with innovative products, but also with innovative services,” said Dr. Volkmar Denner, chairman of the Bosch’s Board of Management, at the annual press conference at Bosch’s research campus in Renningen.

“We are increasingly using connected services to build on our broad basis in the hardware business,” Denner said. “As it does so, the company benefits not just from its technological diversification, but also from its wide-ranging industry and domain expertise.

“In the future, customers will not only come across Bosch in their cars and kitchens. Connected services will make it a constant companion in many aspects of their daily lives,” he explained.

Business year 2015: highs in sales and result

In 2015, Bosch Group sales reached an all-time high of €70.6 billion ($81.14 billion). The full acquisition of two former fifty-fifty joint ventures, BSH Hausgeräte GmbH and Robert Bosch Automotive Steering GmbH, pushed sales up by almost €22 billion ($25.29 billion), or 44 per cent. Bosch saw strong growth in its operations as well; calculated on a comparable basis, sales grew by 10 per cent. After adjusting for exchange-rate effects, the sales increase was 3.8 per cent. Aside from the Industrial Technology business sector, all business sectors saw double-digit growth and were able to improve their result in 2015. Similarly, the result for the Bosch Group as a whole improved once again in 2015. The supplier of technology and services recorded €4.6 billion ($5.29 billion) in earnings before interest and taxes (EBIT), which equates to an EBIT margin of 6.5 per cent. This means that EBIT from operations increased year on year by some €900 million ($1.03 billion), or 24 per cent.

Extraordinary effects had a positive impact on EBIT in 2015, but these were offset by an equivalent amount of extraordinary effects with a negative impact. These extraordinary effects arose from the first-time full consolidation of Automotive Steering and BSH Hausgeräte, impairments, and provisions in conjunction with legal risks.

“Our ambition is to develop innovations that actively help shape our markets,” said Dr. Stefan Asenkerschbaumer, CFO and deputy chairman of the board of management. “Our business performance in 2015 shows that this strategy is paying off, and we will continue pursuing it in 2016 as well.” Despite burdens from restructuring and higher investments in securing its future, Bosch aims to keep earnings stable in 2016.

Services to supplement broad hardware basis in the future

Going beyond hardware products for a connected life, Bosch’s strategic objectives include service solutions for every aspect of connecting those products on the internet of things. In the connectivity business, the company focuses on the “3S’s”: sensors, software, and services.

“Services are becoming an integral part of our product business. Every sale of hardware should be followed by the sale of complementary services,” Denner said. When it comes to developing and introducing services for the connected world, Bosch’s broad business portfolio offers a particular advantage, as does its competence in software and sensors. Denner went on to say that “Bosch can connect many things across a wide range of domains as no other company can – cars with houses, even entire cities.” Nearly 50 per cent of all Bosch electronic product classes are web-enabled. The company plans to gradually expand the existing services business in all four of its business sectors.

Connected industry: cost savings and sales of €1 billion ($1.15 billion) each

In the world of connected industry, also known as Industry 4.0, Bosch benefits first and foremost from the practical experience it gains by applying it in around 250 of its own plants. The company translates this in-house experience into services for third parties. One of these is the Production Performance Manager, which visualises production data in real time and autonomously initiates maintenance processes. By 2020, Bosch expects connected industry to deliver an aggregate €1 billion ($1.15 billion) in cost savings and to generate an additional €1 billion ($1.15 billion) in sales.

“Bosch’s broad footing and its international presence stand it in good stead in connected industry. We can connect large-scale automotive production as well as small-batch mechanical engineering – in Asia, Europe, and the Americas,” Denner said.

Smart homes: new smart-home products to debut in fall 2016

Increasing connectivity will make life easier and more convenient in the smart home as well. Bosch launched its Smart Home System at the start of the year, offering a simple and secure solution for smart homes. Further products for the system are to follow over the course of 2016. One of these is a smoke alarm that, besides its usual function, also provides increased security; for instance, when the residents are on vacation. Bosch expects the global market potential of smart homes to reach €10 billion ($11.5 billion) as early as 2017. By 2020, some 230 million homes – 15 per cent of all households worldwide – will be equipped with smart-home solutions.

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