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Bosch Group 2006 Sales Grow 5% to $54.9 billion

Long-term strategy paying off for the company
- Strong growth in Asia and both Consumer Goods and Building Technology and Industrial Technology Business Sectors
- R&D expenditure remains high
- Global headcount increases to almost 260,000

FARMINGTON HILLS, Mich. — The Bosch Group today announced that it reached its growth target for 2006 by achieving sales of $ 54.9 billion, a five percent increase over the previous year. Profit for the year was slightly down, with the pre-tax result at the lower end of the target corridor of between seven and eight percent of sales. The growth drivers were the Asia-Pacific region, the Consumer Goods and Building Technology business sector as well as the Industrial Technology business sector.

“Our long-term strategy is paying off. We have been able to significantly expand our presence in Asia, and to strongly grow our business outside of automotive technology,” said Franz Fehrenbach, chairman of the Bosch board of management at a press briefing to announce the preliminary figures for 2006 in Stuttgart, Germany.

All three business sectors of the Bosch Group made a positive contribution to growth in 2006, but the level of year-on-year growth of those contributions varied considerably. The Automotive Technology business sector, the main pillar of business at Bosch with a 62 percent share of total sales, grew by 3.5 percent to nearly $34.2 billion. Without consolidation effects, growth was one percentage point less. The highest growth was recorded by the Consumer Goods and Building Technology business sector, where sales grew by roughly 10 percent to nearly $13.8 billion. The Industrial Technology business sector also registered positive numbers, growing by more than seven percent. The transfer of the brake-disk business from Industrial Technology to the Automotive Technology sector resulted in sales of the former registering a five percent growth of $6.9 billion.

In regional terms, Bosch had strong growth in Asia, with sales up 13 percent. In China and India, Bosch sales grew significantly, by more than 20 percent. Business in Latin America and in Eastern Europe grew by 14 and 13 percent respectively. Sales in North America and Western Europe increased more moderately by 4.5 and 3 percent respectively. The increase in headcount at the Bosch Group reflected this growth of business in the regions. At the end of 2006, approximately 260,000 associates were employed at Bosch, compared with 251,000 in 2005, with the most jobs created in the regions with the strongest growth. In Germany, the number of associates remained stable at around 110,000. Research and development expenditure remained high in 2006, reaching $4.1 billion, or 7.6 percent of sales, compared with 7.4 percent in 2005. “We continue to make considerable upfront investments in innovation and future growth. However, this depends on a sustained level of earnings in the long term,” Fehrenbach said.

Automotive Technology: conditions continue to worsen
In Automotive Technology, conditions worsened significantly. Selling prices that could be demanded fell by an average of three to four percent. At the same time, Bosch was faced with a further $300 million increase in already high raw materials prices, especially for noble and nonferrous metals. In addition, capacity utilization fell, especially in the North American plants, due to the considerable sales difficulties experienced by the major U.S. automakers. It was not possible to completely compensate for these developments with the strong growth in business in Asia and with cost reductions. “In 2007, there will not be any appreciable change in the business environment. It is above all the internationalization of our innovations that promises to generate considerable growth in the years to come,” Fehrenbach said.

Bosch is currently working with Indian automakers on roughly 30 engineering projects for the application of diesel injection systems, and there are as many as 50 similar projects in China. In North America “clean diesel” holds a lot of potential. High fuel prices and the re-intensifying environmental debate will provide a significant boost to demand for diesel in the United States. Bosch also expects ESP®, its Electronic Stability Program, to show improved figures: the share of vehicles in the U.S. equipped with ESP® is expected to double from 36 percent in 2006 to 72 percent by 2010. In the same period, Bosch intends to triple its annual sales of ESP® in the United States to almost three million units per year.

Consumer Goods and Building Technology as well as Industrial Technology remain on growth course
All the divisions in the Consumer Goods and Building Technology business sector made a contribution to the sector’s growth – from household appliances and power tools to thermotechnology and security systems. At the end of January 2007, Bosch acquired FHP Manufacturing Company, a leading U.S. manufacturer of electrical heat pumps. “This acquisition fits well with our strategy: it strengthens our Consumer Goods and Building Technology business sector, reinforces our presence in the United States, and positions us in the growing area of renewable energies,” Fehrenbach said. In 2006, Bosch had already bolstered its activities with a series of strategic acquisitions including companies such as Telex Communications, Purolator, and the TeleAlarm Group. Bosch is also successfully launching new products. For example, in power tools 12 out of 15 of the best-selling power tools in German DIY stores are made by Bosch. The Ixo, a handy cordless drill/driver based on lithium-ion technology, has alone recorded sales of six million units worldwide.

In the Industrial Technology business sector, Bosch Rexroth grew strongly once more, while Packaging Technology consolidated its position. Positive developments for the business came from Europe – especially Germany — and from Asia. In China alone, Bosch Rexroth sales grew by some 30 percent. It was in China that Bosch Rexroth was awarded a prestigious contract: the hydraulic drive for the world’s biggest Ferris wheel, which will go into operation in time for the Beijing Olympics in 2008.

The Bosch Group is a leading global manufacturer of automotive and industrial technology, consumer goods, and building technology. In fiscal 2006, some 260,000 associates generated sales of 43.7 billion euros. Set up in Stuttgart in 1886 by Robert Bosch (1861-1942) as “Workshop for Precision Mechanics and Electrical Engineering,” the Bosch Group today comprises a manufacturing, sales, and after-sales service network of more than 280 subsidiaries and some 13,000 Bosch Service Centers in over 140 countries.

In North America, the Bosch Group manufactures and markets automotive original equipment and aftermarket products, industrial automation and mobile products, power tools and accessories, security technology, thermo-technology, packaging equipment and household appliances. Bosch employs nearly 22,700 associates in more than 80 primary and 20 associated facilities throughout the region with reported sales of $8.4 billion in 2005. For more information on the company, visit www.bosch.us.


Editor’s Note: Conversion rate – 1 Euro = 1.2560 USD

Bosch 2006 Sales - February 2007


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