Group Annual Report

Transcription

Group Annual Report

Group Annual Report
2008
B S H B O S C H U N D S I E M E N S H A U S G E R ÄT E G M B H
Strong brands bring success in the marketplace
Our Bosch and Siemens brands are Europe’s biggest sellers. Bosch offers tangible quality and
perfect technology for a better life. Siemens turns the fascination of innovative technology into
something consumers can actually experience. With these and its special and regional brands,
BSH boasts a unique portfolio, precisely tailored to the needs of the various target groups it
serves. Despite all their differences, however, the BSH brands have one thing in common:
They are a guarantee of innovative, high-quality products, which not only promise the utmost in
convenience, but through their energy efficiency and ultra-frugal consumption figures, contribute
to conserving our natural resources.
Main Brands
Special Brands
Regional Brands
Cooking
Dishwashing
Washing
Drying
Refrigeration
Freezing
Floor Care
Consumer Products
Group Annual Report 2008
“Here at BSH Bosch und Siemens Hausgeräte GmbH, we recognized
at an early stage that environmental protection represents an
opportunity for us. Not only do our innovative, highly efficient
products conserve natural resources, but they also offer us a
unique advantage in the international competitive arena. This is
where environmental and economic actions come together.”
Dr. Kurt-Ludwig Gutberlet
CONTENT
5
Foreword
8
Responsibility breeds success
BSH successfully brings together social, environmental and economic actions,
giving it a significant edge not just within the context of its own sector.
14
Arguments that speak for themselves
Modern home appliances combine excellent energy efficiency with even better
performance and even more attractive convenience features. BSH products show
how it’s done.
20
The future begins now
Nobody knows what the world will look like ten years from now. But only those who
make the right decisions today will determine the shape of tomorrow’s markets.
26
Sustainable from end to end
The path from procurement of material through delivery of the finished product is a
long one. Here, BSH puts its faith in long-term partnerships as a means of assuring
high standards right from the outset.
32
The workplace gets a health check
BSH’s corporate principles affirm that our people are the foundation of our success.
The company is taking a healthy interest in ensuring that those people stay fit and
active over the long term.
39
Group Key Figures
40
Supervisory Board Report
42
Board of Management, Supervisory Board
44
44
59
64
67
Management Report
Business Performance
Net assets, financial position, and results of operations
Significant opportunities and risks for future development
Outlook
69
69
70
71
72
73
Group Financial Statements
Consolidated Statement of Income
Consolidated Balance Sheet
Consolidated Statement of Cash Flow
Statement of Recognized Income and Expense
Consolidated Statement of Changes in Shareholders’ Equity
74
74
82
86
95
104
106
Notes to the Consolidated Financial Statements
Accounting and Valuation Methods
Notes to the Statement of Income
Notes to the Balance Sheet
Notes to the Financial Instruments
Notes to the Balance Sheet
Consolidated Statement of Changes in Assests
110
BSH Bosch und Siemens Hausgeräte GmbH Principal Subsidiaries
111
Independent Auditors’ Report
112
Summary of Past Performance
3
4
SECURING A SUSTAINABLE FUTURE
“We are well equipped to
steer our company safely
through difficult times” –
Dr. Kurt-Ludwig Gutberlet,
Chairman and CEO of BSH.
FOREWORD
Securing a sustainable future
During 2008, BSH Bosch und Siemens Hausgeräte GmbH posted group
sales worth some 8.76 billion euros, that is 0.7 percent less than in
the previous year. Against a background of steady levels of investment
in new products and manufacturing lines, earnings before tax stood
at 510 million euros, that is 127 million euros below the figure for 2007.
Although on the one hand this is less than we had budgeted for, it is,
in light of the global economic situation, a result of which we can be
very proud. All in all, BSH’s figures prove that we have outperformed
the market as a whole, and demonstrate that we are in the best possible
shape to cope with the difficult circumstances we face.
The effects of the crisis
The financial market crisis of the last year has also, of course, had
an impact on the consumer goods industry and, because the chaos
in the financial markets has spilled over into the real estate sector,
business in the built-in home appliance area has been hit particularly
hard. A considerable downturn in household appliance business
overall has been recorded in many regions, with massive percentage
falls, running into double digits, being suffered in some cases. With
the exception of Germany and France, all the major Western European
countries have registered marked downturns in demand for large home
appliances. In the USA too, we recorded negative development, while
Eastern Europe and Asia, for example, continued to report pleasing
growth rates. Over the last year, our timely commitment and investment in these growth markets has clearly paid off. In China, our six
factories have allowed us to benefit even more positively than others
from the continued dynamism of the market. Our success in boosting
sales by just on three percent in our home market of Germany was
particularly gratifying, and further increased our market share.
Proactive rather than reactive
Our ability to enhance and strengthen our position even during a
crisis-ravaged 2008 is the result of a long-term strategy best summed
up as “sustainable economic management”. In this context the word
“sustainable” means that our commercial actions are directed towards
securing the future, and this embraces a number of very disparate
aspects: They include targeted strategic investments in tomorrow’s
markets, the resolute nurturing of our brands and a consistent product
policy which puts an emphasis on quality and customer benefits.
An additional aspect is the constant optimization of our processes in
all areas. The continuous improvement of productivity, efficiency and
flexibility releases resources so that we can selectively invest in the
growth and competitiveness of our company.
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6
SECURING A SUSTAINABLE FUTURE
The Board of Management
of BSH (from left to right):
Prof. Werner Vogt,
Dr. Kurt-Ludwig Gutberlet,
Dr. Wolfgang Colberg,
Jean Dufour
FOREWORD
Success through innovation
Securing the future also involves taking the lead as the foremost
innovator in our sector. In 2008, BSH spent some three percent of
its sales revenue on research and development, applying for almost
800 patents for Germany alone. For years now, we have been one of
the country’s most active patent applicants, and occupy the number
one spot among white goods manufacturers. During the last year in
particular, this innovative capability has manifested itself in a wealth
of product launches that have seen us set new international standards.
Examples include the zeolite® dishwasher with a new energy-recovery
method, and the development of ultra-frugal heat pump dryers, which
boast power consumption figures well below the values stipulated for
inclusion in Energy Efficiency Class A, and the largest current portfolio
of A+ and A++ refrigerators. All this puts BSH in pole position to become
the world’s largest supplier of energy-efficient appliances. Here,
innovation not only drives growth, giving us an important competitive
edge, it also makes a genuine contribution to climate-protection and
to the conservation of our natural resources.
Heading for the future
Overall, we can state that we have taken the right course with the
strategy we have adopted. In the turbulent economic times we are living
through, it is vital that we do not depart from our goals and values.
With this in mind, we will continue to push on with our supreme efforts
on the research and development front. Our confidence in the strength
of our brands and the great commitment of our workforce remains
steadfast. We will continue to invest in strategic projects, thereby
shaping our future.
Dr. Wolfgang Colberg
Jean Dufour
Prof. Werner Vogt
7
Responsibility
breeds success
BSH successfully brings together social, environmental
and economic action, giving it a significant edge not just
within the context of its own sector.
10
The concept of the future
The German
Sustainability Award:
A validation of many years
of commitment to the
environment and society.
It is official: Since December 2008 Germany’s
most sustainable company is BSH Bosch und
Siemens Hausgeräte GmbH. Dr. Kurt-Ludwig
Gutberlet, CEO of BSH, received the German
Sustainability Award from Günter Verheugen,
Vice-President of the European Commission,
at a special gala event in December, 2008.
Competition for the prestigious award, which
was being presented for the very first time,
was fierce: No fewer than 350 companies entered, more than half of
the companies among them are listed in the DAX 30, Germany’s blue
chip stock market index. The highly eminent members of the jury
praised BSH in particular, “For the exemplary way in which it combines
commercial success with social responsibility and environmental
protection.” The patron of the German Sustainability Award Ceremony,
German Federal President Horst Köhler, underlined the universal
importance of sustainability in his remarks at the event: “I believe
sustainability is one of the great ideas – and one whose time has certainly come. The concept of sustainability provides us with an answer
to the question of how we can help ourselves and future generations,
both here and elsewhere in the world, to preserve and protect the
natural, economic and social resources on which our lives depend.”
Combined efforts throughout the company
The receipt of the award by Dr. Gutberlet marked the culmination of
a long and involved process that began all the way back in May 2008.
The first step entailed assembling a team for the for the project, which
was led by Christoph Felbinger and included representatives from all
areas of BSH, and then the completion of an extensive questionnaire
to ascertain the importance the company attached to environmental,
economic and social sustainability factors at each stage of the valuecreation process. The relevant aspects of sustainability and value
creation were then investigated and verified using an evaluation scheme
Christoph Felbinger, who
coordinated the company’s
entry for the German
Sustainability Award.
SUSTAINABILITY
drawn up by management consultants A.T. Kearney. This stage of the
assessment process placed particular emphasis on the structures and
processes applied in sustainability management. Only 30 companies
from the original 350 entries advanced to the final round. Auditors
from A.T. Kearney had no trouble verifying the information provided
by the BSH divisions when they visited Group headquarters in August.
“We had to compile all kinds of materials and documents from all
over the company to comply with the assessors’ requirements and we
had very little time in which to do so, but we managed it. This would
have been quite unthinkable had the whole of our organization not
already been putting the principles of sustainability into practice so
systematically for such a long time,” explains Felbinger. The auditors
subsequently had a conversation with Dr. Kurt-Ludwig Gutberlet during which he was able to illustrate for them how sustainability is a
real priority every day at BSH – even at the very highest level. Finally,
the interdisciplinary jury named BSH the winner.
The three pillars of sustainability
Dr. Kurt-Ludwig Gutberlet explained the key elements at the heart of
BSH’s approach to sustainability during the award ceremony: “We have
built our commercial success on three pillars.” Sustainability plays
a central role in keeping BSH competitive. Energy-efficient products,
for example, save the customer an appreciable amount of money over
the course of their operating life. The second pillar is consistency: BSH
applies a single set of values throughout the company worldwide, which
means that its environmental protection targets, for example, are always
identical and equally stringent throughout the company – even where
local or national laws are far less stringent. BSH’s move to switch production at its plant in China to CFC- and HFC-free refrigeration products
in the mid-1990s, for example, stemmed directly from this policy. It
was the first company to take this step and its actions gave a significant boost to the development of climate-friendly technologies in Asia.
Former UN Secretary
General Kofi Annan, with
Dr. Kurt-Ludwig Gutberlet.
BSH has been a member of
Kofi Annan’s Global Compact
on the worldwide improvement of working and living
conditions since 2004.
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12
THE CONCEPT OF THE FUTURE
The third pillar is the principle that efficient technology and market
transformation are both essential if business is to be conducted on a
genuinely sustainable basis. This means that retailers and customers
alike must be convinced of the quality and efficiency of appliances.
The benefits of factors like lower energy consumption, not just for the
environment but also in terms of personal savings, are a key differentiating feature of BSH products and it is thus vital that they be communicated effectively.
The combination of new and improved technology and the successful
marketing of the benefits this technology brings was undoubtedly one
of the factors that helped to steer the German Sustainability Award
into the hands of BSH. The jury confirmed to the company that the
way it continuously improves each product’s environmental performance counts as one of its major strengths. BSH has been committed
to this approach for many years, as its Product/Environment Analysis
system, a method of evaluating the environmental impact of products
throughout their lifecycle that was introduced as early as 1998, capably
attests. The Product/Environment Analysis examines concrete metrics
such as water, energy and cleaning agent consumption during an
appliance’s operating life as well as the resources consumed in its
manufacture in order to identify potential improvements that can
subsequently be incorporated into product planning and the product
development process. Non-negotiable development objectives for new
appliance generations can then be defined on this basis. As a consequence of this focus in research and development, BSH is not only a
leader in energy and water efficiency, but also a pioneer in the area of
recycling, where it has made enormous progress in adopting reusable
materials and eliminating harmful substances across all products.
Responsibility for people
Dr. Gutberlet highlighted BSH’s corporate social policy during his conversation with the assessment team from A. T. Kearney. The notion
that companies have a duty of responsibility to the society in which
they operate – now commonly referred to as corporate social responsibility (CSR) – has been at the center of the sustainability debate for
many years. The OECD created a common framework in this area as
long ago as the mid-1970s with the publication of its Guidelines for
Multinational Enterprises. BSH’s commitment to social responsibility
within its own organization manifests itself in a number of ways. The
company maintains an internal code of conduct, for example, which
governs interactions between employees and with business partners,
and operates a corresponding compliance organization to ensure
strict adherence to the code’s provisions. The value of this approach
is evident in the high health and safety standards applied throughout
the BSH Group and in the extensive personal development programs
provided to help every employee realize his or her potential. BSH has
been documenting its wide-ranging activities in the spheres of environmental protection and social responsibility in an annual sustainability report since 1992, making it a pioneer in the industry in this
respect as well.
SUSTAINABILITY
One particular aspect of BSH’s social responsibility gives Gutberlet
cause for special pride especially in the age of globalization: “We currently employ 14,000 people in Germany, which is the same number
we employed when BSH was founded back in 1967. This means that
we remain the largest German home appliance manufacturer even
after 40 years of international growth and the establishment of a
global manufacturing network that today employs over 40,000 people
around the world.”
Pioneering innovators in our industry
BSH regards the presentation of the German Sustainability Award as
welcome recognition of its efforts and achievements in the area of
sustainability and, of course, as an incentive and source of encouragement for the people who work in this area within its organization.
“Sustainability,” claims Felbinger, “means pursuing one’s objectives
with a measure of foresight and a commitment to bringing social,
environmental and commercial concerns into harmony.” These ideas
are defined in BSH’s Corporate Principles – five guiding principles
that encapsulate the core values of the company. The Corporate Principles cover a commitment to maintaining the trust of customers, the
importance of employees as the foundation for success, the company’s responsibility for the environment and society and its aim to
increase its value continuously on this basis. They also state: We are
pioneering innovators in our industry. Moving responsibly in the
direction of a sustainable future – and that’s exactly what the German
Sustainability Award stands for.
BSH’s energy-saving
“world champions” with
their Launch Managers,
Christian Muck, Ulf Engelbrecht, Sabina Schmitz
and Susanne Kühlich:
All BSH development
efforts are centered around
its sustainable product
policy, and its success
is clearly measured by
consumption figures that
set the standards for the
world.
13
Arguments
that speak for themselves
Modern home appliances combine excellent energy
efficiency with even better performance and even
more attractive convenience features. BSH products
show how it’s done.
16
High-tech for the environment
Nearly 60 percent of
private households’
electricity consumption is
caused by electric home
appliances – representing
a large energy savings
potential which can be
tapped by optimizing
home appliances’ energy
efficiency. For BSH’s
developers, a challenge to
be met each and every day.
Previous page:
In his keynote speech at the
IFA consumer electronics fair,
elucidates how BSH participates in climate protection.
The light goes out. A moment of absolute
silence follows, then a match bursts into flame
and the voice of Dr. Kurt-Ludwig Gutberlet
resumes. “Fear not: reducing the amount of
energy consumed by home appliances does
not mean the lights in the kitchen have to go
out tomorrow. Quite the opposite,” exclaims
the CEO of BSH Bosch und Siemens Hausgeräte GmbH in his speech at the 2008 IFA
international consumer electronics and home
appliances trade fair in Berlin. “Our modern
home appliances combine excellent energy efficiency with even better
performance and even more attractive convenience features.” Now,
however, the time has come to make this a hard and fast rule and
ensure that every new generation of appliances introduces further
improvements in energy efficiency. The International Energy Agency (IEA)
expects global demand for energy to double in the period between
2004 and 2030, and home appliances account for around half of the
electricity used in private homes. “Saving energy is not a passing
fashion, but rather one of the great challenges of our time,” Gutberlet
warns. “We stand on the threshold of a profound change in the nature
of the economy, perhaps even a third industrial revolution. We at
BSH are absolutely determined to play an active part in realizing the
changes that have to be made.”
Over 6,100 m2 of innovation
The IFA international consumer electronics trade fair included the
home appliances industry for the first time in 2008 and European
market leader BSH made its mark in Berlin with an impressive array
of exhibits. The Bosch and Siemens brands presented their latest
products at HOME APPLIANCES@IFA across more than 6,100 square
meters of exhibition hall. Highlights included remarkably energy efficient refrigerators and freezers that use up to 66 percent less electricity than comparable 15-year old appliances, and a line-up of new
ENERGY EFFICIENCY
dishwashers that also raise the bar in matters of energy consumption:
fully loaded, the best need a mere 0.83 kilowatt hours of electricity
and just ten liters of water to clean 13 standard place settings. Sensors
installed in these models monitor water quality and load size to ensure
that no more fresh water than required is supplied, that electricity
consumption is minimized and that the rinse cycle lasts just as long
as necessary for proper cleaning. Continuous flow heaters heat the
water very efficiently, while the Zeolite® drying system, a world first,
exploits this natural mineral’s ability to absorb and store moisture to
boost drying performance. The new tumble dryers with ActiveAir technology feature highly efficient heat pumps, developed especially by
BSH’s engineers, delivering enormous cuts in electricity consumption.
Making this dryer the world’s most energy efficient dryer.
“Don’t hide your light
under a bushel” – As head
of the Energy Excellence
Initiative, Dr. Peter Böhm
coordinates energy efficiency and sustainability
marketing.
Turning small numbers into large
BSH launched its Energy Excellence Initiative in order to communicate
these achievements accordingly to retailers and end customers. The
initiative is being led by Dr. Peter Böhm, who explains how the public
at large is now also very much aware of the efficiency issue: “Up until
2007 price remained the most influential factor in buying decisions,”
he recounts. However, since 2008 consumers have shifted their focus
from the purchase price to the appliances’ electricity and water consumption data in use. “Customers have learned that in the end, even
apparently very small advantages in terms of consumption can add
up to considerable cost savings over the long service life of an appliance.” The feel-good factor inspired by doing something to help the
environment comes as a bonus. The impact that could be made here
is breathtaking, calculates Dr. Böhm. Across the countries of the EU
there are still around 188 million appliances in use that are more than
ten years old and consume far too much water and energy. Replacing
these old-timers with efficient new models could save a massive 44 TWh
of electricity every year, which equates to an annual reduction in carbon
dioxide emissions of approximately 22 million metric tons.
Improved energy
efficiency brings tangible
savings each and every
day – an important factor
for BSH home appliances’
customers.
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H I G H -T EC H F O R T H E E N V I R O N M E N T
Every element of the art
Making a modern home appliance as energy-efficient as possible
while maintaining or even improving the convenience features it
offers means optimizing every product and drawing on every element
of the engineers’ art. Today’s ranges, for example, use less energy
than ever thanks to a whole series of design improvements such as
intelligent heat exhaust control for the oven, reduced thermal bridges
and better sidewall insulation. Quickstart technology brings appliances up to cooking temperature up to 40 percent faster without
increasing energy consumption in the slightest. Induction cooktops
with pan detection automatically match the size of the cooking zone
to the diameter of the base of the pan. Similar improvements are being
made in the washing machines segment, where optimizing energy
and water consumption remains the main priority. This particular area
poses special technical challenges according to Winfried Seitz, Head
of the Product Area Laundry. Ultimately time holds the key to achieving
the desired result: “It is rather like driving a car. If you want to save,
you have to drive slower. You can arrive sooner, but only at the expense
of higher fuel consumption. Our regular programs are consequently
relatively long, but extremely efficient. If the user needs a load cleaned
especially quickly, there are fast wash programs available but these
of course consume more electricity and water.”
Refrigerators and freezers offer the greatest potential savings
because, as Christofer von Nagel, Head of Marketing for this product
area points out, they operate “around the clock, 365 days a year.”
BSH had the largest range of refrigeration products in the sector on
display at the IFA trade fair: 39 basic models, all of which exceed
the specifications for the highest energy efficiency classifications.
“Savings of 70 percent over the last ten years – no other industry can
match that. The home appliance sector is the most advanced sector
of industry bar none on this measure,” says von Nagel with pride.
Energy efficiency in refrigeration appliances stems from constant
improvements in a large number of different components. “We use
more efficient motors. Or new foams in thicker insulating layers – that
can deliver huge extra savings.” Refrigeration circuits have also been
redesigned to enhance efficiency, thermal bridges have been eliminated and, as has always been the case at BSH, particular attention
has been paid to ensuring high manufacturing quality. The appliances
incorporate a wealth of intelligent systems too: “By using electronic
control technology we obtain the most precise and energy efficient
refrigeration results. In the future, appliances in all price bands will
include electronic control technology.”
Energy efficiency is an important issue for small as well as large appliances. “If you asked me to name one type of product that still offers
really significant potential energy savings I would have to cite the vacuum cleaner,” concedes Dr. Ralf Fuchs, Head of Consumer Products at
BSH. “The vacuum cleaner is used every day in many homes, some-
Left: Christofer von Nagel (Product
Area Cooling) shows the tremendous
potential for savings offered by
modern appliances.
Increased energy efficiency for tumble
dryers 40 percent above the Energy
Class A requirements: Winfried Seitz,
Head of Product Area Laundry
(picture top)
ENERGY EFFICIENCY
times more than once, and it is easy to see and feel how energy is simply
blown away. High wattage models, however, are so ‘yesterday.’ We are
putting the latest technology to work to both cut electricity consumption
and improve cleaning results.”
Dr. Fuchs has uncovered a whole series of ways to prevent unnecessary energy consumption in his field. One apparently trivial but very
effective measure is to mount the On/Off switch in clear view at the
front on appliances such as coffee and espresso machines: “A ridiculous amount of electricity has been – and continues to be – wasted
simply because the main switch is hidden away in a poorly accessible
location at the back of the appliance.” Customers used to the convenience of an appliance that was always on and always preheated have
nothing to fear, however, as the water in the new coffee and espresso
machines is heated in a continuous flow heater that efficiently produces
the required temperature as soon as it is switched on.
Meaningful guidance
New technologies are being implemented all the time, but they can
only benefit to the environment in the long term if they are actively
exploited in new home appliances not just in the premium segments
but across all price classes. “We have been calling for a subsidy for
the purchase of especially energy-efficient home appliances for years
so that old appliances that waste water and energy can be phased
out,” states Peter Böhm. Another problem is the system of classifying
appliances by energy efficiency, which has simply failed to keep up
with progress in the sector. “Today 80 to 90 percent of appliances fall
into energy efficiency class A, which means the energy efficiency label
no longer provides a useful indication of the differences between
models. Yes, an A++ appliance is over 40 percent more efficient than
a simple A-rated appliance, but how many people really know that?
We need to give customers meaningful guidance so that they can
make properly informed purchasing decisions.”
BSH has taken a number of steps to help ensure customers receive
the information they need, including the establishment of a comprehensive training program for home appliance retailers. “We are educating committed salespeople to act as energy consultants as well,”
reports Böhm. The program consists of a number of different elements
ranging from traditional workshops and seminars to sophisticated
e-learning systems that are accessible to participants at any time and
can consequently be used during quiet periods at work, for example.
The course lasts six months and has been very much welcomed by the
trade and the salespeople, not least because, as Helmut Michalski,
who is responsible for the design of the training at BSH, explains, “What
we put across to participants is not advertising but rather robust arguments that they can use where appropriate when discussing products
with customers.” And being sound, these arguments naturally point
very much in the direction of BSH.
“Small appliances can offer
significant energy savings” –
Dr. Ralf Fuchs, Head of Consumer
Products (picture top)
Right: Helmut Michalski has
developed a BSH program
to train specialist retailers to
become energy consultants.
19
The
future
begins now
Nobody knows what the world will look like
ten years from now. But only those who come
to the right decisions today will determine the
shape of tomorrow’s markets.
22
In the right direction
Future trends in the
home appliance field are
in many ways imbedded
with the development
of society as a whole.
Accordingly, BSH’s
planning explores
perspectives far beyond
the boundaries of its
own industry.
To some people, the future looks like an onion.
Take Rudolf Walfort, for example. Ask the
Head of Corporate Technology at BSH about
innovation management and he speaks of
many different, successive layers just as in
an onion. A twelve-month layer, a three-year
layer, a six-year layer, a ten-year layer: “Each
of these layers,” Walfort explains, “covers a
different time horizon. It is vitally important
for us to develop as precise a picture as
possible of how we are going to progress from one layer to the next,
because even though we do not yet know exactly what the market will
bring in ten years time, we still need to make sure we are moving in
the right direction.”
Business simulation guides innovation
The layer model to which Walfort refers simulates a wide range of
scenarios in order to generate a coherent picture of the future. What
changes might be expected in society and how would they change
consumer requirements? Which areas of research really promise practical
technical solutions for the future? How will the competitive environment evolve? What will the factory of tomorrow look like? Recognizing
a mega-trend like energy efficiency, for example, is still comparatively
easy. But what does this mean in exactly for BSH as a leading home
appliance manufacturer?
How will people buy, store and prepare food in 2020, and how will
they clean their clothes and living spaces? What effect will demographic shifts have? “We developed five different market scenarios
and then used them to derive appropriate strategies,” explains Walfort,
who is confident these simulations will point him, and hence BSH’s
technology and innovation management, in the right direction. Past
experience suggests it will work: “In 2002, for example, we needed
to forecast the future development of surface technologies in the field
of cooktops. At that time induction cooktops were still very expensive,
the advantages offered by the technology were unknown in many
“Society changes and
so do the expectations
consumers have towards
our products” –
Rudolf Walfort, Head of
Corporate Technology.
MANAGING THE FUTURE
countries and prices are higher than 2,000 euros.” Thus suggesting
a long-term niche market was its most likely future. Based on this
information, no one could have imagined that the technology would
shortly begin to acquire a significant market share. Innovation managers at BSH using “Price, Cost, Quantity” scenarios, assessments
of the interactions between immediately adjacent products and, of
course, breakdowns of market shares across the entire cooking segment, however, actually managed to predict the size of the market for
induction cooktops in 2008 with almost perfect accuracy.
Invent and protect
Think sustainably, act sustainably. The job of implementing visions
of the future at a global company like BSH naturally involves a large
number of people in a wide range of different functions. The process
essentially starts with the engineers and technical experts, who
develop new products at a number of development and competence
centers around the world. The headcount of people in these roles has
increased by 80 percent over the past eight years, underscoring the
importance BSH attaches to product innovation. These developers
have produced some impressive results for the company too: BSH
submitted 786 original patent applications in Germany alone in 2008,
for example, and is the leading representative of the home appliance
sector in the latest patent rankings from the German Patent and Trade
Mark Office. It occupies 13th place in the all-sector ranking, which puts
it above many well-known companies.
Responsibility for protecting the company’s innovations rests with
the Patent Department and its head Dr. Peter Dosterschill. The patent
attorneys create the foundation for the ongoing commercial exploitation
of the inventions made at BSH. Theirs is another task that obviously
requires foresight and a feeling for future developments. “Our people
go into the plants and talk to the development engineers directly,”
explains Dosterschill regarding the work of his department. “Then we
decide which innovations and results of technical development work
need to be protected for BSH. We aim to acquire patents for BSH that
protect broader technical concepts and not only specific embodiments
The patent attorneys, under
the direction of Dr. Dosterschill
(right), provide the basis for the
sustainable and economically
viable utilization of technical
innovations.
23
24
IN THE RIGHT DIRECTION
“Form and function in
perfect harmony” –
Gerd E. Wilsdorf, Head of Design
for the Siemens brand
of products. Small nuances in the formulation of a patent application
can have far-reaching consequences for the scope of protection
afforded.” Dosterschill and his team function in part as a bridge
between the technical world of the engineers and the legal world of
the patent and trademark offices: It falls to them to turn inventions
into the intellectual property rights through which BSH can gain a real
edge over its competitors and exert a lasting influence on the market.
Core propositions
Sustainable product development demands more than just close collaboration between engineers and marketing specialists. Designers
are also intimately involved in the innovation process right from the
outset in order to ensure a harmonious synthesis of form and function. The Head of Design for the Siemens brand, Gerd E. Wilsdorf, in
remarks keeping with the Bauhaus tradition, places special emphasis
on two separate aspects of this role. “We see ourselves as the end
consumer’s advocate. The sales staff has different concerns, as do
our colleagues in marketing. The engineers too have their own focus.
They have to develop a high quality product with strong technical features that can be manufactured easily. We, as designers, essentially
represent the interests of the user. Ergonomics and ease of operation,
for example, are becoming more and more important in the design
process.”
The design of a product, Wilsdorf stresses, is also the calling card
of the brand and the vehicle that conveys its core propositions:
“Through design we create recognition and credibility.” This idea has
actually been verified in blind tests in which customers recognize
Siemens brand appliances by their characteristic design even when
the brand name itself is concealed.
MANAGING THE FUTURE
Perhaps the best person to explain Wilsdorf’s “core brand propositions” in the context of BSH is the company’s Head of Brand Management, Dietmar Turocha. “Brand-specific statements of expertise –
innovation, quality and the like – are in there, but sustainability and
optimal energy efficiency are also very much core propositions for us.
This applies across all of the big brands in our portfolio, although
we do of course vary the relative priority given to each from brand to
brand. Naturally any attempt to position ourselves on the basis of
sustainability, for example, will only work if our products live up to
the proposition.”
A matter of commercial common sense
The long-standing guardian of product sustainability at BSH is the
Environmental Protection department, whose head, Dr. Herbert Mrotzek,
never tires of explaining how product sustainability in reality reflects
the sustainability of internal processes: “It pervades the entire organization,” he asserts. “Every area is involved. Sustainability begins with
purchasing and continues through development – where optimizing
product energy efficiency has become a special priority – to sustainable
production and, eventually, to delivery to the customer. In fact, even
that is not the end of the story, as we have a very strong customer
service team that not only takes care of repairs, but also advises customers on resource conservation.” Mrotzek takes care to stress that
there need be no conflict between sustainability and traditional commercial imperatives. “On the contrary. Only by achieving commercial
success can a company properly engage in the pursuit of sustainability.
Our commitment to sustainability, in turn, has a positive effect both
on our employees and on the credibility and image of our brands, so
ultimately it actually gives us a competitive advantage.”
Viewed in this light, sustainability seems no more than a matter of
forward-thinking commercial common sense.
Commitment to good cause:
Within BSH, the team
headed by Dr. Herbert
Mrotzek (second from left)
bears corporate responsibility for environmental
protection and social
responsibility.
25
Sustainable
from end to end
The path from procurement of material through to
delivery of the finished product is a long one. Here,
BSH puts its faith in long-term partnerships as a means
of assuring high standards right from the outset.
28
Joint action creates sustainability
Making sure that all internal workplaces and
production facilities provide optimal working
conditions is no longer sufficient for global
enterprises such as BSH. Only when all suppliers have been incorporated into and bound
by the same system that ensures the ethical
and responsible treatment of people and the
environment can there be talk of true sustainability all the way from the purchasing of components to delivery on the customer’s doorstep.
For a global corporation,
international collaboration
is part of day-to-day
business. BSH integrates
suppliers into long-term
global partnerships, and
frequently provides vital
developmental assistance.
“Our claims of sustainability are not limited just
to the finished product, but
of course also encompass
every single component
that we purchase” –
Raimund Denk is Head of
Global Purchasing at BSH.
Previous page: The swap
body system significantly
reduces the time it takes
to transfer cargo in transit.
No end to responsibility
Shopping is fun. A pair of fancy shoes, a new flat screen TV, an ultrafashionable dress, a fully-featured cell phone – for many people a day
buying is a day of pure pleasure. For Raimund Denk, Head of Purchasing
at BSH, buying means no end of work and with it, no end of responsibility. Asked about what he most enjoys buying for the company he
nevertheless allows himself a satisfied chuckle, eerily reminiscent of
the successful bargain-hunter, before giving his one-word answer:
“Steel. We always negotiate substantial numbers, in the hundred
million range, and at that level a saved percentage point has real
significance for BSH.” Denk is an experienced negotiator and knows
inside out the prices he can expect as the global market waxes and
wanes. Today, however, the job involves more than just haggling over
unit prices, percentages and delivery dates. Quick, short-term solutions
are out. Now good procurement is just as much about responsibility
for the people behind the product supplied and the environment in
which it is produced as it is about smart deals. Building trust is the key
as customers increasingly want to be confident about the conditions
under which their new home appliances have been manufactured,
while suppliers need a dependable flow of orders and reliable longterm partnerships in order to achieve optimal quality, innovation and
working conditions for their manufacturing employees. Mindful of its
responsibilities in this area, BSH signed up to the United Nations
Global Compact as early as in 2004 and defined its own standards
for modern, secure working conditions at its suppliers in accordance
with the compact’s ten principles.
PARTNERSHIPS
Clear rules for fair treatment and respect
The CECED (European Committee of Domestic Equipment Manufacturers)
Code of Conduct introduced in 2005 requires each of BSH’s partners
adhere to a set of mandatory rules, compliance with which is continuously verified. The code covers areas such as transparency, objectivity
and mutual respect in all negotiations as well as elementary issues
such as the prohibition of child labor, forced labor and discrimination,
and measures to ensure humane working conditions. BSH requires
all its suppliers worldwide to uphold these standards. “All A and B
suppliers signed the Corporate Social Responsibility declaration last
year,” confirms Raimund Denk. “These suppliers account for more
than 90 percent of BSH’s purchasing volume.”
The long-term partnerships sought take time and effort to develop
and maintain. Often the process begins long before the first delivery
ships. Supplier clearance is the term in use at BSH: A newly discovered candidate that manufactures an interesting product but does not
yet have the capacity to supply it in the required quality first undergoes an initial check. Analysis and development work is then carried
out in workshops at the candidate’s site during which the BSH team
provides practical – and free – business consultancy advice. Denk:
“We present new suppliers with an overview of their own processes.
That too is sustainable! They can learn an enormous amount from us
in areas like process and product design, high quality manufacturing
and environmentally-friendly production.” It is still common to find
that improvements are needed in working conditions, especially in
developing countries, which are particularly attractive for buyers due
to their good cost structures. There is no question of compromise
here: “We make it quite clear that nothing more will happen until
these essential requirements have been met.”
Chinese realities
After a recent visit to the plant in Suzhou, China, where BSH engineer
Ursula Moritz and her newly assembled supplier development team
are working, Denk has a very clear idea of the situation there. This
Optimum quality in
terms of material and
production activities,
and stringent worldwide
standards in relation
to environmental protection, occupational
health and safety and
social responsibility –
BSH’s sustainability
philosophy has influence
across the whole valueadded chain.
29
30
J O I N T A C T I O N C R E AT E S S U S TA I N A B I L I TY
plant is intended to eventually supply wire shelves and other metal
components for BSH ovens and refrigerators. Before that can happen,
however, quality will have to be stabilized and a number of development issues resolved; noise protection and general standards of health
and safety at work, for example, still need further improvement, and
a detailed plan of action has already been drawn up to address questions surrounding the site’s wastewater disposal arrangements and
deficiencies in its chemical storage facilities. Ursula Moritz, who spent
time in China for BSH in a quality management role between 1999
and 2001, knows that making real progress here involves arguing the
company’s case tirelessly and compellingly. “People frequently fail
to understand what we are trying to achieve and we hear no end of
arguments against the improvements demanded. When this happens,
we have to demonstrate practical ways of approaching the problem
at hand and work hard to communicate the essence of our concerns.
And we have to keep on talking and explaining until everyone understands the standards we need to put in place.” Moritz’s team has
already begun to make progress: Ear plugs and protective nets for
long hair now have to be worn in the production hall. There is more
to true sustainability than simply protecting employees’ health and
the environment, however, and proper investment in supplier staff
development is essential. The management of the Suzhou plant has
now approved a training program for its employees as part of the
improvements being made.
Beyond the integrated plant
Ursula Moritz’s counterpart in Russia, Kay-Uwe Clemens, has also had
to learn to deal with different business cultures and mindsets in the
course of his work as a supplier development officer. “One obvious
example is that we have found the whole structure in Russia to be
quite different to that with which we are familiar in Western Europe.
Everything, from the bolts to the glass to the rubber seal, is manufactured in-house in gigantic integrated plants. The raw materials go in
at one end and the finished product comes out the other end.” There
is no place for supplier companies in this system and consequently
there are none to be found. BSH accordingly has to look to producers
outside the integrated plant structure. These relatively new operations are in many cases the creation of investors who previously lived
abroad and have now returned to their home country. A newly devel-
Ursula Moritz and
Kay-Uwe Clemens
support Chinese and
Russian companies in
their efforts to meet
BSH’s high supplier
standards.
PARTNERSHIPS
oped system of potential assessments is applied to these companies
to establish the extent to which they already meet BSH’s stringent
requirements and how they might be strategically brought on to reach
the necessary levels across the board. Kay-Uwe Clemens has his hands
full with this particular undertaking, and like Ursula Moritz in China,
he spends much of his time making the case for health and safety at
work. Sometimes progress in this area can actually be comparatively
easy to achieve: simply fitting a rear-view mirror on a fork lift, for
example, can make a significant contribution to preventing accidents.
Logistical challenges
Hans-Gerd Bauerfeind is concerned with transport on a completely
different scale. As Head of Logistics, the final link in BSH’s sustainability chain, he bears ultimate responsibility for a global distribution
logistics budget in excess of 500 million euros. Performance in this
area measures up well against sustainability criteria. Optimally loaded
containers packed to the ceiling, improved rail connections, central
warehousing facilities, full capacity utilization rather than unladen
journeys – BSH’s logistics organization never stops searching for new
ways to make the most of its resources and cut its energy consumption.
“We believe our transport solutions can be economically and environmentally sound at the same time,” says Bauerfeind. Sending goods
by rail and water, for example, is both cheaper and more environmentally friendly than road transport. Making sure that everything arrives
in the right place at the right time despite longer transport times simply
becomes a question of management. “We are committed to improving
the efficiency of our goods movements on a continuous basis, which
makes finding and deploying the right technical solutions essential,”
Bauerfeind explains. One such solution has improved the transfer of
cargo in road transport considerably: Modern swap body systems place
the transport containers on stilt-like supports, the towing vehicle is
coupled to the new load and after a mere 20 minutes (this process
used to involve waiting and loading times of more than 90 minutes)
the truck is back on the road. This particular method helps to enhance
road safety as drivers are better rested. Ultimately, it seems only right
that high-quality, responsibly manufactured products should be delivered to the customer reliably with an equal amount of care – and, of
course, in an environmentally-friendly manner as is possible.
“Efficient, smooth-running
logistics operations have
both an economic and an
ecological effect” –
Hans-Gerd Bauerfeind,
Head of Logistics for BSH
Fast, safe and environmentally
sound – when it comes to transporting its products, BSH puts it
faith in modern technology and
efficient management.
31
The workplace gets a
health check
BSH’s corporate principles affirm that our people are the foundation
of our success. The company is taking a healthy interest in ensuring
that those people stay fit and active over the long term.
34
Fit for the future
As society continues to age, people’s working
lives will be extended accodingly. BSH is
already responding to the challenges of demographic change and taking care to ensure that
its employees remain fit for their retirement.
From new recruit to
pensioner: BSH has instituted a whole series of
programs designed to
help its workforce stay
fit and healthy.
Should health remain a private matter?
Some would say BSH has no business becoming involved in employee health: Health and
safety at work aside, matters of health and
fitness, they would contend, are purely the concern of the individual
and no one can take over that personal responsibility from them.
Klaus-Peter Fröhlich, HR Manager at BSH, disagrees: “A healthy
employee who feels comfortable in his or her working environment is
obviously much more motivated and productive than an unhealthy,
uncomfortable employee.”
Thus, BSH has good reason to take an interest in the health of its employees, and it seems likely this factor will assume even greater importance
in future. As a result of rising life expectancy and falling birth rates,
society continues to age. Like other employers, BSH can accordingly
expect to see a significant increase in the average age of its people
over the coming years, which makes helping employees stay in good
shape all the way through to retirement more important than ever.
Providing a conducive workplace is a key element to maintaining
employee health. A well-designed workstation that minimizes the
loads placed on the employee’s body, for example, can help to
reduce rates of muscular and skeletal conditions. “We are very proud
of these,” says Johann Graf, Head of Work Management at BSH’s
range factory in Traunreut, Germany, pointing to a series of highly
visible circular green signs mounted above the assembly bays. “The
signs indicate that these workstations have undergone an ergonomic
inspection and that no problems were found,” Graf continues. “Our
fitters do not have to make any movements here that could potentially
damage their health over the long term.”
Some 320 workstations at Traunreut have completed the ERGO-Check
inspection in the last year and more are to follow over the next few
months. The inspection involves a member of the Work Management
team scrutinizing the workstation with reference to a detailed questionnaire. Does the operative have to turn or bend frequently while
working? Are key displays installed at eye level? Is the workstation
sufficiently well lit? A special software program is also used to calculate
whether the loads encountered when lifting or carrying heavy items
are within acceptable limits.
Previous page: Employees
at the Bretten factory use
their break to stay fit with
certified physical education
instructors.
P EO P L E AT B S H
Green – yellow – red
The questionnaire and evaluation system are both developments of
materials originally obtained from Robert Bosch GmbH. Each workstation inspected is marked with a green, yellow or red sign depending on the result. Green means “No ergonomic concerns”. “The yellow
sign identifies workstations at which the loads involved are not a
problem provided they do not last too long,” explains Johann Graf.
“We have introduced a new system in response to this: employees
at our yellow workstations now alternate repeatedly throughout the
shift.” Workstations marked with a red sign do not pose an immediate
threat, Graf stresses, but could lead to health problems in the longer
term and consequently have to be redesigned within six months.
One workstation to have been recently redesigned for precisely this
reason is the point at which the fan motor is installed in the oven.
Previously, employees working at this station had to bend over forward
a long way and then stretch out their arms to attach the fan wheel to the
back wall of the oven, and do so 770 times every shift. This awkward
maneuver was eliminated at the three affected workstations by installing
a specially designed tilting mechanism that enables the fitters to reach
into the oven at an angle from above without having to bend. This particular improvement cost BSH a five-figure sum to realize.
After all, the cost: “The plant planners kept on asking us who would
pay for it all,” says Johann Graf recalling the initial difficulties encountered launching the ERGO-Check scheme. “They were right of course:
the modifications have to make economic sense. The fact is that
they undoubtedly do make economic sense. In the long term, a well
designed workplace facilitates cost-effective production.” Keeping
employees healthy, in other words, pays off for all concerned.
The plant planners at Traunreut have now received special training
to raise their awareness of ergonomics so that they can incorporate
associated considerations into future projects. Dr. Jürgen Sturm,
Head of IT, is already thinking one step ahead: “Before long we will
be able to use computer simulations to conduct ergonomic checks on
workstations before they have even been installed.” Once that point
has been reached, the sort of retrospective measures seen at Traunreut
would be a thing of the past.
HR Manager Fröhlich: “Healthy employees
are more motivated and more efficient,
and take fewer sick days.“ Picture bottom:
Green for go. After a successful ERGOCheck, the green sign indicates there are
no ergonomic concerns.
35
36
FIT FOR THE FUTURE
Different ideas and concepts
The ERGO-Check tested at Traunreut in 2008 forms an important part
of an enterprise-wide initiative launched by BSH to prepare for the
consequences of the anticipated demographic change. What will happen if every employee has to work for an extra two years? What should
be done about employees whose health will simply not allow that?
And what can be done to avoid any shortage in qualified junior staff
ready to move up the organization as roles become vacant? Three
working groups are currently canvassing ideas and developing concepts as to how the expected changes might be managed. One group
is concentrating solely on health management and workplace design.
One significant aspect that has already become quite clear is that
health depends not just on what happens during working hours, but
also what the employee does outside of work. Does the employee go
home and sit in front of the TV or does he or she make a conscious
effort to stay in shape?
“When I joined the Neff plant in Bretten in 1996 the sickness rate
stood at 8.5 percent,” recalls HR Manager Iris Karcher. “We went and
talked to our employees to find out what was going on. What we
heard encouraged us to make a much more intensive effort to help
them maintain and improve their own health.”
Little by little the Bretten site acquired a diverse sporting and health
program that makes it very easy for employees to participate. Qualified fitness instructors lead ‘active breaks’ during which employees
are shown how to improve their strength and flexibility using simple
equipment such as rubber bands, while vaccinations, diabetes
screening and physiotherapy are offered in conjunction with the
on-site medical service.
Nobody is under any compunction to join in, but the measures have
proved to be enormously popular. The Neff Aktiv sports club, for example,
now has 600 members. It offers courses in Qigong, aquajogging and
Starting in 2009 all
global BSH subsidiaries
will adopt the ERGOCheck. Bretten’s health
management system is
a persuasive precedent.
P EO P L E AT B S H
Nordic walking, and the company also has its own fitness studio.
“Neff Aktiv has set up a network with other clubs and associations
in the area too,” reports Iris Karcher, concluding, “All we want to do
is help our employees feel enthusiastic about exercise.”
An investment in the future
Costs have been a sensitive issue here as well. Health management
is like an endurance sport: It takes patience and stamina. “It takes a
while for the results of these types of measure to become apparent,
which is another reason why it is so important that BSH is prepared
to make long-term investments in this area,” explains Iris Karcher,
who states that an element of idealism and entrepreneurial risk are
part of being in business.
It turns out that the reward has been well worth the risk. The number
of employees reporting sick has dropped by nearly half in the last
few years. The company’s efforts have been highly acclaimed: The
German Sports Federation (Deutsche Sportbund) has awarded Neff
Aktiv its “Sport Pro Gesundheit” (sport for health) quality seal in
recognition of the positive impact of its sports program; health insurer
GEK is refunding a portion of employer contributions – money that is
invested straight back into fitting out the health center; and BSH itself
has also recognized the Bretten health management approach as
exemplary, honoring it in 2008 as one of the three finalists for the
BSH Special Award for commitment in the field of human resurces,
the environment and society.
Fitness at the workplace –
good for morale.
These two pilot projects, the ERGO-Check in Traunreut and the Bretten
health management program, have effectively demonstrated how the
consequences of demographic change can be ameliorated and both
are now to be taken up by BSH’s subsidiaries worldwide. HR Manager
Klaus-Peter Fröhlich has no doubt the measures will continue to make
an impact: “Programs like these take care of themselves. Our people
believe in them absolutely and will therefore make sure they are
implemented properly everywhere.”
“This doesn’t happen overnight, but there’s
a clear return-on-investment to be gained” –
HR Manager Iris Karcher (photo left) launched
Neff’s health management system.
37
39
Group Key Figures
40
Supervisory Board Report
During the year under review, the Board of
Management reported regularly to the Supervisory Board on the performance of the company
and on its major decisions, both orally and in
writing.
The 2007 financial statement and management
report, the development of business during
fiscal 2007 and in the year 2008, and the Business Plan 2009, including HR and financial
planning, were explained to the Supervisory
Board by the Board of Management at the
two regular Supervisory Board meetings held
during the year. The Board of Management
reported to the Supervisory Board on the
economic development of the company and
on the course of business in the various sales
regions, particularly in Europe, Turkey, in
Eastern Europe including Russia, in North and
Latin America and China. The Supervisory
Board discussed these topics in depth.
Gerhard Kümmel,
Chairman of the Supervisory Board.
Particular advisory effort in the Supervisory Board was devoted to
the risks to the company stemming from the global economic difficulties in the wake of the crisis in the financial markets, particularly
the effects in North America, in Spain and the UK, as well as in other
countries of Western and Eastern Europe, and the associated measures derived. A further point of focus was the business situation in
Brazil and Latin America as a whole, including the structural and
development projects of the Brazilian subsidiary.
The Supervisory Board also advised on the developments and projects involving the Refrigeration Product Area and other Product Areas,
on the status of the new plants in China and Russia and further
investments.
Other topics dealt with in the Supervisory Board meetings included
the introduction of new organizational structures in the USA and
China, the home appliance market in India and how to service it, the
growth of internet trading, the development of market prices and
material, personnel and selling costs, developments on the quality
front, the energy efficiency of household appliances and further
possibilities for cutting energy consumption, trends in innovation,
collaborative arrangements and competitive analyses.
The Supervisory Board received reports from the Board of Management
on the company’s Risk Management and Compliance Management
activities and allied topics during 2008.
In addition to its official meetings during the course of the year,
regular discussions also took place between the Board of Management and the Chairman of the Supervisory Board and his deputies.
SUPERVISORY BOARD REPORT
The financial statement of BSH Bosch und Siemens Hausgeräte GmbH
and the consolidated financial statement as of Dec. 31, 2008, and the
management report for BSH Bosch und Siemens Hausgeräte GmbH
and the Group management report have been audited by Deloitte &
Touche GmbH Wirtschaftsprüfungsgesellschaft, Munich, and have
been given their unqualified approval. The reports prepared by the
auditors were presented to all members of the Supervisory Board.
The Supervisory Board thoroughly examined the documents concerned
and the Board of Management’s proposal regarding the allocation of
net income. The reports were discussed in full at the Supervisory
Board’s meeting to approve the balance sheet, which was held in the
presence of the auditors.
The Supervisory Board raises no objections and concurs with the
findings of the audit. It approves the financial statements and management report of BSH Bosch und Siemens Hausgeräte GmbH as well
as the consolidated financial statements and Group management
report; it recommends the shareholders to confirm the financial statements, to approve the consolidated financial statements and Group
management report and to accept the Board of Management’s proposal regarding the allocation of net income.
The period of office of the Supervisory Board came to an end with
effect from April 30, 2008. After many years as a member of the
Supervisory Board, of which he has in the past served as both Chairman and Vice-Chairman, Mr. Gotthard Romberg has stepped down.
The shareholders and the Supervisory Board thanked Mr. Romberg
for his commitment towards the development of the company. The
end of the period of office also saw Messrs. Karl-Heinz Seibert and
Lothar Wiedeberg and Prof. Dr. Klaus Wucherer step down from the
body. Mr. Artur Fischer retired at the end of 2008. The Supervisory
Board thanked its outgoing members for their valuable contributions.
At the start of its new period of office on April 30, 2008, the Supervisory
Board welcomed Dr. Rudolf Colm, Mr. Joe Kaeser, Prof. Dr. Hermann
Requardt and Mr. Siegfried Stegmann as new members. During the
constituent meeting of the newly elected Supervisory Board, Mr. Gerhard
Kümmel was chosen to serve as its Chairman, with Mr. Elmar Freund
and Prof. Dr. Hermann Requardt as his deputies. Mr. Stefan Rauschhuber
joined the Supervisory Board with effect from January 1, 2009.
The Supervisory Board would like to thank the Board of Management
and the company’s employees for their successful endeavors over the
past year.
Munich, May 5, 2009
For the Supervisory Board
Gerhard Kümmel
Chairman
41
42
Board of Management
Dr. sc. pol. Kurt-Ludwig Gutberlet
Chairman
Chief Executive Officer,
Corporate Strategy,
Corporate Communications,
Law and Industrial Policy,
Compliance,
Internal Audit,
Consumer Products,
Customer Service
Dr. sc. pol. Wolfgang Colberg
(until March 31, 2009)
Chief Financial Officer,
Finance and M &A,
Business Administration,
Corporate Development and Controlling,
Labor Relations Director, Human Resources,
Data Protection,
Information Technology,
Purchasing,
Tax, Customs,
Insurance
Johannes Närger
(since April 1, 2009)
Chief Financial Officer,
Finance and M&A,
Business Administration,
Corporate Development and Controlling,
Labor Relations Director, Human Resources,
Data Protection,
Information Technology,
Purchasing,
Tax, Customs,
Insurance
Jean Dufour
Chief Sales and Marketing Officer,
Corporate Sales,
Brand Management,
Logistics
Prof. E. h. Werner Vogt
Chief Technology Officer,
Product Area Dishwashers,
Product Area Cookers,
Product Area Cooling,
Product Area Laundry,
Electronic Systems and Drives,
Corporate Technology,
Environmental, Occupational, Health,
Fire and Disaster Protection
Supervisory Board
Gerhard Kümmel, Stuttgart
Chairman of the Supervisory Board
Member of the Board of Management
of Robert Bosch GmbH
Rudi Lamprecht, Munich
Chairman of the Supervisory Board
(until April 30, 2008)
Member of the Supervisory Board
(from May 21, 2008)
Advisor to the Managing Board of Siemens AG
Elmar Freund, Bad Neustadt
Vice-Chairman of the Supervisory Board
Chairman of the Group Works Committee
Prof. Dr. phil. nat. Hermann Requardt,
Munich
Vice-Chairman (since April 30, 2008)
Member of the Managing Board of Siemens AG
Wolfgang Chur, Stuttgart
Vice-Chairman (since April 30, 2008)
Member of the Supervisory Board
(from April 30, 2008)
of Robert Bosch GmbH (until June 30, 2008)
Dominik Asam, Munich
Head of the Board of Management
of Siemens Financial Services GmbH
Thomas Bauer, Stuttgart
Director, Sales and Marketing Coordination
Consumer Goods and Industrial Technology,
Marketing Communications and
Brand Management of Robert Bosch GmbH
Ellen Bonna-Knöpp, Giengen
Chairperson of the Works Committee
of the Giengen plant
Dr. rer. oec. pol. Rudolf Colm, Stuttgart
Artur Fischer, Rosenheim
(until Dec. 31, 2008)
Senior Authorized Representative
of the IG Metall trade union
Rosenheim Administrative Office
Union Secretary of the IG Metall trade union
(from May 1, 2008)
BOARDS
Peter Kern, Frankfurt
Union Secretary to the Executive Committee
of the IG Metall trade union
Joe Kaeser, Munich
Member of the Managing Board of Siemens AG
Stefan Rauschhuber, Rosenheim
(since January 1, 2009)
Senior Authorized Representative
of the IG Metall trade union,
Gotthard Romberg, Stuttgart
Formerly Member of the Board of Management
Wolfgang Rückert, Traunreut
Vice-Chairman of the Works Committee,
Traunreut plant
Dieter Schweisfurth, Hamburg
Head of Sales, Bosch Northern Region
BSH Bosch und Siemens Hausgeräte GmbH
Karl-Heinz Seibert, Munich
Head of Mergers, Acquisitions and
Postclosing Management for Siemens AG
Siegfried Stegmann, Nuremberg
Chairman of the Nuremberg Works Committee
Franz Veh, Dillingen
Chairman of the Works Committee,
Dillingen plant
Lothar Wiedeberg, Berlin
Vice-Chairman of the Works Committee,
Berlin plant
Prof. Dr.-Ing., Dr.-Ing. E. h. Klaus Wucherer,
Erlangen
Advisor to the Managing Board of Siemens AG
43
44
Management Report
A. Development of business
Development of the sector and of the economy as a whole
Global domestic product grew by 2.3 percent in 2008, compared with
around 4 percent in 2006 and 2007. From the middle of the year, the
escalating financial market crisis also had a negative impact on the
real economy, causing global economic activity to slow, especially
in the fourth quarter. Following massive commodity price increases
throughout the course of the year, falling commodity prices at the end
of the year and the resulting easing of inflationary pressure brought
only slight relief. Efforts were made to prop up the economy by starting to take monetary and fiscal measures to counter the crisis.
In Europe, the United Kingdom, Ireland, and Spain had to deal with
collapsing real estate markets and falling private consumption.
Germany’s economy was weighed down primarily by a collapse in
demand for exports, while domestic demand proved to be a stabilizing factor. Robust domestic demand in the new EU member states
ensured that economic output fell comparatively less rapidly. Toward
the end of the year, the downturn had spread to all European economies,
albeit to different degrees.
The recession in the USA was exacerbated further in 2008, primarily
as a result of continuing price erosion in the real estate market and
serious weakness in consumer demand. Measures intended to stimulate the economy taken by the US government, such as tax relief, only
had a short-term impact. Overall, gross domestic product increased
modestly in comparison with the previous year.
Economic performance in emerging economies and commodity
exporting countries was comparatively buoyant. Latin America in particular benefited from strong global demand for commodities in the
first half of the year. However, toward the end of the year, the decline
in demand in Western industrialized nations adversely affected the
region. In China, Asia’s largest export market, the sluggish Western
demand resulted in the first single-digit economic growth in year.
The market for large household appliances could not escape the
negative trends in global economic development. Although some
European core markets had expanded in the previous year, most of
them developed negatively during 2008. In Western Europe, the
decline affected above all the important markets of Spain, the United
Kingdom, Italy, and Scandinavia. Confirming initial signs at the end
of 2007, Spain’s construction industry collapsed in 2008. Because of
the great extent to which the Spanish market for large appliances
depends on first-time buyer demand, there was a double-digit fall
in demand. In the United Kingdom, the situation remained tense
because of the weak real estate sector. In addition, the weak exchange
rate of pound sterling weighed on market performance in euro terms.
BUSINESS PERFORMANCE
Positive changes in France and Germany provided support for the
Western European white goods market. Although the number of
household appliances sold in Germany was similar to the previous
year’s figure, increased demand for higher-quality and more energyefficient products boosted revenue.
The market in Eastern Europe performed better than the Western
European market. The markets in Russia and Poland recorded aboveaverage growth rates But even in Russia, Eastern Europe’s largest
market, the economic growth showed the first signs of cooling during
the second half of the year. The weak rouble had an additional negative impact on market performance measured in euros.
The household appliances market in the USA contracted even more
significantly in 2008 than in the previous year. In particular demand
for large appliances in the cooking and dishwashing material groups,
which is to a large extent driven by construction activity, declined
by double-digit percentages. Moreover, the weak annual average
exchange rate of the US dollar contributed to the double-digit decline
in the overall household appliances market when measured in euros.
Renewed solid growth in Latin America’s markets only offset to a limited
extent this poor development of the American continent as a whole.
China was again a sustained growth market in 2008. This was mainly
due to continued demand from first-time buyers in rural regions.
Rising saturation rates in the cities, however, slightly dampened the
increase in demand compared with previous years. India, Asia’s
fourth largest market, also expanded faster than average, while
growth was slow in the saturated markets of Japan and Korea.
In spite of the fall in demand in North America and Western Europe,
the global market for large household appliances expanded slightly.
However, exchange rate developments resulted in a decline on a euro
basis.
Revenue development
In the year under review, BSH Bosch und Siemens Hausgeräte GmbH
(referred to in the text as “Group” or “BSH”) generated consolidated
revenue of EUR 8.758 billion, a year-on-year decline of 0.7 percent.
After currency adjustments, revenue amounted to EUR 8.924 billion,
1.2 percent more than in the previous year.
In Germany, the Group’s revenue was EUR 1.765 billion, an increase
of 2.9 percent. As a result, the proportion of revenue generated outside Germany declined from 80.5 percent to 79.9 percent.
In Western Europe – including Turkey, but excluding Germany –
consolidated revenue fell by EUR 243 million to EUR 4.314 billion.
The decline was mainly attributable to the markets in Spain and the
United Kingdom, while BSH recorded encouragingly good growth
rates in the markets of Belgium, France, and Switzerland.
MANAGEMENT REPORT
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MANAGEMENT REPORT
In Eastern Europe, BSH continued on its extremely positive growth
path of previous years. Revenue increased by around 14.4 percent to
EUR 946 million in the year under review. This growth was driven in
particular by the markets in Russia, as well as Slovakia, Poland, and
the Czech Republic.
The negative revenue development in the North American market
was mainly attributable to the USA, while revenue growth was buoyant in Canada. The fall in revenue in the USA was primarily due to the
financial market crisis and its impact on the sales markets, as well as
exchange rate developments.
Sales by Region
01.4 % Others
09.3 % Asia
03.4 % Latin America
20.1% Germany
05.7 % North America
While revenue in Latin America declined by 2.1 percent, the Group’s
revenue generated in Brazil was similar to the previous year. Revenue
in Peru increased by an encouraging percentage, but this was offset
by a significant fall in revenue in Argentina.
10.8 % Eastern Europe
49.3 % Western Europe
excluding Germany, including Turkey
BSH continued its successful performance in Asia, reporting sharp
increases in revenue. The market development for BSH was satisfactory, especially in China, but also in the United Arab Emirates and
Israel.
As in previous years, revenue expanded rapidly in Australia/Oceania.
Production
BSH manufactures large household appliances and small consumer
products at 29 locations in 14 countries around the world. On the basis
of product platform concepts, the 43 production facilities form part
of a closely linked network in both development and production. This
network allows BSH to maintain its cost at internationally competitive
levels and keep the development cycles for new products short.
In addition, BSH meets the regional requirements in the sales markets
through specific product developments at the respective production
locations.
Consistent process optimization along the supply chain leads to further shortening of the firm order horizon of the production facilities
and thus allows BSH to respond flexibly to changes in demand in the
markets. Moreover, short transport routes mean that BSH can deliver
to retailers and customers quickly.
The strong focus on the ongoing optimization of quality processes
leads to continuous improvement of the quality standard of BSH
products. As a result, BSH’s quality leadership makes it a benchmark
in many countries, not only in terms of the functional reliability of
the products, but in particular regarding the benefits in use for retail
customers.
Independent institutions such as the German consumer organization
Stiftung Warentest or similar organizations in other countries are
impressively unanimous about the Group’s product performance
leadership.
In the year under review, BSH successfully completed the rollout of a
standardized production system for all production facilities. To date,
25 facilities have successfully passed an internal audit.
The BSH production system is a standardized method of testing all
processes along the value chain for inefficiencies. In close collaboration with all employees, the non-value-added components are thus
continuously eliminated or significantly reduced.
An end-to-end formula for success, the BSH production system enjoys
encouraging levels of acceptance among employees at all locations.
In 2009, BSH will further expand and fine-tune the methods employed
by this production system.
The high degree of flexibility of its production facilities allows BSH at
any time to engage in forward-looking demand planning for global
production volumes and manufacturing capacity, thus protecting the
Group especially during times of crisis. By using consistent inventory
management, BSH has been able to reduce inventories accordingly.
With marginally declining output of large household appliances and
unchanged global BSH capacity, utilization was also down slightly,
tracking the decline in revenue.
While the output of German facilities increased by 1.2 percent, output
fell back by around 1 percent in other European countries.
However, the financial market crisis had a significant negative impact
on output at production facilities overseas.
Procurement
While the prices of primary materials, especially steel, rose sharply
in the first half of the year, the effect of the financial market crisis
caused market prices to retreat, in some cases significantly, from
October 2008. Depending on the terms of the procurement contracts
and the dates they were signed, it was possible to offset a portion of
the wide price fluctuations.
In the case of plastics, the sharp increases in the oil price also impacted
the procurement market well into the third quarter. However, looking
ahead to 2009 BSH expects the sharp decline in oil prices at the end
of 2008 to improve conditions to an as yet undeterminable extent.
The general increase in volatility in the area of commodities was in
part moderated by a campaign to develop new suppliers for primary
materials.
MANAGEMENT REPORT
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MANAGEMENT REPORT
In addition, there is continuous and long-term cooperation with core
suppliers. To manage the risks of widely fluctuating commodity
prices, BSH consistently pursues the hedging of non-ferrous metals.
In spite of the economic downturn that started in the fourth quarter
of 2008 and declining market prices at the beginning of 2009, the
prices of commodities and primary materials are expected to increase
in the course of the year. The massive capacity adjustments that
some suppliers have already implemented will quickly lead to supply
shortages and rising market prices in case of even moderate hikes in
demand, especially in emerging economies.
In response to declining order volumes and financing problems
among suppliers, BSH has intensified its risk management activities
in the procurement market, for example through systematic and
preventive monitoring of single source suppliers.
As part of various benchmark projects, more far-reaching procurement strategies have been identified to make better use of the market
in the current economic environment, to optimize processes, and to
strengthen interdisciplinary cooperation. Implementation on the basis
of rollout plans has begun.
Similar to the process for direct materials, a central purchasing function
has been set up for indirect materials and services. The aim for the
Group is to make systematic use of pooling and synergy potential for
investments, communication technology, marketing and consulting
services.
More powerful IT systems have been used to support and optimize
supplier management, risk management, and purchasing control.
All these measures are appropriate ways of increasing BSH’s competitiveness.
As part of its supplier assessment, BSH again gave awards to suppliers
whose performance stood out in the year under review.
Investments
Investment by the Group in intangible assets and property, plant,
and equipment (excluding goodwill) increased by 1.1 percent to EUR
382 million, which equates to 4.4 percent of consolidated revenue.
Of the investments in intangible assets and property, plant, and
equipment, EUR 141 million is attributable to Germany and EUR
241 million to other countries.
The Group made 36.9 percent of its total investments in Germany.
The most significant investments relate to the introduction of new
built-in appliances and investments in information technology.
In other countries, investments were primarily made at locations in
China, Spain, Turkey, the USA, Brazil, and Eastern Europe. In China
and Eastern Europe, investments related to washing machine and
refrigeration appliances. In Spain, investing activities focused on new
built-in appliances.
MANAGEMENT REPORT
Investment *
in EUR million
400
Of the total amount invested 41.3 percent was spent on new products,
23.8 percent on expansion and rationalization activities. 34.9 percent
was spent on land, buildings, logistics, information technology, and
other items; around one third of this figure related to investments in
replacement assets.
Finances
The impact of the financial market crisis is also felt by BSH. The
extreme volatility and turbulence on the financial markets could not
have been predicted, and there are no indications that the crisis
would end after the end of the year.
350
382
378
2008
2007
300
250
200
150
100
50
The stock markets collapsed and bond markets did not follow any
clear trends in the course of the year. Activities on the credit market
were extremely sluggish and even faltered at times. The prevailing
uncertainty about possible liquidity problems in the banking, industry,
and retail sectors prompted international central banks to take
extraordinary measures.
High credit margins and the banks’ reluctance to give credit had no
impact on BSH’s income statement, but only had a very minor formal
effect on its finances.
Since most of its loans are long-term and have fixed interest rates,
BSH is soundly financed and its borrowing is only subject to minor
interest rate risks. In addition, BSH has sufficient – contractually
fixed – flexible lines of credit.
Current and noncurrent financial liabilities decreased by a total of
EUR 113 million in the year under review. This related primarily to the
repayment of matured loans of EUR 107 million by the parent company BSH Bosch und Siemens Hausgeräte GmbH (referred to in the
text as “BSH GmbH”).
While noncurrent financial liabilities increased by EUR 9 million,
current financial liabilities declined by EUR 122 million. Cash and
cash equivalents increased by EUR 50 million.
Currency risks resulting from operating activities are continuously
identified, measured, and hedged in accordance with a defined
finance policy in a rolling process with a horizon of up to twelve
months. BSH hedges currency risks using forward exchange contracts
and currency options.
In the year under review, BSH introduced cash flow hedge accounting
at Group level outside Germany.
0
* Investments in intangible
assets and property, plant,
and equipment (excluding
goodwill)
49
50
MANAGEMENT REPORT
In times of financial market crisis and the resulting credit shortage,
even greater use is made of intercompany financing. In this way, a
centrally managed, Group-wide cash management system ensures
that all subsidiaries are solvent at all times.
Because of market imbalances, all financial market assets lost a large
amount of value in the course of the year under review. As a result,
the financial markets suffered double-digit losses in some cases.
BSH’s fund investments only reported minor losses. In this environment,
this was positive confirmation of BSH’s risk-adjusted investment
strategy, which had proved itself in the past.
BSH chose a narrow interpretation of the guidance of IAS 39 and
recognized the appropriate impairment losses as of the balance
sheet date.
A central treasury control unit ensures that potential treasury risks in
the Group are continuously monitored, identified, and measured.
BSH retained its external long-term rating of “A-” from international
rating agency Standard & Poor’s in 2008. The outlook was raised to
“positive.”
Human resources and social issues
At December 31, 2008, BSH employed a total of 40,286 people worldwide, including apprentices/trainees. Of this total, 26,090 (2007:
24,890) were employed outside Germany and 14,196 (2007: 14,060)
in Germany. At the end of the year, there were 733 employees in
various stages of apprenticeship/traineeship, 449 of them located
in Germany.
Workforce by Region
18 % Asia
35 % Germany
05 % Latin America
04 % North America
10 % Eastern Europe
28 % Western Europe
The headcount increased by 1,336 employees, mainly at the companies
in China, Slovenia, the Netherlands, and Russia. Of this increase,
China accounted for 1,200 and the Netherlands for 104 employees,
resulting from the acquisition of the sales company Willem van Rijn
Huishoud-elektro B.V., Amsterdam. Personnel restructuring was
carried out in Spain, the USA, and Slovakia for local facility-related
reasons. In Germany, BSH’s headcount expanded by a total of 136.
exluding Germany, including Turkey
At December 31, 2008
As in previous years, BSH believes in a sustainable personnel policy
that ensures the Group’s business success for the long term, also
given the current financial market crisis. Examples include safeguarding the compensation structures, maintaining the vocational training
and qualification programs, and long-term personnel development
measures at all management levels.
For further optimization in filling key positions in the Group (in addition to standardized systematic succession planning), the current
need to recruit management personnel in technology and marketing
was determined and appropriate action packages were developed on
that basis.
To ensure the recruitment of young managers strategically and for the
long term, BSH provides intensive personnel development through
programs such as the Junior Executive Pool, the International Executive Pool, and the Senior Executive Program. The Senior Executive
Program for selected senior managers, which had been established
in the previous year, was implemented with great success for the first
time in 2008.
The orientation centers, organized nationally and internationally for
members of the Junior Executive Pool were expanded at national and
international level.
The “PROFI” pilot project was successfully completed in the laundry
product area to establish the career path for project management.
On the basis of existing internal models, external benchmark data,
and the BSH competence model, an international project team developed management principles for application around the world and
presented them to the participants at a corporate conference in 2008.
The BSH competence model has been integrated into almost all
central personnel development tools. Multiplier training was carried
out to support the national companies.
On the employer branding front, BSH again successfully competed
for the Top Employer 2008 award run by the crf institute and German
magazine “Karriere.” The result once again demonstrates BSH’s
attractiveness as an employer.
As of December 31, 2008, BSH employed 449 Professional Academy
students and apprentices as well as 30 trainees in Germany. The
internationalization of its training programs was boosted further with
an increased number of exchanges of students and trainees between
national companies. BSH discharges its social responsibility by, among
other things, employing significantly more apprentices than it needs.
The BSH JuniorFirma program established itself further with great
success and is in high demand as a service provider.
On the subject of training and development, BSH carried out a
strategic realignment project with support from inhouse consulting.
On the basis of the existing organization as well as interviews with
internal customers and external benchmarks, a proof of concept was
developed from strategic and operational topics.
The core task of the newly formed department for communication and
qualification in corporate personnel is to implement this strategic
realignment. This also entails the creation of a uniform, transparent
external effect of BSH’s human resources issues.
MANAGEMENT REPORT
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MANAGEMENT REPORT
The newly designed employee survey was successfully conducted in
Poland and Turkey. In Germany, the monitoring and implementation
of actions derived from the 2007 survey was an important priority.
The further international roll-out was planned at the same time. The
intention is to conduct the employee survey throughout the Group at
standard 2-year intervals.
The Feedback for Management tool was rolled out comprehensively
throughout the Group.
The internationalization of personnel deployment continues at an
undiminished pace. Currently 216 expatriates are deployed in
31 countries, 46 inbounds work at BSH locations in Germany, and
19 employees work internationally as part of cross-country transfers.
Strict governance and approval processes for drafting and amending
contracts along with regular reviews of employment terms and conditions ensure that the management of BSH subsidiaries maintains
market-based terms and conditions of employment while taking local
conditions and company principles into account.
On the basis of external and internal benchmarking, human resources
regularly reviews the level and structure of compensation and ensure
that managers and employees are paid in line with the market. The
Group thus ensures that the quantitative and qualitative aspects of
compensation correspond to those of the market.
Following the successful introduction of the standard framework
agreement on pay (ERA) at almost all locations of BSH GmbH and
Neff GmbH in July 2007, compensation structure officers were appointed
at each location in order to safeguard and apply this new task assessment and performance related pay system for the long term.
BSH adapted to demographic changes at an early stage. Since 2007,
a working group named “Perspektive 67” has been working on the
challenges facing the Group in this regard. To date, the Group has
focused its work on areas such as the improvement of ergonomic
workplace conditions, the expansion of holistic health management,
and communication regarding private and company pension plans.
In the human resource portal, support for managers was driven by
introducing new improved management self-service scenarios.
Operational HR work in Germany focused on uniformly transferring the
customer service and sales organizations to Bavaria’s industry-wide
collective bargaining agreement and merging the HR support function
for customer service, sales, headquarters, and vocational training.
In addition, the terms of employment were changed for middle management employees receiving payment over and above standard salary.
MANAGEMENT REPORT
Environmental protection
BSH is Germany’s most sustainable company
The German Sustainability Prize, which is under the patronage of
German Federal President Horst Köhler and was awarded for the first
time in 2008, recognizes companies which combine economic success with social responsibility and protection of the environment in
an exemplary manner, and use their sustainable activities to generate
further growth.
Following a detailed selection process, BSH was chosen as the
winner from around 350 companies – including over half of the
DAX 30 companies.
During the review of the sustainability factors along the entire value
chain, BSH received confirmation that one of its major strengths was
the continuous improvement of its products’ environmental attributes.
“With our energy-efficient home appliances we are securing our
competitiveness, safeguarding our employees’ jobs, and making a
crucial contribution to conserving resources and protecting the environment,” said Dr. Gutberlet at the award ceremony on December 5,
2008.
Environmental Figures
for Production
BSH has established an environmental management system at all
its operating locations, guaranteeing safe and efficient production
designed to conserve resources. A Group-wide environmental and
quality management system controls the development and production processes internally, using comprehensive key performance
indicators.
Energy per
ton product
(kWh/t product)
In the year under review, a total of 39 of the Group’s 43 production
facilities were certified under ISO 14001, the international standard
for environmental management systems. Investments and costs recognized as expenses attributable to production-related environmental
protection amounted to EUR 21 million in the year under review.
Water per
ton product
(m3/t product)
The introduction to market of the new dishwasher generation and the
new condensation dryer with heat pump technology marks the most
important milestone to date in the development and production of
energy-efficient and environmentally compatible home appliances by
BSH. These products represent the consistent implementation within
the Group of innovative technology and environmental standards and
sets benchmarks for the industry around the world.
Waste per
ton product
(kg/t product)
690 689
90.0 89.9
1.37 1.36
CO2 emissions
per ton product*
44.2 45.2
(kg/t product)
2008 2007
*proportion from electrical
energy generation, district
heating, and and transport
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MANAGEMENT REPORT
Reducing energy consumption is one of the key levers in checking
carbon dioxide (CO2 ) emissions and thus decelerating climate change.
The early replacement of inefficient old appliances is particularly
effective for the environment. The current energy consumption values
of the most energy-efficient BSH appliances has been cut by around
30 percent for cookers, 37 percent for washing machines, up to 52
percent for dishwashers, and up to 80 percent for refrigerators, when
compared with market averages in 1990 (Kyoto Protocol base year).
In 2008, BSH presented its first account of production-related CO2
emissions for all BSH activities, also known as carbon footprint. It
measures the CO2 emitted during production at BSH locations from
the use of gas and heating oil. It also includes emissions from the use
of energy and power at production facilities and office locations as
well as emissions due to business travel, customer service activities,
and the transport of goods from production facilities to customers.
BSH published its 16th Environmental and Corporate Responsibility
Report in 2007. Additional information about environmental protection
within the Group and about BSH’s international production facilities
is available on the internet at www.bsh-group.com.
Research and development
Through its innovation management, research and development
makes an important contribution to the success of BSH.
By introducing and continuously optimizing new methods, tools, and
processes, innovation management – as part of a global development
network with regional variations – promotes the efficiency and overall
success of the Company in the globalized environment.
In addition, a web-based tool was introduced in the year under review
to allow ideas to be captured and systematically assessed anywhere
in the world. During the innovation process, the shell model method
is used to capture and present the technologies and trends relevant
to BSH in this regard.
A comprehensive IT project was launched in the year under review to
further improve document and change management. This will allow
users to exchange meaningful information in real time.
Its innovative and high-quality products enabled BSH again to be
successful in the market in 2008. One case in point was BSH’s first
appearance at the international trade fair for Consumer Electronics
and Home Appliances (IFA) in Berlin, where it exhibited many
extremely successful innovations. It showcased small consumer
products, such as the new EQ.7 automatic coffee machine, as well
as large home appliances, for example the new tumble dryers and
dishwashers.
MANAGEMENT REPORT
For BSH, the conservation of resources, in particular energy, is a
major research and development area. For example, the new dryer
with heat pump and self-cleaning condenser uses 40 percent less
energy than a conventional appliance in energy efficiency class A,
making it the world’s most energy-efficient dryer in 2008. In addition,
the new dishwasher with zeolite®-assisted drying and the A++ initiative
for refrigerators and freezers make an important contribution to the
environment.
Various test results for BSH appliances produced by German and
international consumer organizations provide evidence of superior
quality. They also confirm a good price/performance ratio. In 56 of
the 95 tests involving BSH products in 2008, the Group emerged as
“overall winner” or “best buy.”
But it is not only technical features that provide customer benefit,
the design of a product is increasingly gaining in importance among
customers. The brand designs are facing up to this challenge, as is
impressively evidenced by the 146 international design awards BSH
won in 2008. They include the international “iF design award” and
the “red dot design award.”
Research and
Development Costs
in EUR million
300
250
263
259
2008
2007
200
150
In the year under review, the Group spent EUR 263 million on research
and development, which equates to 3.0 percent of revenue (2007:
2.9 percent). This documents BSH’s long-standing reputation as the
industry’s innovation leader.
As of the balance sheet date, BSH had 2,240 employees in research
and development, 1,198 of them in Germany.
100
50
0
In the context of research and development, BSH applies a very
successful intellectual property strategy centered on maintaining,
bolstering, and expanding its portfolio of industrial property rights
worldwide. This is confirmed by, among other things, the large number of patent applications and grants (786 first patent applications
in Germany in 2008) and BSH property rights. According to the latest
publication of the German Patent Office, BSH ranks among the top 10
German patent and property right applicants; in Spain, BSH is number one in a similar ranking.
as a percentage of sales
Further enhancing its considerable research and development capabilities and ensuring that it remains ahead of its competitors in terms
of innovation are among BSH’s strategic objectives.
0.5
3.0
3.0
2.9
2.5
2.0
1.5
1.0
0
2008
2007
55
56
MANAGEMENT REPORT
Significant developments
BSH responds to the excellent revenue performance in China by
making further investments in this market in order to consolidate its
market position and increase market share.
At the Chinese production facility in Chuzhou in Anhui Province,
BSH made large-scale investments in the start-up of production of
new fridge-freezers in the year under review.
At the Appliance Park operated by BSH Electrical Appliances Co., Ltd.,
Nanjing in Jiangsu Province, the production of hot water appliances,
which are part of consumer products, started successfully. At the
same location, investments were made in a new production line for
washing machines; production started in 2008 as planned.
In Russia, construction started on the expansion of production facilities at the St. Petersburg location.
The major investments of BSH Ev Aletleri Sanayi ve Ticaret A.Ş. at
the Çerkezköy location in Turkey relate to the new production line for
dishwashers and the production of refrigerators.
The production of Tassimo coffee machines started at the Nazarje
location in Slovenia, and their market launch was successfully completed in Germany, France, and Austria. Their rollout in the Spanish,
US, and Canadian markets is planned for 2009.
At the Łódź location in Poland, the production of the new tumble
dryer with heat pump and self-cleaning condenser started as
planned. This particularly energy-efficient appliance was presented
at the IFA trade fair for the first time and its acceptance by customers
promises success. Further good news was that the Łódź location
celebrated the production of its 10 millionth large home appliance
in the year under review. As a symbol to mark the occasion, one oak
tree was planted for every one million appliances.
Investing activity was also buoyant in Germany, where BSH spent
36.9 percent of its global investment volume. Production of the new
dishwasher and built-in appliances started at the Dillingen and
Traunreut locations. In addition, logistics commissioned a new container terminal in Giengen and a new sales warehouse in Nauen.
At the vacuum cleaner facility in Bad Neustadt, an ultra-modern,
especially environmentally friendly paint facility with low emissions
was installed.
BSH Electrodomésticos España, S. A. relocated to its new headquarters in Zaragoza, Spain. Other investments in Spain focused
mainly on new built-in appliances.
At Hortolandia in Brazil, the local BSH company commissioned its
new production hall for the manufacture of cookers. This location
supplies the Latin American market.
Investments for new dishwashers and washing machines were also
made in North America. In spite of the crisis on the US financial markets, BSH expects revenue and profits to grow considerably for the
new washing machine and the new 60 cm middle class dishwasher.
Effective January 1, 2008, BSH acquired the sales company Willem
van Rijn Huishoud-elektro B.V., thereby taking over direct marketing
of the Bosch and Neff brands in the Netherlands.
Effective January 1, 2009, BSH Huishoud-elektro B.V., Amsterdam took
over the household appliance activities of Siemens Nederland N.V.,
The Hague, i.e., the sales of the Siemens and Gaggenau brands in the
Netherlands.
Also in the year under review, BSH established a new Moroccan sales
company, BSH Electroménagers S.A., based in Casablanca. The company sells the Bosch and Siemens brands in that country.
The sales activities for household appliances of Siemens AG in
Northern Ireland were transferred to BSH Home Appliances Ltd. in
the UK as of October 1, 2008.
BSH électroménagers S.A., Luxembourg took over the sales of household appliances from Siemens S.A./N.V., Brussels with effect from
January 1, 2009. It now sells the BSH brands in Luxembourg.
BSH GmbH is Germany’s most sustainable company, chosen from a
total of 350 companies offering products and services in Germany.
This award was given to BSH on December 5, 2008 to honor the economic, ecological, and social sustainability of its corporate strategy.
According to the jury, BSH deserves the award because of the special
way in which it promotes the idea of a future-capable company.
“BSH helps reduce the country’s energy consumption, protect the
climate, and improve the quality of life of its population.” This is how
the Group’s sustained commitment has been presented, for example
with reference to the exchange of refrigerators BSH has initiated in
the poorer quarters, known as favelas, of many Brazilian cities. The
exchange works as follows: Old appliances are disposed of in an
environmentally responsible manner and replaced with new energyefficient appliances – at no cost to the people living in the favelas.
MANAGEMENT REPORT
57
58
MANAGEMENT REPORT
BSH was elected Supplier of the Year by EURONICS International Ltd.
for the third time in succession. This buying group for electrical
appliances, which is based in Amsterdam in the Netherlands, has
6,300 members at 11,500 locations in 28 countries and reaches over
600 million consumers.
The criteria for giving this award to BSH were innovation and product
quality, marketing and sales support, delivery reliability, and customer service.
The members of CECED (Conseil Européen de la Construction d’appareils Domestiques or European Committee of Domestic Equipment
Manufacturers) elected the CEO of BSH, Dr. Kurt-Ludwig Gutberlet,
as its President for the second time at its annual General Assembly.
The main focus of Dr. Gutberlet’s two-year term of office will be the
revision of energy efficiency classes at EU level.
At a number of national and international trade fairs, BSH’s brands
presented their new design. For example, there were large-scale BSH
exhibits at the important Eurocucina and IFA trade fairs. In addition to
the latest generations of large home appliances, the first automatic
coffee machine produced at BSH’s own facilities was also introduced.
Competence in household appliances: Bosch celebrated 75 years of
household appliances in 2008. Under the banner “The future needs a
past,” the Bosch brand continues to be a winner through innovation
and modern design.
N E T A S S E T S , F I N A N C I A L P O S I T I O N , A N D R E S U LT S O F O P E R AT I O N S
MANAGEMENT REPORT
B. Net assets, financial position, and results of operations
Total assets fell by EUR 103 million year-on-year to EUR 6,173 million.
The improvement in cash and cash equivalents is due to cash inflow
from operating activities slightly exceeding the cash outflow from
investing and financing activities. BSH also benefited from a significantly higher opening amount of cash and cash equivalents at the
beginning of the year under review.
The decrease in cash inflow from operating activities amounting to
EUR 43 million was primarily due to the decline in profit before taxes
as well as a further reduction in trade payables and other liabilities.
This was offset by higher depreciation and amortization charges, a
further reduction in inventories, and higher other non-cash income
and expenses.
The cash outflow from investing activities was impacted by a decline
in investments in securities and increased sales of securities. On the
other hand, the fact that no financial receivables were retired in the
year under review (unlike the previous year) prevented higher cash
inflow from investing activities. Higher additions of financial receivables led to further cash outflow from investing activities in the year
under review.
The net cash outflow from financing activities increased by EUR
27 million year-on-year, driven by higher dividend payments to the
parent companies, lower borrowing, and lower repayments of financial liabilities.
Exchange rate fluctuations and changes in the consolidated group,
on the other hand, had a minor impact on cash and cash equivalents.
BSH has demonstrated successful asset management with regard to
both trade receivables and inventories. With revenue almost the same
as in 2007, the two balance sheet items were reduced by 4.9 percent
and 2.6 percent respectively. Other assets increased by EUR 58 million to EUR 273 million, driven primarily by positive fair values from
currency hedging transactions.
BSH’s investments in property, plant, and equipment amounted to
EUR 369 million. Strong exchange rate fluctuations reduced cost by
EUR 103 million. Retirements amounted to EUR 181 million.
BSH’s net investments led to an increase in property, plant, and
equipment of EUR 37 million.
This included depreciation of EUR 56 million for the year under
review. The depreciation charge was positively impacted by exchange
rate fluctuations of EUR 66 million.
Balance Sheet Structure
2008
2007
9%
36 %
8%
36 %
Cash, cash equivalents, and securities
Receivables and other assets
17 %
18 %
Inventories
38 %
38 %
Noncurrent assets
6,173
6,276
Total assets (in mill. of EUR)
2008
2007
11%
11%
Trade accounts payable
10 %
12 %
Financial liabilities
26 %
27 %
Provisions
14 %
12 %
Other liabilities
39 %
38 %
Shareholders’ equity
6,173
6,276
Total liabilities and shareholders’ equity
(in EUR million)
59
60
MANAGEMENT REPORT
Intangible assets declined marginally to EUR 235 million. Investments
added goodwill of EUR 8 million and software of EUR 12 million.
Deferred tax assets as of the reporting date fell to EUR 146 million
(2007: EUR 203 million), due primarily to the change in the discount
rate used to calculate pension provisions to 5.60 and 6.00 percent
abroad and in Germany respectively (2007: 5.40 and 5.25 percent)
In addition, impairment losses recognized in accordance with IAS 36
and IAS 39 had an impact on the recognition of deferred tax assets.
The use of the remaining loss carryforwards also led to a reduction in
deferred tax assets.
On the liabilities side, current liabilities declined by 2.0 percent and
noncurrent liabilities by 4.7 percent; equity rose by 1.0 percent.
In total, financial liabilities decreased by EUR 113 million to EUR
639 million because of loan repayments; they now account for
10.3 percent of total equity and liabilities.
Trade payables, current income tax liabilities, and other current
liabilities rose by EUR 73 million in the year under review, mainly
because of negative fair values from currency hedging transactions
and liabilities to customers and third parties. The percentage of
trade payables, current income tax liabilities, and other current liabilities as a proportion of total equity and liabilities rose to 24.7 percent
(2007: 23.1 percent).
Provisions excluding pension obligations totaled EUR 830 million and
accounted for 13.4 percent of capital employed. The EUR 48 million
decline in provisions is mainly due to items in the HR and sales areas
with a material impact on the income statement.
Provisions for pension obligations declined by EUR 32 million as of
the balance sheet date, primarily due to the change in the discount
rate from 5.40/5.25 percent to 5.60/6.00 percent.
The reduction in deferred tax liabilities is mainly the result of consolidation adjustments.
Consolidated equity increased by EUR 24 million in the period under
review to EUR 2,396 million, due primarily to changes in retained
earnings, dividend payments, consolidated net profit for the period,
and items recognized directly in equity.
Following the rapid rises in revenue during previous years, the financial market crisis prevented BSH from meeting revenue expectations
in the year under review. Consolidated revenue declined from EUR
8.818 billion in 2007 to EUR 8.758 billion in 2008.
Cost of sales amount to 65.8 percent, a marginal 1.3 percent higher
than in the previous year. This shows that in 2008 the sharp
increases in the prices of energy, primary materials, and logistics
services could not be fully offset by revenue. Therefore, gross profit
decreased to EUR 2,999 million, or 34.2 percent of revenue.
Sales Trend
in bill. of EUR
After significant increases in selling expenses in previous years, BSH
cut these expenses back to 2006 levels, thus reflecting the negative
development of revenue in the year under review. In line with the
trend of previous years, administrative expenses declined further.
Total selling and administrative expenses accounted for 24.1 percent
of revenue, a reduction of 1.6 percentage points.
9
Research and development expenses increased to EUR 263 million
and accounted for 3.0 percent of revenue. In spite of the financial
market crisis, BSH’s expenses in this area increased by 1.5 percent,
highlighting the enormous value the Company attaches to innovation.
5
In the year under review, net other operating expenses (other operating income less other operating expenses) amounted to EUR 5 million,
an increase of EUR 52 million over the net other operating income of
EUR 47 million in 2007.
8.758
8.818
2008
2007
8
7
6
4
3
2
1
0
The change in other operating income was mainly due to exchange
gains on trade receivables and trade payables as well as gains on
currency hedging transactions.
The figure also includes other operating income, which declined yearon-year, lower income from the reversal of impairment losses, and
income from the reversal of provisions that is not function-related.
Profitability Trend*
in EUR million
The year-on-year change in other operating expenses was primarily
driven by losses on currency hedging transactions and exchange
losses on trade receivables and trade payables. The figure also
includes miscellaneous other operating expenses and expenses
under IAS 36.
700
600
637
500
510
Net interest expense was EUR 12 million, marginally less than in 2007.
400
Because of high currency volatility on the financial markets, net other
finance income/expense changed considerably compared with the
previous year.
300
On a net basis, exchange gains and losses as well as fair value measurement gains and losses – especially on intercompany financial
transactions – exceeded the net loss reported in the previous year by
EUR 65 million. Expenses arising from the application of IAS 39 also
belong under this caption.
BSH’s profit before taxes amounted to EUR 510 million, or 5.8 percent
of revenue, thus falling short of the ambitious budget for 2008 and
the previous year’s result.
200
100
0
2008
2007
* Profit before income taxes
MANAGEMENT REPORT
61
62
MANAGEMENT REPORT
Income tax expense amounted to EUR 199 million (2007: EUR 226 million), or 2.3 percent (2007: 2.6 percent) of revenue.
The change in income taxes is the result of a smaller increase in effective taxes and, primarily, due to the halving of deferred taxes.
The increase in the effective tax burden in Germany is offset by a
decline in the effective tax burden abroad.
The use of the small amount of loss carryforwards still available in
Germany led to a year-on-year decline in deferred tax expense.
In addition, temporary differences arising from changes in provisions,
impairment losses recognized in accordance with IAS 36 and IAS 39,
and consolidation adjustments impact on the deferred income tax
expense.
The Group tax rate as of the reporting date was 39.0 percent.
BSH’s consolidated net profit for 2008 declined by EUR 99 million,
with minority interest falling only slightly. Thus the Group generated
consolidated profit of 3.5 percent of revenue (2007: 4.6 percent).
Key factors affecting profits
Consolidated revenue fell by EUR 60 million to EUR 8.758 billion.
The fact that the business plan figure or prior-year revenue was not
achieved is a significant reason for the change in profit.
In line with a further reduction in quality costs, the Group adjusted
its obligations to actual requirements. This led to an increase in profit
in the year under review.
The measurement of financial assets in accordance with IAS 39 led
to a not immaterial expense recognized in the income statement for
the reporting period because of the consistent application of the
guidance on necessary write-downs to fair value as of the balance
sheet date.
Impairment losses recognized on assets in accordance with IAS 36
led to additional expenses recognized in the consolidated income
statement.
The wage tax audit for 2002 through 2006 conducted in Germany in
2008 had a not immaterial positive impact on the income statement
due to reversal of some provisions proven unnecessary.
Personnel obligations due to performance-related agreements led to
a reduction in this balance sheet item.
Due to the decline in the number of persons entitled to claims on the
basis of age, along with no new legal requirements or new contractual
arrangements have been made, the obligations for partial retirement
and overtime were reduced significantly.
For the field action on dishwashers in the USA, obligations for sales
made in the more distant past were recognized as other operating
expenses in the income statement.
The financial market crisis, declining sales, lower revenue, and a
difficult cost situation led to a renewed decline in profit in the USA
in 2008.
Stagnating revenue, exchange rate-related increases in the cost of
exports, and non-operating expenses prevented the Brazilian company from generating a profit despite its improved cost structure.
As in the previous year, the large production companies in Poland
and Turkey did not reach their prior-year profits in 2008. This was
primarily attributable to the sharp decline in their currencies at the
end of the year as well as a fall in export revenue in Poland because
of the financial market crisis.
Following the sale of intercompany assets, the Spanish subsidiary’s
profits improved compared with the previous year, in spite of a
decline in revenue caused by the domestic market.
Business performance was also difficult in the UK sales company.
A considerable decline in revenue and significant exchange rate factors caused a sharp fall in profits.
In spite of significant increases in revenue, the Chinese companies
recorded a not inconsiderable overall decline in profits. The main
reasons were large investments, a rise in selling expenses and startup costs for new products, the subsidiary economic environment
caused by the Olympic Games, and the financial market crisis.
The German companies are still among the Group’s most important
profit drivers.
As in the previous year, appropriate provisions were recognized at all
Group companies for known and other risks at the balance sheet date.
MANAGEMENT REPORT
63
64
MANAGEMENT REPORT
SIGNIFICANT OPPORTUNITIES AND RISKS FOR FUTURE DEVELOPMENT
C. Significant opportunities and risks to future development
BSH Compliance Management assists the operating units in complying with the law, the Business Conduct Guidelines, and the BSH
guidelines. The establishment of the compliance organization, which
started in 2007, was completed in 2008. The organization consists
of the Corporate Compliance Committee, the Office of the Compliance
Committee, regional compliance officers, and the external ombudsman.
During the implementation of the local compliance organizations 36
regional compliance officers were appointed. These officers support
the central BSH compliance organization and local management on
compliance issues and in organizing training events in 40 countries.
To date, more than 7,200 employees have successfully completed
the online training programs on BSH compliance and the Business
Conduct Guidelines as well as anti-corruption activities. Senior and
middle managers as well as company representatives, and employees
who have contact with customers and suppliers are obliged to complete compliance training. More online and attendance courses are
planned for 2009.
Risk reporting continues as part of the risk management process.
Concurrently, the Business Continuity Management Program was
stepped up in business units and selected national companies of
BSH.
In 2008, all existing insurance contracts were examined with regard
to the underlying risks and how they have developed, both between
renewal dates and each time a contract was due for renewal. Content
and cover were adjusted to the latest requirements wherever necessary.
Especially in the fourth quarter of 2008, it was noticeable across
industries and countries that insurers had reduced the cover for credit
risks. This trend is expected to continue in 2009. BSH took preventive
measures to counter this development. In addition, a new reporting
process was set up for corporate credit risk management to improve
the way credit risks are mapped.
The consolidation of IT systems continued. The new corporate data
center architecture further minimized the risk of prolonged malfunctions or outages of the IT infrastructure impacting on business
processes.
Energy consumption and cooling costs in the data center were
reduced at the same time.
To control the increased counterparty risk of banks, which increased
as a result of the financial market crisis, corporate finance specified
a more stringent procedure for assessing current risk in business
transactions with banks.
In addition, the development of exchange rates continues to present
a not immaterial currency risk for business activities outside the eurozone. The Group counters these risks by taking appropriate action.
The Group employs the treasury control and value contribution monitor used in corporate finance to identify and control interest and currency management activities throughout the Group. BSH uses these
information systems to identify, weigh, and assess interest rate and
currency risks throughout the Group and thus manage its hedging
transactions.
Given the current and future consequences of the financial market
crisis, risk management in purchasing is equally important to ensure,
among other things, that the Company’s performance and competitiveness are sustained.
BSH counters the risk of single sourcing by systematically taking
preventive and corrective action.
Further risks exist in the development of prices in the commodity and
energy markets, as well as in possible fluctuations in supply security
in parts of the energy market.
BSH counters the former by integrating parts and components suppliers in BSH master agreements with suppliers of primary materials,
particularly steel and plastic pellets.
In addition, the Group will organize procurement opportunities by
placing specifications for materials and their processing across a
broader supply market.
To ensure energy supplies, the Group uses the existing opportunities
under agreements with large consumers.
Purchasing counters the possible risk of future steel and plastic shortages by, among other things, entering into medium-term agreements.
In regards to the markets, the financial market crisis poses risks to
the performance of the macro-economic development, which will also
affect the home appliances market.
By taking additional measures in the operating and procurement
areas, in cost management and in its sales and marketing activities,
BSH will try to minimize the impact of this crisis as much as possible
by making consistent use of the maneuvering room it offers in order
to strengthen and expand its competitive position.
MANAGEMENT REPORT
65
66
MANAGEMENT REPORT
In addition to the current market risks, there are also opportunities.
These opportunities arise, albeit to a smaller extent than in previous
periods, as a result of more favorable procurement options and
prices, the competitive situation in the market, the recruitment of
highly qualified staff, and BSH’s presence in growth markets..
Further opportunities for BSH result in particular from the environmental and corporate responsibility the Company has taken on. This
is evidenced in the high energy efficiency of the products and the
resource-conserving production process. It also includes fair dealings
with employees, suppliers, customers, and shareholders.
In conclusion, BSH is able to state that it is currently not aware of any
risk that threatens the continued existence of the Group as a going
concern.
OUTLOOK
D. Outlook
BSH expects a difficult economic environment for 2009. A significant
decline in economic output is expected in the industrialized nations,
and the economy will also lose momentum in emerging economies.
Falling inflation and energy prices boost private consumption,
although this is offset by uncertain income prospects due to the
heightened risk to job security.
Falling demand for exports and lower capital expenditure further
weigh on economic growth. Moreover, the economic stimulus packages that have been passed will only have a gradual effect.
In Europe, declining economic output will continue to particularly grip
the United Kingdom, Spain, and Ireland, which were already affected
by the real estate crisis in 2007/2008.
The accelerated decline in demand for exports will have a major
impact on Germany, a large and important exporter, and probably
lead to a contraction in gross domestic product.
Likewise, economic growth in Eastern European countries will be
affected by the wave of generally poor economic performance around
the world.
The US economy faces several problems in 2009: The continuing
crisis in residential construction, financing problems for companies
and private households, a sharp increase in unemployment, and
weak demand for exports weigh on gross domestic product. However,
decisive economic policy countermeasures and the early onset of the
downturn could make the United States one of the first countries to
emerge from the recession.
In the emerging economies, BSH still expects positive economic
growth, but at a sharply slower rate. BSH anticipates lower growth
rates particularly in China, although the political climate is relatively
stable, and the country has large foreign currency reserves and has
passed a comprehensive economic stimulus program to deal with
the financial market crisis.
It is currently hard to forecast the intensity and duration of the impact
the change in key factors will have on the white goods industry.
The situation in the home appliances market will track the deterioration
of global economic development in 2009.
Germany and the Western European core markets will probably experience negative growth.
Although the US home appliances market is already at a low level,
no visible recovery is expected for 2009.
Growth markets such as China and India will probably also lose
momentum.
MANAGEMENT REPORT
67
68
MANAGEMENT REPORT
OUTLOOK
BSH will align its activities with the reduced regional growth potential
in 2009. The Group does not expect revenue to expand in Western
Europe and South America in the subsequent year either.
However, BSH has identified good prospects for revenue and profits
in Belgium and Australia/New Zealand.
The internationally strong Bosch and Siemens brands, BSH’s exceptional expertise in the white goods field, the positive development
of quality costs, and a well positioned international customer service
organization will help to limit the impact on BSH of the market
decline that is expected by all parties.
On the basis of attributes such as the sustainability, energy efficiency, and environmental compatibility of its home appliances,
the Group hopes to turn the economic challenges, especially in the
European and North American markets, into an opportunity.
With this in mind, BSH will be able to defend its market leadership in
Germany and Europe even in the economically difficult 2009 fiscal year.
In line with the general expectations of market participants, the
Group has significantly revised the profits planned for 2009, down
from the more positive figure anticipated in the previous year.
Nevertheless, the situation also offers cost reduction and other savings opportunities for the Group. Measures that have already been
rolled out are continuously monitored, improved, and consistently
implemented.
BSH sees major challenges in very volatile procurement prices and
in the possible demise of some suppliers caused by the financial
market crisis.
To be prepared for further deterioration in the economic environment,
BSH has developed alternative planning scenarios and resulting
measures, in addition to the approved business plan. Business performance at the beginning of the 2009 fiscal year – with revenue and
profit failing to reach the amounts originally budgeted – indicates
that BSH will achieve the results of the current planning scenario.
Munich, February 26, 2009
The Board of Management
Group Financial Statements
G R O U P F I N A N C I A L S TAT E M E N T S
Consolidated Statement of Income
Note
2008
2007
Revenue
4
8,758
8,818
Cost of sales
5
5,759
5,683
2,999
3,135
Gross profit
Selling and administrative expenses
6
2,109
2,263
Research and development expenses
7
263
259
Other operating income
8
344
200
Other operating expenses
8
349
153
1
0
621
660
10
77
70
Finance cost
10
– 89
– 84
Other financial result
11
– 99
–9
510
637
199
226
311
411
6
7
305
404
Goodwill impairment
Operating profit
Finance income
Profit before taxes
Income taxes
12
Profit after taxes
Minority interest
Consolidated net profit
13
January 1
to December 31, 2008
(in EUR million)
69
70
CO N S O L I D AT E D B A L A N C E S H E E T
Consolidated Balance Sheet
as at
December 31, 2008
(in EUR million)
Note
12/31/2008 12/31/2007
ASSETS
Current assets
Cash and cash equivalents
15
503
453
Securities
16
70
90
Trade accounts receivable
17
1,729
1,819
29
19
Current income tax receivables
Other current assets
18
273
215
Inventories
19
1,074
1,103
3,678
3,699
20
674
707
0
12
Property, plant, and equipment
21
1,440
1,403
Intangible assets
22
235
252
Deferred tax assets
12
146
203
Total noncurrent assets
2,495
2,577
Total assets
6,173
6,276
Total current assets
Noncurrent assets
Noncurrent financial assets
Noncurrent income tax receivables
SHAREHOLDERS’ EQUITY AND LIABILITIES
Current liabilities
23
138
260
24
682
728
8
19
Other current liabilities
25
834
704
Other current provisions
25
371
363
2,033
2,074
Current income tax liabilities
Total current liabilities
Noncurrent liabilities
23
501
492
Other noncurrent liabilities
26
12
11
Other noncurrent provisions
26
459
515
Provisions for pensions and other postretirement benefits
27
763
795
Deferred tax liabilities
12
9
17
1,744
1,830
Total noncurrent liabilities
Shareholders’ equity
Subscribed capital
28
125
125
Retained earnings and other reserves
28
1,944
1,816
305
404
22
27
Total shareholders’ equity
2,396
2,372
Total shareholders’ equity and liabilities
6,173
6,276
Consolidated net profit
Minority interest
28
CO N S O L I D AT E D S TAT E M E N T O F C A S H F LO W
Consolidated Statement of Cash Flow
Note
2008
311
411
12
199
226
510
637
–6
–7
300
253
Profit after taxes
Income taxes
Profit before tax
Minority interest
13
Depreciation, amortization, and impairment of noncurrent assets
and reversals of impairment losses
2007
Gains and losses on disposals of assets
–1
0
Net interest expense
12
14
– 89
– 84
Interest paid
Interest received
73
71
–170
– 171
92
44
–16
– 94
Change in trade accounts receivable
and other accounts receivable
–8
– 41
Change in securities (held for trading)
–9
11
Change in trade accounts payable and other liabilities
64
137
– 59
– 49
18
33
711
754
0
0
– 401
– 388
13
15
Income taxes paid
Other noncash income and expenses
Changes in assets and liabilities
Change in inventories
Change in provisions
Change in deferred taxes
Cash provided by operating activities
29
Payments for financial investments
Payments for investments in intangible assets
and property, plant, and equipment
Proceeds from the disposal of assets
Increase in financial receivables
Decrease in financial receivables
Investments in securities (available-for-sale)
Sales of securities (available-for-sale)
Cash used in investing activities
29
Dividends
Minority interest
Proceeds from bank borrowings
Repayment of financial liabilities
Net cash provided by/used in financing activities
29
Net change in cash and cash equivalents
Cash and cash equivalents at the beginning of the period
Change in cash and cash equivalents due to changes
in exchange rates
Change in cash and cash equivalents due to changes
in basis of consolidation
Cash and cash equivalents at the end of the period
29
29
–16
0
0
63
– 433
– 474
471
443
– 366
– 341
– 197
– 158
2
4
92
131
–185
–238
– 288
–261
57
152
453
305
–8
–4
1
503
0
453
(in EUR million)
71
72
S TAT E M E N T O F R ECO G N I Z E D I N CO M E A N D E X P E N S E
Statement of Recognized Income and Expense
(in EUR million)
Net loss (–)/gain (+) from financial instruments available-for-sale
2008
2007
–32
–13
Net gain on fair value measurement of financial instruments
used for hedging purposes (CFH)
7
2
Actuarial gains (+)/losses (–) from defined benefit pension
and similar obligations
45
86
Exchange differences on translating foreign subsidiaries
– 91
24
Deferred tax relating to components of income
and expense recognized directly in equity
–16
–33
Income and expense recognized directly in equity
– 87
66
Profit/loss after taxes
311
411
Total recognized income and expense for the year
224
477
CO N S O L I D AT E D S TAT E M E N T O F C H A N G E S I N S H A R E H O L D E R S ’ E Q U I T Y
Consolidated Statement of Changes in Shareholders’ Equity
(in EUR million)
125
1,929
8
44
–
–78
2,028
st
tere
orit
y in
Total
shareholders’
equity
Min
Fair
me -value
nt o
m
f se easu
r
cur
itie es
De r
inst ivative
rum
f
ent inanci
s (C al
FH )
Act
u
on arial g
pen
sion ains/l
pro osses
visi
ons
Equ
i
t
y
of t
h e h o ld e r
par
ent s
ing
de
arn
Ret
a
ine
cap
i
bed
Su b
sc r i
s
Cur
r
ad j e n c y t
u st
me ransla
nt
tion
Accumulated other comprehensive income
tal
Note 28
29
2,057
– Profit after taxes
–
404
–
–
–
–
404
7
411
– Dividend payments
–
– 152
–
–
–
–
–152
–6
–158
– Foreign currency
translation differences
–
–
24
–
–
–
24
0
24
– Financial instruments
–
–
–
–10
1
–
–9
–
–9
– Pensions
Net actuarial gains/losses
–
–
–
–
–
51
51
–
51
– Other changes
–
–1
–
–
–
–
–1
–3
–4
125
2,180
32
34
1
–27
2,345
27
2,372
– Profit after taxes
–
305
–
–
–
–
305
6
311
– Dividend payments
–
– 190
–
–
–
–
–190
–7
–197
– Foreign currency
translation differences
–
–
– 91
–
–
–
– 91
0
– 91
– Financial instruments
–
–
–
–32
5
–
– 27
–
–27
– Pensions
Net actuarial gains/losses
–
–
–
–
–
32
32
0
32
– Other changes
–
–
–
–
–
–
–
–4
–4
125
2,295
– 59
2
6
5
2,374
22
2,396
73
74
Notes to the Consolidated Financial Statements
1 General
was formed in 1967 as a joint venture of
Robert Bosch GmbH, Stuttgart, and Siemens AG,
Berlin and Munich. The activities of the BSH
Group (hereafter referred to as “Group” or
“BSH”) comprise: the manufacture or procurement and marketing, as well as research
and development, of industrial products in
the area of electrical engineering, precision
mechanics, and related technology, especially in the area of home appliances; the
manufacture or procurement and marketing
of goods for use as accessories, auxiliary
materials, or tools with the manufactured or
marketed products. The address of registered
office of parent company (BSH-D) is
Carl-Wery-Straße 34, 81739 Munich, Germany.
The Supervisory Board will approve the consolidated financial statements for publication
on May 5, 2009.
2 Presentation of accounting policies
The following accounting policies were used in
the preparation of the consolidated financial
statements of BSH.
2.1 Statement of compliance
The consolidated financial statements of
BSH for the year ended December 31, 2008,
have been prepared in accordance with the
mandatory International Financial Reporting
Standards (IFRS) issued by the International
Accounting Standards Board (IASB), London,
as adopted by the European Union (EU), and
the additional requirements of German commercial law in accordance with section 315 a (1)
of the Handelsgesetzbuch (German Commercial Code – HGB).
2.2 Basis of presentation
The Group currency of BSH is the euro; unless
stated otherwise, all amounts are reported in
millions of euros (EUR million).
The income statement is presented using the
cost of sales method. To enhance the clarity
of presentation, various captions of the balance sheet and income statement have been
aggregated. Refer to the notes for separate
disclosure and explanations.
The consolidated financial statements have
been prepared on the basis of historical cost,
with the following exception:
– “Financial assets at fair value through profit
or loss” and “available-for-sale financial
assets” are recognized at fair value.
The accounting policies described below
have been consistently applied over the
reporting periods covered by these consolidated financial statements.
The members of the Group consistently
applied the accounting and measurement
policies.
2.3 Amendments to accounting standards
2.3.1 Guidance to be applied for the first time
IFRIC 11 “IFRS 2 – Group and Treasury Share
Transactions”
The interpretation clarifies the accounting
treatment of share-based payment throughout the Group. It does not result in any changes
to the consolidated financial statements.
IFRIC 14 “IAS 19 – The Limit on a Defined
Benefit Asset, Minimum Funding
Requirements and their Interaction”
IFRIC 14 deals with the interaction between
an obligation as of the balance sheet date to
pay additional contributions into a pension
plan (minimum funding requirement) and the
guidance of IAS 19 on the upper limit of any
positive difference between plan assets and
a defined benefit obligation (asset ceiling).
It also deals with the impact statutory or
contractual minimum funding requirements
may have on the net liability/net asset to be
recognized. In addition, it provides guidance
on when minimum funding requirements can
lead to an additional liability to be recognized.
The amendment has no material impact on
the consolidated financial statements.
Amendment to IAS 39 “Financial Instruments:
Recognition and Measurement” and IFRS 7
“Financial Instruments: Disclosures”
The amendment allows certain financial
instruments to be reclassified, if they are
measured at amortized cost less any writedowns for impairment. The amendment has no
material impact on the consolidated financial
statements of BSH.
A CCO U N T I N G A N D VA LU AT I O N M E T H O DS
2.3.2 Newly issued guidance adopted by
the EU that is not applied ahead
of the deadline
The following accounting guidance published
by the IASB is mandatory for fiscal years
beginning on or after January 1, 2009. The
Company is still assessing the potential
impact of these pronouncements on the
consolidated financial statements.
Amendment to IFRS 1 “First-time Adoption
of Financial Reporting Standards” and IAS 27
“Consolidated and Separate Financial
Statements”
The standards provide guidance for the
accounting of transactions under which an
entity retains control and transactions under
which it loses control. Transactions under
which control is retained are not taken
directly to equity. Any remaining interest is
measured at fair value at the time control is
lost. Deficit balances may be reported for
minority interests, i. e., losses will in future
be allocated in proportion to the interest
held and no ceiling will be applied.
Revision of IFRS 3 “Business Combinations”
and IAS 27 “Consolidated and Separate
Financial Statements”
IFRS 3 provides new guidance for applying
the purchase method to account for business
combinations. The most significant changes
relate to the measurement of minority interest, accounting for step acquisitions, and the
treatment of contingent consideration and
acquisition costs. According to the new guidance, minority interest can be measured
either at fair value (full goodwill method)
or at the fair value of the acquiring entity’s
portion of identifiable net assets. In step
acquisitions, shares held at the time control
is obtained are to be remeasured at fair value
through profit or loss. A change in the amount
of contingent consideration recognized as a
liability at the time of the acquisition will in
future be recognized in profit or loss. Acquisition costs will be expensed as incurred.
Revision of IAS 1 “Presentation of Financial
Statements”
IAS 1 (2007) replaces IAS 1 (2003) “Presentation of Financial Statements.” The revision is
aimed at improving analysis options and the
comparability of financial statements for users.
N OT E S T O T H E CO N S O L I D AT E D F I N A N C I A L S TAT E M E N T S
IAS 1 provides basic guidance for the presentation and structure of financial statements.
It also specifies minimum requirements for
their content.
Amendments to IAS 23 “Borrowing Costs”
The amendments will make it mandatory to
capitalize borrowing costs that are directly
attributable to the acquisition, construction,
or production of a qualifying asset, thus
removing the option to recognize them immediately in the income statement.
IAS 32 “Financial Instruments:
Presentation” and IAS 1 “Presentation of
Financial Statements”
The amendment relates primarily to the
conditions for classifying puttable financial
instruments as equity instruments or liabilities.
Amendments to IAS 39 “Financial Instruments:
Recognition and Measurement”
These amendments clarify how the principles
for presenting hedge accounting contained in
IAS 39 are applied to two special cases.
Firstly the one-sided risk in relation to a
hedged item and secondly the designation
of inflation in a hedged item.
IFRIC 13 “Customer Loyalty Programs”
IFRIC 13 provides guidance for the accounting
treatment of customer loyalty programs operated by manufacturers or service providers
themselves or by third parties.
IFRIC 15 “Agreements for the Construction
of Real Estate”
IFRIC 15 provides guidance for the accounting
treatment of real estate sales where contracts
are signed with buyers before construction is
completed. The interpretation firstly clarifies
under what circumstances an agreement falls
within the scope of IAS 11 or that of IAS 18.
In addition, it provides guidance on when
revenue is recognized and what disclosures
have to be made in the notes to the financial
statements.
IFRIC 16 “Hedges of a Net Investment
in a Foreign Operation”
The interpretation seeks to clarify two issues
arising from Standards IAS 21 “The Effects of
Changes in Foreign Exchange Rates” and IAS 39
“Financial Instruments: Recognition and Mea-
75
76
surement” in connection with accounting for
hedges of foreign currency exposure within a
company and its foreign operations. IFRIC 16
clarifies what is regarded as risk in hedging a
net investment in a foreign operation and which
entity within a group may hold the hedging
instrument to reduce this risk.
IFRIC 17 “Distributions of Non-cash Assets
to Owners”
IFRIC 17 provides guidance on how an entity
measures non-cash assets distributed as dividends to shareholders. A dividend payable
should be recognized when a dividend has
been authorized by the bodies responsible
and is no longer at the discretion of the entity.
2.3.3 Newly issued guidance adopted by
the EU that does not have any impact
on the BSH Group
The following accounting requirements are
not applicable to BSH and therefore do not
have any impact on the consolidated financial statements.
Amendments to IFRS 2 “Share-based
Payment”
The amendment clarifies that vesting conditions are service conditions and performance
conditions only. It also stipulates that all
cancellations should receive the same
accounting treatment, irrespective of whether
the plan is canceled by the entity itself or
another party. The amendment will have no
impact on BSH.
IFRS 8 “Operating Segments”
IFRS 8 requires entities to report on the
financial situation of its segments using the
management approach. Under this standard,
the definition of segments and the disclosures for segments are based on information
that management uses internally to assess
segment performance and allocate resources.
BSH does not apply this standard.
2.4 Foreign currency translation
Foreign currency transactions included in the
annual financial statements of BSH GmbH
and the subsidiaries are translated at the
exchange rate prevailing at the transaction
date. At the balance sheet date, monetary
items denominated in foreign currency are
recognized using the closing rate. Any translation differences are recognized in the
income statement.
The financial statements of consolidated
subsidiaries prepared in foreign currency are
translated on the basis of the functional currency concept (IAS 21 “The Effects of Changes
in Foreign Exchange Rates”) using the modified closing rate method. The foreign subsidiaries that are part of the BSH Group carry
out their activities independently from a
financial, economic, and organizational point
of view, and for this reason, the functional
currency is always the same as the company’s
local currency. All assets and liabilities (but
not shareholders’ equity) are translated at
the closing rate. The accounts included in
the income statement are translated at the
annual average rate. All resulting exchange
rate differences are taken directly to a currency translation reserve in equity.
In the single-entity financial statements of
and the subsidiaries, foreign currency receivables and payables are measured on initial
recognition at the exchange rate on the date
of the transaction. Any exchange rate gains
and losses at the balance sheet date are
recognized in income.
The exchange rates of one euro for the most
important currencies used for currency translation have changed as follows:
Closing rate
12/31/2008 12/31/2007
Average rate
2008
2007
US dollar
1.3917
1.4721
1.4708
1.3705
Sterling
0.9525
0.7334
0.7963
0.6843
Turkish lira
2.1408
1.7102
1.8983
1.7776
Brazilian real
3.2372
2.6077
2.6737
2.6694
Chinese yuan renminbi
9.6104
10.6669
10.2147
10.4175
2.5 Basis of consolidation
and consolidation principles
The consolidated financial statements
include BSH GmbH and all companies under
its control. This control usually exists if BSH
GmbH, directly or indirectly, holds over 50 %
of the voting rights of the subscribed capital
of an entity or has the power to govern the
financial and operating policies of the entity.
The interests of minority shareholders in the
Group’s equity are reported separately in the
balance sheet and income statement.
Companies are consolidated from the time the
BSH Group obtains the option of control and
deconsolidated when the option of control
ceases.
The financial statements of BSH GmbH and
its consolidated subsidiaries have been prepared, audited, and consolidated in accordance with IAS 27, applying accounting and
measurement policies that are uniform
throughout the BSH Group.
Germany
Other
Countries
Total
11
52
63
in 2008
0
3
3
Deconsolidated in 2008
0
0
0
11
55
66
Consolidated as of
December 31, 2007
Consolidated for the first time
Consolidated as of
December 31, 2008
See section 3 of the notes for more information on changes to the basis of consolidation.
The consolidated group also includes a special fund. As of December 31, 2008, five
(2007: four) companies were not consolidated, because they have no or only insignificant operating activities. This does not have
a significant influence on the Group’s net
assets, operating results and financial position. In addition, BSH Bosch und Siemens
Hausgeräte Altersfürsorge GmbH, Munich,
is not consolidated because its assets are
defined as plan assets and are deducted
from pension provisions in accordance with
IAS 19. The consolidated financial statements
and group management report of BSH are
published in the electronic German Federal
Gazette. See Annex II of the notes to the
consolidated financial statements for more
information on shareholdings.
Investments are consolidated on the basis
of the fair values applicable at the date of
acquisition or first-time consolidation. Any
positive difference between purchase price
and fair values is recognized as goodwill.
Intragroup balances and intragroup transactions as well as resulting intragroup profits
and losses are eliminated in full. Deferred
taxes are recognized for consolidation transactions recognized in the income statement.
2.6 Revenue
Revenue from the sale of products is recognized when ownership or risk and reward are
transferred to the customer, a price has been
agreed or can be determined, and its payment can be expected. Revenue is reported
net of the discounts, price reductions, customer bonuses, and rebates.
Royalties are recognized on an accrual basis
in accordance with the substance of the relevant agreement.
2.7 Research and development costs
Research expenditure is recognized as an
expense when incurred. Likewise, development expenditure is recognized as an
expense when incurred. Project development
costs that fully meet the following criteria are
exempt from this rule:
– The product or system is clearly defined
and the relevant expenditure can be clearly
assigned and reliably measured.
– The technical feasibility of the product
can be demonstrated.
– The product or system will be either
marketed or used internally.
– The assets will generate future economic
benefits (e. g., the entity can demonstrate
the existence of a market for the product
or, if it is to be used internally, its usefulness).
– There are adequate technical, financial, and
other resources to complete the project.
Costs are capitalized from the time the
above criteria are met. Costs recognized as
expenses in previous accounting periods are
not capitalized retrospectively.
77
78
2.8 Trade accounts receivable
Trade accounts receivable are reported at
amortized cost. Any necessary valuation
allowances, which are based on the probable
risk of default, are taken into account.
Allowances on trade receivables are recognized using impairment accounts. Non-interest-bearing or low-interest bearing receivables
with maturities of more than one year are
discounted. If the requirements of IAS 32.42
are met, receivables and payables are netted.
2.9 Inventories
Inventories are recognized at the lower of
cost or net realizable value. Net realizable
value is the estimated selling price in the
ordinary course of business less the estimated costs of completion and the estimated
costs necessary to make the sale. Work in
process and finished goods are recognized at
cost. This includes all costs that are directly
attributable to the manufacturing process,
plus a reasonable portion of the production
overhead, including production-related
depreciation and amortization, proportionate
administrative expenses, and proportionate
social security costs. Borrowing costs are not
capitalized. Inventory risks that result from
the duration of storage or reduced usefulness
or marketability are taken into account by
making write-downs. Lower values as of the
reporting date due to reduced sales proceeds
are recognized in the balance sheet and
income statement.
2.10 Financial assets
The shares in nonconsolidated affiliated
companies and associates reported under
financial assets are recognized at cost,
unless a different market value is available.
According to IAS 39, financial investments are
broken down into the following categories:
(a) Held-to-maturity investments
(b) Financial assets held for trading or at fair
value through profit or loss
(c) Available-for-sale financial assets
(d) Loans and receivables
Financial assets with fixed or determinable
payments and fixed maturity that the Company
has the positive intent and ability to hold to
maturity, other than loans and receivables,
are classified as held-to-maturity investments.
Financial assets obtained principally to generate a profit from short-term fluctuations in
price or exchange rates are measured and
classified at fair value through profit or loss.
Securities held as financial assets at fair
value through profit or loss and securities
held for trading are recognized at market
value, if available. If no market value is available, they are carried at cost.
Changes in the fair value of financial assets
held for trading are recognized through the
income statement.
All other financial assets, other than loans
and receivables originated by the Company
are classified as available-for-sale financial
assets. Until realized, gains and losses on
the fair-value measurement of an availablefor-sale financial asset are recognized directly
in equity, taken deferred taxes into account.
Available-for-sale securities and financial
assets are measured in accordance with
IAS 39.61.
2.11 Property, plant, and equipment
Property, plant, and equipment is measured
at cost, less straight-line depreciation and,
in some cases, write-downs for impairment.
Low-value assets are fully depreciated in the
year of acquisition. The cost of self-created
property, plant, and equipment comprises all
direct costs and a reasonable portion of the
necessary material and production overheads. This includes production-related
depreciation and amortization, as well as a
proportion of the costs for the Company’s
pension plan and voluntary employee benefits. Borrowing costs are not capitalized.
Depreciation is based on the following useful
lives:
Buildings
12 – 33.3 years
Machinery and equipment
6 – 13.0 years
Office equipment and vehicles 3 – 8.0 years
Land is not depreciated.
In accordance with IAS 36 “Impairment of
Assets,” impairment losses are recognized
on property, plant, and equipment if both
the realizable value and the value in use of
the asset concerned fall below its carrying
amount. If the reasons for an impairment
loss no longer apply, the impairment loss is
reversed, but the increased carrying amount
must not exceed the carrying amount that
would have been determined (net of depreciation) if no impairment loss had been recognized.
Depreciation and impairment losses charged
during the year under review are reported
under functional costs or other operating
expenses. Reversals of write-downs are
shown under other operating income.
2.12 Intangible assets (excluding goodwill)
Purchased and self-created intangible assets
are carried at cost. Assets with finite useful
lives are amortized over their useful lives.
Amortization is based on the following useful
lives:
Concessions, industrial rights, and customer
bases according to normal useful lives (contract, license period, etc.)
Purchased software
4 years
Internally generated
intangible assets
4 – 6 years
Amortization is on a linear basis over a period
of four to six years. The expense is allocated
to functional areas according to source.
Write-downs are recognized for any impairment losses. If the reasons for an impairment
loss no longer apply, the impairment loss is
reversed, but the increased carrying amount
must not exceed the carrying amount that
would have been determined (net of amortization) if no impairment loss had been recognized. Assets with infinite useful lives are not
amortized.
Amortization and impairment losses charged
during the year under review are reported
under functional costs or other operating
expenses. Reversals of write-downs are
shown under other operating income.
2.13 Goodwill
Goodwill is recognized in accordance with
IFRS 3. Goodwill is tested for impairment
regularly at least once a year; if required, an
appropriate impairment loss is recognized.
Under IAS 36 “Impairment of Assets,” an
impairment requirement is determined by
comparing the expected future discounted
cash flows of the cash-generating unit in
question with the goodwill amount recognized.
2.14 Pension provisions
Provisions for pensions and other postretirement benefits are recognized using the
projected unit credit method as specified in
IAS 19, “Employee Benefits.” In addition to
the pensions and vested benefits known as
of the balance sheet date, this method takes
into account expected future increases in
salaries and pensions. If pension obligations
are covered by plan assets, only the net
amount is reported. The calculation is based
on actuarial reports taking into account biometric calculation methods.
As specified in IAS 19.93 A onward, actuarial
gains and losses incurred in the fiscal year
are reported in the statement of recognized
income and expense (SORIE) and recognized
directly in equity.
2.15 Provisions
A provision is recognized only if a present
(legal or constructive) obligation exists as a
result of a past event, it is probable that an
outflow of resources embodying economic
benefits will be required to settle the obligation, and a reliable estimate can be made of
the amount of the obligation. Provisions are
tested at each balance sheet date and
adjusted to the current best estimate. Where
the effect of the time value of money is material, the provision amount is the present
value of the expenditure expected to be
required to settle the obligation. Where dis-
79
80
counting is used, the carrying amount of a
provision increases in each period to reflect
the passage of time. This increase is recognized under other net finance income/cost.
The interest cost on tax provisions is recognized under tax expense.
2.16 Derivative financial instruments
Derivative financial instruments are
employed solely for hedging purposes, in
order to reduce exchange rate, interest rate,
and fair value risks from operating business
and any resultant finance requirements.
According to IAS 39, all derivative financial
instruments such as interest rate, currency
and combined interest rate and currency
swaps, as well as currency forwards are recognized at fair value, regardless of the purpose or intention behind them. The fair value
of derivative financial instruments is determined on the basis of market data and recognized measurement methods. The mark-tomarket measurement of derivative financial
instruments is performed using computeraided methods by discounting future cash
flows or by using option price models with
parameters in line with market conditions.
The effective part of the change in fair value
of derivative financial instruments, for which
cash flow hedge accounting is employed, is
recognized in equity as part of other recognized gains and losses. It is reclassified to
the income statement at the same time as
the hedged item is realized. That part of the
change in fair value not covered by the underlying transaction is immediately recognized
in the income statement. If hedge accounting
cannot be employed, the change in fair value
of derivative financial instruments is recognized in the income statement.
The change in fair value of derivative financial instruments not qualifying for hedge
accounting is shown under other operating
expenses or income.
The changes in interest rate derivatives are
recognized in other net finance income/cost.
If this involves “combined instruments,” for
which separate measurement of the embedded derivative instruments is not possible,
the entire “combined instrument” is recognized at fair value through profit or loss.
2.17 Leases
A lease is classified as an operating lease
if the lessor retains substantially all the risks
and rewards incident to ownership. Lease
payments under an operating lease are recognized as an expense and allocated equally
to each period of the lease term.
2.18 Government grants
A government grant is not recognized until
there is reasonable assurance that the Company will comply with the conditions attaching to it, and that BSH will receive the grant.
Government grants are recognized as income
on a systematic and rational basis over the
periods necessary to match them with the
related costs that they are intended to compensate. Grants received for the acquisition
of property, plant, and equipment are treated
as a reduction in the cost of such assets.
Other grants received are initially recognized
as a liability on the balance sheet (miscellaneous other liabilities), which is then used
to offset the corresponding depreciation
charges over the useful life of the asset concerned.
2.19 Management judgment
The preparation of the consolidated financial
statements in accordance with IFRS requires
that assumptions and estimates are made
that may impact the amount recognized for
assets and liabilities on the balance sheet,
income and expenses, as well as contingent
liabilities. Estimates and assumptions may
change over time and have a significant
impact on the Group’s net assets, operating
results, and financial position. The assumptions and estimates relate primarily to the
measurement of property, plant, and equipment and intangible assets, impairment of
assets, the recognition and measurement of
provisions, and the realizability of future tax
benefits. The estimates and assumptions are
regularly assessed and adjusted if necessary.
At the time of the preparation of the consolidated financial statements, no material
changes to the underlying assumptions and
assets were anticipated.
Allowances on doubtful receivables reflect
to a significant extent assumptions and estimates for specific receivables that are based
on the current credit rating of the customer
in question and the economic market environment in the country concerned.
Goodwill, property, plant and equipment,
and intangible assets are tested for impairment at least once a year using measurement
methods that are based on discounted cash
flows and use estimated growth rates,
weighted average cost of capital, and tax
rates. The planning horizon is a three-year
plan approved by management.
Deferred tax assets are recognized if it seems
probable that the tax benefits can be utilized
within the planning horizon.
Provisions for pensions and similar obligations
and the corresponding expenses and income
are recognized on the basis of actuarial
methods. The main estimated variables are
discount factors, the expected return on
plan assets, salary and pension trends, and
life expectancies. The parameters are defined
according to circumstances as of the balance
sheet date. Due to fluctuating market and
economic conditions, these actuarial
assumptions may differ considerably from
future developments and may therefore lead
to a material change in pensions and similar
obligations.
The measurement of provisions for warranties,
losses expected on uncompleted transactions, and litigation involves a considerable
amount of future estimates, some of which
are determined on the basis of past experience and adjusted in line with the latest
assessment.
3 Changes in the basis of consolidation
Willem van Rijn Huishoud-elektro B.V., the
Netherlands, was included in the consolidated financial statements for the first time.
As of January 1, 2008, BSH acquired a
100 percent interest in the sales company
Willem van Rijn Huishoud-elektro B.V.,
thereby taking over direct marketing of the
Bosch and Neff brands in the Netherlands.
The following carrying amounts and fair values were allocated to the company’s assets
and liabilities at the time of acquisition:
Carrying
amount
Fair
value
1
1
and other receivables
23
23
Inventories
17
17
3
12
22
22
Current assets
Noncurrent assets
Property, plant, and equipment
and intangible assets
Current liabilities
and other liabilities
Deferred tax liabilities
Acquired net assets
0
2
22
29
Previously unrecognized intangible assets
(excluding goodwill) amounting to EUR 9 million before deferred taxes were recognized
as part of the acquisition.
Willem van Rijn Huishoud-elektro B.V. generated a profit of EUR 2 million in the fiscal year.
The company’s revenue was EUR 170 million,
the date of first consolidation was January 1,
2008. Payment of the purchase price led to a
net cash outflow in the same amount.
The first-time consolidation of BSH Home
Appliances Service Jiangsu Co., Ltd., Nanjing
and BSH Electroménagers (SA), Casablanca
was not material. The companies were
included in the basis of consolidation for the
first time. Comparability of the consolidated
group with that of the previous year has not
been adversely affected by the change.
81
82
N OT E S T O T H E S TAT E M E N T O F I N CO M E
4 Revenue
Revenue was primarily generated from electrical appliances and gas appliances, as well as
from related customer services; it breaks
down as follows:
Germany
2008
%
2007
%
1,765
20.1
1,716
19.5
Western Europe
(excluding Germany,
including Turkey)
4,314
49.3
4,557
51.7
Eastern Europe
946
10.8
827
9.4
North America
497
5.7
550
6.2
Latin America
298
3.4
304
3.4
Asia
815
9.3
741
8.4
Rest of world
123
1.4
123
1.4
Total
8,758 100.0
8,818 100.0
5 Cost of sales
The cost of sales figure of EUR 5,759 million
(2007: EUR 5,683 million) comprises the
full production-related costs incurred in the
manufacture of the products sold.
6 Selling and administrative expenses
Selling and administrative expenses amounted
to EUR 2,109 million (2007: EUR 2,263 million)
and comprised solely costs, income, and
expenses allocated to these categories.
General administrative expenses include
personnel and material costs, and depreciation/amortization in corporate areas that
cannot be assigned to production, sales and
marketing, or research and development.
7 Research and development costs
Research and development costs amounting
to EUR 263 million (2007: EUR 259 million)
include research costs and development
costs not recognized in the balance sheet.
No development costs were capitalized during fiscal year 2008 (2007: EUR 0 million).
8 Other operating income and expenses
2008
2007
33
18
117
38
17
25
Rental and leasing income
3
3
Income from the disposal of assets
6
5
121
43
Income from costs transferred to third parties
30
43
Miscellaneous other operating income
17
25
344
200
14
18
107
47
45
41
5
4
37
0
Income from the reversal of provisions (not function-related)
Foreign currency gains on trade accounts receivable and payable
Income from the reversal of allowances on
and remeasurement of receivables
Income from foreign exchange derivatives
Total other operating income
Expenses to set up provisions (not function-related)
Foreign currency losses on trade accounts receivable and payable
Expenses for allowances on receivables
Expenses for the disposal of assets
Impairment losses
Other taxes
Losses on foreign exchange derivatives
Miscellaneous other operating expenses
Total other operating expenses
3
2
104
19
34
22
349
153
9 Income from investments
Income from investments relates primarily
to dividends paid by Kreisbaugesellschaft
Heidenheim GmbH, Giengen.
10 Finance income and finance expense
2008
Interest income
2007
77
70
– 89
– 84
–12
–14
Loans and receivables
52
62
Financial assets available-for-sale
24
7
– 88
– 83
Interest expense
– of which to nonconsolidated
affiliated companies
EUR – 0.8 million
(2007: EUR – 0.5 million)
Net interest income/expense
– of which from financial instruments
in measurement categories defined
by IAS 39:
Financial liabilities carried
at amortized cost
Interest income and expense calculated
under the effective interest rate method
was recognized in the income statement for
financial assets and financial liabilities not
measured at fair value.
11 Other financial result
Other financial result relates to the fair-value
measurement of financial instruments, the
disposal of securities, the measurement of
receivables and liabilities denominated in
foreign currency, expenses from interest cost
added to provisions, and miscellaneous
other financing income and cost. In 2008,
available-for-sale financial assets were sold.
This resulted in a reduction in equity of
EUR 19 million (2007: EUR 23 million) and the
recognition as expenses (2007: income) of an
equivalent figure under other financial result.
Expenses according to IAS 39.61 amounted to
EUR 32 million (2007: EUR 2 million).
12 Income taxes
By origin, the BSH Group’s taxes on income
break down as follows:
Effective taxes
Deferred income taxes
Total income taxes
2008
2007
174
172
25
54
199
226
83
84
Income taxes paid or payable in the various
countries as well as deferred taxes are
reported under income taxes. Deferred taxes
are calculated on the basis of temporary
differences between the carrying amounts
of assets and liabilities in the IFRS financial
statements and the tax base, and on the
basis of consolidation transactions, recoverable loss carryforwards, and tax credits.
The calculation is based on the tax rates
expected to be in force in the various countries at the time the asset is realized or the
liability is settled. In all cases, the rates are
derived from the laws and provisions in force
or enacted at the balance sheet date.
Germany’s corporate income tax rate in 2008
was 15 % plus a solidarity surcharge of 5.5 %
of the corporate income tax charge. Taking
into account trade tax at 13.52 %, the overall
tax rate for German companies was 29.35 %
(2007: 38.29%).
The reported income tax expense in the
year under review of EUR 199 million is
EUR 49 million higher than the expected
income tax expense of EUR 150 million,
which would in theory arise if the German tax
rate were to be applied to the consolidated
profit before taxes.
The reconciliation between the expected tax
expense and the reported tax expense is as
follows:
Profit before taxes
2008
2007
510
637
Expected taxes when using the tax rate
applicable to the parent company
of 29.35% (2007: around 38.29%)
150
244
Effects of differences in foreign tax rates
–34
– 78
1
15
46
5
36
22
Effects of changes in tax rates
Effects of permanent differences
Change in the recoverability
of deferred tax assets
Other changes
0
18
Reported income tax expense
199
226
Corporate tax rate in percent
39.0
35.5
Deferred tax assets and liabilities are derived from the following individual balance sheet items:
Deferred
tax assets
Deferred
tax liabilities
2008
2007
2008
2007
9
5
63
67
Receivables and other assets
17
20
45
13
Inventories
51
53
4
3
Liabilities
50
30
8
2
Pension provisions
46
60
4
1
Other provisions
91
67
0
0
5
0
5
2
Tax loss carryforwards and tax credits
135
130
0
0
Gross total
404
365
129
88
Write-downs
–138
– 91
0
0
Netting
–120
–71
–120
–71
146
203
9
17
Intangible assets and property, plant, and equipment
Available-for-sale securities
Deferred taxes after netting
Deferred tax assets are recognized to the
extent that it is probable that future taxable
profit will be available. At each balance sheet
date, a new assessment is made of unrecognized deferred tax assets and of the carrying
amount of deferred tax assets. A write-down
of deferred tax assets was performed on tax
loss carryforwards and tax credits amounting
to EUR 113 million (2007: EUR 78 million)
and on deductible temporary differences
totaling EUR 25 million (2007: EUR 13 million), as direct use in the foreseeable future
seems improbable. The change in the writedowns was recognized in the income statement. Out of the total amount of these potential tax benefits of EUR 138 million (2007:
EUR 91 million), EUR 78 million (2007:
EUR 56 million) can be carried forward without limitation and EUR 60 million (2007:
EUR 35 million) for more than three years.
As of December 31, 2008, the BSH Group
had unutilized tax loss carryforwards of
EUR 305 million (2007: EUR 321 million). The
following table shows the utilization periods
for tax loss carryforwards:
Utilization periods
2008
13 Minority interest
The profit attributable to the minority
interest in BSH Ev Aletleri Sanayi ve Ticaret
A.Ş., Istanbul, and BSW Household Appliances Co., Ltd., Wuxi, is EUR 6 million (2007:
EUR 7 million).
14 Other income statement disclosures
The functional costs include the following
personnel expenses:
Wages and salaries
Social security contributions
Expenses for pension plans and benefits
Personnel expenses
2008
2007
1,346
1,361
262
260
84
83
1,692
1,704
The cost of materials totals EUR 4,464 million
(2007: EUR 4,436 million).
The Group received government grants for
research and development amounting to
EUR 5 million (2007: EUR 1 million) and other
grants amounting to EUR 1 million (2007:
EUR 1 million), which were recognized in the
income statement.
2007
3
15
The average number of employees breaks
down as follows:
more than three years
124
96
BSH GmbH
Can be carried forward without restrictions
178
210
305
321
Can be carried forward with restrictions,
less than three years
2008
2007
Wage earners
6,526
6,605
Salary earners
5,545
5,416
Can be carried forward with restrictions,
Apprentices/trainees
Tax loss carryforwards, excluding deferred
tax assets, amount to EUR 278 million (2007:
EUR 201 million).
The deferred taxes recognized directly in equity
include deferred tax liabilities on securities
and derivative financial instruments totaling
EUR 4 million (2007: EUR 2 million) and
deferred tax liabilities on actuarial gains and
losses related to pension obligations totaling
EUR 2 million (2007: deferred tax assets of
EUR 11 million).
331
334
Other companies in Germany
1,759
1,715
Companies outside Germany
26,547
25,348
Total
40,708
39,418
15 Cash and cash equivalents
Cash and cash equivalents breaks down as
follows:
Checks
Cash on hand
2008
2007
23
26
6
6
Bank balances
474
421
503
453
All items under cash and cash equivalents
are due within three months, as in 2007.
85
86
NOTES TO THE BALANCE SHEET
16 Securities
In accordance with IAS 39, securities are
classified as available-for-sale and recognized at a fair value of EUR 70 million (2007:
EUR 90 million).
17 Trade accounts receivable
Trade accounts receivable (third parties)
2008
2007
1,832
1,904
(nonconsolidated affiliated companies)
Allowances on receivables
0
0
–103
– 85
As of December 31, 2008, the carrying
amount of trade receivables, for which the
contractual conditions were renegotiated,
was EUR 6 million (2007: EUR 3 million).
Trade receivables include an amount of
EUR 0.1 million (2007: EUR 0.1 million) with
a maturity of more than one year.
18 Other current assets
Other receivables (third parties)
Trade accounts receivable, net
1,729
1,819
Other receivables from nonconsolidated
1,832
1,904
affiliated companies
Prepaid expenses
of which neither impaired nor
overdue as of the reporting date
1,333
1,597
(note 30)
overdue as of the reporting
Other tax receivables and receivables
128
109
from employees
less than 1 month
77
56
Allowances on other current assets
between 1 month and 3 months
35
25
Total other current assets
more than 3 months
16
28
2007
At January 1
85
108
Exchange rate differences
–5
2
Finished goods and merchandise
0
0
Work in process
Additions
57
9
Utilization
26
31
8
3
103
85
At December 31
0
0
21
19
65
9
123
141
–2
–2
273
215
19 Inventories
2008
Reversal
48
Prepaid expenses primarily consist of IT
service payments made in advance.
The development of allowances on trade
receivables is as follows:
Change in basis of consolidation
2007
66
Current derivative financial instruments
of which not impaired but
date by periods of
2008
Regarding trade receivables which are neither
impaired nor in default, there were no indications as of the balance sheet date that the
debtors will not meet their payment obligations. Additionally, almost half of the trade
receivables are insured, individually and on
a country-specific basis, by the companies
concerned.
Raw materials, consumables, and supplies
2008
2007
730
759
34
33
238
245
Spare parts
53
51
Advance payments
19
15
1,074
1,103
Total
The spare parts item comprises components
held in warehouses to cover a 10-year parts
warranty on home appliances. The writedown recognized in the year under review
was EUR 110 million (2007: EUR 103 million).
20 Noncurrent financial assets
Noncurrent financial assets included the
following:
Financial assets
Financial investments
Other noncurrent assets
Noncurrent financial assets
2008
2007
643
681
0
0
31
26
674
707
The following table shows the breakdown of
other noncurrent assets:
Loans (third parties)
2008
2007
3
2
Noncurrent derivative financial
instruments (note 30)
2
5
Miscellaneous other noncurrent assets
26
19
Other noncurrent assets total
31
26
EUR 1 million of the loans were impaired
(2007: EUR 1 million), and there are no overdue loans.
21 Property, plant, and equipment
The consolidated statement of changes in
assets (see Annex I) shows a breakdown of
the property, plant, and equipment items
aggregated on the face of the balance sheet,
together with the changes in these items in
the year under review.
As of the balance sheet date, obligations
incurred in connection with the acquisition
of property, plant, and equipment amounted
to EUR 1 million (2007: EUR 3 million). There
were no restrictions on title to assets in the
year under review (2007: EUR 5 million).
22 Intangible assets
Please refer to the statement of changes in
assets (Annex I) for information on changes
in intangible assets.
Additions under this item included the costs
of purchased software, tool licenses, industrial and similar rights, customer bases, and
similar assets. A significant item in intangible
assets was goodwill, for the most part attributable to the subsidiaries in Turkey and the
USA. Additions to intangible assets (goodwill)
of EUR 8 million resulted from the acquisition
of additional shares in a subsidiary (2007:
EUR 10 million).
To meet the requirements of IFRS 3, in combination with IAS 36, and to test for goodwill
impairment, the cash-generating units have
been defined to coincide with the legal entities, and an impairment test has been performed.
For the impairment test, the carrying amount
of each cash-generating unit is determined by
allocating the assets and liabilities, including
attributable goodwill and intangible assets.
An impairment loss is recognized if the recoverable amount of a cash-generating unit is
lower than its carrying amount. The recoverable amount is fair value less cost to sell or
value in use, whichever is the higher.
For its impairment tests, BSH uses a discounted cash flow (DCF) method to determine the expected future cash inflows of
the cash-generating unit. The calculation of
the cash flows of each cash generating unit
is based on business plans with a planning
horizon of three years. We have assumed a
uniform rate of increase due to inflation of
1.0 % p. a. after the end of the three-year
planning period. Country-specific discount
rates vary between 8.0 % p. a. and 15.0 % p. a.
(2007: between 8.0 % p. a. and 15.5 % p. a.),
including the risk premium.
All goodwill items recognized in the consolidated balance sheet and assigned to cashgenerating units were tested for impairment.
An impairment loss of EUR 1 million (2007:
EUR 0 million) was recognized as a result.
87
88
23 Current and noncurrent financial liabilities
Current and noncurrent financial liabilities
comprise primarily liabilities to banks.
25 Other liabilities and provisions (current)
Current provisions and other current liabilities break down as follows:
2008
The financial liabilities have the following
remaining periods to repayment:
Provisions for taxes
2008
2007
up to 1 year
138
260
1– 5 years
376
386
over 5 years
125
106
Total
639
752
2007
61
50
Other provisions
310
313
Current provisions
371
363
Notes payable
155
61
17
30
375
404
Advance payments received
Accrued liabilities
Deferred income
2
1
57
43
44
4
Miscellaneous other liabilities
184
161
Other current liabilities
834
704
Other tax liabilities
Financial liabilities due within one year are
reported as current financial liabilities; financial liabilities due after one year are classified
as noncurrent financial liabilities.
Current derivative financial instruments
The following tables show the contractually
agreed (undiscounted) interest and principal
payments for non-derivative financial liabilities and derivative financial instruments with
negative fair values:
The statement of changes in provisions (note
26) gives details of changes in current provisions.
Carrying 2009 2010 2011 2012 2013 > 2014
amount as of
December 31,
2008
(note 30)
26 Other liabilities and provisions
(noncurrent)
The following table shows the breakdown of
noncurrent other liabilities and noncurrent
provisions:
682
688
0
0
0
0
0
Liabilities to banks
639
242
67
202
63
62
56
Other financial liabilities
158
158
1
0
0
0
0
Noncurrent derivative
45
44
1
0
0
0
0
financial instruments (note 30)
1
0
Miscellaneous other liabilities
11
11
Other noncurrent liabilities
12
11
Provisions for taxes
127
115
Other provisions
332
400
Noncurrent provisions
459
515
Derivative financial instruments
Carrying 2008 2009 2010 2011 2012 > 2013
amount as of
December 31,
2007
Derivative financial instruments
728
728
0
0
0
0
0
752
260
11
63
199
59
175
97
86
2
3
2
2
2
4
4
0
0
0
0
0
24 Trade accounts payable
Trade accounts payable are recognized at the
higher of their nominal amount and repayment amount; all trade accounts payable are
due within one year, as in 2007.
2008
2007
The following table shows the breakdown of current and noncurrent other provisions:
Provisions
for taxes
Personnel
and social
security
obligations
Obligations
relating to
the sales
function
Other
provisions
Total
At January 1, 2008
165
224
331
158
878
–13
–4
–9
–7
–33
0
0
1
0
1
49
55
141
19
264
Reversal
3
24
51
13
91
Additions
88
26
183
33
330
Changes in the basis of consolidation
Utilization
Interest cost
0
5
2
3
10
Reclassifications
0
–1
0
0
–1
188
171
316
155
830
61
54
222
34
371
127
117
94
121
459
Current portion of provisions
Noncurrent portion of provisions
The additions include interest cost of EUR
10 million (2006: EUR 7 million).
The reclassifications are shown under accrued
liabilities.
The provisions for personnel and social security obligations include primarily obligations
for partial retirement, personnel adjustments,
and long-service bonuses. The provisions
for obligations relating to the sales function
include primarily provisions for warranty obligations. Other provisions include provisions
for guarantees, contractual agreements in
Germany and abroad, environmental protection, and other risks.
27 Provisions for pensions
and other postretirement benefits
27.1 Defined benefit plans
The benefit obligations of subsidiaries in
Israel, the Netherlands, and another company in Thailand were recognized for the first
time in the consolidated financial statements
as of December 31, 2008.
There are postretirement benefit entitlements
for employees in Germany, primarily granting
lump-sum/pension benefits and fixed
individual amounts. For employees in other
countries (Belgium, Great Britain, Norway,
Portugal, Sweden, and Switzerland), the benefits mainly depend on the number of years
in service and the salary received immediately prior to retirement. The postretirement
benefits granted in Austria, France, Greece,
Israel, Italy, Poland, Singapore, Thailand,
Turkey, and the United Arab Emirates are
lump-sum payments.
The postretirement benefits in Germany
are mainly financed by the recognition of
pension provisions; part of the obligation is
met through an employee trust. In other
countries, they are mainly financed through
insurers and pension funds.
The commitment under defined benefit plans
is measured annually using the projected
unit credit method or approximations.
In accordance with IAS 19.93 A, the SORIE
method is used to determine the pension
provisions and the pension expense. Actuarial
gains and losses are disclosed in the SORIE
statement and taken directly to equity.
89
90
The breakdown of pension obligation funding is as follows:
Net present value of unfunded pension obligations
Germany
Other
countries
Germany
Other
countries
2008
2008
2007
2007
39
37
41
35
Present value of funded pension obligations
738
73
768
82
External plan assets
– 67
–57
– 66
– 65
Unrecognized actuarial gains (+)/losses (–)
0
0
0
0
Unrecognized past service costs
0
0
0
0
710
53
743
52
Pension provision
The pension provisions changed as follows in the course of fiscal 2008:
Germany
Other
countries
Germany
Other
countries
2008
2008
2007
2007
743
52
793
63
0
–5
0
0
Transfer values
0
0
1
0
–38
–4
– 34
–3
Employer contributions to external funds
–7
–5
–2
–5
Reversal (–)/addition (+)
63
9
60
8
Brought forward
Pension and capital amounts paid by the Company
Deferred compensation
0
0
0
0
Amount recognized in SORIE
–51
6
–75
–11
Pension provision
710
53
743
52
In Germany, contributions from the deferred compensation amounting
to EUR 3 million were shown under “service cost” for the first time
in 2007. In prior years, these contributions were recognized under
personnel expenses rather than pension expense. In 2008, the contributions also amounted to EUR 3 million.
The expense recognized in the income statement breaks down as
follows:
Germany
Other
countries
Germany
Other
countries
2008
2008
2007
2007
Service cost
25
5
26
5
Interest expense
41
6
38
5
Expected return on external plan assets
–3
–4
–3
–3
Amortization of actuarial gains (–)/losses (+)
0
0
0
0
Amortization of past service cost
0
1
0
1
0
1
–1
0
63
9
60
8
Expense (+)/income (–) from curtailment
and settlement
Total Expense (+)/income (–) recognized
The total expense is recognized in the functional areas.
The reconciliation of benefit obligations and assets is as follows:
Present value of obligations at beginning of year
Deferred compensation
Germany
Other
countries
Germany
Other
countries
2008
2008
2007
2007
809
117
859
124
0
0
0
0
Service cost
25
5
26
5
Interest expense
41
6
38
5
0
1
0
1
–54
–4
–75
–11
0
–11
0
–4
Employee contributions
Actuarial gain (–)/loss (+)
Exchange rate effects
– 44
–7
– 40
–5
Past service cost
Total amount of pensions and lump sums paid
0
1
0
1
Transfer values
0
1
1
1
–
0
–
–
Obligations transferred as a result
of business combination
Effect of curtailments and settlements
Present value of obligations at end of year
Fair value of plan assets at beginning of year
Actuarial gain (+)/loss (–)
0
1
0
0
777
110
809
117
66
65
66
61
3
4
3
3
–3
–10
0
0
Exchange rate effects
0
–6
0
–3
Employer contributions to external pension funds
7
5
2
5
Employee contributions to external pension funds
0
1
0
1
–2
Amounts of pension and lump sums paid
–6
–3
–5
Transfer values
by external funds
0
1
0
0
Assets acquired as a result of business combination
–
0
–
–
Effects of plan settlement
Fair value of plan assets at end of year
0
0
0
0
67
57
66
65
The actual return on external plan assets was as follows:
Actual income from external plan assets
Germany
Other
countries
Germany
Other
countries
2008
2008
2007
2007
3
3
4
3
–3
–10
0
0
0
–6
3
3
For 2009, contributions paid to external funds are expected to
total around EUR 5 million and direct pension payments around
EUR 40 million.
91
92
The amounts disclosed in the statement of recognized income and
expense (SORIE) are as follows:
Effect of asset limitation (IAS 19.58[b])
Amount recognized in SORIE
Total recognized in SORIE
Germany
Other
countries
Germany
Other
countries
2008
2008
2007
2007
51
–6
75
11
0
0
0
0
51
–6
75
11
14
–7
–37
–1
–15
2
–32
–3
Total recognized in shareholders’ equity
–4
2
11
0
Net actuarial gains (+)/losses (–) reported in equity
10
–5
–26
–1
Deferred taxes on actuarial gains (+)/losses (–)
The actuarial gains and losses incurred are attributable to the following categories:
Germany
Other
countries
Germany
Other
countries
2008
2008
2007
2007
–3
–10
0
0
–1
–1
1
–2
Difference between expected and actual return
on external plan assets
Difference between expected
and recorded amounts
Adjustment due to changes
in measurement assumptions
55
5
74
13
Total actuarial gain (+)/loss (–)
51
–6
75
11
The breakdown in the other prior reporting periods in accordance with
IAS 19.120 A (p) is as follows:
Germany
Other
countries
Germany
Other
countries
Germany
Other
countries
2006
2006
2005
2005
2004
2004
45
39
44
36
41
30
– 66
– 61
62
53
61
44
3
4
5
6
3
3
–21
–1
17
6
–74
–5
17
1
18
–1
0
0
Germany
Other
countries
Germany
Other
countries
2008
2008
2007
2007
Present value of unfunded pension obligations
External plan assets
Actual income from external plan assets
Actuarial gains (+)/losses (–) recognized in SORIE
Difference between expected and recorded amounts
The reported plan assets break down as follows:
Values in percent
Equities and other securities
Bonds
Real estate
Other assets
Total
Values in percent
0.0
37.0
33.0
47.0
27.0
34.0
34.0
23.0
6.0
16.0
6.5
13.0
67.0
13.0
26.5
17.0
100.0
100.0
100.0
100.0
34.3 % (2007: 23.4%) of the plan assets
reported for Germany are invested in the
sponsors of the employee trust.
The expected return on plan assets in Germany was assumed to be 5 %. The expected
return on external plan assets for companies
outside Germany ranges between 4.0 % and
6.3 %.
In Germany, part of the plan assets comprises pension trust (employee trust) receivables from BSH GmbH. As at December 31,
2008, the receivables stood at EUR 23 million
(2007: EUR 15 million). In addition, the plan
assets include real estate leased to the
Group. The employee trust had sold part of
the real estate to an investor in 2007.
The calculation of the pension obligations
and pension expense was based on the following assumptions:
Germany
Other
countries
2008
2008
Values in percent
Germany
Other
countries
2007
2007
Values in percent
Discount rate
6.00
5.60
5.25
5.40
5.00
5.30
5.00
5.80
Salary inflation
3.00
3.70
3.00
3.70
Pension inflation
2.00
–
1.80
–
The pension obligations of German companies were remeasured as of December 31,
2008, using a discount rate of 6.00 % p. a.
The measurement assumptions used for
countries outside Germany are weighted
averages.
The expected long-term return on investment
is determined on the basis of publicly available and internal capital market studies and
forecasts.
In Germany, the 2005 G Heubeck tables were
used as the basis for the biometric calculation. Employee turnover probabilities were
estimated for specific age groups and genders.
93
94
27.2 Defined contribution plans
In 2008, the Company made contributions of
EUR 86 million (2007: 83 million) to defined
contribution plans (employer contributions to
statutory pension insurance).
27.3 Partial retirement agreements
and long-service bonus commitments
In some countries, there are also obligations
from partial retirement agreements and longservice bonus commitments. The amount
of the obligation for these plans was around
EUR 91 million at the end of 2008 (EUR 104 million at the end of 2007). The difference is primarily attributable to income of EUR 16 million
(2007: EUR 18 million).
28 Shareholders’ equity
The statement of changes in shareholders’
equity shows the changes in the BSH Group’s
equity and its components.
The currency translation reserve captures
directly in equity the differences resulting
from the translation of the financial statements of subsidiaries outside Germany.
In accordance with IAS 19, the actuarial
gains/losses item comprises actuarial
gains/losses on pension provisions (net of
deferred taxes) recognized directly in equity.
The reserve for available-for-sale securities
includes the measurement gains or losses
on securities and derivative financial instruments, net of deferred taxes, recognized
directly in equity.
Retained earnings and reserves include the
income earned in the past by the companies
included in the consolidated financial statements, insofar as they have not been paid as
dividends, and other recognized gains and
losses.
Minority interests include the paid-in capital
and the net profit for the year generated by
the sales companies whose shares are held
by Robert Bosch GmbH and Siemens AG.
This item also includes the minority interest
in the equity of BSH Ev Aletleri Sanayi ve
Ticaret A.Ş., Istanbul, and BSW Household
Appliances Co., Ltd., Wuxi, including the
proportion of profit or loss attributable the
minority shareholders.
A dividend of EUR 190 million (2007:
EUR 152 million) was paid out to the shareholders on May 6, 2008 in proportion to their
interests. BSH Germany reported a net profit
of EUR 212 million in its 2008 financial statements prepared in accordance with German
commercial law. Management proposes to
distribute an amount of EUR 211 million to
shareholders.
29 Notes to the cash flow statement
The cash flow statement reports how the BSH
Group’s cash and cash equivalents changed
in the course of 2008 as a result of cash
inflows and outflows. In accordance with
IAS 7 “Statement of Cash Flow”, a distinction
is made between cash flows from operating,
investing, and financing activities.
The cash flow statement is determined using
the indirect method starting from the profit
after income taxes. The net cash from operating
activities is determined after applying adjustments for non-cash income and expenses,
primarily depreciation and amortization, and
after taking into account any changes in
working capital.
Investing activities comprises additions
under noncurrent assets and the purchase or
sale of securities. Cash flows from financing
activities show cash inflows and outflows
from the drawdown or repayment of financial
liabilities and from dividends.
The cash and cash equivalents reported in
the cash flow statement comprise cash on
hand, checks, and bank balances, providing
they are available within three months. The
effect of exchange rate changes on cash and
cash equivalents and the effect of changes
in the consolidated group are reported separately. The changes in the balance sheet
items reported in the cash flow statement
cannot be directly reconciled to the balance
sheet statement because they have been
adjusted for exchange rate effects. The
exception to this is the figure for cash and
cash equivalents. Minor amounts of cash
and cash equivalents were subject to
exchange control restrictions (2007 and
2008: EUR 0 million).
NOTES TO THE FINANCIAL INSTRUMENTS
30 Financial instruments
A financial instrument is a contract that
simultaneously leads to a financial asset in
one entity and a financial liability or equity
instrument in another. Financial instruments
involve non-derivative as well as derivative
assets or liabilities. Derivative financial
instruments are used to hedge future cash
flows.
IAS 39 divides financial instruments into the
following categories:
– Financial investments held to maturity
– Financial assets/liabilities at fair value
through profit or loss
– Available-for-sale financial assets
– Loans and receivables
– Other financial liabilities
In the BSH Group, financial instruments are
generally classified as “loans and receivables” or as “available-for-sale.” The nonderivative financial liabilities are assigned
to the category “other financial liabilities.”
Derivative financial instruments not qualifying for hedge accounting are classified as
“held for trading.” Financial instruments are
shown on the balance sheet upon purchase
or sale on the settlement date under usual
market conditions.
Net gains/losses by category
Available-for-sale financial assets
2008
2007
37
31
–24
25
35
16
–151
– 83
Financial assets and financial liabilities
at fair value through profit or loss
Financial liabilities carried at amortized cost
The net gains/losses from the loans and
receivables category include changes in
write-downs, gains and losses on derecognition and payments received, exchange rate
gains and losses, and the reversal of impairment losses or of gains/losses on derecognized loans and receivables.
Net gains and losses on the sale of availablefor-sale financial assets comprise gains and
losses on the derecognition of availablefor-sale financial assets and interest income
from these financial instruments. For the
amount of unrealized gains and losses on
available-for-sale financial assets recognized
directly in equity during the fiscal year, and
the amount reclassified from equity and
recognized as income in the year, see the
consolidated statement of changes in shareholders’ equity.
Net gains or losses on financial assets and
liabilities at fair value through profit or loss
include not only the effects of changes in fair
value, but also interest expense or income
from these financial instruments.
The net expense from financial liabilities
valued at amortized cost consists of interest
expenses and currency gains and losses.
95
96
Carrying amounts and fair values by category and class
12/31/2008
Measurement
categories
defined by IAS 39
Carrying
amount
12/ 31/2007
Fair Value
Carrying
amount
Fair Value
ASSETS
LaR
503
503
453
453
LaR
1,729
1,729
1,819
1,819
Other financial receivables
LaR
225
228
203
203
Available-for-sale financial assets
AfS
547
547
597
597
FAHfT
56
56
13
13
Derivative financial assets not qualifying for hedge accounting
Derivative financial assets (hedge accounting)
n. a.
10
10
2
2
FVTPL
27
27
36
36
FLAC
682
682
728
728
FLAC
639
608
752
737
FLAC
326
326
217
217
Finance lease liabilities
n. a.
0
0
0
0
FLHfT
45
45
4
4
n. a.
1
1
–
–
FVTPL
–
–
–
–
2,457
2,460
2,475
2,475
547
547
597
597
Financial assets with embedded derivatives
SHAREHOLDERS’ EQUITY AND LIABILITIES
Derivative financial liabilities not qualifying for hedge accounting
Derivative financial liabilities (hedge accounting)
Financial liabilities with embedded derivatives
Of which aggregated by measurement category
Loans and receivables (LaR)
Available-for-sale financial assets (AfS)
Financial assets at fair value through profit or loss (FAHfT)
Financial liabilities carried at amortized cost (FLAC)
56
56
13
13
1,647
1,616
1,697
1,682
Financial liabilities at fair value through profit or loss (FLHfT)
45
45
4
4
Financial assets at fair value through profit or loss (FVTPL)
27
27
36
36
181
181
192
192
482
482
513
513
Reconciliation to balance sheet
Other nonfinancial receivables
(included in other current assets, securities,
and noncurrent financial assets)
Other nonfinancial liabilities
(included in other current and noncurrent liabilities)
LaR
AfS
Available-for-sale
FAHf T
Financial assets held for trading
FLAC
Financial liabilities measured at amortized cost
FLHfT
Financial liabilities held for trading
FVTPL
Fair value through profit or loss
30.1 Non-derivative financial instruments
30.2 Derivative financial instruments
Available-for-sale financial instruments
Available-for-sale financial instruments are
always reported at fair value. The fair value
is generally the market value. If there is no
active market, fair value is determined using
a generally accepted measurement technique.
Hedging policy and financial derivatives
The activities of BSH are impacted by a number
of factors, including exchange rate fluctuations. It is the aim of the Company’s business
policies to limit these risks with hedging
measures. Hedging transactions are entered
into exclusively with first-rate national and
international banks. A limit is imposed on
transactions with each contract partner.
Investments in nonconsolidated subsidiaries
and associates
Shares in nonconsolidated subsidiaries and
associates are always reported at cost;
impairment losses are recognized where
appropriate.
There is no active market for these companies
and fair value therefore cannot be reliably
determined with reasonable time and effort.
Loans/receivables and financial liabilities
Loans/receivables and financial liabilities are
measured at amortized cost using the effective interest method, provided they are not
related to hedges. In particular, these are
– Loans under financial assets
– Trade receivables and trade payables
– Other current assets and liabilities
As in the previous year, most loans under
financial assets have a maturity in excess of
four years, but trade accounts receivable and
payable are, as in the previous year, due
within one year.
The amortized cost is calculated as the
amount in which a financial asset or a financial
liability was measured on initial recognition,
less any repayments, impairment losses, or
uncollectibility write-downs, and net of the
premium/discount. The premium/discount
is allocated using the effective interest rate
method over the life of the financial asset or
liability.
For current receivables and liabilities, amortized cost equals the nominal amount or the
repayment amount.
Because of the Company’s customer structure, there is no substantial concentration of
payment default risk in reported receivables,
nor is disclosure required.
Binding internal rules and guidelines provide
firm guidance on permitted actions and
responsibilities for hedging, especially the
hedging relationship with operating business
and financial investment or financing transactions. BSH does not use derivative financial
instruments for speculative purposes.
The Group employs the treasury control and
value contribution monitor used in the
finance unit to control interest and currency
management activities. These information
systems are used to support the identification
and assessment of interest rate and currency
risks throughout the Group for the next twelve
months, based on planned cash flow.
This takes place according to the minimum
hedging rates stipulated in the company’s
financial guidelines, and taking account
of the strategy laid down by the Treasury
Committee, which meets regularly under
the chairmanship of a member of executive
management.
If hedge accounting is used, changes in the
fair value of derivative financial instruments
are shown in shareholders’ equity as part of
other recognized gains and losses. If cash
flow hedge accounting cannot be employed,
the changes in fair value are recognized in
the income statement.
97
98
Currency risks
As a basis for controlling its exposure to currency risks, BSH primarily uses a Group-wide
cash flow reporting system, differentiated by
currency; the subsidiaries outside Germany
prepare rolling monthly reports for headquarters.
Most of the hedging instruments used are
forward exchange contracts; options are used
in some cases. To monitor the risks from
financial derivatives, hedges are mark to
market on each bank working day; this valuation, plus additional information such as
exchange rate gains or losses and risks, is
available to the employees concerned and
to the managers responsible.
The market values disclosed in the above list
were determined on the basis of information
available on the balance sheet date. They
represent the settlement amounts (redemption
values) of the financial derivatives.
Redemption values are calculated on the
basis of quoted prices and standardized
procedures. The maximum credit risk of
derivative financial instruments is limited to
the total positive market values in the event
of default by a contract partner of BSH GmbH
or the BSH Group companies.
The nominal volumes of the reported hedges
represent the total of purchase and selling
amounts on which the hedges are based.
Nominal volumes
2008
Maturity
Fair value
2007
2008
2007
up to
1 year
between
1 year
and
5 years
up to
1 year
between
1 year
and
5 years
405
–
320
–
40
6
–
–
17
–
–
0
56
16
8
40
17
7
Derivatives with positive fair values
Foreign currency derivatives not qualifying
for hedge accounting
Currency forwards
Currency options
Other foreign currency derivatives
Interest rate and other derivatives not qualifying
Other interest rate derivatives
Other price hedging instruments
3
–
10
–
0
–
24
–
–
–
0
–
60
–
37
–
10
2
Foreign currency derivatives, hedge accounting
Currency forwards
Derivatives with negative fair values
Foreign currency derivatives not qualifying
Currency forwards
440
2
231
–
43
3
Currency options
–
–
–
–
–
–
Other foreign currency derivatives
2
24
13
–
1
0
Interest rate and other derivatives not qualifying
Other interest rate derivatives
63
0
13
–
0
0
Other price hedging instruments
18
–
86
–
0
1
15
–
–
–
1
–
Foreign currency derivatives, hedge accounting
Currency forwards
Changes in the value of financial instruments
from the hedging of planned transactions
and available-for-sale financial instruments
are recognized directly in other recognized
gains and losses. As of December 31, 2008,
EUR 8 million (2007: EUR 35 million) were
included in shareholders’ equity after the
deduction of deferred taxes. Of this, the
effects of cash flow hedges amounted to
EUR 6 million (2007: EUR 1 million). As in the
previous year, no gains or losses were recognized from the remeasurement of ineffective
cash flow hedges for fiscal year 2008.
Fluctuations in market prices can have
significant risks for the BSH Group. Changes
in exchange rates, interest rates, and share
prices affect worldwide operating business,
as well as investment and financing activities. To represent these risks, IFRS 7 calls
for sensitivity analyses which indicate the
effects of hypothetical changes in relevant
risk variables on profit or loss and equity. The
periodical effects are determined by relating
the hypothetical changes in the risk variables
to the portfolio of financial instruments as
of the reporting date. This assumes that the
portfolio as of the reporting date is representative of the full year.
BSH has implemented a system based on the
sensitivity analysis, made up of various risk
analysis and risk management methods. The
sensitivity analysis approximately quantifies
the risk that can occur subject to the given
assumptions, if particular parameters are
changed to a defined extent. The risk assessment here assumes:
– a parallel 10 % decrease/increase in the
exchange rate of the US dollar against euro
exchange rate of pound sterling against
euro
exchange rate of the Turkish lira against
euro
– a parallel shift in the interest curves of all
currencies by 100 basis points (1 percentage point)
– a 10 % rise or fall in the prices of all listed
investments classified as available-for-sale
financial assets
The potential economic effects of this
represent estimates. They are based on the
assumption that the market changes implied
within the framework of the sensitivity
analysis occur. As a result of the global
market developments actually taking place,
the actual effects on the consolidated
income statement can differ significantly
from these.
More than half of BSH’s subsidiaries are
located outside the eurozone. As the Group’s
reporting currency is the euro, the company
translates the financial statements of these
companies into euros. In order to address
translation-related currency effects in risk
management, the working hypothesis that
investments in foreign companies are in all
cases long-term in nature, and the returns
are continuously reinvested, is applied.
Translation-related effects resulting from
changes in the value of net assets translated
into euros caused by exchange rate fluctuations are recognized in equity in the BSH
consolidated financial statements; they are
not included in the sensitivity analysis.
99
100
Foreign currency risks (remeasurement)
USD +10 %
Recognized
in income
statement
USD –10 %
Effect on
other
movements
in equity
Recognized
in income
statement
Effect on
other
movements
in equity
Recognized
in income
statement
Effect on
other
movements
in equity
Recognized
in income
statement
Effect on
other
movements
in equity
0
Financial assets
Cash and cash equivalents (1)
0
0
1
0
0
0
–1
Trade accounts receivable (2)
4
0
4
0
–4
0
–4
0
11
0
15
0
–11
0
–15
0
–1
Other assets FVTPL (3)
0
0
0
1
0
0
0
Derivatives FVTPL
Financial assets AfS (4)
–3
0
–17
0
3
0
17
0
Effect on financial assets before tax
12
0
3
1
–12
0
–3
–1
0
Derivatives FVTPL
–11
0
4
0
11
0
–3
Trade accounts payable (5)
0
0
0
0
0
0
0
0
Financial liabilities (6)
3
0
–3
0
–3
0
3
0
–8
0
1
0
8
0
0
0
4
0
4
1
–4
0
–3
–1
Effect on financial liabilities before tax
Total effect before tax
GBP +10 %
Recognized
in income
statement
GBP –10 %
Effect on
other
movements
in equity
Recognized
in income
statement
Effect on
other
movements
in equity
Recognized
in income
statement
Effect on
other
movements
in equity
Recognized
in income
statement
Effect on
other
movements
in equity
Financial assets
Derivatives FVTPL
Derivatives CFH (7)
1
0
1
0
–1
0
–1
0
–1
0
0
0
1
0
0
0
0
0
0
0
0
0
0
0
–14
0
–1
0
14
0
2
0
0
–5
0
–4
0
5
0
4
–14
–5
0
–4
14
5
1
4
Derivatives FVTPL
13
0
0
0
–13
0
0
0
2
0
3
0
–2
0
–3
0
0
0
–1
0
0
0
1
0
15
0
2
0
–15
0
–2
0
1
–5
2
–4
–1
5
–1
4
TRY +10 %
Recognized
in income
statement
TRY –10 %
Effect on
other
movements
in equity
Recognized
in income
statement
Effect on
other
movements
in equity
Recognized
in income
statement
Effect on
other
movements
in equity
Recognized
in income
statement
Effect on
other
movements
in equity
0
Financial assets
–7
0
0
0
7
0
0
Trade accounts receivable (2)
–9
0
–5
0
9
0
5
0
1
0
4
0
–1
0
–4
0
Derivatives FVTPL
–3
0
0
0
3
0
0
0
–18
0
–1
0
18
0
1
0
–1
0
–8
0
1
0
8
0
4
0
7
0
–4
0
–7
0
Derivatives FVTPL
27
0
12
0
–27
0
–12
0
30
0
11
0
– 30
0
–11
0
12
0
10
0
–12
0
–10
0
AfS
FVTPL
CFH
Available-for-sale
Cash flow hedge
Explanatory notes:
(1) Cash and cash equivalents includes checks, cash on hand, and deposits with banks. The currency risk relates to remeasurement.
(2), (5) Trade accounts receivable and payable relate to both external and intercompany receivables and payables subject to remeasurement risk.
(3) Other assets relate in particular to intercompany loan receivables and cash pool amounts subject to remeasurement risk as a result of exchange rate fluctuations.
(4) AfS financial assets include securities in particular. In the case of interest-bearing securities, exchange rate changes bring about a change in market values, which
impacts on the income statement. Mutual funds in bonds and money market funds are not included. Currency fluctuations in the case of stock funds and mutual
funds in stocks would likewise be reported in the revaluation surplus.
(6) Financial liabilities include both external borrowings and intercompany loan liabilities. The currency risk relates to remeasurement.
(7) Derivative instruments with hedge accounting (cash flow hedges) only include currency forwards. For the effective portion, the effect of exchange rate changes is
thus recognized directly in equity.
101
102
Interest rate risks
In order to determine the interest rate risk, a flat-rate 1 % increase or cut in general interest
rates is simulated. The changes in interest expense or income thus derive from the nominal
volumes concerned. Changes in the market values of fixed-income securities and derivatives
that react to interest rates are determined by calculating the basis point value (1 % = 100 BP).
Interest risk
+1%
Recognized
in income
statement
–1%
Effect on
other
movements
in equity
Recognized
in income
statement
Effect on
other
movements
in equity
Recognized
in income
statement
Effect on
other
movements
in equity
Recognized
in income
statement
Effect on
other
movements
in equity
0
Financial assets
5
0
4
0
–5
0
–4
0
–11
0
–6
0
11
0
6
Derivatives FVTPL (3)
0
0
1
0
0
0
–1
0
5
–11
5
–6
–5
11
–5
6
0
4
0
–2
0
–4
0
2
–1
0
–1
0
1
0
1
0
3
0
–3
0
–3
0
3
0
8
–11
2
–6
–8
11
–2
6
AfS
FVTPL
Available-for-sale
Explanatory notes:
(1) Cash and cash equivalents includes checks, cash on hand, and deposits with banks. A change in interest rates would result in increased/reduced interest income
based on the demand and fixed-term deposits and accounts with interest-bearing balances as of the reporting date.
(2) AfS financial assets comprise securities in particular. In the case of interest-bearing securities, a change in interest rates brings about a change in market values,
which is reflected in the revaluation surplus. Mutual funds in bonds and money market funds are not included. Stock funds and mutual funds in stocks are in particular subject to other price risk, which is always recognized in the revaluation surplus. The simulation is conducted through the income statement only if impairments
have already been recognized through profit or loss.
(3), (4) Derivatives not qualifying for hedge accounting include currency forwards, currency options, stock index futures, currency swaps, and interest rate index
futures. Any effect of the scenarios in question is recognized in the income statement.
(5) Financial liabilities include external borrowings. A change in interest rates would result in increased/reduced interest expense based on the variable-interest liabilities as of the reporting date.
Other price risks
Within the framework of the other price risk, a 10 % flat-rate increase or reduction in the stock
prices is simulated, with the result that the stock prices or the corresponding stock price indices
(relative to the mutual funds invested in stock funds or relative to the index futures concerned)
are shown as being 10 % higher or lower.
Other price risks
Stocks +10 %
Stocks –10 %
Recognized
in income
statement
Effect on
other
movements
in equity
Recognized
in income
statement
Effect on
other
movements
in equity
Recognized
in income
statement
Effect on
other
movements
in equity
Recognized
in income
statement
Effect on
other
movements
in equity
Financial assets
Derivatives FVTPL
5
2
4
15
–7
0
–4
–15
–2
0
0
0
2
0
0
0
3
2
4
15
–5
0
–4
–15
–2
0
–9
0
2
0
9
0
–2
0
–9
0
2
0
9
0
1
2
–5
15
–3
0
5
–15
AfS
FVTPL
Available-for-sale
Explanatory notes:
(1) AfS financial assets comprise securities in particular. In the case of interest-bearing securities, a change in interest rates brings about a change in market values,
which is reflected in the revaluation surplus. Mutual funds in bonds and money market funds are not included. Stock funds and mutual funds in stocks are in particular subject to other price risk, which is always recognized in the revaluation surplus. The simulation is conducted through the income statement only if impairments
have already been recognized through profit or loss.
(2) Derivatives not qualifying for hedge accounting include currency forwards, currency options, stock index futures, currency swaps, and interest rate index futures.
Any effect of the scenarios in question is recognized in the income statement.
103
104
Credit and liquidity risks
The liquidity risk for the company consists in
its possibly being unable to meet its financial
liabilities, for example the repayment of
financial liabilities and the payment of purchase commitments. BSH limits this risk by
means of effective central cash management,
global access to lines of credit provided by
prime rated banks, and a syndicated credit
line primarily entered into for contingencies.
A significant portion of the external bank
loans has been taken out over the long term,
thus excluding short-term liquidity risks from
repayment obligations. To supplement the
above-mentioned liquidity management tools,
BSH continuously follows up the financing
options offered on the financial markets. In
addition, the Group monitors developments
relating to availability and cost. A major
objective here is to secure BSH’s financial
flexibility and to limit unreasonable refinancing risks.
No deficits from financial investments subject to credit risks had been identified as of
the reporting date.
31 Leases
The breakdown of future minimum lease
payments under non-cancelable leases is as
follows:
Maturity
within one year
second through fifth year
more than five years
Total
2008
2007
62
47
123
95
84
72
269
214
The minimum lease payments relate primarily to rents paid for real estate. Under rental
agreements and leases, minimum lease payments of EUR 77 million (2007: EUR 54 million) and sublease payments of EUR 3 million
(2007: EUR 3 million) were recognized in
income in 2008.
The part of a property that the pension trust
(employee trust) of BSH GmbH had sold to
an investor in 2007 was leased back in part
in 2008 by the investor to a BSH Group company for a period of 10 years, with an option
to extend twice by a period of 5 years. The
remainder of the real estate still owned by
the employee trust has been leased to BSH
companies on the basis of longer-term leases.
32 Contingent liabilities
and other financial liabilities
No provisions have been set up for the
following contingent liabilities, recognized
at their nominal values, because it is not
deemed probable that the risk will occur.
2008
2007
Surety and letters of support
2
16
Guarantees on notes
2
1
Other contingent liabilities
2
1
Total
6
18
33 Related party disclosures
The following companies or persons are
related parties for BSH GmbH under IAS 24:
– Robert Bosch GmbH, Stuttgart, Germany
– Siemens AG, Munich and Berlin, Germany
– Companies directly or indirectly controlled
by BSH GmbH
– Other consolidated and nonconsolidated
affiliated companies of the Robert Bosch
Group and the Siemens Group
– Members of the executive management or
the Supervisory Board
– Companies in which Robert Bosch GmbH,
Siemens AG, or members of management
hold a significant portion of the voting
rights
Transactions with these related parties are
performed at normal market terms and conditions. The goods and services bought from
related parties include primarily production
supplies and sales services, and a small
amount of training and other services. The
goods and services supplied to related parties primarily involve the sale of household
appliances. Most of these transactions are
performed by the companies in Germany.
Since 2008, revenue, receivables, and liabilities vis-à-vis related parties are reported for
the Group; in 2007 they were only reported
for BSH GmbH.
2008
Robert BoschSiemensGroup
Group
2007
Robert BoschSiemensGroup
Group
Receivables
1
22
0
Liabilities
3
12
2
11
Revenue
3
131
0
108
34 Remuneration of members of the Board
of Management and the Supervisory Board
The remuneration paid to the Supervisory
Board amounted to EUR 0.1 million (2007:
EUR 0.1 million); executive management
remuneration amounted to EUR 2.4 million
(2007: EUR 3.4 million). Former members of
executive management and their surviving
dependents received payments of EUR 1.6 million, including pensions and transitional
payments (2007: EUR 1.4 million). As of
December 31, 2008, provisions amounting
to EUR 20.2 million (2007: EUR 19.7 million)
were recognized for pensions and benefit
entitlements for these persons.
In 2008, as in the previous year, there were
no loans to members of the executive management or the Supervisory Board. The members of the executive management and the
Supervisory Board are listed in the annexes.
Executive Management
15
105
CO N S O L I D AT E D S TAT E M E N T O F C H A N G E S I N A S S E S T S
Appendix I
Consolidated Statement of Changes in Assets
January 1 to
December 31, 2008
(in EUR million)
I. Property, plant, and equipment
pos
als
Dis
Add
itio
ns
p*
Cha
n
con ges in
s oli
t
dat he
ed g
rou
Cur
re
lati ncy tr
on
a
diff nsere
nce
s
. 1,
Jan
e
200
8
Purchase and production cost
Not
106
21
Land and buildings
771
–21
6
22
9
Technical equipment and machinery
1.548
– 62
0
100
65
Other equipment, operating, and
office equipment
1.224
–20
2
142
107
134
–1
0
85
0
50
1
0
20
0
3.727
–103
8
369
181
Patents, licenses, customer bases,
etc. (excl. software)
30
0
10
1
0
Software
67
–1
0
8
1
Goodwill
212
–33
0
8
0
1
0
0
0
0
310
–34
10
17
1
28
0
0
4
0
Development expenses
3
0
0
0
0
Intangible assets being created
4
0
0
0
0
35
0
0
4
0
4.072
–137
18
390
182
Assets under construction
Advance payments on property,
plant, and equipment
II. Intangible assets
22
Purchased intangible assets
Advance payments on intangible assets
Self-created intangible assets
Software
* Change in the basis of consolidation as a result of the acquisition of Willem van Rijn Huishoud-elektro B.V., the Netherlands.
Depreciation, amortization, impairment losses
Carrying
5
4
0
350
451
47
1.568
1.108
– 45
0
122
63
–21
0
1.101
467
84
1.325
887
–12
2
132
102
18
0
925
400
–117
101
3
–1
0
3
0
–1
0
4
97
– 46
25
0
0
0
0
0
0
0
0
25
0
3.820
2.324
– 66
6
286
170
0
0
2.380
1.440
0
41
25
0
0
3
0
0
0
28
13
1
74
53
0
0
7
1
0
0
59
15
0
187
3
0
0
1
0
0
0
4
183
–1
0
0
0
0
0
0
0
0
0
0
0
302
81
0
0
11
1
0
0
91
211
4
36
11
0
0
3
0
0
0
14
22
0
3
1
0
0
0
0
0
0
1
2
–4
0
0
0
0
0
0
0
0
0
0
0
39
12
0
0
3
0
0
0
15
24
0
4.161
2.417
– 66
6
300
171
0
0
2.486
1.675
ersa
Cur
re
200
. 1,
Jan
De c
** Including EUR 36 million impairment of property, plant and equipment and EUR 1 million impairment of intangible assets.
. 31
, 20
De c
29
l
Rev
4
pos
als
–8
nt y
326
8
801
. 31
, 20
32
Rec
lass
ifica
Rec
lass
ifica
Dec. 31,
2008
Dis
08
tion
s
*
ear
*
Cha
n
con ges in
s oli
dat the
ed g
rou
Cur
re
lati ncy tr
on
a
diff nsere
nce
s
08
tion
s
p
amounts
107
Consolidated Statement of Changes in Assets
January 1 to
December 31, 2007
(in EUR million)
I. Property, plant, and equipment
pos
als
Dis
ns
itio
Add
Cha
n
con ges in
s oli
dat the
ed g
rou
Cur
re
lati ncy tr
on
a
diff nsere
nce
s
. 1,
Jan
e
200
7
p
Purchase and production cost
Not
108
21
Land and buildings
727
2
0
30
16
Technical equipment and machinery
1.339
18
0
69
32
Other equipment, operating, and
office equipment
1.217
2
1
94
46
110
0
0
130
3
43
–1
0
43
0
3.436
21
1
366
97
Patents, licenses, etc. (excl. software)
30
0
0
1
0
Software
57
0
0
7
0
Goodwill
190
12
0
10
0
3
0
0
0
0
280
12
0
18
0
29
–1
0
0
0
Development expenses
3
0
0
0
0
Intangible assets being created
0
0
0
4
0
32
–1
0
4
0
3.748
32
1
388
97
Assets under construction
Advance payments on property,
plant, and equipment
II. Intangible assets
22
Purchased intangible assets
Advance payments on intangible assets
Self-created intangible assets
Software
Depreciation, amortization, impairment losses
Carrying
07
tion
s
9
3
–2
326
445
154
1.548
989
11
0
95
30
45
–2
1.108
440
– 44
1.224
850
1
0
126
42
– 48
0
887
337
–103
134
3
0
0
2
2
0
0
3
131
–35
50
0
0
0
0
0
0
0
0
50
0
3.727
2.152
14
0
245
83
0
–4
2.324
1.403
–1
30
22
–1
0
2
0
2
0
25
5
3
67
48
0
0
7
0
–2
0
53
14
0
212
3
0
0
0
0
0
0
3
209
–2
1
0
0
0
0
0
0
0
0
1
0
310
73
–1
0
9
0
0
0
81
229
0
28
10
–1
0
2
0
0
0
11
17
0
3
0
0
0
1
0
0
0
1
2
0
4
0
0
0
0
0
0
0
0
4
0
35
10
–1
0
3
0
0
0
12
23
0
4.072
2.235
12
0
257
83
0
–4
2.417
1.655
De c
ersa
Rev
Cur
re
200
. 1,
Jan
De c
* Including EUR 7 million impairment of property, plant and equipment.
. 31
, 20
22
l
0
pos
als
2
nt y
310
7
771
. 31
, 20
28
Rec
lass
ifica
Rec
lass
ifica
Dec. 31,
2007
Dis
ear
*
Cha
n
con ges in
s oli
dat the
ed g
rou
Cur
re
lati ncy tr
on
a
diff nsere
nce
s
07
tion
s
p
amounts
109
110
BSH Bosch und Siemens Hausgeräte GmbH Principal Subsidiaries
as at December 31, 2008
Apendix II
Share of
capital in %
Consolidated subsidiaries according to IAS 27.12
Share of
capital in %
South America
BSH Electrodomésticos S.A., Buenos Aires
Germany
Constructa-Neff Vertriebs-GmbH, Munich
50
100
BSH Continental Eletrodomésticos Ltda., São Paulo
100
BSH Continental da Amazônia Ltda., Manaus
100
Neff GmbH, Munich
100
BSH Electrodomésticos S.A.C., Callao-Lima
100
BSH Hausgeräte Service GmbH, Munich
100
Briky S.A., Montevideo
100
BSH Hausgerätewerk Nauen GmbH, Nauen
100
BSH Hausgeräte Service Nauen GmbH, Nauen
100
Asia
Gaggenau Hausgeräte GmbH, Munich
100
BSH Home Appliances Co., Ltd., Chuzhou
100
BSH Vermögensverwaltungs-GmbH, Munich
100
BSH Home Appliances Service Jiangsu Co., Ltd., Nanjing
100
BSH Hausgeräte Vertriebs GmbH, Munich
100
Jiangsu BS Home Appliances Sales Co., Ltd., Nanjing
100
BSH Electrical Appliances (Jiangsu) Co., Ltd., Nanjing
100
Europe
BSW Household Appliances Co., Ltd., Wuxi
60
BSH Home Appliances S.A., Brussels
100
BSH Home Appliances Ltd., Hong Kong
100
BSH Hvidevarer A/S, Ballerup
100
BSH Home Appliances Ltd., Tel Aviv
100
BSH Kodinkoneet Oy, Helsinki
100
BSH Home Appliances Sdn. Bhd., Kuala Lumpur
100
BSH Electroménager S.A.S., Saint Ouen
100
BSH Home Appliances Pte. Ltd., Singapore
100
Gaggenau Industrie S.A.S., Lipsheim
100
BSH Home Appliances Pty. Ltd., Heatherton, Victoria
100
BSH Ikiakes Syskeves A.B.E., Athens
100
BSH Home Appliances Ltd., Auckland
100
BSH Home Appliances Ltd., Milton Keynes
100
BSH Home Appliances Ltd., Bangkok
100
BSH Elettrodomestici S.p.A., Milan
100
BSH Home Appliances Manufacturing Ltd., Kabinburi
100
BSH Huishoud-elektro B.V., Amsterdam
100
BSH Home Appliances FZE, Dubai
100
Gaggenau Nederland B.V., Nieuwegein
100
Willem van Rijn Huishoud-elektro B.V., Amsterdam
100
Africa
BSH Husholdningsapparater A/S, Oslo
100
BSH Electroménagers (SA), Casablanca
100
BSH Hausgeräte Gesellschaft mbH, Vienna
100
BSH Home Appliances (Pty) Ltd., Johannesburg
100
BSH Home Appliances Holding GmbH, Vienna
100
BSH Finance Management GmbH, Vienna
100
Consolidated subsidiaries according to IAS 27.13 (b)
BSH Sprzet Gospodarstwa Domowego Sp.z o.o., Warsaw
100
Robert Bosch Hausgeräte GmbH, Munich
–
BSHP Electrodomésticos, S.U., Lda., Carnaxide
100
Siemens-Electrogeräte GmbH, Munich
–
BSH Electrocasnice S.R.L., Bucharest
100
Constructa GmbH, Munich
–
OOO BSH Bytowaja Technika, Moscow
100
OOO BSH Bytovye Pribory, St. Petersburg
100
Not consolidated subsidiaries according to IAS 27.13
BSH Hushållsapparater AB, Stockholm
100
BSH Bosch und Siemens Hausgeräte Altersfürsorge GmbH,
BSH Hausgeräte AG, Geroldswil
100
Munich
BSH Drives and Pumps s.r.o., Michalovce
100
BSH Hišni Aparati d.o.o., Nazarje
100
Not consolidated subsidiaries due to immateriality
BSH Electrodomésticos España, S.A., Huarte
100
BSH I.D. Invalidska druzba,
BSH PAE, S.L., Vitoria
100
proizvodnja in storitve d.o.o., Nazarje
100
BSH Krainel, S.A., Vitoria
100
BSH Home Appliances Sarl, Tunis
100
100
BSH électroménagers S.A., Luxemburg
100
BSH domácí spotřebiče s.r.o., Prague
BSH Ev Aletleri Sanayi ve Ticaret A.Ş., Istanbul
97,84
TOV BSH Pobutova Technika, Kiev
100
Plus one subsidiary without business operation
BSH Háztartási Készülék Kereskedelmi Kft., Budapest
100
Profilo Elektrogeräte-Vertriebsgesellschaft mbH, Munich
North America
BSH Home Appliances Ltd./Électroménagers BSH Ltée,
Mississauga
100
BSH Electrodomésticos, S.A. de C.V., Mexico City
100
BSH Home Appliances Corporation,
Huntington Beach/New Bern
100
100
100
Independent Auditors’ Report
We have audited the consolidated financial
statements prepared by BSH Bosch und
Siemens Hausgeräte GmbH, Munich, comprising income statement, balance sheet,
cash flow statement, statement of changes in
equity, statement of recognised income and
expense and the notes to the consolidated
financial statements, together with the group
management report for the business year
from January 1 to December 31, 2008. The
preparation of the consolidated financial
statements and the group management
report in accordance with IFRS as adopted
by the EU, and the additional requirements
of German commercial law pursuant to
§ 315a Abs. (paragraph) 1 HGB are the
responsibility of the parent company’s
management. Our responsibility is to express
an opinion on the consolidated financial
statements and on the group management
report based on our audit.
We conducted our audit of the consolidated
financial statements in accordance with
§ 317 HGB and German generally accepted
standards for the audit of financial statements promulgated by the Institut der
Wirtschaftsprüfer (Institute of Public Auditors
in Germany). Those standards require that
we plan and perform the audit such that
misstatements materially affecting the presentation of the net assets, financial position,
and results of operations in the consolidated
financial statements in accordance with the
applicable financial reporting framework and
in the group management report are detected
with reasonable assurance. Knowledge of the
business activities and the economic and
legal environment of the Group and expectations as to possible misstatements are taken
into account in the determination of audit
procedures. The effectiveness of the accounting-related internal control system and the
evidence supporting the disclosures in the
consolidated financial statements and the
group management report are examined primarily on a test basis within the framework
of the audit. The audit includes assessing the
annual financial statements of those entities
included in consolidation, the determination
of entities to be included in consolidation,
the accounting and consolidation principles
used, and significant estimates made by
management, as well as evaluating the over-
all presentation of the consolidated financial
statements and the group management
report. We believe that our audit provides a
reasonable basis for our opinion.
Our audit has not led to any reservations.
In our opinion, based on the findings of our
audit, the consolidated financial statements
of BSH Bosch und Siemens Hausgeräte
GmbH, Munich, comply with IFRS as adopted
by the EU, the additional requirements of
German commercial law pursuant to § 315a
Abs.1 HGB, and give a true and fair view of
the net assets, financial position, and results
of operations of the Group in accordance with
these requirements. The group management
report is consistent with the consolidated
financial statements and as a whole provides
a suitable view of the Group’s position and
suitably presents the opportunities and risks
of future development.
Deloitte & Touche GmbH
Wirtschaftsprüfungsgesellschaft
Prof. Dr. Plendl
Prosig
Wirtschaftsprüfer
Wirtschaftsprüfer
(German Public Auditors)
111
112
Summary of Past Performance
BSH Bosch und Siemens Hausgeräte GmbH (Group)
(in EUR million)
2008
IFRS
2007
IFRS
2006
IFRS
2005
IFRS
2004
HGB
2003
HGB
2002
HGB
2001
HGB
8,758
–1
80
8,818
6
81
8,308
13
78
7,340
7
78
6,844
9
77
6,296
0
74
6,289
3
73
6,092
–3
71
40.3
39.0
38.0
35.5
34.5
34.4
35.7
35.6
1,692
1,704
1,654
1,448
1,486
1,458
1,448
1,392
Investment in tangible fixed assets*
In percent of sales
382
4.4
378
4.3
358
4.3
333
4.5
278
4.1
275
4.4
278
4.4
220
3.6
Depreciation of tangible fixed assets*
In percent of capital investment
299
78
257
68
281
78
223
67
197
71
188
68
175
63
197
89
Balance sheet total
6,173
6,276
5,950
5,325
4,311
3,844
3,611
3,584
Fixed assets
2,349
2,374
2,259
1,957
1,571
1,484
1,277
1,291
Inventories
1,074
1,103
1,019
828
741
643
669
633
Trade receivables from sales
of goods and services
and other current assets
2,031
2,053
2,052
1,655
1,587
1,407
1,181
1,209
Share capital and reserves
In percent of balance sheet total
2,396
39
2,372
38
2,057
35
1,859
35
1,535
36
1,176
31
961
27
837
23
Provisions
1,593
1,673
1,709
1,581
1,462
1,426
1,380
1,322
EBITDA
821
908
834
731
770
696
684
715
EBIT
522
651
553
505
541
486
474
470
Results from ordinary activities
510
637
542
500
520
473
434
459
Net income for the year
(before profit transfer)
311
411
372
386
367
278
257
241
Sales
Year-to-year change in percent
Foreign share of sales in percent
Workforce
(in thousands
at Jan.1 of the following year)
Personnel expenses
* Including intangible assets, excluding goodwill.
A mark of commitment:
BSH promotes climate protection.
Mixed Sources
Product group from well-managed
forests, controlled sources and
recycled wood or fibre
www.fsc.org Cert no. IMO-COC-026340
© 1996 Forest Stewardship Council
Right of amendment reserved, errors excepted. May 2009.
Printed in Germany © by BSH Bosch und Siemens Hausgeräte GmbH.
Reproduction and use in all media (incl. electronic media),
whether complete or in part, subject to approval.
Oslo
Ballerup
Amsterdam
Milton Keynes
Nauen
Bad Neust
Brussels
Bretten
Luxembourg
Dillin
Paris Giengen
Toronto
Lipsheim
Munich
Geroldswil
Milan
New Bern
La Follette
Santander
Vitoria
Estella
Huarte
Esquiroz
La Cartuja
Huntington Beach
Montañana
Lisbon
Casablanca
Mexiko City
Callao
Hortolândia
São Paulo
Group Headquarters
Subsidiaries
Factories
Cooking
Refrigeration/Freezing
Dishwashing
Buenos Aires
Washing/Drying
Consumer Products
Motors, pumps
Wide-coverage sales and customer service network
As at: May 2009
Helsinki
Stockholm
St. Petersburg
Chuzhou
Nanjing
Moscow
Wuxi
Warsaw
Berlin
tadt
Łódz
Pragua
ngen
Regensburg
Traunreut
Vienna
Nazarje
Kiev
Michalovce
Budapest
Hong Kong
Bucharest
Çerkezköy
Istanbul
Kabinburi
Bangkok
Athens
Tunis
Kuala Lumpur
Tel Aviv
Singapore
Dubai
Johannesburg
Melbourne
Auckland
Carl-Wery-Straße 34
81739 Munich
Germany
Tel.
Fax
+49 89 4590-01
+49 89 4590-2347
www.bsh-group.com
General information and ordering the following reports:
Konzern-Geschäftsbericht 2008
Group Annual Report 2008
Verantwortung für Umwelt und Gesellschaft 2008
Environmental and Corporate Responsibility 2008
Corporate Communications
Tel.
+49 89 4590-2809
Fax
+49 89 4590-2128
E-Mail corporate.communications@bshg.com

Group Annual Report

Transcription

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