In a significant turnaround, automotive supplier MAHLE has reported a record-breaking financial performance for the year 2023, achieving an 8.2% increase in sales to €12.8 billion, adjusted for exchange rate effects.
At the company’s annual press conference, Arnd Franz, Chairman of the Management Board and CEO, announced that MAHLE has successfully returned to profitability, with operating profits soaring to €304 million from the previous year's €60 million, and a positive group result of €26 million.
Sales in engine systems and components globally increased by 9.3% to €2.6 billion. The Filtration and Engine Peripherals business unit reported a 9.7% growth, reaching €2.1 billion. The aftermarket business unit notably surged by 22% to €1.3 billion, all adjusted for exchange rate effects.
'Despite many economic and geopolitical challenges we faced, we boosted sales and closed the year with a profit. MAHLE has managed to turn the tide around our strategy and is gaining traction. We are back on course.
Solid financing, close cooperation with our employees, strong relationships with our customers worldwide, a strong market position with our core products, as well as innovations for the electrification of mobility. We are demonstrating how transformation in the German automotive industry can be successful, he said.
Though Franz was jubilant in announcing the record results, he was a bit sceptical in giving projections for CY24 due to uncertainty in the global economy. However, he said that 2024 marks an important milestone on the road back to a sustainable profitability. 'We will make further improvements in our profitability and cash flow. Our aim is to grow faster, more efficiently and more powerfully. To successfully implement e mobility, we need to plan for the future in a reality-oriented manner. This is the only way we can keep the financial and social costs of this transformation as minimal as possible,' he added.
Talking on the company's strategic framework, he said, under MAHLE 2030+, the company has focused on electrification, thermal management, and sustainable combustion engines, leading to significant financial success despite global economic challenges. The divestiture of its 50% stake in the joint venture BHTC and the sale of its original equipment business with thermostats were highlighted as key steps in refining the company's focus and boosting profitability.
Electrification
Franz said electrification has emerged as a central theme for MAHLE's future strategy. Over 60% of its sales now come from technologies not directly tied to passenger car combustion engines. Despite moderate growth in the Electronics and Mechatronics business units, the company is bolstering its offerings in the electric vehicle market, particularly in thermal management, by planning to manufacture new air conditioning systems and battery cooling plates in Europe.
Franz emphasised the company's commitment to making electric mobility more appealing and affordable. MAHLE has launched a technology kit for electric motors that operate efficiently without rare earth materials and has set a global standard for an automated positioning system for wireless electric vehicle charging. The company also secured two significant orders for its innovative thermal management module, which is expected to dramatically enhance electric vehicle efficiency.
In 2023, MAHLE's R&D expenses increased to €673 million, representing 5.3% of sales. This investment has yielded 341 new patent applications and 502 inventions, 70% of which are related to electrification, he mentioned.
On the financial front, MAHLE has secured its future with a new €1.6 billion syndicated loan agreement, enhancing its capital structure well ahead of the previous loan's maturity. The company's stable financial base allows for continued innovation and adaptation in a rapidly changing automotive industry.
As the European Parliament election approaches in June, Franz highlighted the necessity for political and regulatory environments that support technological diversity and competitiveness, rather than imposing bans.
Franz concluded by saying, 'We are ready for the mobility transition. This is confirmed by our key figures and by our innovative products.'
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