voith.com

2023
AnnualReportVoith at a Glancein € millions

2021/222022/23

Orders received

5,164

6,139

Sales

4,881

5,506

EBIT adjusted1)

200

245

Return on sales in %

4.1

4.4

ROCE in %

10.5

12.1

Result before taxes

116

157

Net result

30

73

Cash flow from operating activities

93

306

Total cash flow

-137

36

Investments

143

188

Research and development

213

232

in % of sales

4.4

4.2

Equity

1,436

1,367

Equity ratio in %

24.1

23.9

Balance sheet total

5,956

5,728

Employees

21,491

22,4792)

1) For more information, see section “Notes on segment reporting” in the notes to the financial statements.
2) Full-time equivalents; without apprentices; as at September 30.

Annual Report 2023
Group
Foreword4
The Corporate Board of Management

8Report of the Supervisory Board

10

The Supervisory Board

15Group Management Report
I.

Background18

II. Economic report

32

III. Risks and opportunities

62

IV. Forecast report

77

Consolidated Financial Statements
Consolidated statement of income86

Consolidated statement of comprehensive income

87

Consolidated balance sheet88

Consolidated statement of changes in equity

90

Consolidated cash flow statement

92­Notes to the consolidated financial statements
for the 2022 /23 fiscal year

93

Notes to the consolidated statement of income122

Notes to the consolidated balance sheet

130

Notes to the consolidated cash flow statement 

151

Notes on segment reporting152

Segment information by business segment

154

Segment information by region 

156

Other notes

157

Responsibility statement

181

Voith Annual Report 2023
Group

3

Group

Page

Foreword

4

The Corporate Board of Management

8Report of the Supervisory Board

10

The Supervisory Board

15

4Voith Annual Report 2023
Group
Foreword

Ladies and gentlemen,dear business partners of the Voith Group,With the present report, we are looking back on a 2022/23 fiscal yearthat was satisfactory despite the challenging economic environment andgreat uncertainties on the global markets. The war in Ukraine changed
the world with direct and indirect consequences. The appreciably higher
inflation and rising interest rates in most regions of the world havedampened the growth in the world economy.
Seldom have there been so many and such diverse uncertainties on the
global markets. The end to the zero-Covid policy in China brought

Voith Annual Report 2023
Group
Foreword“Voith managed well over the2022/23 fiscal year and remains ina robust condition both in terms ofoperating business and financially.”

5

about a gradual stabilization of
global supply chains, but the central
banks continually increased key

Dr. Toralf Haaginterest rates globally to combat the
inflation prevailing in most regions of the world. The associated rise in
the cost of borrowing cast a further shadow on the investment climate.
Combined with the wide range of geopolitical crises and an increasing
geoeconomic fragmentation of the world, the global economy
weakened noticeably in all sales markets relevant to Voith.
In 2023, the rates of growth in the global economy are below thehistorical average. In this respect, Europe and Germany in particular areproving to be weak by international comparison. The high energy
prices, specifically in Germany, are placing a burden on the domestic
economy – as is the large amount of bureaucracy and the clearly
apparent backlog of reforms.
Voith nevertheless performed satisfactorily in the past fiscal year andshowed a positive balance overall. Achieving such a result, despite all
the aforementioned imponderables on the markets, can certainly not
be taken for granted. This extraordinary achievement is attributable tothe enormous efforts on the part of all Voith colleagues. On behalf ofthe entire Corporate Board of Management, I would like to express at
this point my heartfelt thanks for this commitment.
Voith managed well over the 2022/23 fiscal year and remains in a robust
condition both in terms of operating business and financially. Orders
received rose more appreciably than expected; one of the factors
contributing to this was the increase in the volume in an ongoing major6

Voith Annual Report 2023
Group
Foreword“The evolution of the core businesstowards sustainable technologies andthe expansion into new markets offer
promising growth opportunities andwill be central components of Voith’s
corporate strategy once again in thecurrent fiscal year.”hydropower project. Correspondingly, the orders on hand reached
a new all-time high. We also succeeded in increasing both sales
and the operating result.
The broad sectoral and geo­

Dr. Toralf Haaggraphical diversification and theestablished market position in the three Group Divisions contributed tothis achievement, as did our regional supply chains. The strategic focus
on sustainable technologies is central to further developing our corebusiness as well as to tapping into potential new growth areas such ashydrogen technology and energy storage. This means we are ideally
positioned for future growth in the field of industrial sustainability.
For us at Voith, the transformation of industry is a challenge and an
opportunity at the same time. The megatrends of digitalization anddecarbonization open up new business opportunities that we intend to
exploit on our way into a more sustainable future. Today, Voith is alreadyundergoing a transformation from a traditional mechanical engineering
company to a sustainable technology group with a high level of digital
expertise. Digitalization is revolutionizing the manner in which industry
produces goods and offers products and services. In this context,­artificial intelligence is a significant driver of transformation and innovation at Voith.
The evolution of the core business towards sustainable technologies
and the expansion into new markets offer promising growth opportunities and will be central components of Voith’s corporate strategy onceVoith Annual Report 2023
Group
Foreword

7

again in the current fiscal year. All in all, we expect to see a stabledevelopment in central performance indicators for the 2023/24 fiscal
year. In particular, we intend to further improve our profitability: With
regard to the operating result (EBIT), we assume a slight increase;
growth in the return on capital employed (ROCE) is likewise expected.
With regard to orders received and Group sales, we anticipate levels
below the high figures seen in the reporting year. Due to the aforementioned uncertainties stemming from the geopolitical situation and thestate of the world economy, the outcome of our planning is not a surefire success but will require a great deal of effort. I am convinced that
we will overcome the challenges. Over the last few years we have put
ourselves into a starting position that will enable us to emerge stronger
from the multiple crises.
The fact that we have achieved profitable growth in a very challenging
environment showcases one aspect: Our strategy is gaining traction.
The unambiguous alignment to the megatrends of decarbonization anddigitalization and our strategic focus on sustainable technologies inparticular are paying off.
Thank you for the trust you place in us and we would be pleased for you
to continue accompanying us on our way forward.
Sincerely yours,

Dr. Toralf Haag
President & CEO

8Voith Annual Report 2023
Group
The Corporate Board of Management

Dr. Toralf Haag
President and CEO
Stephanie Holdt
Finance and Controlling
Dr. Stefan Kampmann
Innovation & Technology(until November 30, 2023)
Andreas Endters
Voith Paper
Dr. Tobias Keitel
Voith Hydro
Cornelius Weitzmann
Voith Turbo(from top left to bottom right)

Voith Annual Report 2023
Group
The Corporate Board of Management

The Corporate Board of Management

910Voith Annual Report 2023
Group
Report of the Supervisory Board

Report of the Supervisory Boardfor the 2022/23 Fiscal Year

Ladies and gentlemen,
The economic and global political climate in the 2022/23 fiscal year was characterized by great
uncertainties. The gradual end to the Covid-19 pandemic and, in particular, the ending of the zeroCovid policy in China brought about a slow but steady normalization of global supply chains; however
the global economy continued to suffer from the high level of inflation: The policy of interest rate hikes
deployed by central banks to combat inflation has increased the costs of borrowing and cast a shadow
on the investment climate. Russia’s war in Ukraine was a further burden, causing not only enormous
human suffering but also high macroeconomic costs as well as upheavals on many markets. Over thereporting year, the economy continued to slow in virtually all of the sales regions of relevance to Voith.
This means that 2023 is seeing a rate of growth in the world economy below the historical average. The
euro area in particular is weakening. In the light of energy prices that are high by international comparison
and a reform backlog that many businesses consider onerous, the German economy has even slipped
into recession and, according to the forecasts by leading economists, is expected to contract on theprevious year also in the full year 2023.
Voith proved to be in a robust condition both operatively and financially in the 2022/23 fiscal year andsaw a satisfactory development despite the extremely challenging general environment. A further increasein sales and net result was achieved. Orders received turned out to be better than expected, growing
appreciably, in particular due to an increase in the volume in an ongoing major hydropower project.
A contribution to the overall satisfactory development came just as much from the Company’s broad
sectoral and geographical positioning and the established market position in the three Group Divisions

Voith Annual Report 2023
Group
Report of the Supervisory Board

as it did from the strategic focus area on sustainable technologies – a focus that points the way for theongoing development of today’s core business as well as for investments in new growth areas, such ashydrogen technology and energy storage. The global trend towards sustainable technologies and the
expansion of renewable energies underscore once more that Voith is well positioned with its contribution
to industrial sustainability and is able to exploit the growth opportunities in this field.

Oversight activities of the Supervisory Board
The members of the Board of Management of Voith Management GmbH, the personally liable generalpartner of GmbH & Co. KGaA, informed the Supervisory Board regularly, promptly and comprehensively
on all relevant issues and business transactions, including the current business position and financial
position of the Group and its Group Divisions, the business planning along with financial and personnel
planning as well as the corporate strategy. The sales and earnings situation of the Group and its divisions
were also presented in this context. Furthermore, investments and any risks to the Company as well ascompliance issues were presented and explained.
In the 2022/23 fiscal year, the Supervisory Board held four scheduled meetings; furthermore, in addition
to the scheduled meeting on December 8, 2022, an inaugural meeting was held the same day on accountof the new election to the Supervisory Board of the members of the Supervisory Board representing theemployees and of representatives of the shareholders. Between Supervisory Board meetings, there wasregular contact between the Chairman of the Supervisory Board and the Board of Management of thepersonally liable general partner, Voith Management GmbH. The Supervisory Board was informed about
the most important points of this exchange of information at the subsequent meetings.
The Supervisory Board meetings were held on October 7, 2022, December 8, 2022, March 22, 2023, andon June 14, 2023. All Supervisory Board members attended at least half of the Supervisory Board meetings.
At its first meeting in the 2022/23 fiscal year on October 7, 2022, the Supervisory Board addressed thepreliminary business figures for the 2021/22 fiscal year, which at that time had just come to a close; theplanning for the 2022/23 and 2023/24 fiscal years, taking special account of the Group Division Turbo;
and the Group’s financial, investment and personnel planning.
The Supervisory Board came together for its second scheduled meeting on December 8, 2022. In
accordance with the resolution recommended by the Audit Committee and following in-depth discussion,that meeting of the Supervisory Board approved the financial statements and the management report ofVoith GmbH & Co. KGaA for the 2021/22 fiscal year, as well as the consolidated financial statements andthe Group management report. Over and above this, the Supervisory Board proposed that the general
meeting, being the body responsible at a company organized as a partnership limited by shares (KGaA),
approve the financial statements; likewise, the Supervisory Board adopted the necessary proposals to
the general meeting, including those relating to appropriation of the unappropriated retained earnings andelection of the independent auditor. Furthermore, the Supervisory Board was provided with information
about the energy price management in Germany. The general meeting of the Company was held thesame day, December 8, 2022; the general meeting approved the financial statements in accordancewith the Supervisory Board’s recommendation and otherwise passed resolutions in accordance withthe aforementioned proposals submitted by the Supervisory Board.

11

12

Voith Annual Report 2023
Group
Report of the Supervisory Board

After the terms of office of the representatives of the employees on the Supervisory Board and of
all but one of the representatives of the shareholders had ended at the close of the general meetingon December 8, 2022, the Supervisory Board came together for an extraordinary, inaugural meeting
immediately after the general meeting. This meeting addressed exclusively the topic of elections.
At its third scheduled meeting in the 2022/23 fiscal year held on March 22, 2023, the Supervisory Board
addressed the development of business over the first quarter of the reporting year and the outlook for thefull fiscal year. Over and above this, the Supervisory Board’s deliberations concerned the strategy of theGroup Division Hydro and Voith’s regional strategy in Asia. Finally, at its meeting in March, the Supervisory
Board dealt, among other things, with the upcoming new tender process for the independent audit.
The main topic of the Supervisory Board’s discussions during its fourth and last scheduled meetingin the reporting year on June 14, 2023, was the report by the Board of Management of the personallyliable general partner on the first half of the 2022/23 fiscal year and on expectations for the full fiscal
year. Furthermore, at this meeting, the Supervisory Board was provided with an overview of the use of
artificial intelligence at Voith.
In the reporting year, there was no indication of any conflicts of interests in the Supervisory Board.
Report on the work of the committees
The Company’s Supervisory Board has an Audit Committee and a Nomination Committee. There were
no further Supervisory Board committees in the reporting year.
In the reporting year, the Nomination Committee passed a resolution by written procedure on November 7, 2022, on the election proposals to the general meeting scheduled to convene on December 8,2022, regarding reelection of Supervisory Board members representing the shareholders.
As in previous years, the Audit Committee came together in the 2022/23 fiscal year for three scheduled
meetings that were held on October 6, 2022, on December 7, 2022, and June 13, 2023. Furthermore,
an inaugural meeting of the Audit Committee was held on December 8, 2022, on account of the newelections to the Supervisory Board; the single item on this meeting’s agenda was the election of thecommittee’s chair.
The Audit Committee held each of its meetings in the presence of the responsible audit partner fromthe auditor, KPMG AG Wirtschaftsprüfungsgesellschaft, Munich. The main topic of the two meetingsof the Audit Committee held on October 6, 2022, and December 7, 2022, concerned the 2021/22
financial statements for the Group and Voith GmbH & Co. KGaA including the report by the independent
auditor; furthermore, the Audit Committee addressed at these meetings the financial aspects of the2022/23 planning and, as scheduled, also addressed issues concerning the effectiveness of the internal
control system (ICS), the yearly report by the Internal Audit function and the compliance report. At its
meeting on June 13, 2023, the Audit Committee addressed primarily the Group’s six-monthly financial
statements as at March 31, 2023, and dealt with risk management and the measures taken at Voith withregard to the German Act on Corporate Due Diligence Obligations in Supply Chains (LkSG). Further,
the Audit Committee prepared the new tendering process for the independent audit of the financial
statements.

Voith Annual Report 2023
Group
Report of the Supervisory Board

In addition, the agenda for all meetings of the Audit Committee in the reporting year contained compliance
topics including the measures to further improve the compliance management system as a consequenceof the settlement concluded with the World Bank in April 2022.
Change in the Board of Management of the personally liable general partner andon the Supervisory Board
Effective as of November 1, 2022, Dr. Tobias Keitel was appointed to the Board of Management of thepersonally liable general partner Voith Management GmbH and as member of the Board of Management
responsible for the Group Division Hydro; he is the successor to Uwe Wehnhardt, who stepped downfrom the personally liable general partner, Voith Management GmbH, as of October 31, 2022.
The Supervisory Board would like to thank Mr. Wehnhardt for his exceedingly valuable commitment to
the Company and his great dedication to the ongoing development of the Voith Group, particularly theGroup Division Hydro. The Supervisory Board wishes Mr. Wehnhardt all the best for the future.
After the end of the reporting period, Dr. Stefan Kampmann stepped down as member of the Boardof Management and CTO of the personally liable general partner, Voith Management GmbH, as ofNovember 30, 2023.
The Supervisory Board would also like to express its gratitude to Dr. Kampmann for his dedication to
Voith and his successful work as CTO; in this function, Dr. Kampmann made an essential contribution
to the technical transformation and new orientation of the entire Voith Group.
The new election of the employee representatives on the Supervisory Board was held on November 17,
2022. Messrs. Walter Beraus, Klaus Lehleiter, Thomas Martin and Gerd Schaible left the Supervisory
Board at the close of the general meeting on December 8, 2022. Alongside the reelected employee
representatives, Mr. Alexander Schlotz and Mr. Tobias Bucher, Ms. Saskia Genthner, Ms. Simone
Jassat, Mr. Kevin Brzoza and Mr. Bernhard Kohl were elected to the Supervisory Board as employee
representatives.
Prof. Dr.-Ing. Siegfried Russwurm, Mr. Johannes Hammacher, Mr. Martin Schily, Ms. Isabel Diaz Rohrand Ms. Constanze Hufenbecher, whose previous positions as representatives of the shareholders on
the Supervisory Board ended at the close of the general meeting on December 8, 2022, were reelected
at the general meeting of December 8, 2022, at the proposal of the Nomination Committee.
The Supervisory Board would like to express its thanks to the members leaving for their many years of
involvement with the Company and their dedicated work for the Company.
At the inaugural meeting of the new Supervisory Board on December 8, 2022, Prof. Dr.-Ing. Siegfried
Russwurm was reelected chairman of the Supervisory Board and Mr. Alexander Schlotz was reelected
deputy chairman.
To the extent that the independent auditor was consulted in the reporting year as expert at the meetingsof the Supervisory Board or Audit Committee, the members of the Corporate Board of Management (inthe case of the Audit Committee, the CEO and the CFO) of Voith Management GmbH as the personally

13

14

Voith Annual Report 2023
Group
Report of the Supervisory Board

liable general partner of Voith GmbH & Co. KGaA took part in the meetings pursuant to Section 109 (1)Sentence 3 last clause German Stock Corporation Act (AktG).
KPMG Wirtschaftsprüfungsgesellschaft, Munich, was appointed independent auditor of the financial
statements for the 2022/23 fiscal year at the general meeting on December 8, 2022. The Supervisory
Board then engaged the independent auditor.
The general meeting of Voith GmbH & Co. KGaA held on December 8, 2022, exonerated the personallyliable general partner and the Supervisory Board for their activities in the 2021/22 fiscal year.
2022/23 financial statements
The independent auditor, KPMG AG Wirtschaftsprüfungsgesellschaft, Munich, examined and granted its
unqualified audit opinion on the accounting records, the annual financial statements and the management
report of Voith GmbH & Co. KGaA and the consolidated financial statements and the group management
report as at September 30, 2023. The consolidated financial statements were prepared in accordancewith International Financial Reporting Standards (IFRS).
At its meeting on December 5, 2023, the Audit Committee examined in depth the financial statements ofVoith GmbH & Co. KGaA and the Group as well as the respective management reports. The responsible
audit partner from KPMG AG Wirtschaftsprüfungsgesellschaft, Munich, took part in the meeting of the
Audit Committee held on December 5, 2023; at this meeting he reported on the material results of
the audit and provided additional information. The CEO and the CFO of Voith Management GmbH as
the personally liable general partner of Voith GmbH & Co. KGaA took part in the meeting of the Audit
Committee pursuant to Section 109 (1) Sentence 3 last clause AktG. At its meeting on December 6, 2023,
in which the responsible audit partner from KPMG AG Wirtschaftsprüfungsgesellschaft, Munich also took
part, the Supervisory Board performed an in-depth examination of its own of the financial statements, theconsolidated financial statements and the management reports that did not give rise to any objections,
the Supervisory Board agreed with the results of the audit on the part of the independent auditor andapproved the financial statements and the consolidated financial statements in accordance with therecommendation of the Audit Committee. The Board of Management of Voith Management GmbH as the
personally liable general partner of Voith GmbH & Co. KGaA took part in the meeting of the Supervisory
Board pursuant to Section 109 (1) Sentence 3 last clause AktG. The financial statements of Voith GmbH& Co. KGaA were then approved by a resolution of the general meeting on Decem­ber 6, 2023, with theapproval of the personally liable general partner. Furthermore, at its meeting on December 6, 2023, theSupervisory Board followed the proposal of the personally liable general partner made to the general
meeting relating to the appropriation of the unappropriated retained earnings.
Finally, the Supervisory Board would like to thank the Board of Management of Voith Management GmbHas the personally liable general partner of Voith GmbH & Co. KGaA and the respective managements ofthe subsidiaries as well as the representatives of the workforce, but most of all the employees, for their
dedicated service and their successful work over the past fiscal year.
Heidenheim an der Brenz, December 2023
Chairman of the Supervisory Board

Prof. Dr.-Ing. Siegfried Russwurm

Voith Annual Report 2023
Group
The Supervisory Board

The Supervisory Board
Prof. Dr.-Ing. Siegfried Russwurm

Saskia Genthner*

Klaus Lehleiter*

Chairman of the Supervisory Board of

Second Authorized Representative ofUniversity-qualified engineer Voith Turbo,

Voith GmbH & Co. KGaA andthe Metal Workers’ Union (IG Metall),

J.M. Voith SE & Co. KG

the Shareholders’ Committee ofSchwäbisch Hall

(until December 8, 2022)

Voith Management GmbH

(from December 8, 2022)

Walter Beraus*

Johannes Hammacher

Innovation Manager Voith Paper,

Secretary of the Metal Workers’ Union

Member of the Executive Board of

J.M. Voith SE & Co. KG(IG Metall), Regional Organization

JMV Management und Verwaltungs SE(until December 8, 2022)

Constanze Hufenbecher

Gerd Schaible*

Former Member of the Board of Management

Head of Office of the Corporateof Infineon Technologies AG

Works Council ofThomas Martin*

Baden-Württemberg(until December 8, 2022)
Kevin Brzoza*
Deputy Chairman of the Works Council

Voith GmbH & Co. KGaA

J.M. Voith SE & Co. KG Heidenheim

Simone Jassat*(from December 8, 2022)

Chairwoman of the Works Council

Tobias Bucher*(until December 8, 2022)

J.M. Voith SE & Co. KG Voith Turbo Salzgitter

Martin Schily(from December 8, 2022)

Member of the Executive Board ofFirst Authorized Representative of

JMV Management und Verwaltungs SE

the Metal Workers’ Union (IG Metall),Dr. Norbert Kloppenburg

Heidenheim

Former Member of the Executive Board

Alexander Schlotz*of Kreditanstalt für Wiederaufbau

Deputy Chairman(from October 7, 2022),

Isabel Diaz Rohr
Member of the Supervisory Board

Bernhard Kohl*

Chairman of the Corporate andof Palfinger Group

University-qualified engineer Voith Paper,

Joint Works Council

Spokesman for the Senior Executives(from December 8, 2022)* Elected by the employees.

15Voith Annual Report 2023
Group Management Report

17Group Management Report

Page

I.

Background

18

I.1.

Group structure and business activities 

18

I.2.

Management system

19

I.3.

Group strategy

20

I.4.

Research and development

23

I.5.

Sustainability26

I.6.

Employees27

II.

Economic report

II.1.

Overall assessment 

32

II.2.

Macroeconomic and industry-specific environment

33

II.3.

Business development of the Group

39

II.4.

Business development of the Group Divisions

43

II.5.

Economic position

56

III. Risks and opportunities

32

62

III.1.

Risk and opportunities management

62

III.2.

Accounting-related internal control system 

63

III.3.

Risks65

III.4.

Opportunities75

IV. Forecast report

77

IV.1.

Business environment 

77

IV.2.

Future development of the Voith Group

80

18

Voith Annual Report 2023
Group Management Report
I. BackgroundI.

BackgroundI.1. Group structure and business activities
Family-owned, global technology group
The Voith Group is a global technology company. With its broad portfolio of systems, products, services
and digital applications, Voith sets standards in the energy, paper, raw materials, and transport &automotive markets. With locations in over 60 countries, Voith operates around the globe, maintaining
an extensive network of production, service and sales units on every continent on the planet.
Voith GmbH & Co. KGaA, based in Heidenheim an der Brenz, Germany, is the operative head organization and parent company of the Group. The central functions are also performed here.
The Board of Management of Voith Management GmbH is responsible for the strategy and operative
management of the Voith Group. Voith Management GmbH, which like Voith GmbH & Co. KGaA is
100 % family-owned, is the personally liable general partner of, and manages the business of, Voith
GmbH & Co. KGaA. The Board of Management of Voith Management GmbH is appointed by the Voith
Management GmbH Shareholders’ Committee. Oversight of Voith GmbH & Co. KGaA is exercised by
the Supervisory Board.
The operating business is structured into three Group Divisions: Hydro, Paper and Turbo. These Group
Divisions are managed separately and their respective business results are presented transparently as
part of the segment reporting.
The Group Division Hydro is a leading full-line supplier and trusted partner for equipping hydropower
plants. Voith Hydro develops customized, long-term solutions and services for large and small hydropower plants all over the world. Its portfolio of products and services covers the entire life cycle andall major components for large and small hydropower plants, from generators, turbines, pumps andautomation systems, right through to spare parts, maintenance and training services, and digitalsolutions for intelligent generation of hydropower.
The Group Division Paper is a leading full-line supplier as well as a pioneer in the paper industry. Throughconstant innovations Voith Paper is continually optimizing the papermaking process and facilitating
resource-saving and efficient production.
The Group Division Turbo is a specialist in intelligent drive systems and customized services. With innovative and smart products, Voith Turbo offers the highest levels of efficiency and reliability. Customers fromhighly diverse industries, such as oil & gas, energy, mining and mechanical engineering, ship technology,
rail and commercial vehicles, rely on the advanced technologies and digital solutions provided by Voith.

Voith Annual Report 2023
Group Management Report
I. Background

19

Organizational structure
Voith Group Divisions

Voith GmbH & Co. KGaA

­Hydro

Paper

Turbo

I.2. Management system
The key financial performance indicators for the Voith Group are the performance of orders received
and sales as well as EBIT (earnings before interest and taxes) and ROCE (return on capital employed).
The internal performance indicator EBIT is based on an operating earnings indicator derived from externalfinancial reporting, the operational result. This figure is determined on the basis of operating activities
and is calculated from sales less costs before financial result and income taxes. To calculate EBIT,
amortization and depreciation of hidden reserves disclosed within the scope of business combinations,
restructuring expenses and other extraordinary expenses are added. For reconciliation to EBIT, theoperational result is adjusted for these amounts in order to come to a better assessment of the operating
activities for internal control purposes.
For more informationon the calculationof ROCE, see theNotes on segment­reporting sectionin the notes to thefinancial statements.

Calculating the ratio of EBIT to capital employed produces return on capital employed (ROCE). Capital
employed designates the funds tied up within the business with a view to generating sales. Thisessentially comprises property, plant and equipment and net working capital. Calculating the ratio ofa performance indicator from the statement of income (profit from operations) to a figure based on thebalance sheet (capital employed) is in compliance with generally accepted standards for holistic business
management and with value-based management.
The indicators and reports submitted to the Corporate Board of Management of Voith GmbH & Co.
KGaA as well as within the Group Divisions and the operating companies are based on these Group
performance indicators.

20

Voith Annual Report 2023
Group Management Report
I. BackgroundI.3. Group strategy
The basis: Our DNA, our values*
At Voith, business success is defined as a long-term goal. As a family-owned company, Voith understoodthe importance of the sustainability mindset and of value-driven business long before these concepts
became part of the economic debate. In the course of the Company’s history covering more than
155 years, this approach has enabled Voith to overcome numerous obstacles, manage in turbulent
times and to write industrial history.
Our DNA: Sustainable technologies for future generations.
We develop sustainable technologies to preserve and improve the natural foundation of life for future
generations. By doing so, we are, at the same time, safeguarding Voith’s long-term future. By generating
profitable growth, we guarantee the stability and financial independence of our Company and, at thesame time, balance our business success with our responsibility towards society and the environment.
The way we see ourselves is expressed in our corporate values.
Ambitious:
We embrace challenges and set ambitious goals that enable us to continuously grow both as individuals
and as an organization.
Innovative:
We turn ambitious ideas into innovative technology. To do so, we listen attentively, have a close lookand think in new ways. This enables us to experience firsthand the way the world and our customers
are changing, develop solutions that create value added, and set new standards in our markets.
Reliable:
As Voithians, we constantly strive for the trust of our customers and partners by keeping our promises.
This allows us to build productive, long-term relationships.
Fair:
In every interaction, we show respect, sincerity, honesty and modesty. This is not a question of merecompliance with rules and regulations but constitutes our underlying philosophy.
Sustainable:
We are mindful of our responsibility to society and the environment in everything we do. With ourtechnical innovations, we want to make a contribution to growth and prosperity worldwide. As afamily-owned company we strive for lasting financial independence.

* The content of this section consists of unaudited, voluntary content that was critically read by the independent auditor.

Voith Annual Report 2023
Group Management Report
I. Background21

Our strategy for growth and rising profitability
The last four fiscal years were marked by an exceedingly challenging economic environment. The
crisis-related turbulence on the global markets constitutes a stress test for companies around theworld and is putting their business models under scrutiny. Voith proved its resilience in this phase: The
Company generated operating results in the three-digit million euro range. Compared to the pre-crisis
year 2018/19, Voith has increased its sales by more than a quarter and, in the reporting year, EBIT isalso appreciably in excess of the pre-crisis level. Over and above this, we are going into the 2023/24
fiscal year with orders on hand that are almost € 1.6 billion higher than four years ago.
The broad sectoral and geographical diversification and the established market position in all three
Group Divisions are important factors that have enabled Voith to come through these challenging times
comparatively well. Over and above this, we are benefiting from a sound balance sheet and from liquidity
safeguarded over the long term by appropriate funding lines. In this context, we made a conscious
decision to continue investing even in times of crisis: in research and development, business acquisitions,training and the ongoing development of our Company.
To safeguard Voith’s long-term success and financial independence, we continue to place an emphasison growth. Over and above this, we have resolved to appreciably improve the Company’s profitability
and financial strength. This is increasing in importance especially in times of rising interest rates, low
cyclical growth and ongoing economic uncertainty.
The megatrends of decarbonization and digitalization point the way for our growth strategy. They offer
immense opportunities for Voith both for expanding our core business and for opening up new businesssegments and markets. In the light of the fact that overcoming the climate crisis is one of the largest
global challenges, governments all around the world have set specific targets for achieving climate
neutrality. Furthermore, the impact of increasing resource depletion and the burden of waste on theearth make it necessary to switch over to a circular economy. At the same time, digitalization of all areasof life continues inexorably. This means the global economy is facing tremendous transformation tasks.
Companies around the world must set today the right course for tomorrow through investment – firstly,in order to secure important competitive advantages on the global markets with innovative products andwith highly efficient digitalized production and, secondly, to meet regulatory requirements. Our businessmodel: With sustainable technologies and digital solutions, we support our customers in achieving theirtransformation goals and in attaining economic success. This is enabling us to make a key contribution toindustrial sustainability and at the same time safeguard our growth. The megatrends of decarbonizationand digitalization provide orientation inside the Company. For example, we are also working very hardon digitalizing our own business processes and on making our business activities more sustainable.
We align our business activities to the objective of being a pioneer and performance leader in our
strategic business units. We want to be the first point of call for companies in the market segments weserve and set value-adding standards that benefit our customers. We also aspire to grow more strongly
in the specified business units compared to the relevant market average and, in each case, to be oneof the three largest providers by sales over the medium term.

22Voith Annual Report 2023
Group Management Report
I. BackgroundOn the way to this objective, we are focused on four strategic pillars:
1. Leveraging the potential of our core business:
We are one of the largest and most renowned market participants worldwide in our core business.
Building on the technological leadership we have in many of the market segments we serve, we intend
to leverage the full potential of our current core business. This, firstly, involves an appreciable expansionof the service and aftermarket business in all three Group Divisions. Secondly, the goal is to enhance
the core business technologically. In this context, the focus is on environmentally friendly, sustainable
solutions that contribute to climate neutrality and resource efficiency, as well as digital, often AI-driven,products and services that boost the efficiency and availability of systems. In strengthening our corebusiness, we are building not only on our own expertise in the areas of technology, sales, marketing,organization and management but also on targeted acquisitions that supplement our core business ina meaningful way.
Information on ourinnovation strategy,
particularly withreference to new
business segments
and markets, can befound in section I.4.
Research anddevelopment.

Information on the
topic of occupational safety can befound in section I.6.
Employees.

2. Exploring future business segments and markets
Our strategy also includes a clear commitment to investment in new business segments and markets.
With our experts, we are working on strategies and concepts in order to develop marketable technologies
from innovative ideas. Alongside the growth initiatives that are being driven forward from within theindividual Group Divisions, centrally managed “strategic workstreams” address growth areas that offer
Voith a variety of starting points in existing or new fields. These currently include hydrogen technology
and energy storage.   
3. Efficiency gains through optimized structures and processes:
In order to position Voith as an independent, successful company in the long term and to secure
the financial leeway for necessary investments in the future, it is imperative to boost the Company’s
profitability and liquidity. Contributions to this goal stem not only from a cost- and resource-conscious
approach to work on the part of every individual, but also from the continual advancement of our
productivity and efficiency. For this, we need an organization that is as lean, agile and efficient as
possible, as well as demand- and customer-oriented structures and processes throughout the Company.
We have successfully implemented a variety of change projects in recent years, including for example a
streamlining of the administrative functions and optimization of our production network. In the reporting
year, we initiated the “Future” project aimed at optimizing our processes from end to end. “Future”
acts as a binding force between various strategic initiatives, some of which were launched towards
the end of the reporting year. The initiatives perform an analysis of how activities can be prioritized andrendered more effective as well as of the complexity and efficiency of processes. One important lever inachieving efficiency gains is a powerful IT systems landscape. Specifically, within the scope of a complex
multiyear project, we are continuing to work on the introduction of an ERP (enterprise resource planning)system that integrates a number of business processes on a standardized Group-wide platform. In themeantime, the ERP system has been successfully deployed at various locations; further rollouts areplanned for the 2023/24 fiscal year. The topics of occupational safety and quality management remain
a top priority for Voith. High standards in both areas are imperative for achieving excellence in ourbusiness operations and generating good commercial results.   

Voith Annual Report 2023
Group Management Report
I. Background23

4. Advancing our corporate culture:
Voith’s DNA and values are the foundations of our corporate culture. In order to cope with the changes in
our industry and play an active role in shaping the outcome, we have promoted a cultural change in ourorganization. The direction: a clear market and customer orientation, a distinct culture of innovation anda strong focus on results and, on the other hand, less hierarchical thinking and bureaucratic processes.
In this context, the aim is to further strengthen cooperation marked by collegiality and reliability. Even
though the intended changes have already been kicked off through various human resources tools, theadvancing of our culture remains a central pillar of our corporate strategy.

I.4. Research and development
Innovation as the basis of future business successResearch and development (R&D) has traditionally played a central role at Voith. Technological expertiseand ability to repeatedly transform this know-how into market-oriented innovations with added value forour customers form the foundation for Voith’s strong positioning in the markets and regions we serve.
Ever since the Company was founded, our engineers have been writing history with their inventions in
the field of technology. This is reflected in the strong patent base: Voith holds several thousand active
patents worldwide and several hundred more are registered each year. In this context, active patent
management ensures that the portfolio always reflects the current business strategy and no funds aretied up ineffectively in securing outdated or unviable technologies. This means that, even with regard to
the handling of its intellectual property, Voith applies the principle of cost optimization through technology
and invests the R&D budget in a targeted and sensible manner in the development of forward-looking
projects.
Innovation is decisive for the success of industrial companies: New solutions safeguard sustainable
competitive advantages and thus the sales and growth of tomorrow. In order to respond to the everfaster pace on markets and the at times radical changes involved, we build on the principle of “openinnovation”. Applying this approach means that new solutions are not developed in isolated processes
and are only presented when they have been thoroughly elaborated; rather, they come into being inan open, collaborative process that includes the involvement of customers, suppliers and research
institutions. The networking of expertise and talents from various sectors releases creative energy,
increases the speed of innovation and makes the generation of completely new solutions possible
through providing access to a wide range of knowledge. For a long time, Voith has built on close
cooperation with academic institutions. Over and above this, continuous feedback from customers
facilitates incremental innovation, which means that existing products and services are gradually refined.
In the reporting year, Voith has now introduced a further, third, pillar for promoting open innovation aimed
at reinforcing cooperation with suppliers: As part of the “Supplier Innovation Days”, segment experts
and visionaries, not only from within the Group but from the industry at large, are brought together
to exchange ideas and to explore the most recent technologies and drive change within society and24Voith Annual Report 2023
Group Management Report
I. Backgroundbusinesses. In this context, the focus is placed not only on gaining new insights but also building up
contacts and partnerships likely to be beneficial to all parties on the way to success.
Information onthese two pillarsof our Groupstrategy can befound in section I.3.
Group strategy.

We consider decarbonization and digitalization of the economy to be a great opportunity over the
next decade. Consequently, these two megatrends are reflected as central elements in our Groupstrategy and our R&D strategy is derived from these. They point the way for the ongoing technologicaldevelopment of our current core business as well as for R&D investments in new business segments
and markets.
One important strategic objective for Voith is to also use existing expertise in the areas of hydropower,
paper production, mobility and industrial applications beyond the current product portfolio and, by doing
so, to open up new business segments and markets. Alongside the growth initiatives that are being
driven forward from within the individual Group Divisions, Voith has also identified further growth areas,
which are managed centrally as strategic workstreams, reporting directly to the Corporate Board ofManagement. On account of their extremely dynamic environment, the growth projects designated as
strategic workstreams differ from the Company’s traditional management processes. They are managed
agilely according to the lean start-up principle, which is distinguished by iterative product development,
rapid learning and an adaptable business model. In this respect, the development of new products andsolutions in a strategic workstream is essentially characterized by three strategic directions: technology,
market and business. The degree of elaboration is described on the basis of various phases that extend
from identifying an innovative idea and its subsequent validation through to building up business. The
scaling of the products resulting from this is ultimately performed in the operating business, by meansof which the strategic growth streams are transferred into the Company’s core business. In recent
years, Voith has defined four strategic growth streams: hydrogen technology, electrical drive systems,
cargo rail and energy storage. Over the course of the reporting year, the development of electrical drive
systems and a fully automatic, digital freight coupler (cargo rail) was transferred into Voith Turbo’s corebusiness, where both projects are now being refined. This means that hydrogen technology and energy
storage remain as strategic workstreams.
In order to facilitate the viable use of electric drives in trucks and other heavy load vehicles, in one of thestrategic workstreams, we are addressing the use of hydrogen in mobility applications. As part of this,and with contributions coming from all Group Divisions, Voith is developing a complete hydrogen tanksystem that can be easily integrated into vehicles. This is an area where Voith can apply its experience
gained over many years with the processing of carbon.
To increase the portion of electricity generated from renewable energies in the grid and to cover
increasing demand for energy, it is imperative to stabilize power grids with flexible intermediate storage
systems. Within the scope of the growth area of energy storage, we are focusing on the developmentof a solution providing energy storage for several hours that enables the performance peaks of, forexample, solar farms or windfarms to be stabilized and to bridge periods of darkness without wind,
also known by the neologism “dunkelflaute”. The current solution is based on a vanadium redox flow
battery. Compared to other batteries, redox flow technology offers the benefit of slower battery aging
which, in turn, makes a longer service life possible. In addition, batteries produced using this technology
are recyclable and non-flammable.

Voith Annual Report 2023
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I. Background25

Not only are the strategic growth areas linked to the megatrend of decarbonization, but they are also
closely intertwined with the new possibilities of digitalization. Today already, digitalization plays a vital rolein our core business, which includes developing digital solutions and services for the Industrial Internetof Things (IIoT) that enable customers of our three Group Divisions to make sustained improvements tothe efficiency and availability of their systems and applications. Our dataPARC (previously “OnCumulus”)
cloud platform in addition to our software applications and AI-driven solutions form the basis for these
services and solutions.
Alongside the digital transformation of our customers, we are also accelerating the digitalization of ourCompany. Through standardization of our internal digital infrastructure and our digital applications, weare optimizing our processes and facilitating a continuous stream of innovations. This is reflected ininternal efficiency gains and an increasingly data-based decision-making process.
As the Voith Group, we continue to invest consistently in research and development of new solutions –over € 1 billion in total over the past five years. Even in times of crisis, we made a conscious decision
to maintain our R&D commitment at a high level.
The Voith Group’s R&D expenditure developed as follows over the reporting year:

Research and development Groupin € millions

213

2021/22232+9 %2022/23

Based on Group sales, the R&D ratio of the Voith Group was 4.2 % (previous year: 4.4 %). Of the total
R&D expenditure of € 232 million, € 3 million were capitalized (previous year: € 5 million). Simultaneously,
depreciation and amortization of € 12 million (previous year: € 9 million) was recognized on capitalized
development costs.
Our latest innovations in the reporting year are described in section II.4. Business development of theGroup Divisions.

26

Voith Annual Report 2023
Group Management Report
I. Background

I.5. Sustainability*
Industrial sustainability as a business model
Sustainability is one of our central corporate values and is embedded in our DNA: sustainable technologies
for future generations. The commitment to engaging in ecologically sound, socially responsible and fairbusiness activities has its roots in the traditions of Voith as a family-owned company. We have refined
our understanding of sustainability over past years: Sustainability not only defines the way in which
we act as a company. More than ever before, we interpret it to mean how Voith can use technologicalinnovation to help transform the industrial sector in the direction of climate neutrality and conservationof resources while, at the same time, ensuring economic prosperity. Our strategic focus on sustainable
technologies points the way for the ongoing development of our product portfolio in the existing corebusiness and for investments in new business segments and markets. In brief: Industrial sustainability
is our business model. By doing so, we are making a key contribution to a decarbonized industrial
society, supporting our customers in achieving their sustainability and climate goals and, at the sametime, safeguarding our growth.
We are systematically implementing our sustainability strategy and have defined five fields of action tothis end: sustainable business management, responsibility for our products, for our supply chain, for theenvironment and for our employees. Our goal is to make a demonstrable contribution to the sustainable
development of the Company, society and the environment and to set standards throughout the industry
with regard to sustainability issues. In our core business, we are addressing today already the global
megatrend of decarbonization with the refinement of hydropower as a regenerative energy source,
resource-saving paper production and the development of alternative drive technologies.
We measure the success of our activities in particular against the assessment by ISS-ESG, the renowned
rating agency, thus underscoring the fact-based approach of our actions. In this context, Voith’s sustainability performance was awarded a B- rating, as in the previous year, thus achieving prime status
for the sixth time in succession. According to the current rating, Voith is among the five best companies worldwide in terms of sustainability, compared with 190 other plant and mechanical engineering­companies. The ESG company rating is based on a twelve-point grading system, ranging from A+ (excellent performance) to D- (poor performance or lack of transparency for a performance assessment). A
rating of C+ or higher grants companies prime status. The rating is not only an important indicator of
the effectiveness of our sustainability measures but also has a positive impact on our financing costs.
Since 2009, Voith has systematically recorded and analyzed environmental data, materials indicatorsand relevant personnel data. Since 2011, we have published an annual sustainability report that provides
information on such issues as environmental, employee and social matters as well as compliance withhuman rights and the combating of corruption. Comprehensive figures, data, facts and explanations
relating to all the aforementioned areas of activity can be found in this sustainability report. For the2022/23 reporting year, the Voith Group plans to issue for the first time a voluntary, non-financial* The content of this section consists of unaudited, voluntary content that was critically read by the independent auditor.

Voith Annual Report 2023
Group Management Report
I. Background

27

Group statement pursuant to Sec. 289b (3) and Sec. 315b (3) German Commercial Code (HGB). The
non-financial statement is to be prepared in accordance with Sec. 315c in conjunction with Secs. 289c
through 289e HGB and integrated into the Sustainability Report.
Section I.6. of this Group management report contains general information on how we fulfill our
responsibility towards our employees.

I.6. Employees
Number and distribution of employees
The number of employees in the Voith Group developed as follows in the 2022/23 fiscal year and was
distributed across the various Group Divisions and regions as shown (all figures represent full-time
equivalents excluding apprentices, as at September 30 in each case):

Employees Group
Full-time equivalents as at September 30

21,4912021/22

22,479+5 %2022/23

Employees total 22,479
by Group Division

Hydro
18 %

by region

Paper
35 %

Germany
35 %Europeexcluding Germany
23 %

Other
1%
Corporate Functions& Services
11 %

Turbo
36 %

Americas
19 %

Asia
22 %

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Voith Annual Report 2023
Group Management Report
I. Background

The headcount of Voith Group employees rose by 988 in the reporting year. A large share of the increase
stems from the acquisition of IGW Rail, whose approximately 450 employees were consolidated in theVoith Group for the first time. There was, in addition, organic growth in headcount essentially attributable
to a build up in capacity due to the good development of business in the Group Division Hydro.
At Voith Hydro, the number of employees as at September 30, 2023, increased by 648 to 4,092(previous year: 3,444). This was largely due to a higher staffing level being needed temporarily in thecontext of the assembly and commissioning of four projects in Brazil. The employees recruited at short
notice for this purpose received fixed-term contracts for the duration of the assembly work on therespective project. Over and above this, there was an increase totaling around 220 jobs, mainly for a
new production facility in Southeastern Europe and in the area of HyService to achieve the planned
growth in the service business.
Despite the subdued market outlook, the Group Division Paper largely maintained a stable level of
employees and recruited in a targeted manner several new staff members to safeguard the transfer ofknowledge between generations and to meet the challenges of digitalization. In addition, there was aslight increase in the number of jobs in the service field. At the end of the 2022/23 fiscal year, the Group
Division Paper had 7,898 employees (previous year: 7,825, +73).
At Voith Turbo, the number of employees rose by 305 to 8,037 as at September 30, 2023, (previous
year: 7,732). This growth is attributable to the acquisition of IGW Rail with around 450 full-time equivalentjobs. In contrast, minor capacity adjustments were made in one department of the division Industry
and in the division Off-Highway.
In Corporate Functions & Services, i.e., in the Group’s holding company, there was a stable sideways
movement. As at the end of the fiscal year, this function had 2,452 employees (previous year: 2,490).
As far as the regions are concerned, Voith still employs most people in Germany. The second largest
region is Europe excluding Germany, closely followed by Asia, with the Americas following behind.
In the 2022/23 fiscal year, global personnel expenses were as follows:· € 1,461 million (previous year: € 1,301 million) for wages and salaries· € 277 million (previous year: € 243 million) for social security· € 37 million (previous year: € 38 million) for post-employment benefits.

Priorities of HR work*
Our employees are key to sustainable business success. They are the force behind our innovative drive
and, with their ideas, their skills and their personalities, they create competitive advantages for Voith.
For this reason, we consider the recruitment and long-term retention of employees and the ongoingdevelopment of their potential to be an important value driver for our Company.

* The content of this section consists of unaudited, voluntary content that was critically read by the independent auditor.

Voith Annual Report 2023
Group Management Report
I. Background

Information on our
corporate culture
and the Voith values
can be found insection I.3. Groupstrategy.

29

Advancing our corporate culture – an important pillar of our Group strategy – also remains one focal
point of HR activities. As we see leadership to be a vital aspect in leveraging the corporate culture, weoffer our executive managers a wide range of development programs. We train them in line with theirduties and their experience background in the application of our management tools and use various
educational formats to convey the knowledge, best practices, skills and abilities needed in modern
management based on our Voith values.

Talent management and personnel development*
Our personnel development concepts help us, as an organization, to prepare for a dynamic, complex
and networked working world and empower our employees to actively participate in shaping it. Basedon our employees’ individual training needs, we support them with internal and external training andpersonal development measures that foster professional, personal and methodological skills andcompetencies, thus facilitating lifelong learning.
In this respect, we work with a holistic model for leadership. The structures, processes and systems
derived from this are designed in such a way that our executive managers and employees are in constantdialog with each other: Regularly recurring and ad hoc discussions help to optimize collaboration, boost
performance and facilitate learning. Additionally, with our talent management tools, we pursue the goalof recruiting personnel for our key positions from our own ranks over the long term. Thanks to internaltalent pools and state-of-the-art means of identifying talent, we are continually refining the ways ofmatching people with positions.

Employer attractiveness and personnel marketing*
At Voith, fair working conditions and competitive remuneration are standard practice. Voith sees itself
as a family-friendly company that supports diverse ways of life. This perception of ourselves has been
defined in our Group-wide guidelines for a flexible and family-oriented work culture. It is our declaredobjective to offer our employees a working environment that adjusts as flexibly as possible to their
particular circumstances. This also includes individual working-time models that employees can sign up
to in consultation with their line managers. These models range from a combination of “mobile working”
and on-site presence, or part-time work and job sharing through to flexible vacation arrangements.
Moreover, we provide support with offers of assistance relating to childcare and caring for relatives. We
regularly obtain external confirmation that we are living up to our aspiration to be a fair employer: Since
2014, Voith has received the “FairCompany” seal of quality awarded by Handelsblatt newspaper andthe Institute for Employment and Employability (IBE).
Given the global shortage of skilled labor, and now a general labor shortage, Voith is constantly working
to reinforce its employer brand and strives to make the application and onboarding processes as* The content of this section consists of unaudited, voluntary content that was critically read by the independent auditor.

30

Voith Annual Report 2023
Group Management Report
I. Backgroundpleasant and efficient as possible for new employees. When selecting applicants, the crucial factors
include, in addition to the required professional qualifications, ways of thinking and working that alignwith our corporate culture. To ensure both factors are met, we build on a personal dialog and additionallydeploy objectivized, partially standardized procedures. One key aspect reinforcing the employer brandin the reporting year related to the enhancement of the Voith career website, including its going-live in
September 2023.

First-class professional training*
In the reporting year, we once again provided a large number of young people with career prospects
and increased the number of apprenticeships. At the close of the 2022/23 fiscal year, 745 apprentices
and students were employed at Voith locations around the globe (previous year: 720, +3 %; basis:
headcount).
As a matter of tradition, Voith attaches great importance to first-class vocational training. In this context,
we build on interdisciplinary learning and a holistic approach to imparting a combination of both socialand professional skills. At our major international locations, we employ training methods based on theGerman dual system but adapted to local requirements. Voith’s most important training facilities outsideof Germany are located in Kunshan, China, and in São Paulo, Brazil.

Diversity, inclusion and equal opportunity*
As an employer, Voith sees it as its duty to offer all its employees equal opportunities and to ensure thatthe workplace is free from discrimination. This stance has been reinforced in the form of a Declaration
on Diversity, Inclusion and Equal Opportunities (“D&I Declaration”) signed by the Corporate Board ofManagement.
Since the 2012/13 fiscal year, there has been a Group-wide diversity and inclusion (D&I) program in place
at Voith. “Diversity” stands for the variety of our workforce with regard to the dimensions of gender, age,nationality or ethnic origins, skin color, language, religion, training and professional experience as well as
all other individual differences such as family status, social background, beliefs, health status, physicalor mental abilities or gender or sexual individuality. We are convinced that these varied dimensions – inconjunction with different experiences, talents and strengths – promote diversity of thought. At Voith, weunderstand “inclusion” to be a culture of appreciation and mutual respect that facilitates the developmentof individual potential.
Alongside the awareness among executive managers and employees which is maintained consistently
via workshops and related campaigns, the D&I program also involves optimizing our processes withthe objective of countering unconscious patterns of thought. In addition, managers have been provided
with a D&I toolkit that contains specific suggestions for how to work in and manage teams. To promoteand foster a diverse and inclusive working environment, we support employee networks, known as
employee resource groups (ERGs). Our ERGs offer Voithians a possibility to meet up with like-minded* The content of this section consists of unaudited, voluntary content that was critically read by the independent auditor.

Voith Annual Report 2023
Group Management Report
I. Background31

colleagues and exchange experiences. As a signatory to and endorser of the Diversity Charter, Voith
regularly organizes regional and global D&I days with a wide offering of workshops, discussion forums
and keynote speeches.
One significant objective of our D&I program involves increasing the proportion of women in specialist
and leadership positions. By doing so, we intend not only to increase the diversity within the Company
but also to address demographic challenges. In the light of the fact that women are still underrepresented
in technical professions and courses of studies, technology companies generally employ significantly
fewer women than men. This is also the case at Voith. In the reporting year, the proportion of women in
the overall workforce was 19 % (previous year: 18 %, based on headcount). We intend to increase boththe proportion of women overall and the share of female executives in the Company. For this reason,
we are working hard to offer an environment and to promote a culture that are also attractive to women.
In our personnel marketing activities we pay attention to positioning Voith as an interesting employer
especially for women. Internal regional women’s networks also make a valuable contribution with various
initiatives such as mentoring programs, networking events and training sessions.

Occupational health and safety management*
Occupational health and safety are top priorities for us. By taking a responsible approach to the designof workplaces and processes, we aim to avoid accidents and work-related illnesses as far as is possible.
Since the implementation of our global occupational safety program, we have seen great improvements
at all our locations: The frequency rate, calculated pursuant to an international standard and documenting
the number of accidents per one million working hours, has been reduced appreciably from the baselineof 13.9, or 921 reportable accidents per year in the 2008/09 fiscal year. In the reporting year, the numberof accidents per one million working hours stood at 1.8, which means there was a total of 75 accidents.
Although this figure makes us better than the internal target (2.0), it is, however, up on the previous
year’s value (1.6). In an industry comparison, the frequency of accidents at Voith is at a low level: Theaverage frequency rate for companies in the German Wood and Metal Trades Association is over 20.
At Voith, there has been an appreciable improvement in what is known as the severity rate, whichreflects how serious accidents are. In the reporting year, this figure improved to 362 (previous year:492) hours lost per one million working hours. The success of our occupational safety program stems
from the involvement of all employees acting in conjunction with the Corporate Board of Management
and executive managers as well as the organization’s ongoing willingness to continue working on theseissues with a dedicated and long-term approach.
In the field of occupational safety, we are building on our effective HSE (Health, Safety, Environment)
organization. The Group-wide IT system Quentic (previously: hse+) assists our HSE experts in their work.
In the area of occupational health, we pursue a regional approach appropriate to heterogeneousconditions. No matter where our employees work, they should be able to maintain their ability to workand retire in good health at the end of their working lives.

* The content of this section consists of unaudited, voluntary content that was critically read by the independent auditor.

32

Voith Annual Report 2023
Group Management Report
II. Economic reportII.

Economic report
II.1. Overall assessment
Growth, improved profitability, increased cash flow –in a challenging environment
The Voith Group performed satisfactorily in the 2022/23 fiscal year (October 1, 2022, to September 30,2023) and proved to be in a robust condition with regard to its operations and finances. All key financial
performance indicators of the Voith Group rose in the reporting year; almost all growth and earnings
targets were exceeded.
The orders received by the Voith Group increased by 19 % to € 6.14 billion. One of the main reasons
behind this growth of € 975 million was the increase in the volume in an ongoing major project of theGroup Division Hydro. Another reason for the encouraging development in the Group’s orders received
was the appreciable growth in excess of expectations in the Group Division Turbo, partly attributableto acquisitions. At € 7.22 billion, orders on hand reached an all-time high at the end of the fiscal year.
Group sales grew by € 625 million or 13 % to € 5.51 billion. All Group Divisions contributed with risingsales to this development exceeding expectations. The Group Division Turbo saw the clearest growth.
With sales of € 2.24 billion, Voith Paper remained the Group Division with the strongest sales.
In addition to perceptible organic growth, Voith also benefited from two acquisitions: In the reporting
year, IGW Rail, taken over in October 2022, was included in the Voith Group’s financial statements forthe first time, and Argo-Hytos, acquired in August 2022, for the first full fiscal year. This gave rise to an
acquisition-related increase of around € 210 million in orders received and around € 230 million in sales.
This expected consolidation effect was already anticipated in the business planning and forecast for
the reporting year.
In addition to the good sales trend, the earnings indicators in the reporting year reflect an improved
profitability. EBIT grew by 22 % to € 245 million. Return on sales improved to 4.4 % (previous year:
4.1 %) and ROCE to 12.1 % (previous year: 10.5 %). The increase in materials prices, transport costs
and wages – which was massive in some cases – required significant countermeasures. Thus, inflationrelated cost increases were countered by efficiency gains, general discipline in the use of resources anddifferentiated procurement strategies and contractual arrangements.
All three Group Divisions – Hydro, Paper and Turbo – contributed to the pleasing development at Grouplevel with higher operating results.
Bottom line, we increased the Group net result from € 30 million in the previous year to € 73 million in
the reporting year.

Voith Annual Report 2023
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II. Economic report

33

Significant investments for the future were once again made in the reporting year. For instance, we
increased our investments in property, plant and equipment and intangible assets from € 143 million
to € 188 million and our R&D expenditure from € 213 million to € 232 million. In this context, the strong
orientation of the Voith Group towards industrial sustainability is given high priority along with theassociated ongoing strategic and technological enhancement of the Voith product portfolio. Over andabove this, we invested in the structures and processes and in particular in the IT infrastructure of ourorganization. Great dedication continued to be applied to the training and ongoing development of ouremployees.
The net assets and the financial position of the Voith Group is very sound. The equity ratio stood at 23.9 %at the reporting date (previous year: 24.1 %). A sharp increase in cash flow from operating activities
was achieved, amounting to € 306 million in the reporting year (previous year: € 93 million). Total cash
flow was positive at € 36 million, in contrast to the previous year (€ -137 million) that was characterized
by acquisitions.
The net liquidity, defined as the difference between liquid financial assets and interest-bearing financial
liabilities (not taking lease liabilities into consideration) likewise improved and amounted to € -182 million
at the end of the reporting year (previous year: € -233 million). The stable liquidity position from our own
bank balances and existing loan agreements gives us sufficient leeway to further invest in our future
and to advance important strategic topics.
The expense and income figures for the 2022/23 fiscal year include negative exchange rate effects, butthese are negligible in light of the high level of growth in the operating business.

II.2. Macroeconomic and industry-specific environment
Global economic downturn continues, Germany in recession
The downturn in the global economy continued over the 2022/23 fiscal year. After global economic
growth of 3.5 % in 2022, forecasts by the International Monetary Fund (IMF) see a global growthrate of only 3.0 % for 2023. Global supply chains, for instance, have in fact largely normalized over
the reporting year and the global economy is gradually recovering from the impact of the Covid-19
pandemic. However, the global economy continues to suffer under the high inflation prevailing in mostof the world’s regions. Firstly, the high inflation is cutting into household purchasing power and is thus
hampering household consumption; secondly, the restrictive monetary policy of most central banks
required to combat inflation is increasing the costs of borrowing and discouraging investment. The war
in Ukraine continued to cause general uncertainty and high volatility on many markets, particularly thosefor energy, oil & gas, and raw materials.
In this context, developments are very varied between the regions of the world.

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Economic growth
Real change in GDP1) on the previous year

World output
Advanced economies
USA
Euro area2)
Germany
Emerging market anddeveloping economies
China
ASEAN-5 3)
India
Brazil

2022

3.5 %

2023

3.0 %

2022

2.6 %

2023

1.5 %

2022

2.1 %

2023

2.1 %

2022

3.3 %

2023

0.7 %

2022

1.8 %

2023

-0.5 %

2022

4.1 %

2023

4.0 %

2022

3.0 %

2023

5.0 %

2022

5.5 %

2023

4.2 %

2022

7.2 %

2023

6.3 %

2022

2.9 %

2023

3.1 %

Source: International Monetary Fund (IMF); World Economic Outlook, October 2023.
1)

2022: estimates; 2023: forecasts.

2)

Including Germany.

3)

Indonesia, Malaysia, Philippines, Singapore, Thailand

In advanced economies, the economic downturn is more pronounced than in the emerging markets.
The euro area, in particular, cooled sharply and is expected to see growth of only 0.7 % in 2023. Europe
is continuing to suffer under energy price hikes triggered by the Russian war of aggression in Ukraine.
Germany has slipped into recession and, as the only major economy of the world, is contracting in
2023. The main reason for this is the weakness of German industrial production due to higher energy
prices in an international comparison. This is exacerbated by weak global trade, which is appreciably
down on the long-term average and is impacting especially heavily on Germany as an export-oriented
economy. The US economy has proven to be relatively robust. The US gross domestic product is
expected to grow by a good 2 % in 2023, as was the case in the previous year, and is thus not only ona better trajectory than the euro area but also better than expected by economic researchers when our2022 Group management report was published. The expansive fiscal policy of the US administration,
which includes the Inflation Reduction Act, also contributed to this comparatively good development.
Growth in the emerging markets is being driven by China and India. After ending its strict zero-Covid
policy at the start of 2023, China (IMF forecast for 2023: +5.0 %) experienced a surge in growth which,in turn, triggered the corresponding positive signals worldwide. India continued to see great momentum(2023: +6.3 %). For the ASEAN-5 countries, growth of 4.2 % is forecast for 2023. A welcome surprise wasprovided by Brazil (2023: +3.1 %), where agriculture in particular underwent very good developments.
Although this South American country is experiencing weaker growth than most Asian countries, it
is appreciably stronger than expected by economic researchers when our 2022 Group management
report was published.

Voith Annual Report 2023
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II. Economic report35

Mechanical and plant engineering showing an appreciable decline inorders received
The investment climate deteriorated noticeably over the reporting year. The level of orders received in
the German mechanical and plant engineering sector fell over the first half of 2023 by 14 % in real terms
in comparison to the corresponding previous-year period. Thanks to the normalization of the supply
chains, it was possible to process the high backlog of orders on hand from the previous year more
quickly. However, the lack of a sufficient quantity of new orders meant that price-adjusted production
output stagnated.

Voith markets mainly robust, but volatile
Of the five target markets that Voith serves, the early cyclical paper market reacted most sharply to theeconomic downturn. The markets for oil & gas, energy and raw materials benefited from prices thatremained at a high level following the market turbulence triggered by the Ukraine war and were marked
in many segments by high investment activities. The transport & automotive market was on a recovery
trajectory after the gradual end to the Covid-19 pandemic.
Energy: war in Ukraine is accelerating the expansion of renewable energies
The energy market encompasses the conversion of various primary energy sources such as hydropower
and wind, and also coal and gas into electricity, as well as various forms of storage. This market isserved by the Group Divisions Hydro and Turbo.
Global electricity consumption rose slightly in the 2022/23 fiscal year but with growth slowing on theprevious year in line with the weakening economy. Whereas the US and – due to high energy prices –Europe in particular underwent declines, there was an uptick in consumption in China and India. Overthe medium term, demand for electricity will continue to rise due to the growth in the world population,
the switchover to e-mobility and increasing electrification of all areas of life.
With regard to electricity generation, the trend towards renewable energies continues. In the reporting
year, global power generation from renewable energies increased appreciably, driven by ongoing additionof output of solar energy and wind power, with the highest rates of growth seen in the last 30 years.
After the outbreak of war in Ukraine, coal saw an unforeseen peak as the short and thus expensive
supply of gas was replaced at short notice by coal in many regions; in 2023 and 2024, the amount ofcoal used in power generation is expected to fall slightly, with developments varying from region toregion. Power generation from gas remained roughly at a stable level over the reporting year. Nuclear
energy saw at most stable developments and oil has played a subordinate role in power generation
for years. In 2022, 29 % of the electricity generated worldwide stemmed from renewable energies and
15 % from hydropower.
Investments in the electricity sector increased appreciably in the reporting year. The largest share in thisis attributable to renewable energies, also supported by government subsidies and regulations in many
countries. Among the renewables, the greatest share of investments was allocated to photovoltaics.

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In the area of hydropower the market volume may fluctuate sharply from year to year on account of
the large volumes of investment of individual hydropower projects. A large portion of total investments
in hydropower stemmed from pumped storage projects in China. These, however, are being awarded
primarily to local competitors on account of relevant regulations by the Chinese government. In the2022/23 fiscal year, the volume of contracts awarded that is relevant to the Group Division Hydro
increased in comparison to the previous year. With regard to the market for conventional power planttechnology relevant for the Group Division Turbo, the picture was mixed: Whereas the investments infossil power stations were in decline in the reporting year, more investments were made once again in
nuclear power generation.
Oil & gas: prices down on previous year’s high, vigorous investment activity
The oil & gas market comprises three segments: upstream involving the extraction of crude oil andnatural gas, midstream relating to transport of raw materials primarily via pipelines and tankers, anddownstream consisting of the refining of crude oil and natural gas into the various fuels and raw materials
used by the chemicals industry. The division Industry of the Group Division Turbo supplies all segmentsin this market with application-specific products and services.
After the war in Ukraine had triggered enormous price surges and turbulence on the oil & gas market
in the previous year, prices of crude oil and gas remained volatile, but they nevertheless fell appreciably
below the previous year’s level over the 2022/23 fiscal year. Since the high, exceeding USD 70 per million
British thermal units, in August 2022, the price of gas in Europe fell continually, coming to an averageof USD 11.55 at end of the fiscal year in September 2023. The circumstances behind the fall in prices
included an increase in imports of liquid gas to replace the Russian pipeline gas that is no longer being
delivered to Europe, a relatively mild winter as well as efforts to boost energy efficiency and to economize
on energy use. The price of gas also fell considerably in the USA. In September 2023, it stood at an
average of USD 2.64 per one million British thermal units, after reaching USD 8.79 in August 2022. The
price for a barrel of Brent crude oil, which had peaked at over USD 120 in June 2022, fluctuated most of
the reporting year within a corridor between USD 70 and 90 USD, standing at well over USD 92 at theend of the 2022/23 fiscal year. In this context, an upward trend in the price of crude oil became apparent
since the summer, which is essentially attributable to the cuts in oil production by OPEC+ members.
Oil and gas prices determine the earnings position of companies active in the oil & gas market as wellas their willingness to make investments, which, in turn, has an influence on Voith Turbo’s business inthis sector. The major oil and gas companies generated record income in 2022, but only invested part ofthis income. Upstream investments increased perceptibly in the reporting year, but they remained downon the level prior to the outbreak of the Covid-19 pandemic. In the midstream segment, investments in
LNG infrastructure increased significantly, driven by the substitution of Russian pipeline gas with liquid
gas in Europe. Investments in refineries (downstream) rose slightly and concentrate on the Middle East,
China, India and North America.
Paper: slight fall in level of production, significant decline in investments in paper machines
The paper market covers all areas of paper production: from stock preparation and paper production –including surface refinement by calendering and coating – through to reeling paper webs. The GroupVoith Annual Report 2023
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37

Division Paper serves this market for all types of paper: board and packaging paper, specialty paper,
tissue and graphic paper. Its range of offers includes new lines and rebuilds, automation technology anddigitalization solutions, services and spare parts as well as wear parts such as roll covers and fabrics.
These are augmented by the preparation of primary (pulp) and secondary fiber (wastepaper) and water
treatment facilities.
In the 2022/23 fiscal year, global paper production was, according to industry analysts, in decline. Paper
manufacturers around the world suffered under the high material and energy prices, in particular gas. As
was already the case in the previous fiscal year, the European market was impacted most severely as
energy and gas are especially expensive here in an international comparison. Of the different grades of
paper, graphic papers saw the sharpest decline – a trend that is unlikely to be reversed in the near future
due to the progressing digitalization. With all other grades of paper, a return to rising production volumes
is expected in the foreseeable future following the decline and stagnation in the 2022/23 fiscal year.
All in all, the earnings position of paper manufacturers deteriorated perceivably. In addition, thecommissioning of a large number of new machines and rebuilds built up excess capacities over recent
years. Specifically in China, large machines came to a standstill at paper factories once again in 2023.
After the recent years of strong investment activity, the market for new lines and rebuilds started tocool. In the light of the challenging and uncertain environment, the investment volume fell appreciably
in comparison to the previous year. Demand for wear parts has to date been hardly impacted by the
decline on the market for new investments. In addition, demand for services recovered after the endof the pandemic-related lockdowns.
Raw materials: normalization of prices at a good level, high level of investment activity again
We define raw materials as ores and minerals extracted from the earth, such as copper, iron ore and coal
along with other geological materials, for instance sediments used as building materials. By contrast,
the raw materials oil and gas are considered separately as part of the oil & gas market. The segment of
the raw materials market of relevance for Voith is primarily the mining sector, which is supplied by theGroup Division Turbo (division Industry).
After the previous year’s turbulence and price surges, the market for raw materials started to calm in
the reporting year, a development that was accompanied by significant price drops. Prices for power
plant coal fell continually after the highs seen in the summer of 2022. Similarly, the prices of metals
and minerals such as iron ore, copper, nickel and aluminum fell appreciably in the reporting year incomparison to the highs in the previous year. In a medium-term comparison, prices of raw materials
are still at a high level. This development was driven firstly by the normalization and diversification of
the global supply chains disrupted by the outbreak of the war in Ukraine and secondly by the subdued
global economy. As a result, there was greater balance between supply and demand.
Given the ongoing good price level, investment activity by the mining industry was once again high inthe reporting year even though the climate deteriorated somewhat over the course of the reporting year
in light of the slower global economic growth, the high inflation and rising interest.

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Transport & automotive: recovery from Covid effects and growth in some market segments
The transport & automotive market includes diverse transport routes and the means of transport usedon them for moving people and goods as well as working machinery. The Group Division Turbo (division
Mobility) serves this varied market as a specialist for intelligent drive systems and customized services
for commercial vehicles, rail vehicles, the marine segment and off-highway vehicles.
The commercial vehicle markets developed better than expected in the 2022/23 fiscal year. Global
production of heavy trucks (> 15 metric tons) grew perceptibly in 2023, but is still down on the precoronavirus level. The strongest growth was generated in Asia, driven by a market recovery in China after
the end of the Covid-19-related lockdowns. Dynamic developments were also seen in Western Europe,and within this region, the German-speaking countries. The bus market returned even more appreciable
growth than the truck market, driven by strong developments in the city bus segment. This segment
benefited from the transformation towards low-emission vehicles with alternative drive technologies,
which is being given regulatory support in many countries. Whereas Europe saw growth in electricbuses in particular, Chinese manufacturers benefited from a significant increase in the export business.
The recovery on the rail market continued in the reporting year after passenger figures normalized
after the gradual end to the Covid-19 pandemic and global supply chains began to function again. In
particular, overhauling and other services were made use of on a large scale.
The market for marine applications likewise remained on a recovery trajectory. In this respect, there
was ongoing stronger demand for alternative, carbon-free and low-consumption drive technologies.
Specific stimulus for growth was seen with special-purpose vessels for servicing offshore wind turbines.
The market for agricultural machines stagnated in the 2022/23 fiscal year. In the light of the weaknessof the construction sector due to high inflation, rising interest rates and shortage of labor, demand forconstruction equipment was subdued in the reporting year. The development was most of all negativein South America and on the German market that is important for Voith Turbo.

Voith Annual Report 2023
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II.3. Business development of the Group
II.3.1. Material events
Change on the Corporate Board of Management
Effective as of November 1, 2022, Dr. Tobias Keitel was appointed a member of the Corporate Boardof Management of Voith Group and President & CEO of Voith Hydro. He succeeds Uwe Wehnhardt,
who continues to be available to the Company as Senior Advisor. Dr. Tobias Keitel had already beena member of Voith Hydro’s Management Board since 2016 where he was most recently responsible
for the areas of operations, project execution, as well as service and sales. Holding a PhD in industrial
engineering and an MBA, he worked for a well-known management consulting firm and a major plantengineering company, before he joined the Voith Group in 2011.

M&A activities
At the beginning of October 2022, Voith acquired 100 % of the shares in IGW Rail. Based in the Czech
Republic, IGW Rail is a globally operating high-tech company that has specialized in customized gear
unit and coupling solutions for the rail vehicle industry. IGW Rail has four production facilities in the
Czech Republic, India, the USA and China, and at the time of the takeover employed around 450 people.
Through the acquisition, Voith has become one of the world’s largest independent manufacturers of rail
vehicle gear units and transmissions. IGW Rail has been fully consolidated since October 1, 2022, andis assigned to the Group Division Turbo.

II.3.2. Orders received
Appreciable increase in orders received
In the 2022/23 fiscal year, orders received by the Voith Group rose by 19 % to € 6,139 million (previous
year: € 5,164 million). This appreciable growth means that we have exceeded our targets (forecast in
the 2022 Group management report: “slight decline”). One of the main reasons behind this growthand plans being exceeded was the increase in the volume in an ongoing major project of the Group
Division Hydro. Another reason for the encouraging development in the Group’s orders received was
the appreciable growth in excess of expectations in the Group Division Turbo. In view of the economic
environment marked by a lack of economic dynamism and by uncertainties, we consider this result tobe very satisfactory.
Two acquisitions also contributed to the growth of € 975 million in orders received: In the reporting
year, IGW Rail, taken over in October 2022, was included in the Voith Group’s financial statements for40

Voith Annual Report 2023
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II. Economic report

the first time, and Argo-Hytos, acquired in August 2022, for the first full fiscal year. This gave rise to an
acquisition-related increase totaling around € 210 million. This expected consolidation effect was alreadyreflected in the forecast for the 2022/23 fiscal year. In contrast, negative currency effects weighed onorders received. These were negligible in the light of the high level of growth in the operating business,
however.
The orders received by the Group and the Group Division Hydro do not contain an order for a customer
in Angola with an order volume of € 873 million. Although a customer agreement has been signed,
financing arranged and an export guarantee put in place, which would normally lead to the order being
recognized in full in orders received, the Corporate Board of Management has still, in this specific case,identified not inconsiderable uncertainties regarding implementation of the project because only part of
the agreed first down payment has been made by the customer. The Corporate Board of Management
has consequently issued instructions to align the business management and controlling of the Groupand the Group Division Hydro to performing only activities (essentially engineering) that are covered by
the down payment received. Only when the remaining amount of the down payment has been received
will the Group and Voith Hydro take this order and its entire order volume into consideration in thebusiness management and controlling.
At € 7,220 million as at September 30, 2023, (previous year: € 7,029 million), the Voith Group’s orders
on hand reached a further all-time high. The high level of orders on hand will be reflected only graduallyin sales growth on account of long project times customary in the large plant business.

Orders received Group

Orders on hand Groupin € millionsin € millions

6,139
5,164

2021/22

Detailed informationon the developmentof orders received ineach Group Division
can be found insection II.4. Businessdevelopment of theGroup Divisions.

7,029

7,220
+3 %

+19 %

2022/232021/222022/23

All three Group Divisions operated successfully in a market environment that remained challenging
and contributed, with high figures, to the encouraging development at Group level. On account of theincrease in volume in an ongoing project already mentioned, Voith Hydro’s orders received leapt to€ 1,915 million (+62 %). Voith Turbo (€ 2,048 million) increased its orders received by 25 %. In the Group
Division Paper (€ 2,097 million), orders received declined from the very high previous-year figure as
expected following the market cooling (-7 %).

Voith Annual Report 2023
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41

In the reporting year, orders received were distributed as follows among the Group Divisions and regional
markets:

Orders received total € 6,139 million
by Group Division

by region

Hydro
31 %

Paper
34 %

Germany
11 %Europeexcluding Germany
28 %

Other
16 %
Corporate Functions& Services
1%

Turbo
34 %

Americas
23 %

Asia
22 %

II.3.3. Sales
Appreciable increase in Group sales
Group sales grew by € 625 million to € 5,506 million (previous year: € 4,881 million). The 13 % rise
exceeded our expectations (forecast in the 2022 Group management report: “slight increase”, taking
account of the consolidation effect from Argo-Hytos and IGW Rail).
After the pandemic-related travel and contact restrictions had come to an end and supply chains hadlargely normalized, we were once again in a better position to process the high level of orders received
in the previous years and convert them into sales. Specifically the service business, where revenue istypically recognized quite quickly, also saw a positive development.
In addition to the good development of the operating business, there was acquisition-related growthfrom the takeover of Argo-Hytos and IGW Rail totaling around € 230 million. In contrast, negative
currency effects weighed on sales but these were negligible, however, in the light of the perceptibleorganic growth in sales.

Sales Groupin € millions

4,881

2021/22

5,506
+13 %

2022/23

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Detailed informationon the developmentof sales in eachGroup Division canbe found in section II.4. Businessdevelopment of theGroup Divisions.

All three Group Divisions succeeded in increasing their sales and exceeding their targets. Voith Turbo(€ 1,994 million) saw the strongest growth of 28 %. In the Group Division Hydro (€ 1,189 million), sales roseby 13 %. Voith Paper (€ 2,239 million) grew 2 % and made the largest contribution to the Group sales.
In the reporting year, Group sales were distributed as follows among the Group Divisions and regional
markets:

Sales total € 5,506 million
by Group Division

Hydro
22 %

by region

Paper
41 %

Germany
14 %Europeexcluding Germany
31 %

Other
3%
Corporate Functions& Services
1%

Turbo
36 %

Americas
24 %

Asia
28 %

II.3.4. Operating result
Profitability increased

For our definition
of EBIT, referto section I.2.
Management
system.

Detailed informationon the developmentof EBIT in eachGroup Division canbe found in section II.4 Businessdevelopment of theGroup Divisions.

The appreciable sales growth was also reflected in the operating result. EBIT rose by 22 % to € 245 million
and was thus better than expectations (forecast in 2022 Group management report: “perceptible
increase”). The increase in materials prices, transport costs and wages – which was massive in somecases – required significant countermeasures. Thus, inflation-related cost increases were countered by
efficiency gains, general discipline in the use of resources as well as differentiated procurement strategies
and contractual arrangements.
The appreciable increase in EBIT was achieved although significant forward-looking investments
continued to be made. For instance, we further increased our R&D expenditure in the reporting year
and remained committed to the training and ongoing development of our workforce. Furthermore, weinvested in the structures and processes and the IT infrastructure of our organization.
A large contribution to the Group EBIT came from the Group Division Paper (€ 145 million), which increased
its operating result by 11 % starting from an already high level. The Group Division Turbo improved its
operating result appreciably: Voith Turbo’s EBIT increased by 66 % to € 80 million. At € 6 million, EBIT in
the Group Division Hydro (previous year: € 2 million) remained at a less than satisfactory level.

Voith Annual Report 2023
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II. Economic report

EBIT Group

ROCE Groupin € millions

in %

43

245
200

+45
2021/222022/232021/22

10,5

12,1

2022/23

Return on sales stood at 4.4 % (previous year: 4.1 %). ROCE improved from 10.5 % in the previous year
to 12.1 % in the reporting year, thus within the range of our expectations (forecast in the 2022 Groupmanagement report: “perceptible improvement”).
With the increase in return on sales and ROCE, we consider ourselves to be on the right path. A further
improvement in profitability and return ratios – while investments in the future remain high – will stay
one of our main objectives for the coming years.

II.4. Business development of the Group Divisions
II.4.1. Hydro
Growth in sales and orders received, EBIT remains at a low level
The Group Division Hydro looks back on a challenging 2022/23 fiscal year. On the one hand, Voith
Hydro made a leap forward in terms of orders received – mostly through the increase in volume in an
ongoing project – and was able to perceptibly increase its sales also thanks to the upswing in the service
business; on the other hand, the earnings situation remains unsatisfactory with a view to the massive
rises in materials and transport costs and the processing of orders booked in weak market phases
under high price pressure. Increasing profitability remains an important objective for the Group Division.

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Key financial performance indicators
The Group Division Hydro’s key financial performance indicators for the 2022/23 fiscal year are as follows:

Orders received Hydro

Sales Hydroin € millionsin € millions

1,915
1,184

+62 %
1,048

2021/222021/222022/23

EBIT Hydro

ROCE Hydroin € millions

in %

6
2

2021/22

+4

1,189
+13 %

2021/222022/232022/231.0

2.9

2022/23

Hydropower market showing signs of recovery
The market environment of the Group Division Hydro showed signs of recovery after the end of thepandemic-related lockdowns and travel limitations, and the normalization of the supply chains. The
global volume of contracts awarded of relevance for Voith in the 2022/23 fiscal year increased on theprevious year. However, the war in Ukraine, the higher key interest rates in many of the world’s regions
and the general economic slowdown ran counter to a comprehensive market recovery.
Orders received marked by increase in volume in an ongoing major project
Voith Hydro’s orders received rose by € 731 million to € 1,915 million in the reporting year. The forecast
published in the 2022 Group management report (“stable development”) was exceeded appreciably. As
at September 30, 2023, orders on hand rose to € 4,005 million (previous year: € 3,538 million).
The main reason for the leap in orders received was an increase in volume achieved in the reporting
year at a major project where implementation has been ongoing for several years. The service businessalso developed very positively and contributed to the growth in orders received.

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45

The orders received by the Group Division Hydro do not contain an order for a customer in Angola withan order volume of € 873 million. Although a customer agreement has been signed, financing arranged
and an export guarantee put in place, which would normally lead to the order being recognized in fullin orders received, the Corporate Board of Management has still, in this specific case, identified notinconsiderable uncertainties regarding implementation of the project because only part of the agreed first
down payment has been made by the customer. The Corporate Board of Management has consequently
issued instructions to align the business management and controlling of the Group Division Hydro toperforming only activities (essentially engineering) that are covered by the down payment received. Only
when the remaining amount of the down payment has been received will Voith Hydro take this orderand its entire order volume into consideration in the business management and controlling.
Voith was awarded an appropriate share of the new projects tendered in the reporting year. In the growing
pumped storage segment, Voith received a number of orders. As facilities used for stabilizing grids,
pumped storage plants make an important contribution to the expansion of renewable energies. Voith
has in-depth expertise and renowned references. As part of the extensive expansions of the Kruonis
pumped storage plant in Lithuania, Voith is supplying a highly flexible pump turbine unit with an output
of 110 MW. Over and above this, Voith is acting as the general contractor for the design, manufacturing
and transport, as well as the assembly and commissioning of the unit on site. One particular success
was winning a large pumped storage project in China. Pumped storage projects make up an enormous
share of the large Chinese hydropower market. The Chinese government’s decoupling strategy has madeit impossible for Voith to tender for a large portion of these projects. It is all the more pleasing that ourbranch office in Shanghai was able to win the order for the 1,400 MW Jingning power plant. Within thescope of this new power plant in the Chinese province of Zheijang, Voith is supplying four reversible
Francis turbines, each with an output of 350 MW, as well as the generators.
Voith also recorded a good level of orders received in other countries in Asia. An order from Laos, forexample, contributed to this development. Voith will supply the electromechanical equipment for the
new hydropower plant located in Nam Phak, which will have an output of 168 MW. In Japan, a large
number of small- and medium-size orders were tendered as part of the government’s promotion ofrenewable energies, of which we were able to win several.
We succeeded in maintaining our strong position on the large North American market, which ischaracterized by modernization projects. For example, we were awarded the contracts for two major
projects in the USA, namely the modernization of two run-of-river hydropower plants: Oxbow Damon the border between Idaho and Oregon and Norfork in the State of Arkansas. In addition, we wereawarded various other contracts in North America.
On account of the advanced age of many hydropower plants in South America, opportunities formodernizations and service activities have also started to arise in this region, and Voith is exploiting
them. In the reporting year, for example, we were awarded the contract to modernize the Porto Colombia
hydropower plant, which is located on the Rio Grande river and has an installed capacity of 320 MW.

46Voith Annual Report 2023
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In theory, Africa has some of the greatest unused potential for hydropower worldwide and various
countries on this continent are seeking to expand their energy supplies over the medium term. As,
however, large projects frequently depend on financing by foreign partners, the planning phases are
longer than average and the timing of the contract awarding is difficult to predict. No major projects
were awarded in Africa over the reporting year.
Sales up 13 %Voith Hydro’s sales rose by 13 % to € 1,189 million in the reporting year and thus exceeded our expectations(2022 Group management report forecast: “stable development”).
A very good service business contributed to this encouraging development in sales. Due to revenue
typically being recognized quite quickly in the service business, part of the rise in orders in this area
has been reflected in the sales of the reporting year already.
Looking at the regional distribution of sales, a good third is attributable each to the Americas and Europe(including Germany). One quarter of sales was generated in Asia. Europe was the growth driver. SouthAmerica also saw very positive developments.
Operating result remains at a low level
The earnings situation in the Group Division Hydro continued to be burdened by sharp rises in materials
and transport costs as well as by orders that were booked in weak market phases under high pricepressure. For this reason, EBIT, return on sales and ROCE improved on the very weak previous-yearlevel, but remained short of a satisfactory level, nevertheless. At € 6 million (previous year: € 2 million),
EBIT stood at the lower end of our expectations (2022 Group management report forecast: “perceptible
increase”). Return on sales increased from 0.2 % to 0.5 %. ROCE improved from 1.0 % to 2.9 %. Thismeans the forecast (2022 Group management report: “perceptible improvement”) was met.
One important objective in the Group Division Hydro consists of improving the profitability over the
coming years. Alongside further expansion of the service business, the plans include differentiatedcontractual arrangements and close coordination with our customers to contribute to addressing thegeneral increases in costs.
Material events
Since the reporting year, Voith Hydro has been operating a new center of competence for generator
components in Bosnia and Herzegovina. The location in Lukavac (Tuzla) will serve customers in various
markets; from North and Latin America to Europe and Africa. The setup was implemented together withexperts from Voith Hydro’s central technology department in Germany, where essential R&D functions
for generator components are based. The new center of competence works in close collaboration
with the Bosnian facility of ELIN Motoren, a Voith company belonging to the Group Division Turbo,
which successfully produces motor and generator coils as well as wind generator components in theimmediate neighborhood.

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47

Innovations
The Group Division Hydro set new standards in Pelton technology in the reporting year: Voith brought
the first six-nozzle horizontal Pelton runner onto the market and successfully put it into operation in astorage facility in Austria. In the Pelton turbine, which is especially suited to plants with high heads,
the water is directed by forming free jets at very high velocity from one or several nozzles to the Pelton
runner. Until now, Pelton turbines with more than three nozzles have always been designed with a verticalshaft. The main reason for this was that it allowed higher efficiency than a horizontal arrangement. We
have now successfully eliminated this drawback and achieved an efficiency level comparable to that ofthe vertical configuration, as demonstrated in the Gerlos 1 power plant in the Tyrol region of Austria. At
the Tyrolean storage facility, which was commissioned in 1949, the previous four vertical Pelton turbines
were successfully replaced by one six-nozzle horizontal Pelton turbine. This new development is primarilyof interest for upgrades of existing hydropower plants where single- or double-nozzle horizontal units
are already installed. This provides enormous potential for increasing efficiency, with the replacementof the turbine not involving a great deal of construction work. In the case of new builds, this innovativetechnology also has advantages over conventional solutions: Its footprint is smaller and the installation
time is shorter, which cuts the total investment costs.
For some time now, Voith has been working intensely with virtual technologies such as building
information modeling (BIM) and 3D scans for building development and planning as well as for theasset management of hydropower plants. In the reporting year, we successfully applied these tools at
a new plant and a major modernization project. BIM refers to a digital representation of the physicaland functional characteristics of a building. BIM models help improve the planning and design andoptimize collaboration between the partners involved. 3D scans are used for recording and creatinga digital representation of the real world in the machinery room and offer valuable support, especiallyin engineering. BIM and 3D scans have been in use in traditional construction projects for around 20
years and have become standard in that field. Digital tools are increasingly seen as the key to complex
construction projects of all kinds, which also include hydropower plants. The hydropower sector isstill in the early-adopter phase in this regard. In line with its role as technology leader, Voith is alreadyleading the way.
As part of the work to modernize an Austrian pumped storage power plant, we succeeded in the 2022/23
fiscal year in not only boosting the efficiency and the output of the plant but also in significantly reducing
its noise emissions. With a view to the power plant’s proximity to a residential area, this was one of the
project’s main objectives. The numerical flow and acoustic calculations developed in the context of themodernization work can also be used in future projects to reduce noise emissions.

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II.4.2. Paper
Good results for orders received, sales and EBIT, despite market cooling
Following two years with exceptionally high levels of investment in the paper market and record figures
at Voith Paper, the expected market cooling set in over the course of the 2022/23 fiscal year. In thelight of this, the orders received by the Group Division Paper were down on the high previous-year level,and sales grew slightly. Despite the challenging business environment involving massive increases inmaterials prices and transport costs, Voith Paper succeeded in further increasing EBIT. ROCE almost
reached the good previous-year figure.
Key financial performance indicators
The Group Division Paper’s key financial performance indicators for the reporting year are as follows:

Orders received Paper

Sales Paperin € millionsin € millions

2,256
-7 %

2021/22

2,097

2,196

2022/232021/22

EBIT Paper

ROCE Paperin € millions

in %

131

2021/22

145
+14

2,239
+2 %

2022/232021/2226.2

2022/2325.4

2022/23

Orders received decreased as expected
In the 2022/23 fiscal year, the Group Division Paper generated orders received of € 2,097 million(-7 %). The slight decline on the very high previous-year figure corresponds to our expectations and is
attributable to the already explained market cooling after several years of exceptionally strong investment
activity, which became increasingly apparent from the beginning of the second half of the reporting year.

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Detailed informationon the developmentof the paper market
in section II.2.
Macroeconomic andindustry-specificenvironment.

49

In the light of the subdued economic situation, existing excess capacities and a massive rise in costs at
the paper manufacturers, investments in paper machines fell around the world. As a consequence, theorders received by our project business (new lines and rebuilds) declined. Over the course of the fiscal
year, stagnating paper production and downtimes of numerous machines increasingly also impacted
our business with wear parts, spare parts and services.
At the end of the fiscal year on September 30, 2023, orders on hand stood at € 1,522 million (September 30, 2022: € 1,878 million).
Orders received in the project business (new lines and rebuilds) were dominated by new lines andrebuilds for the production of board and packaging paper. For instance, we received an extensive full-line
contract from the Swedish-Finnish paper and packaging manufacturer Stora Enso to convert a former
paper machine into Europe’s largest board machine with the aim of enabling maximum production andresource efficiency with a minimum CO2 footprint.
Likewise in the area of packaging paper, we were commissioned in August by the Chinese paper
manufacturer Shanying Suzhou Paper to supply two new lines for its new site in Zhongying, Anhui
Province, in eastern China. The order scope includes state-of-the-art digitalization and automation
solutions as well as services and spare parts packages.
We received a further important rebuild order from a packaging and paper manufacturer with global
operations. The company commissioned Voith with converting the existing production line into a stateof-the-art production line for recycled packaging papers.
Investments were also made in the segment for specialty paper machines and nonwovens. For instance,
we were awarded a contract in the USA for the manufacture of a new line for the production of glass mat.
Slight sales growth
Sales in the Group Division Paper rose by 2 % to € 2,239 million, thus developing better than expected(forecast in 2022 Group management report: “slight decline”). The sales trend reflects the high backlogof orders on hand from the previous year and the level of orders received that was still good at the
beginning of the fiscal year. Looking at the 2022/23 fiscal year as a whole, we were able to achieve
perceptible growth in the business with wear parts, spare parts and services.
From a regional perspective, Asia and Europe (including Germany) each made up a good third of Voith
Paper’s sales. The Americas were the growth driver.
Further increase in operating result at a good level
The earnings situation of the Group Division Paper remains good. At € 145 million (+11 %) in the reporting
year, EBIT stood at the upper end of our expectations (2022 Group management report forecast: “slightincrease”). We managed to increase return on sales further, from 6.0 % in the previous year to 6.5 % in
the 2022/23 fiscal year. Contributions to the improved margin came from efficiency gains, a changed

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sales mix and a reduction in technical warranty-related costs. At 25.4 %, ROCE almost reached the very
good level of the previous year (26.2 %) but, due to a higher level of capital employed, fell short of our
expectations (2022 Group management report forecast: “slight improvement”).
Material events
In the reporting year, Voith acquired a minority shareholding in the start-up Yangi, headquartered in
Sweden, thus investing in future-oriented, new technologies to further drive decarbonization in the paperindustry. Yangi is pioneering a new technology to produce 3D-formed, cellulose-based packaging.
The manufacturing process developed by Yangi is based on dry forming principles in one machine line
and offers a solution which is cost- and resource-efficient and also low-emission. This solution has thepotential to replace rigid plastic at scale. The applications for packaging solutions are diverse and range
from cosmetics and beauty products to fresh food, take-away articles and consumer goods.
As part of the expansion of the business with wear parts, spare parts and services, we added significant
capacities for refurbishing paper machine components in Scandinavia and all over Europe. In January2023, a state-of-the-art workshop with extended office space was opened in Karlstad, Sweden, offering
refurbishment services. With the new location, Voith is doubling, among other things, the capacity forscrew press refurbishments on account of increasing customer demand in this area, and is extending
its range of services for refurbishing components such as rotary valves, vacuum pumps and rolls.
We have reinforced our service activities in China, too, and opened a new OnPerformance.Lab locationin Kunshan. The Voith OnPerformance.Labs (OPL) are remote service centers offering data-based
services such as data analysis, condition monitoring, smart monitoring and expert advice. Together
with customers, OPL specialists implement innovative Papermaking 4.0 solutions for sustainable costsavings and efficiency improvements. There are already OPL locations in Heidenheim, Germany, andTokyo, Japan – the opening of further branches in further regions is being planned.
Our commitment to sustainable and efficient paper production was recognized in December 2022 with
the German Sustainability Award (GSP). The XcelLine paper machines were among the winners in the
Design competition, Vision category. The German Sustainability Award is the most comprehensive
award of its kind in Europe. The award is presented by the Stiftung Deutscher Nachhaltigkeitspreis e.V.
(German Sustainability Award Foundation) in cooperation with the German federal government, leading
municipal and business associations, civil society organizations and research institutions. The decisive
factor for the GSP jury was the contribution to achieving the climate targets of the 2030 Agenda.

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51

Innovations
As part of our Papermaking for Life sustainability program we have set ourselves the ambitious goalof realizing CO2-neutral paper production on an industrial scale by 2030. We reached one importantmilestone on this journey in the reporting year: Voith has developed a completely new, disruptive concept
for CO2-neutral paper production. In addition, the concept significantly reduces fresh water consumption
and energy consumption throughout the entire production process and does not require any fossil fuels.
This has been confirmed in successful laboratory-scale test runs. The research results were transferred
to a pilot line at the Voith Heidenheim site in the reporting year. To drive further development of this newprocess, Voith has entered into a development partnership with Essity, a global hygiene and healthcarecompany.
Voith has entered into a further development partnership in the field of decarbonization with Koehler, aGerman manufacturer of specialty papers. The two long-term business partners will work together on
new solutions for decarbonizing production lines. As part of optimizing the energy efficiency of its plants,
Koehler is evaluating the possibilities of replacing fossil fuels with sustainable CO2-neutral alternatives asheat sources. Voith will perform the corresponding retrofitting work in close consultation with Koehler.
In the reporting year, we launched a new research project called FOREST together with partners fromindustry and research organizations. The goal of the project is to develop a fully comprehensive digital
map for papermaking processes that can capture energy and material flows, as well as CO2 flows andfootprints, down to the sub-process and sub-product level. The digital framework identifies multiple
optimization opportunities that promote a targeted acceleration of the paper industry’s transformation
towards climate neutrality. The research project is funded by the German Federal Ministry of Economic
Affairs and Climate Action.
Over and above this, the Group Division Paper brought numerous innovations onto the market in the2022/23 fiscal year, for example a product for quick and safe format changes: FastFormat enables
automated format changes in ongoing operations without operator intervention. This not only increases
safety for the operator but also boosts winder production.
As an addition to the proven OceanCoat roll cover, Voith has developed the OceanCoat P. The newcoater backing roll cover is specially made for high-demand positions in blade coater applications.
Another of our market launches in the 2022/23 fiscal year is the AdaptClean technology. The AdaptClean
rebuild kit is the latest optimization option within our BlueLine product range aimed at keeping energy,
water and fiber consumption as low as possible in stock preparation. The AdaptClean enables a quick
and easy conversion of existing low consistency cleaners from a diameter of 105 mm, regardless ofthe manufacturer.

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II.4.3. Turbo
Significant growth, profitability increased
The Group Division Turbo performed better than expected in the reporting year. Orders received andsales have risen appreciably, also on account of two successful acquisitions, one consolidated forthe first time ever and the other for the first time for a twelve-month period. Alongside the acquisitionrelated growth, a positive operating performance also contributed to this encouraging development.
The increase in sales was reflected in the operating result, which was able to be increased significantly
despite the considerable rises in materials costs. Return on sales and ROCE improved. After entering
the off-highway market (agricultural machinery, construction equipment and material handling vehicles)with the acquisition of Argo-Hytos in August 2022, Voith Turbo’s reporting has been aligned to threedivisions since the reporting year.
Key financial performance indicators
The Group Division Turbo’s key financial performance indicators developed as follows in the 2022/23
fiscal year:

Orders received Turbo

Sales Turboin € millionsin € millions

2,048
1,636

1,994
1,557

+25 %

2021/222021/222022/23

EBIT Turbo

ROCE Turboin € millions

in %

80
48

2021/22+32

2021/222022/23+28 %2022/235.0

7.8

2022/23

Stronger than expected growth in orders received
The Group Division Turbo increased its orders received by 25 % in the 2022/23 fiscal year and passed the€ 2 billion threshold for the first time in its history. This appreciable growth exceeded our own objectives.
Taking account of the consolidation of IGW Rail and Argo-Hytos, we had forecast in the 2022 Groupmanagement report a perceptible increase and in strictly organic terms a stable development.

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The reason for the forecast being exceeded arose from the positive operational development of Voith
Turbo, especially in the division Mobility. Despite the generally slower economy, investment activities
remained at a high level in many market segments relevant to the Group Division Turbo.
Two acquisitions also contributed to the growth in orders received totaling around € 412 million: In
the reporting year, IGW Rail taken over in October 2022 was included in the Voith Group's financial
statements for the first time ever, and Argo-Hytos acquired in August 2022 for the first full fiscal year.
This led to acquisition-related growth totaling around € 210 million in orders received.
Orders on hand as at the end of the 2022/23 fiscal year increased to € 1,672 million (September 30,
2022: € 1,583 million).
The largest division, Mobility, was able to increase its orders received appreciably in comparison to
the previous year and saw the highest level of orders received in its history. This stemmed mainly froma dynamic development in the operating business, contributions to which came not only from new
business but also from the service business. There was, in addition, the first-time consolidation of theorders received by IGW Rail, which had been acquired in October 2022 and was integrated into thedivision Mobility in the reporting year. In the commercial vehicles segment, unit sales of air compressors
and retarders rose over the course of the reporting year. This development was driven by the recoveryof the Chinese truck market after the end of the lockdowns. In the light of the general recovery of
the bus market, demand for our VEDS (Voith Electrical Drive System) electric drive showed a very
encouraging trajectory as the VEDS supplies the trend towards alternative drives in city buses which
receives regulatory support in many countries. The business in the rail segment recovered similarly,
with heterogeneous developments in the various regions and product groups. In the marine segment,
business picked up noticeably and Voith was awarded further important orders for the electric Voith
Schneider propeller (eVSP).

Detailed informationon the development of
the markets relevant
for Voith Turbo for­energy, oil & gas, rawmaterials, transport& automotive can befound in section II.2.
Macroeconomic andindustry-specificenvironment.

Over the 2022/23 fiscal year, the volume of orders received in the division Industry was stable at the highlevel of the previous year. The sales markets served by the division Industry – oil & gas, raw materials andenergy – remained marked by a high level of investment activity in many segments. Our business withgeared variable speed drives for the oil & gas industry developed especially well. We also saw strong
demand for turbo gears as well as for actuators and control systems, all of which are product groups
used in various industries. Similarly, there was a good level of unit sales of components and solutions
from ELIN Motoren, the subsidiary acquired three years ago.
The basis for the division Off-Highway was formed by the subsidiary Argo-Hytos acquired in the previous
year. Argo-Hytos develops and produces hydraulic components and system solutions with a focus onagricultural machinery, construction equipment and material handling vehicles. As this company was
consolidated in the Voith Group for the first time for the full twelve-month period (previous year: twomonths), the division’s contribution to Voith Turbo’s orders received was a multiple of the previous-year
figure.
Significant sales growth
The Group Division Turbo’s sales rose by 28 % to € 1,994 million in the reporting year. Contributions to thesignificant rise in sales totaling € 437 million came not only from the two acquisitions (total consolidation
effect around € 230 million) but also the existing business. After the end of the pandemic-related travel

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limitations, the service business, where revenue is typically recognized quite quickly, returned to a
positive trajectory.
This means that also in terms of sales, Voith Turbo performed better than anticipated in our planning(forecast in the 2022 Group management report: “perceptible increase”; taking the consolidation effectinto account, “stable development”). The main reason for the forecast being exceeded was the good
operating development of the Group Division.
Voith Turbo was able to increase its sales in all regions. The strongest sales region and growth driver
was Europe (including Germany). Asia remains the second most important region.
Profitability increased
The good development in sales was also reflected in the operating result. Despite massive rises inmaterials costs, the Group Division Turbo was able to increase its EBIT by 66 % to € 80 million (previous
year: € 48 million). This increase stems primarily from increases in the operating result in the existing
business, but also from positive contributions to earnings from the two recently acquired companies.
This development was at the upper end of our expectations (forecast in the 2022 Group management
report: “perceptible increase”, taking account of the consolidation effect).
The successful implementation of our programs to boost efficiency made it possible to more thancompensate for the inflation-related cost increases. Return on sales improved to 4.0 % from 3.1 % in theprevious year. In the reporting year, ROCE stood at 7.8 % (previous year: 5.0 %). This means the forecast(2022 Group management report: “perceptible improvement”) was met.
Material events
Voith acquired IGW Rail at the beginning of October 2022. IGW Rail is a globally operating technology
company specializing in customized gear unit and coupling solutions for the rail vehicle industry. IGW
Rail’s product range addresses all types of rail vehicles. As Voith also supplies a portfolio of components
for these rail vehicle markets, the acquisition perfectly complements Voith’s existing activities in thisarea. IGW Rail has been fully consolidated in the Group Division Turbo as of the 2022/23 fiscal year.
Innovations
R&D work in the Group Division Turbo over the reporting year continued to focus on the electrificationof power trains and on the refinement of alternative low-emission drive technologies.
One core innovation in the division Mobility in recent years is the Voith Electrical Drive System (VEDS)
electric drive concept for commercial vehicles introduced in 2019. We have constantly enhanced theconcept to successively include further commercial vehicle segments. The outstanding efficiency of the
VEDS, which has been confirmed on multiple occasions by independent test centers, makes a significant
contribution to our customers’ market success and thus to the good unit sales of the VEDS. This has
led to Voith customers winning various tenders in the reporting year for the delivery of emissions-freebuses with VEDS drives.

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The DIWA NXT transmission presented in the 2021 fiscal year supports not only e-mobility but also otherclimate-friendly innovations, such as hydrogen drives for buses. For example, we have teamed up withKeyou, a clean mobility company specializing in hydrogen technology, to develop a hydrogen-driven
city bus. This hydrogen bus with DIWA NXT won the innovation award from the German specialist
journal “busplaner” in July 2023 in the category of “components and power units”. The vehicle basedon the chassis of a leading European bus manufacturer is equipped with a “green”, hydrogen-powered
combustion engine and the DIWA NXT mild-hybrid system – a combination that creates a new kind ofzero-emission mobility and fulfills the pertinent EU standard.
For rail, too, Voith is driving forward important innovations, and offers sustainable, efficient solutions
both for passenger transport and cargo rail traffic. One of our lighthouse projects is the CargoFlex, adigital automatic freight coupler that we introduced in 2019 and have been continually refining sincethen. One current new development is the CargoFlex Hybrid variant, which enables switching between
automatic and manual coupling. This offers the flexibility required for the transition period until all freightcars throughout Europe have been equipped with automatic couplers. The new locomotive coupler
successfully passed a prototype test in the reporting year and the next steps towards series production
have been initiated.
With regard to the electric Voith Schneider propeller (eVSP), our most important innovation in recent
years for the marine segment, we have extended the portfolio with various installation variants forvarious marine applications, with which we have already achieved the first market successes. To nameone example, we received an order for two powerful eVSPs for the Federal Republic of Germany’s new
research vessel Meteor IV.
The division Industry also brought numerous innovations to market in the 2022/23 fiscal year. After three
years of technical development, we succeeded in presenting seven different drive package designs forconveyor systems, with which we won an extensive and demanding contract in the USA in the reportingyear. The drive packages developed for the project are based on the new fill control turbo coupling
TurboBelt 800 TPXL. The Voith subsidiary ELIN Motoren is providing customized low noise electricmotors for the project, including spares. Alongside the TPXL couplings and the main electric motors,
the drive packages contain numerous other Voith components, including the TurboBelt DriveControl
control system.
The self-learning digital diagnostics system OnCare.Health Vorecon brought us the first market successes
in the reporting year. Customers use the system to optimize the maintenance management of Vorecon
variable-speed planetary gears. OnCare.Health monitors in real time signals relevant to Vorecons anddiagnoses deviations from the normal state so that significant changes can be reported before a fault
occurs. This keeps maintenance costs to a minimum and increases the availability of the drivetrain.
Hydrogen as an energy carrier of the future is playing an increasingly important role. There is also
considerable potential for industrial applications. In this respect, we see possibilities for growth not
only beyond the current product portfolio but also with various existing products. The division Industry
is currently working on various forward-looking projects in the area of hydrogen infrastructure.

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Research and development initiatives are being driven forward also in Off-Highway, the youngest
division of the Group Division Turbo. One of Argo-Hytos’s achievements in the reporting year was theenhancement of the MHPS/MSC modular hydro-pneumatic suspension system. The new version 2.0
features a significant improvement in the suspension performance in agricultural machinery and tractors.
Argo-Hytos launched its power packs with frequency converter on the market in the 2022/23 fiscal year.
These are intelligent power packs that have the ability to sense what energy is required and can adapt
accordingly to the needs of the machine. Use of this groundbreaking product extends the lifespan ofcomponents and reduces energy consumption of machines significantly.

II.5. Economic position
II.5.1. Earnings position
Significant increase in operational result and Group net result
In the reporting year, the Voith Group’s statement of income is marked by perceptible growth in total
output and an improved cost structure with a clear reduction in the ratio of materials to total output.
All in all, we succeeded in significantly increasing the operational result as well as the Group net result.

Operational result GroupNet result Groupin € millionsin € millions

181
136

+45
73
30

2021/222022/232021/22+432022/23

Total output in the Voith Group stood at € 5,513 million (previous year: € 4,963 million). The Group
succeeded in growing sales (€ 5,506 million) at a faster rate (+13 %) than total output (+11 %), as theincreases in the inventories of work in progress had fallen sharply on the previous year.
Cost of materials rose by 6 % to € 2,549 million (previous year: € 2,404 million). The ratio of cost of
materials to total output decreased to 46.2 % (previous year: 48.4 %). In this context, inflation-related
rises in materials costs were countered by efficiency gains, general discipline in the use of resources

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as well as differentiated procurement strategies and contractual arrangements. A changed product mix
as well as a fall in the cost of purchased services also contributed to the decrease in the ratio of costof materials to total output.
The increase in personnel expenses was more noticeable. Due to the higher headcount – largely as aresult of the acquisitions – and a general rise in the wage and salary level in comparison to the previous
year, this figure increased by 12 % to € 1,774 million (previous year: € 1,582 million). The personnel
expenses ratio (ratio of personnel expenses to total output) was at a slightly higher level of 32.2 %(previous year: 31.9 %).
Depreciation and amortization amounted to € 202 million (previous year: € 180 million, +12 %). The ratio
of depreciation and amortization to total output remained stable at 3.7 % (previous year: 3.6 %).
The negative balance of other operating expenses and income as well as impairment losses on tradereceivables and contract assets, net, increased to € -806 million (previous year: € -661 million, +22 %).
The main driver of this development was a € 28 million increase in impairment losses on trade receivables
and contract assets, net, and a decrease in exchange rate expenses and income (€ -31 million).
Furthermore, there was an increase in travel and installation expenses as well as rental expenses. In
contrast, additions to provisions decreased by € 32 million to € 214 million, mainly caused by a lower
level of additions for order-related provisions.

Detailed informationon the developmentof EBIT can be foundin section II.3.4.
Operating result.

The operational result rose by € 45 million to € 181 million (previous year: € 136 million, +34 %). EBIT,
the important financial indicator for the Group, is obtained by eliminating non-recurring items andperforming other adjustments. In the reporting year, EBIT was increased by € 45 million to € 245 million(previous year: € 200 million, +22 %). Non-recurring items and other adjustments between the financial
performance indicator EBIT (€ 245 million) and the operational result according to the statement ofincome (€ 181 million) amounting to € 63 million results from extrapolation of the result from increasing
the carrying values upon first-time consolidation (€ 25 million), restructuring expenses (€ 11 million)
and impairment losses on assets in Russia (€ 14 million) and other expenses eliminated for business
management purposes (€ 13 million).
At € -1 million, the share of profit/loss from companies accounted for using the equity method was up
on the previous-year figure (previous year: € -4 million).
The reduction in the financial result from € -19 million to € -25 million is essentially attributable to the factthat the currency results contained in the other financial result decreased from € 11 million to € -8 million.
In addition, the balance of interest income and interest expenses (without the effect contained thereinfrom the measurement of financial liabilities on account of termination rights of non-controlling interests),
which fell from € -48 million to € -50 million, placed a burden on the financial result. This arose from thegeneral rise in the interest rate level, in particular from the compounding of pension provisions and in
relation to bank loans. The opposite effect in the financial result stemmed from interest income fromthe measurement of financial liabilities on account of termination rights of non-controlling interests of€ 26 million (previous year: € 11 million in interest expenses).

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The result before taxes increased by € 41 million to € 157 million (previous year: € 116 million, +35 %).
Income taxes totaled € 84 million (previous year: € 87 million). The tax rate decreased to 54 % (previous
year: 75 %). The decrease is mainly attributable to the reduction in deferred tax liabilities on temporary
differences.
The Group net result increased by € 43 million to € 73 million (previous year: € 30 million).

II.5.2. Net assets
Net assets remain stable
In comparison to September 30, 2022, total assets decreased by € 228 million to € 5,728 million (previous
year: € 5,956 million, -4 %). The decline is essentially due to a reduction in inventories, contract assets
and intangible assets.
In total, non-current assets decreased by € 86 million to € 2,607 million (previous year: € 2,693 million,-3 %). The reduction in intangible assets is essentially attributable to the amortization due to increases
in the carrying values upon first-time consolidation with regard to business combinations performed inprevious years. Property, plant and equipment decreased by € 21 million to € 1,060 million (-2 %).
Current assets decreased by € 142 million to € 3,121 million (previous year: € 3,263 million, -4 %).
Inventories decreased by € 49 million to € 830 million (-6 %) and contract assets fell by € 55 million to€ 660 million (-8 %). Cash and cash equivalents underwent a stable development and amounted to€ 413 million (previous year: € 412 million) as at the reporting date. Further details on the developmentof cash and cash equivalents can be found in the following section on the financial position.

II.5.3. Financial position
Financial position remains soundNon-current liabilities were reduced slightly by € 50 million to € 1,632 million (previous year: € 1,682 million;-3 %). Pension provisions decreased by € 20 million to € 525 million (-4 %) primarily on account of higher
discount rates in comparison to the previous year. In addition, the decline in deferred tax liabilities of€ 14 million (-14 %) contributed to the reduction in non-current liabilities. At € 627 million, non-current
bank loans were at the previous year’s level.
Current liabilities fell by € 109 million to € 2,729 million (-4 %), mainly on account of the decrease in trade
payables of € 77 million to € 652 million (-11 %) and in contract liabilities of € 18 million to € 990 million(-2 %). In addition to this, there was a decrease in bank loans of € 40 million to € 154 million (-21 %).

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The net balance of deferred tax assets and liabilities increased by € 10 million. The rise is mainly due tothe lower level of deferred tax liabilities of the German Group companies.
Equity fell by € 69 million to € 1,367 million (previous year: € 1,436 million, -5 %). The main cause of thisdevelopment, alongside dividends of € 31 million, was other comprehensive income of € -103 million.
Other comprehensive income was essentially impacted by negative effects from currency translationof € -109 million. The net income of € 73 million had the opposite effect. The equity ratio fell slightly to
23.9 % (previous year: 24.1 %).
Sharp increase in cash flow from operating activities
The main components of the cash flow statement in the reporting year break down as follows:
Development of cash flowin € millions

2022/232021/22306

93

Cash flow from investing activities

- 140

- 401

Cash flow from financing activities

- 130

171

36

- 137

Cash flow from operating activities

Total cash flow

The cash flow from operating activities was increased by € 213 million to € 306 million in the 2022/23
fiscal year (+231 %). The main factor in the rise stemmed from the increase in the result before taxes aswell as proceeds from decreasing inventories.
The cash flow from investing activities amounted to € -140 million in the reporting period (previous year:€ -401 million). The sharp decline in cash outflows is mainly attributable to the reduced level of M&A
activity in comparison to the previous year. Payments of only € 43 million were made for the acquisitionof consolidated companies in the 2022/23 fiscal year, whereas payments of € 192 million were incurredin this respect in the previous year. Payments for business combinations in the reporting year related
to the acquisition of IGW Rail. In addition, payments for investments decreased from € 139 million to€ 14 million. The main reason for this decline was the granting in the previous year of a loan to a company
that is controlled by the ultimate parent company, JMV SE & Co. KG, and that is not included in thepresent consolidated financial statements, in order to finance the acquisition of the remaining 35 %shareholding in Voith Hydro Holding GmbH & Co. KG. Net receipts and payments for property, plantand equipment, and intangible assets amounted to € -109 million (previous year: € -94 million).
In the 2022/23 fiscal year, we increased our investments in property, plant and equipment and intangible
assets appreciably to a total of € 188 million (previous year: € 143 million). The rights of use under leases
amounting to € 56 million (previous year: € 27 million) were taken into account in this figure pursuant to
IFRS 16.

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Investments Groupin € millions

188
143

+31 %

2021/222022/23

As a percentage of the Group’s sales, our investment ratio rose to 3.4 % in the reporting year (previous
year: 2.9 %).
The investments broke down as follows across the various Group Divisions:

Investments total € 188 million
by Group Division­Hydro
10 %

Paper
44 %

Corporate Functions& Services
11 %

Turbo
35 %

Moderate decrease in financial liabilities
We achieved a moderate decrease in the Voith Group’s financial liabilities in the reporting year. Thereis one final tranche totaling € 21 million outstanding from the note loan issued in 2015; this tranche isscheduled for repayment in November 2025. The last but one tranche amounting to € 38 million was
repaid in November 2022.
The note loan issued in 2020 amounting to € 400 million has maturity dates in 2025, 2027 and 2030.
The syndicated euro loan of € 600 million was extended until 2028 by all twelve banks over the reporting
period. The credit line has not been drawn on and is available as a strategic liquidity reserve, plus afurther renewal option until 2029. It contains an option to increase the volume of the facility up to a
maximum of € 800 million subject to the banks’ consent.

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The revolving syndicated loan in China, which was refinanced in 2019, will be available until June 2024;
it is for an amount of € 181 million. This facility is currently not being utilized.
The bilaterally confirmed credit lines entered into with six banking partners totaling € 525 million withmaturities of two to three years are regularly renewed each year. At the reporting date, € 119 million ofthese credit lines had been utilized.
In July and August 2022, confirmed loans of € 100 million each were drawn on at two banks from new
credit facilities. These loans are due in 2025 and 2027.
In addition, Voith uses free bilateral bank credit lines for low-interest financing of fluctuations in working
capital.
These long-term and diversified instruments facilitate sustainable growth. The availability of a stableliquidity position from its own bank balances and existing loan agreements is given top priority by
Voith – especially in the light of the economic environment marked by uncertainty.
Payments for dividends amounted to € -32 million (previous year: € -32 million).
The cash flow from financing activities decreased by € 301 million to € -130 million (previous year:€ 171 million). The decrease was caused by the balance from the taking out and repayment of bankloans being reduced by € 304 million to € -45 million.
In contrast to the previous year, the total cash flow was positive, coming to € 36 million (previous year:€ -137 million).
Net liquidity still at a good level
The net liquidity of the Voith Group, defined as the difference between liquid financial assets and interestbearing financial liabilities (not taking lease liabilities into consideration), is at an improved level, despite
moderate acquisition activity. At the end of the reporting year, it amounted to € -182 million (previous
year: € -233 million). The net liquidity indicator is not defined under International Financial ReportingStandards (IFRS) accounting policies, which means that its definition and calculation may differ fromthe practice in other companies.
Fundamentals and objectives of financial management
The key objective of liquidity and financial management is to make sure at all times that the Voith Groupis able to continue as a going concern and to ensure the financial independence of the family-owned
business.
Cash management is the task of the Group’s treasury function as well as the related regional financecenters. The Group maintains cash pooling systems in Europe, China, India and North America, which
it uses to concentrate its cash and cash equivalents as far as possible and to lower interest expenses
caused by external debt financing. Borrowings are generally taken out by Voith GmbH & Co. KGaA andprovided to the Group companies when needed.

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III.

Risks and opportunities
III.1. Risk and opportunities management
Geared towards increasing the value of the Company
Entrepreneurial activity involves making decisions under conditions of uncertainty. Risk is therefore an
integral part of entrepreneurial activity. To safeguard against risks that could jeopardize the Group or its
companies as a going concern, Voith operates a consistent and binding Group-wide risk management
system.
All the elements of risk management have been brought together in a risk management system. This is
not only geared to compliance with legal requirements. It should also contribute to increasing the valueof the Group and its companies by reducing potential risks and their probability of occurrence. At thesame time, the system is intended to produce a state of equilibrium between correctly assessed risks
and the exploitation of opportunities.
Voith distinguishes between five risk types:
1. Strategic risks
2. Financial risks
3. Operating risks (process risks, infrastructure risks, production risks)
4. Performance risks (contractual risks and technical risks)
5. Compliance risks
Risk management at Voith is organized on a decentralized basis but is monitored and coordinatedcentrally. Responsibilities are clearly defined for the differentiated risk profiles at all levels of the Group.
The risk management process itself breaks down into four stages:· Risk identification: Voith constantly monitors macroeconomic developments, developments in specificindustries and internal business processes that could affect the situation of the Group. A risk catalog
helps identify individual risks. For this purpose, risks are collated at all levels of the Group and in allfunctional areas and then documented in a Group-wide internal database.
· Risk analysis and assessment: The risks identified in this way are assessed in terms of extent ofdamage and their probability of occurrence. Wherever possible, the potential impact is quantified asa cost factor. In order to assess the potential risk, the worst-case scenario and an expected-casescenario are analyzed for each identified performance risk, and their respective impact on the financial
situation of the Group is examined. Multiplying this figure by the probability of occurrence provides
the aggregate risk.

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63· Risk management: Analysis and assessment of the identified risks gives Voith’s management the data
it needs to decide whether the risks should be avoided, reduced by suitable actions, transferred bysigning appropriate agreements, or whether they have to be carried by means of optimized processes
and controls.
· Risk monitoring and reporting: Voith has a multitiered set of controlling and reporting tools that help
the Corporate Board of Management analyze risks and make well-founded decisions. Those performance risks that involve either a maximum risk potential ≥ € 5 million or a maximum risk potential of≥ € 2 million and a probability of occurrence of ≥ 50 % are reported to the Corporate Board of Management on a quarterly basis. The reporting additionally includes the measures taken in this context tomitigate the risk such as existing insurance policies, recognized provisions or recorded depreciation.
Furthermore, the general risk situation, also with regard to other risk types, is regularly placed on theagenda of the advisory committees of all business units. Risks to the Group’s ability to continue as agoing concern are reported to the next highest organizational level through to the Corporate Board ofManagement even between scheduled meetings. Risks to the Group’s ability to continue as a going
concern are defined as aggregate risk potential (gross, before consideration of measures to mitigaterisk) in relation to the respective business unit that exceeds either 50 % of equity or 10 % of sales.
In addition to the systematic management of risks, it is also essential that we support our businessperformance by actively managing opportunities. The identification of opportunities and their strategic
and financial assessment play an important role in the strategy discussions the Corporate Board ofManagement holds regularly with those responsible for the operating units. The results of these meetings
are incorporated into the Voith Group’s strategic decisions as well as into the medium-term planningand the annual operative planning process.

III.2. Accounting-related internal control system
Proper and reliable financial reporting
The key elements of the internal control and risk management system for the Group’s financial reporting
process are described in the following. The aim of the accounting-related internal control and risk
management system is to guarantee that accounts are prepared correctly and reliably and to ensurethat consolidated and single-entity financial statements comply with the applicable regulations.

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The following structures and processes have been implemented in the Group:
The Corporate Board of Management bears overall responsibility for the internal control and risk
management system with regard to the Group’s financial reporting process. All levels of the Group are
integrated through a strictly defined management and reporting organization.
Uniform recognition and measurement based on the regulations applicable for the Voith GmbH &Co. KGaA consolidated financial statements is ensured by Group accounting guidelines. Amended
accounting rules are constantly adapted and communicated by Voith GmbH & Co. KGaA. The qualityof the guidelines is ensured by an ongoing exchange between the departments responsible.
Accounting is organized on a decentralized basis but is monitored and coordinated centrally. Accounting
entries are recorded in the separate financial statements of the subsidiaries of Voith GmbH & Co.
KGaA. There are internal controls in place in the Voith risk control matrix for those line items that, froma Group perspective, are significant and exposed to an elevated risk of misstatement; these controls
were developed at corporate headquarters and must be applied by the subsidiaries when preparing
their end-of-year financial reporting. The controls address the significant accounting-related risks forthe specified line items of the financial reporting and contain corresponding instructions on controlling
activities, responsibilities and documentation duties. Among other elements, the controlling activities
comprise analytical procedures as well as the practice of having significant and complex business
transactions processed and controlled by different people. Complex accounting issues (e.g., financial
instruments) are referred to corporate departments or external experts (e.g., relating to pensions). The
activities and controls for these issues are also considered in the risk control matrix.
The consolidated financial statements are prepared by adding information to the single-entity financial
statements of the subsidiaries to create standardized reporting packages which are included in the
consolidation system. Once the data has been fed into the consolidation system, it is subject to an
automated plausibility check. If this returns an error message, this is immediately corrected by theindividuals in charge of the subsidiaries concerned. The subsidiaries are supported by contact persons
at headquarters for all accounting-related issues. After the data is finally approved, the respective
management, or in isolated cases the representatives they appoint, issues a letter of representation
confirming the completeness and accuracy of the reporting package in accordance with the relevant
requirements and confirming that the internal controls have been conducted and documented.
Group-wide reconciliation of balances takes place worldwide via an intranet-based platform. The various
deadlines for the different parts of the reporting package are stipulated in the consolidation systemand centrally monitored in the course of the preparation process. Almost all consolidation activities areundertaken centrally at Voith GmbH & Co. KGaA. The entire consolidation process is supported by both
systems-based and manual controls.
The proper functioning of the controls defined in the accounting-related internal control system is
evaluated on a regular basis. If any weaknesses are identified, the system is adjusted accordingly bycentral accounting.

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The quality of financial reporting is also ensured by reconciling planning calculations with the externalreporting at all levels of the Company. System access controls based on authorization concepts aswell as programmed plausibility checks in those IT systems used for the financial reporting ensure thatprocesses are complete and accurate.
The internal audit department performs regular reviews of the proper functioning, correctness, reliability
and efficiency of all internal control and risk management systems in the Voith Group independently of
the individual processes. Suitable measures are promptly taken to remedy any gaps or weaknesses
that may be identified.
Compliance with individual rules of the accounting-related internal control system is tested by theexternal auditors on a sample basis in the course of their audit of the consolidated and separate
financial statements. Any deficiencies or flaws that appear are recorded in a management letter alongwith suggested improvements.

III.3. Risks
In the sections that follow, we describe risks that could have a substantially negative effect on ourbusiness position, net assets, financial position and earnings position and lead to failure to meet
forecasts or targets. The order of the risks within the five risk categories presented below reflects how
we currently estimate the importance of these risks for the Voith Group. Unless stated otherwise, thefollowing risks relate to all Group Divisions.

III.3.1. Strategic risks
In the “strategic risks” risk category we examine external risks stemming from the macroeconomic,
market-competitive and political situation, risks arising from the Group strategy and coordination, as
well as technology, human resources and IT risks.
Risks from the macroeconomic and political environment
Our economic environment is determined by global demand for capital goods. This demand is in turninfluenced by the global macroeconomic environment. If economic development were to fall perceptibly
short of expectations, it is highly probable that this would have appreciable negative effects on Voith’sbusiness position, net assets, financial position and earnings position. We based our planning for the2023/24 fiscal year on the assumption that the global economy will continue to grow only slightly,
particularly due to the war in Ukraine and the associated effects on energy and raw materials prices
as well as the inflation that is continuing to only slowly flatten off. In this respect, Asia, in particular
China, is accountable for a large part of the forecast global economic growth, while very little economic
momentum is expected for North America, South America and Europe. All in all, the environment willremain marked by high volatility and considerable uncertainties. Various risks call into question whether
the forecast economic growth can actually be achieved.

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One significant risk to the macroeconomic environment and Voith’s earnings position arises fromgeopolitical crises. It is currently not possible to foresee an end to Russia’s ongoing war in Ukraine.
Over and above this, the China-Taiwan conflict intensified over the reporting year. In addition, the Middle
East conflict flared up again at the beginning of the new fiscal year. Further intensification and escalationof geopolitical crises would in all probability have a negative impact on global trade and supply chainsand might cause a new round of price shocks in energy, raw materials and other factor costs. Being anexport-oriented economy with a strong manufacturing base, Germany reacts particularly sensitively to
disruptions to global trade. The development of energy prices particularly affects energy-intensive sectors
such as the paper industry. With its focus on energy-efficient, resource-saving technologies, Voith meetssuch sectors’ requirements and considers itself to be well positioned in the competitive environment.
In the context of the war in Ukraine, the EU imposed economic sanctions against the aggressor, Russia,
which have already started to impact parts of Voith’s business. If the escalation of other geopoliticalconflicts entail sanctions against further countries that affect Voith’s business segments, this might
impact Voith’s earnings position.
Even if interest rates around the world have leveled off, they are, in most countries, still appreciably higher
than central bank targets and there is great uncertainty about the further trajectory of inflation. Persistent
inflation is cutting into real incomes and weighing on consumer demand. It constitutes a challengethat requires central banks around the world to act sensitively: Excessive countermeasures could
protract the current economic slump; insufficient tightening of monetary policy would lead to inflation
becoming entrenched, which would require even stronger interest rate hikes with the corresponding
discouragement of investment.
For China, a comparatively high growth rate is expected (IMF forecast for 2024 and 2025: +4.2 % and
4.1 %, respectively). On account of China’s large contribution to the forecast global economic growth,
any intensification of the Chinese real estate crisis will constitute a further risk to the global economy asa whole. China’s development falling below planning levels would, in all probability, also directly impact
Voith’s business. In the reporting year, more than 15 % of our Group sales originate in China.
The European Union is currently not developing as well as the global economy or even the USA. Somefactors involve the risk that Europe will continue to lose competitiveness over the medium term. These
include the high energy prices in an international comparison, the demographic development andoutstanding structural reforms. Europe’s falling behind would also directly impact Voith’s business.
In the reporting year, more than 40 % of our Group sales stemmed from Europe (including Germany).
Market and competitive risks
Various market and competitive risks could have a negative impact on Voith’s earnings position should
they occur.

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A high degree of uncertainty is generally detrimental to the investment climate. Decisions on the awardingof plant engineering contracts could be postponed.
If important sales markets for Voith were to collapse because of the economy cooling off appreciably
more sharply than expected, this would have negative effects on Voith’s earnings position. This relates
primarily to markets and segments that react especially sensitively to economic developments, such as
the truck market, mining or wear parts, spare parts and services for paper machines. Falling demand
would make it more difficult to achieve the targets for orders received and sales.
For some time now, the Group Division Paper has been observing a rise in competitive and pricepressure, especially in China. This pressure might increase more sharply than assumed in the planning,which could under certain circumstances have negative consequences for our earnings margin.
Risks from Group strategy and coordination
Despite the exceedingly challenging economic environment and the overlapping crises seen over the
past three fiscal years, we have continued to consistently pursue our Group strategy described in section
I.3. of this Group management report. This strategy involves massive forward-looking investments into
the ongoing development of our Company, into research and development, business acquisitions
and training. In the past three fiscal years alone, we have invested more than € 600 million in in-housedevelopment of innovations and just under € 300 million in company acquisitions. The megatrends ofdecarbonization and digitalization point the way not only for the expansion of our product portfolio in
the existing core business but also for opening up new business segments and markets. We believethat this alignment provides us with decisive competitive advantages and opens up growth potential. As
is always the case with such major transformation processes, there is the general risk of the strategicchanges not being implemented within the planned time period or not leading to the desired outcome.
We are aware of this risk as well as of the associated opportunities. The alignment of our business model
to industrial sustainability and the ongoing strategic and technological development of the Voith rangeof products enjoy the utmost attention from the Corporate Board of Management, which is reflectedamong other things in the “Innovation & Technology” portfolio that is organized at this level.
Human resources risks
One of the central challenges for Voith is the ability to recruit a sufficient number of qualified employees
and retain them within the Company, specifically in light of the progressing demographic change andthe associated shortage of labor worldwide. The corporate targets will be noticeably jeopardized if
qualitative and quantitative bottlenecks in the availability of staff occur. In this respect, we competewith other international players. With regard to personnel marketing, we are building on the strong
Voith brand and are constantly taking new directions in the context of staff recruitment and retention.
Competitive compensation schemes, a family-friendly HR policy and flexible working models along withinternational career development prospects enable us to offer an attractive work environment. Througha wide range of training and development programs as well as a culture of lifelong learning, we makeit possible for the people employed at Voith to continually improve their qualifications in order to meet

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Further information
can be found in section I.6. Employees.

Information on ourinnovation strategy
can be found in section I.4. Researchand development.

the demands of a constantly changing working world. By doing so, we also contribute to ensuring thetransfer of knowledge from one generation to the next.   
Technology risks
For a technology group such as Voith, the technological shift and the Group’s own technology strategy
constitute a central risk area. The future profitability of the Company hinges on its ability to develop
marketable products and services and to use state-of-the-art production technologies and service
processes. Our earnings position could be negatively impacted by investments in technology that do
not work out as planned or fail to find the level of market acceptance expected or that are overtakenby new disruptive technologies.
Voith invests large sums of money in further improving and refining existing technologies, and inresearching and developing new products, systems and services. The strengthening of our market
orientation and our innovative drive is a declared objective in the advancing our corporate culture. Our
aim is to identify disruptive technologies at an early stage, get involved in them from the very beginningand take an active role in shaping the future of our markets. In order to make optimum use of its R&D
resources, Voith employs tried-and-tested management methods. For instance, agile management
following the lean start-up principle is applied to the strategic workstreams, and new R&D projects aremanaged as “advanced development projects”. Both approaches contribute to the optimum deployment
of R&D resources because ongoing reflection and the targeted building up of expertise at the relevant
places makes it possible to identify unfavorable developments and introduce countermeasures at an
early stage. This avoids high amounts of unprofitable investments or quality costs.
IT risks
In the area of IT risks, we monitor risks arising from the IT infrastructure and information security risks.
The latter relate not only to Voith’s own business operations but also to products and solutions developed
for customers.
Our successful business activities are underpinned by state-of-the-art and secure information technology.
For this reason, we have our own central IT function within the Group that safeguards reliable information
processing on an ongoing basis. The IT specialists in this function manage the entire IT infrastructure
for the Group and the specific application systems used by each Group Division. We employ a hybrid IT
infrastructure: One part of our systems, applications and data is hosted in in-house computer centers,
another part is kept in a cloud.
Our information security management is based on the international standard ISO/IEC 27001, and thus
meets the most stringent standards. Important IT services have been certified under this standard.
Our primary objective regarding the management of IT risks is to ensure the availability, confidentiality
and integrity of our IT infrastructure and IT applications, and data used. Outages of basic systems
owing to technical faults, attacks or force majeure would result in business processes being massively
disrupted or coming to a complete standstill. In order to prevent such business interruptions, we have

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built redundancy capacity into the core systems of our IT landscape at two computer centers. At theapplication level, we address not only the risk of outages but also the risk of defective software andthe risk of attacks by third parties, such as those involving ransomware. Applications are consistently
implemented with the “security by design” and “privacy by design” approach, which means that security
and data protection requirements are already taken into consideration at the development phase inorder to prevent later security vulnerabilities and data protection issues. In addition, there are dedicatedvulnerability tests and simulated hacks. We intensified our security testing over the reporting year.
In order to maintain the confidentiality of our data, these must be categorized by each and every
employee according to the confidentiality levels defined in a Group directive. Depending on the respective
level of confidentiality, we have auxiliary IT tools such as encryption technology, which we use to securely
store and transfer data. This also ensures that our intellectual property is protected to the fullest extent
possible. In addition to these technical measures, we train and inform our employees about how tosecurely handle confidential data by means of e-learning programs and awareness campaigns.
As early as at the beginning of the Covid-19 pandemic, we succeeded in aligning the global IT
infrastructure to a large share of mobile working. A fast, stable IT infrastructure, in addition to data andsystem security, safeguarded ongoing business operations and unhindered communications even intimes of limited personal contact. In the meantime, mobile working has been implemented as standard.
In this respect, state-of-the-art authentication methods are deployed in order to ensure data security
even with mobile working.
Cyber attacks by criminal groups, state-sponsored actors or politically motivated activists, potentiallywith serious or even very serious effects on business operations, are a growing threat for companies.
At Voith, we put a great deal of effort into addressing this risk. In the 2022/23 fiscal year, we further
expanded our protective measures against cyber attacks. For instance, our internal experts haveundergone further development in this field and we have strengthened our team with outside specialists.
The first tangible result of our intensified efforts in this area: We have further improved the Company’s
ability to respond and the associated reporting system with regard to cyber events. Over the 2023/24
fiscal year, we firstly intend to refine the business continuity capabilities in the field of IT and to prepare
the Company in the best possible way for potential attacks – we launched a project to this end in thereporting year; secondly, we have plans to further expand our capabilities to prevent and detect as well
as respond to cyber attacks.
The cybersecurity of our products and solutions for customers is also of importance to us. The machinery,plants, systems and components in our product portfolio contain digital components that are exposed tocyber threats through increasing interconnectivity. Governments, our customers and business partners
all around the world are facing the task of managing the digital transformation and are demanding
cybersecurity concepts for software-based components and solutions over the entire product life cycle.
If Voith were not in a position to meet the regulatory, statutory and customer requirements relating to thecybersecurity of its products, there would be a risk, in addition to liability risks, of not being consideredin calls for tender.

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We have recently appreciably expanded our cybersecurity management for the development of digitalproducts and solutions. Since 2022, our processes for the secure development of digital products havebeen certified on the basis of the internationally recognized standard IEC 62443-4-1. One importantcomponent of this standard is a risk-based approach. Accordingly, a threat analysis and a risk assessment
are performed for each product which are used to determine product-related security requirementsthat are then fulfilled by appropriate measures. The introduction of product cybersecurity in our General
Terms and Conditions of Purchase also safeguards cybersecurity through the supply chain. With theIEC 62443-4-1 standard, we meet the highest quality and security standards and consider ourselves
to be in a good position. Going forward, it is imperative to address the most recent developments andto adapt the product development processes to the resulting requirements.
With a view to reducing the complexity in our IT application landscape, we are currently working towards
introducing a Group-wide ERP (enterprise resource planning) system that maps a large number ofbusiness processes on a standardized platform. This is a complex multiyear project that involves risk
during the implementation phase. Apart from this, there are currently no specific IT risks.

III.3.2. Financial risks
Voith’s diversified financing structure is designed to safeguard long-term stability. By virtue of the ability
to access borrowed capital from unused lines of credit, Voith is currently not exposed to any concrete
liquidity risks and has sufficient liquidity reserves at its disposal to be able to meet all payment obligations
at all times. In 2023, Voith extended its bilaterally confirmed credit lines by a year in each case, thus
maintaining the previous year’s high level of precaution against increased liquidity requirements withunchanged maturity. Most of these facilities are still available for utilization. Likewise, Voith extended thematurity of its syndicated EUR loan from October 2022 by one year until 2028, as scheduled.
As a company with global operations, Voith remains exposed to the risk of fluctuating exchange rates,
which could have a negative impact on the business position, net assets, financial position and earnings
position. To contain risks arising from cash flows in different currencies (mainly the US dollar but also
currencies such as the Chinese renminbi (yuan), Brazilian real or Indian rupee), there are consistentcurrency management procedures in place throughout the Group. All Group companies are required
to hedge foreign currency items whenever these occur. Revaluation of the euro against various othercurrencies could have negative effects on sales and net result due to currency translation of the financial
statements prepared in foreign currency. This could further have an impact on our competitive position
as competitors could benefit from cost advantages in weaker currencies. Moreover, interest rate risks
are hedged using suitable instruments in order to maintain interest and financing security in the longterm. To this end, interest rate swaps were entered into in the 2021/22 fiscal year in such a way thatjust over 80 % of our financing instruments with maturities of more than one year are not subject to any
interest rate risks.

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To hedge existing transactions such as future cash flows in different currencies or floating-rate financing,
Voith uses a variety of derivative financial instruments, in particular forward exchange contracts tomanage currency risks, and interest rate swaps to manage interest rate risks. The instruments used andthe hedging strategies are formally designated and documented at the inception of the hedge in linewith the Company’s risk management objective. The risks are constantly monitored and, if necessary,the hedging instruments are adjusted.
To guard against political and economic risks associated with goods and services provided by the Group
Divisions, the Group buys commensurate insurance from government export credit insurance agencies,
from the private-sector insurance market and from banks. The Group also maintains adequate cash
reserves to cover all other operating risks.
Counterparty risks with financial partners are monitored constantly. For more information, please referto the notes to the consolidated financial statements. The related reporting as well as reporting on
financial instruments (Sec. 315 (2) No. 1 German Commercial Code (HGB)) is provided there in thesection “Other notes”.
Adequate provisions have been recognized and contingent liabilities have been disclosed in the notes
to cover the potential financial burden of tax risks. Neither Voith GmbH & Co. KGaA nor any of its Group
companies are involved in any current or foreseeable taxation proceedings that could have a material
effect on their economic situation.
There are no indications of particular liquidity or financial risks.

III.3.3. Operating risks
In the “operating risks” risk category, we monitor process, infrastructure and production risks.
Procurement risks
The most important operating risks currently stem from the area of procurement. Collaboration with
suppliers in the global procurement markets generally involves risks with regard to potential supply
disruptions, unforeseen cost increases and non-compliance with environmental and social standards.
To secure our supplies, we have embedded effective measures in the relevant purchasing processes –supplier selection, order processing and delivery date tracking. In addition, we have a multiple source
policy in place in order to circumvent the risks of supply outages and supplier insolvency at a global
level. Despite this general line, there is in some cases only one procurement source that we can utilize.
One reason for this might be the supplier being prescribed or pre-specified by the customer. In somecases, there is also no second supplier for technological reasons. In order to keep unplanned cost
increases to a minimum, we additionally used master agreements and long-term price agreements
in contracts with significant procurement volumes once again in the 2022/23 fiscal year. We haveintegrated compliance with current national environmental and social standards in our General Terms
and Conditions of Purchase.

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Our attention is currently focused on the massively increased price level of energy, raw material, othermaterials and components. Higher than expected inflation rates might cause our costs to rise more
sharply than assumed in the budgeting. If we were not able to pass on the rising material and transport
costs completely to our customers as part of our order origination process, this would weaken our
profitability. If, in the case of contracts already concluded, the costs were to rise more strongly thanassumed in the price calculation, the calculated margin of individual orders would not be attained – arisk that relates most notably to the large plant business with long project times, particularly in theGroup Division Hydro.
In the current environment with high inflation rates, we strive to keep our cost increases as low as
possible. We closely and promptly monitor and analyze the development of global prices for the materials
required in our production. In order to implement prices that are as close to the market as possible,
we are also reviewing in a targeted manner new suppliers who compete with existing purchasing
sources. In this context, best-country strategies are employed, i.e., we do not just look for the lowest
price offered, but apply the principle of total cost consideration that also takes into account factors
like quality standards, logistics costs and delivery times as well as the legal framework. In the event offalling raw materials prices, as could be observed in some areas over the reporting year, we enter into
renegotiations with our suppliers to benefit from this development. Some supplier agreements also
contain price escalator clauses that bring about automatic adjustments.
With regard to energy prices: These primarily have an indirect impact on Voith due to the energy costs
contained in the product costs of our purchasing volume. In contrast, Voith’s own energy and electricity
needs are comparatively small. Specifically in Germany, where the energy prices are especially high in
an international comparison, we have secured our needs for the 2023/24 fiscal year by using forward
contracts. The forward contracts constitute an effective measure to limit this risk.
However, we are able to counter worldwide inflationary trends only to a limited extent with procurement
strategies. When concluding new contracts, we consequently ensure that our price calculation is as
forward-looking as possible and the contractual arrangement addresses the risk of price increases. In
the case of contracts that have already been concluded, we perform new calculations and, in somecases, we enter into renegotiations with our customers.
Global supply chains have to a great extent normalized with the gradual end to the Covid-19 pandemic
and in particular the ending of the zero-Covid policy in China. Supply sources and transport routes that
became unavailable due to the war in Ukraine have largely been replaced. In this respect, the risk of thelack of availability of raw materials and intermediate products required for manufacturing has decreasedon the previous year. And the scenario of energy shortages, and specifically insufficient volumes of gas
in Europe deemed realistic at the beginning of the 2022/23 fiscal year, is deemed to be rather unlikely
from today’s perspective. A new round of supply chain problems are, however, conceivable in the eventof a further escalation of the war in Ukraine, the Middle East conflict or other geopolitical disputes.
Should materials that are required in our production or directly on our construction sites be temporarily
unavailable, our deliveries or commissioning work would have to be postponed, which could delay
revenue recognition or lead to considerable contractual penalties.

Voith Annual Report 2023
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III. Risks and opportunities73

To counter the massive supply chain issues seen in recent years, we have diversified and, where possible
also localized, our procurement sources. As part of intensified risk management, we have additionallydeveloped various tools and processes. Not least, we have introduced strict date-tracking at our
suppliers. We, therefore, consider ourselves to be in a good starting position to identify at an early stage
any disruptions that might occur in the supply chains and counter them with flexible alternative solutions.
Environmental and health risks
The business activities of an industrial company generally give rise to risks for people and the environment.
Such risks occurring could also result in damages being filed and a loss of reputation. Industrial safety
as well as compliance with environmental legislation and corporate policies is a top priority for us. All
production processes are subject to the Group directives on health, safety and environmental protection
and on quality and risk management. Integrated management systems monitor compliance with these
directives and ensure that both production and products consistently meet the same high quality andenvironmental standards. Environmental risks can thus be identified at an early stage and appropriate
countermeasures initiated. Insurance policies have been taken out or adequate provisions have beenrecognized for any residual risks. In this respect, we consider environmental and health risks arisingfrom Voith’s business activities to be well under control with regard to probability of occurrence andamount of potential damage in particular.

III.3.4. Risks to performanceLong-term contracts, especially for major projects, form a key component of our plant engineeringbusiness at the Group Divisions Hydro and Paper. Such contracts are associated with a host of significant
risks and we attach great importance to managing these. These firstly include contractual penalties
and claims for damages through to withholding of payments and contract terminations arising from
unexpected technical problems or unforeseeable developments at the project locations or failure to meet
specified deadlines. Secondly, cost overruns or reduction of productivity within the scope of fixed pricecontracts may lead to a fall in earnings margins. Contracts with price escalator clauses partially minimize
this risk; there remains a residual risk if the underlying indices do not fully reflect the price fluctuations.
Project management and controlling, as it has been implemented, continuously reviews whether the
projects are indeed performing in line with the plans. Any deviations are addressed at an early stage
and any risk allowances necessary are recognized. Liability and property insurance in line with standard
industry practice is taken out to cover potential losses and/or liability risks. Appropriate provisions arerecognized for special risks arising from existing contracts if these risks can be reliably quantified.
As part of our regular internal reporting on performance risks, we monitor the maximum risk potential
associated with specific risk positions as well as the risk potential deemed to be realistic after carefulassessment. The maximum risk potential is considered in the light of whether they constitute risks
jeopardizing the Group’s ability to continue as a going concern. There were no risks to the Group’s
ability to continue as a going concern at the reporting date. The realistic risk potential is considered forprofit planning purposes and in order to assess the need to recognize provisions in the balance sheet.

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As at the reporting date, provisions and allowances totaling € 255 million (previous year: € 316 million)
were recognized in the balance sheet for significant performance risks (maximum risk: € 508 million;
previous year: € 462 million).

III.3.5. Compliance risks
At Voith, we base all our actions on trust and integrity. We require each and every employee to comply
with the applicable laws and our own internal guidelines (compliance). This applies to all levels of hierarchy
throughout the Group. Voith’s Code of Conduct contains rules that govern conduct towards third parties
such as business partners, competitors, political parties and authorities as well as between employees
within the Company. Non-compliant behavior, or even illegal acts committed by employees – forexample cartel infringements, corruption, economic crime, money laundering or manipulation of financial
reporting – can be damaging to our reputation and can lead to sanctions, penalties and ultimately to a fallin earnings. Even compliance infringements on the part of business partners can likewise have negative
consequences. For this reason, we place great value on a well-functioning compliance management.
Compliance with these principles is monitored by the Group’s Compliance Committee, whose chair
reports directly to the Corporate Board of Management, and by the compliance officers in the Group
Divisions and in each Group company. All employees are required to report any infringement of theVoith Code of Conduct. Our whistleblower system is also accessible to people outside the Company. In
addition, we perform random internal compliance reviews in all areas, but especially anywhere potential
corruption risks have been identified within the scope of the risk management process. Infringements
are consistently met with sanctions. To avoid compliance infringements on the part of third parties,
corresponding regulations are enshrined in our general terms and conditions and are also a constituent
part of other contractual arrangements. We perform a compliance due diligence check on important
suppliers before our cooperation starts.
In the 2021/22 fiscal year, Voith Hydro entered into a settlement agreement with the World Bank onbringing to a conclusion proceedings against two companies in the Group Division Voith Hydro, Voith
Hydro Shanghai Ltd. and Voith Hydro GmbH & Co. KG, that had been running since 2018 and werealready addressed in the consolidated financial statements in past years. The settlement agreement
includes, among other things, the temporary debarment of the two named Voith Hydro subsidiaries
from projects financed by the World Bank; the corresponding debarment of Voith Hydro GmbH & Co.
KG ended on July 12, 2023. Within the scope of the settlement, Voith Hydro is fully cooperating with
the World Bank and is currently collaborating with an external expert to revise the existing compliancemanagement system, which is also being coordinated with the World Bank.

Voith Annual Report 2023
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III. Risks and opportunities

75

III.3.6. Overall risk
To the best of our knowledge, there are no risks which, either individually or collectively, could jeopardize
the ability of the Voith Group to continue as a going concern. Of all the risks facing the Voith Group,
external risks could have the strongest negative impact on business development. At the end of the2022/23 fiscal year, the overall risk potential is at a comparable level to that prevailing as at September
30 of the previous year. We are convinced that, in light of our strong diversification, the establishedmarket position in all three Group Divisions, our financial strength and the instruments used to control
risks, our Group is able to bear the risks associated with our business activities.

III.4. Opportunities
In the following, we describe significant opportunities that could have a positive impact on ourbusiness position, net assets, financial position and earnings position, and lead to forecasts or targets
being exceeded. The order of the opportunities presented below reflects how we currently estimate
the importance of these opportunities for the Voith Group. Unless stated otherwise, the following
opportunities relate to all the Group Divisions.
Growing our service businessPart of our strategy consists in expanding the service business and increasing its share of sales. In thelight of the uncertain economic and global political climate, investment in new equipment and machines
was postponed in several industries. With respect to the extended service life of existing equipment,
customers are increasingly tending to make more intensive use of our range of services, such as
maintenance, performance-enhancing components and spare parts. This offers opportunities in all
Group Divisions for our service activities, which might grow more strongly than currently anticipated.
Expansion of our portfolio with product innovations
We are constantly working on developing new technologies, products and solutions as well as improving
existing ones. We again launched numerous new products in the market for all Group Divisions in thereporting year. In the best-case scenario, this will not only allow us to secure our market position but
also to generate sales and to gain market share that has not yet been integrated in our business plan,
especially if innovations are recognized as value-adding by our customers much faster than currently
assumed. We see opportunities particularly in products aimed at climate neutrality and resource
efficiency, such as products for sustainable paper production or for sustainable passenger and goods
transport, such as electrical drives. Over and above this, we see, as part of the progressing digitalizationof many segments, growth potential for Voith with new digital solutions relating to the Industrial Internetof Things.

76Voith Annual Report 2023
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III. Risks and opportunities

Growth through acquisitions
Alongside organic growth, we also strive for growth through business acquisitions and equity investments.
Potential acquisition targets are profitable businesses with viable technology and above-averagepotential for growth, that complement our business in the existing markets or expand it with newactivities. We use structured M&A processes to continually screen potential target companies for theirsuitability. Even in the short term, acquisitions offer opportunities for additional earnings not provided
for in the business plan; in the mid-term they can help improve our position in existing markets or open
up promising new industries for Voith. In addition, acquisitions may offer potential synergies.
New sales markets for existing products and services
As well as expanding our portfolio of offerings, we also evaluate market opportunities for our
existing products and services in all of our Group Divisions in those regions where they have been
underrepresented to date or have no presence at all. Africa, for instance, offers great potential, especiallyfor the Group Divisions Hydro and Turbo. As the markets there are proving to be volatile and difficult topredict, however, we have made conservative assumptions in this respect for our business planning.
Similarly, additional opportunities, that are not currently reflected in the budgeting, may well arise in
China, especially in the rail market and the commercial vehicles market.
We also seek to transfer our already successful products to new fields of application or sales areas.
Another approach that offers new growth opportunities especially for the Group Division Turbo consistsof more intense marketing of complete systems. This means that various components, some of which
can also be purchased from subcontractors, are combined in one system with an optimized setup. The
resulting additional sales potential has not yet been integrated in our business plan.
Expectations on volume awarded in the hydropower market exceeded
On account of the scale of many hydropower projects, the annual volume awarded on the market
is exposed to volatile fluctuations. In the event that some of the major projects currently on hold areawarded in the 2023/24 fiscal year, this would lead to an unexpected upward spike and improve theGroup Division Hydro’s order situation.
Opportunities associated with the global economy
If the economic environment in important sales regions proves to be better over the short to medium
term than currently assumed, it is likely to have a positive impact on Voith’s business position, net assets,financial position and earnings position. Upside potential for global economic development might cometo fruition, for example, if inflation could be brought down more quickly than currently assumed, or if itwere possible to bring about an unexpected solution to existing geopolitical or trade conflicts. Global
economic developments which exceed current expectations would benefit all Group Divisions, albeit withdifferent degrees of delay. However, the economic risks currently predominate so that the probability ofthis occurring should be seen as rather slight.
Other opportunities
Specifically in the Group Division Hydro, unexpected receipts of payments on impaired receivables might
give rise to positive effects on results.

Voith Annual Report 2023
Group Management Report
IV. Forecast report

IV.

77

Forecast report
IV.1. Business environment
Economic environment remains sluggish
At the beginning of the 2023/24 fiscal year, the global economy remains in a downturn and is confronted
by major challenges. These include, firstly, geopolitical conflicts, particularly the war in Ukraine andthe new flare-up of hostilities in the Middle East and an increasing geoeconomic fragmentation of theworld. Secondly, cyclical factors are placing a burden on global economic development, in particular
the exceptionally high inflation rates prevailing in most countries and the associated restrictive monetary
policy by central banks.
Global economic growth is expected to remain slow over the coming two years. For example, in its mostrecent release from October 2023, the IMF sees world economic growth of 3.0 % in 2023, followed by
global growth rates of 2.9 % (2024) and 3.2 % (2025).
In every one of the major advanced economies, growth rates of significantly under 2 % are expected in
2024. In this context, the US gross domestic product (IMF forecast 2024: 1.5 %) is expected to increaseat a minimally higher rate than the euro area (1.2 %) before the growth rates converge in 2025 at only aslightly higher level (1.8 %). According to forecasts, the German economy will return to positive territory
after a year of recession in 2023, but will only grow by 0.9 % in 2024. For 2025, the forecast is more
optimistic with growth of 2.0 %.
Growth in the emerging markets is being driven by Asia. IMF forecasts state that China will raise its grossdomestic product in 2024 and 2025 by more than 4 %, but will remain however a long way away fromthe high growth rates seen before the Covid-19 pandemic due to the crisis in the real estate sector. India
is forecast to grow more than 6 % in those two years, but at a lower level in absolute terms than China.
For the ASEAN-5 countries, growth rates of 4.5 % are forecast. In South America, the development is
expected to be less dynamic. The large Brazilian market is projected to return below-average growthwithin this region of only 1.5 % and 1.9 %, respectively.

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The IMF forecasts the following growth rates in 2024 and 2025 for the regions and countries mostimportant to Voith:
Economic growth
Real change in GDP1) on the previous year

World output
Advanced economies
USA
Euro area2)
Germany
Emerging market anddeveloping economies
China
ASEAN-5 3)
India
Brazil

2024

2.9 %

2025

3.2 %

2024

1.4 %

2025

1.8 %

2024

1.5 %

2025

1.8 %

2024

1.2 %

2025

1.8 %

2024

0.9 %

2025

2.0 %

2024

4.0 %

2025

4.1 %

2024

4.2 %

2025

4.1 %

2024

4.5 %

2025

4.5 %

2024

6.3 %

2025

6.3 %

2024

1.5 %

2025

1.9 %

Source: International Monetary Fund (IMF); World Economic Outlook, October 2023.

The material risks
to global economic
development can befound in section III.3.
Risks.

1)

Forecasts.

2)

Including Germany.

3)

Indonesia, Malaysia, Philippines, Singapore, Thailand

All in all, the economic environment remains volatile. The already subdued forecasts are, according to
the IMF’s own statements, subject to great uncertainty with the balance of risks currently tilted to thedownside. These risks include, most of all, a new round of shocks in energy, raw materials and foodprices or other market turbulence caused by geopolitical conflicts, a phase of high inflation rates lasting
longer than expected and an intensification of the real estate crisis in China with repercussions for the
global economy.

Divergent developments in the Voith markets
Over Voith’s 2023/24 fiscal year, the mechanical and plant engineering industry will probably continue tobe faced by a subdued investment climate weighing on the order situation due to the low level of global
economic growth and the great uncertainty. The German mechanical and plant engineering industry is
also expecting a further decline, after adjusting for inflation, with regard to production.
The five Voith markets are expected to see heterogeneous developments in the 2023/24 fiscal year.
We anticipate that the raw materials and paper machine markets will cool off. The oil & gas and energyVoith Annual Report 2023
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79

markets should benefit from the ongoing high prices on these markets, but they will probably be marked
by a great degree of volatility again in the 2023/24 fiscal year. Important segments of the transport &automotive market will, in our assessment, see a positive trajectory.
The medium- to long-term growth trajectory of the energy market is characterized by rising global needs,
which necessitate increasing investments in the creation of additional power generation capacities. In
this context, there is a transition to low-emission electricity generation underway around the world, also
supported by government regulation and subsidy programs in many countries, such as the Inflation
Reduction Act, which came into force in the USA in 2023. Alongside climate change, one of the drivers
behind this development is Europe’s aspiration towards energy independence and security. Even thoughmost of the additional output is expected to come from photovoltaics and wind energy, hydropower
will also play a major role in the energy mix, expanding with new-build and modernization projects. A
considerable portion of this growth will be attributable to pumped storage power plants, which can beused to ensure grid stability and supply reliability. Over the short term, the volume of contracts awardedin the hydropower market may be exposed to volatile fluctuations from year to year that are difficult
to predict. In the field of conventional energies, growth is expected most of all with nuclear electricity
generation. In the future, in particular what are known as “small modular reactors” are hoped to open
up new areas of deployment in this field.
The oil & gas market will most probably continue to be characterized by volatility. After oil and gas
prices started to rise towards the end of the reporting year, industry analysts expect that specificallythe price of oil over the 2023/24 fiscal year overall is likely to be up on the previous-year level in light ofthe production cuts by the OPEC+ countries. The good earnings positions of oil and gas producers in
2022 and 2023 is increasing the leeway for investment over the short term. On the other hand, global
efforts to reduce fossil energies with a view to limiting CO2 emissions is slightly dampening the sector’s
willingness to invest.
In the light of the low economic dynamics, the investment climate in the paper market will continue tocool. Investments in new lines and rebuilds will, in all probability, continue to fall over the 2023/24 fiscal
year in view of existing excess capacities. Assuming that global paper production will, at best, increase
only slightly, we reckon with minor growth in demand for wear parts, spare parts and services. The focus
of investment activities over the coming years will be on board and packaging due to the long-term
market trends. Over the short term, however, market activities will also remain at a low level in thissegment, as we see mostly rebuilds under efficiency and sustainability considerations in the 2023/24
fiscal year rather than investments to increase capacity.
For the raw materials market, we anticipate a slight cooling in the 2023/24 fiscal year. According toforecasts by industry analysts, the prices of metals and minerals will fall slightly once again in 2024, withcoal seeing an appreciable decrease. Investments by the mining industry are likely to decline slightly
in light of the low level of global economic growth and high interest rates. Over the medium and longterm, it can be assumed that global efforts to achieve climate neutrality will cause demand for critical
hard rock minerals, such as copper, cobalt and lithium, to rise sharply. The corresponding market
potential is becoming increasingly apparent from the constant rise in exploration activities in the hardrock mining sector.

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We are fundamentally optimistic about the segments of the transport & automotive market that are mostimportant for Voith. For the commercial vehicles segment, we anticipate slight growth in the 2023/24
fiscal year. In the truck market, development is closely tied to the economic development in the mostimportant regions. For instance, stimulus for growth on the Chinese market is expected from the further
recovery from the far-reaching uncertainties during the Covid lockdowns. The transition to alternative
drive technologies for city buses is the driving force on the bus market. The global rail market will in allprobability continue to expand over the coming years. In this respect, rail is benefiting from the global
climate protection efforts and the trend towards urbanization. In India, there are signs of significant
growth from a sharp rise in government investment in vehicle procurement. Additional opportunities
stem from the digitalization and harmonization of European railroad systems. In the marine segment,
we anticipate increasing demand. Central growth drivers in the market segments relevant to Voith
Turbo are the expansion of offshore wind energy facilities and the rise in security expenditure by many
countries in the wake of rising international tensions. We expect the markets for agricultural machineryand construction equipment not to start recovering until the second half of 2024.

IV.2. Future development of the Voith GroupOver the last four years, which were marked by an exceedingly challenging economic environment,
Voith demonstrated the resilience of its business model and its organization. We made a conscious
decision to continue investing even in times of crisis: in research and development, business acquisitions,training and in the ongoing strategic and organizational development of our Company. By doing so,
Voith has put itself into a good starting position to generate sustainable and profitable growth in the
future. Our strategic focus on sustainable technologies will continue to point the way not only for thefurther development of our current core business but also for investments in new business segments andmarkets over the coming years. This involves a great deal of commitment to research and development
and targeted business acquisitions going forward. Over and above this, we have resolved to further
improve the Company’s profitability and financial strength.
Our Group forecasts for the four key financial performance indicators in the 2023/24 fiscal year are as
follows:
2022/23in € millions

2023/24
Forecast

Orders received

6,139

Perceptible decline

Sales

5,506

Slight decline

EBIT

245

Slight increase

ROCE

12.1 %

Slight improvement

Voith GroupVoith Annual Report 2023
Group Management Report
IV. Forecast report81

We assume that the level of orders received by the Voith Group will remain at a high level in the 2023/24
fiscal year. Compared with the exceptionally good figure seen in the reporting year stemming from theincrease in the volume in a hydropower project, it will probably fall perceptibly. The decisive factor inthis development is the Group Division Hydro, while we expect a stable volume of orders received for
the Group Divisions Paper and Turbo. Should the contract for a major hydropower project in Angola
described in sections II.3.2 and II.4.1 be finalized in the 2023/24 fiscal year, our volume of orders received
would be appreciably higher than provided for in the budgeting and likely to reach the level seen in thegood reporting year. With regard to Group sales, we anticipate a slight decline on the high value of thereporting year due to the declines in the Group Divisions Hydro and Paper. In all Group Divisions, we
expect growth stimulus to come from the service business. We intend to further improve our profitability.
Over the last few years, we have worked very hard on optimizing our structures and processes. The
efficiency gains brought about by this are now becoming increasingly apparent. The opposite effectcame from increases, considerable in some cases, in the costs of materials, personnel and energy.
For the 2023/24 fiscal year, our business planning provides for a slight increase in EBIT despite theexpected decline in sales. All three Group Divisions are expected to contribute to this improvement inearnings. In line with the development of the operating result, our planning also sees ROCE improving.
All forecasts are stated before taking account of currency effects and the effect of any new M&A activities.
Our forecasts for the Group Division Hydro are as follows:
2022/23in € millions

2023/24
Forecast

Orders received

1,915

Significant decline

Sales

1,189

Perceptible decline

EBIT

6

Slight increase

ROCE

2.9 %

Slight improvement

Group Division Hydro

Investment in the hydropower market is likely to remain dominated by pumped storage power plants
as facilities for stabilizing grids, especially in China. However, the majority of Chinese pumped storage
projects are being implemented by Chinese competitors due to political constraints, which make it
difficult for Voith to tender. Alongside the pumped storage sector, we have identified potential most of all
in modernization projects and in the service business. We based our business planning for the 2023/24
fiscal year on the assumption that the global volume of contracts awarded in the hydropower market
relevant to Voith will remain roughly at the level of the reporting year. For Voith Hydro, we expect orders
received to decrease back to the level of previous years after the exceptionally good reporting-year figure
marked by the increase in the volume in an ongoing project. Should the contract for a major project inAngola described in sections II.3.2 and II.4.1 be finalized in the 2023/24 fiscal year, our volume of orders
received would be appreciably higher than provided for in the budgeting and likely to reach the level
seen in the good reporting year. With regard to sales, there is likely to be a perceptible decline in the

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IV. Forecast report

2023/24 fiscal year despite the high level of orders on hand at the end of the reporting year because aproject in Eastern Europe was terminated as a consequence of the war in Ukraine. For EBIT and ROCE,
our business planning provides for a slight improvement. Both key figures are, however, expected to be
below the Group’s average in the 2023/24 fiscal year.
For the Group Division Paper we forecast the following developments:
2022/23in € millions

2023/24
Forecast

Orders received

2,097

Stable development

Sales

2,239

Slight decline

Group Division Paper

EBIT

145

Slight increase

ROCE

25.4 %

Slight improvement

We assume that the cooling of the paper machine market will continue in the 2023/24 fiscal year. With
the expected slight increase in paper production, demand for wear parts and services should, on theother hand, pick up slightly. Thanks to our good market position and our expertise in resource-saving,
low-emission paper production, we expect Voith Paper to once again achieve a volume of orders
received similar to the good level seen in the reporting year in the 2023/24 fiscal year. Digital solutions,wear parts, spare parts and services are expected to have an increasing share in this development.
For the Group Division’s sales, our business planning provides for a slight decline as a consequence ofthe fall in orders received in the reporting year. Despite the forecast decrease in volume, we intend toachieve a slight increase in EBIT and, in doing so, bring about a slight improvement in ROCE startingfrom the current high level.
Our forecasts for the Group Division Turbo are as follows:
2022/23in € millions

2023/24
Forecast

Orders received

2,048

Stable development

Sales

1,994

Stable development

EBIT

80

Perceptible increase

ROCE

7.8 %

Slight improvement

Group Division Turbo

The environment in which the Group Division Turbo operates is likely to remain volatile. For the 2023/24
fiscal year, we expect a stable development in orders received at an ongoing high level. We identify
growth stimulus as coming from the service business in particular. In the light of the high volume oforders on hand as at September 30, 2023, we expect to be able to maintain sales in the 2023/24 fiscal
year at the high level of the reporting year. We intend to further improve our profitability. In particular,Voith Annual Report 2023
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83

successful implementation of our ongoing efficiency programs is intended to make a contribution tothis development. Increases in the costs of materials and personnel will have the opposite effect. From
today’s perspective, we forecast a perceptible increase in EBIT. ROCE is expected to improve slightly.
There are currently considerable uncertainty factors that make it difficult to provide a reliable outlook.
The above forecast report shows the Voith Corporate Board of Management’s perspective on the
future course of business and reflects the state of knowledge at the time of reporting. The actual
development may deviate – positively or negativity – from these forecasts, with the downward factors
currently predominating. Concerning the already known opportunities and risks to the forecast businessdevelopment, we refer to section III. Risks and opportunities of this Group management report.
As a company, we see ourselves equipped in the best possible way for coming challenges. Thanks to
its broad sectoral and geographical diversification, the established market position in all three Group
Divisions as well as a sound balance sheet, Voith is extremely resilient. The Company has a productportfolio that is fit for the future, an efficient organization and an outstanding, dedicated workforce.
We are in a good strategic position, and the reliable long-term access to capital provides us with thenecessary entrepreneurial scope needed to make important investments for the future and to implement
the decisions we deem suitable to enable us to continue along our path of sustainable profitable growth.

Heidenheim an der Brenz, November 29, 2023
The Board of Management of Voith Management GmbH

Dr. Toralf Haag
Stephanie Holdt
Dr. Stefan Kampmann
Andreas Endters
Dr. Tobias Keitel
Cornelius Weitzmann

Voith Annual Report 2023
Consolidated Financial Statements

Consolidated Financial
Statements

85

Page

Consolidated statement of income

86

Consolidated statement of comprehensive income

87

Consolidated balance sheet

88

Consolidated statement of changes in equity

90

Consolidated cash flow statement92­ otes to the consolidated financial statementsNfor the 2022 /23 fiscal year

93

Notes to the consolidated statement of income

122

Notes to the consolidated balance sheet

130

Notes to the consolidated cash flow statement

151

Notes on segment reporting152

Segment information by business segment

154

Segment information by region

156

Other notes

157

Responsibility statement

181

86

Voith Annual Report 2023
Consolidated Financial Statements
Consolidated statement of income

Consolidated statement of income
for the period from October 1, 2022 to Septem­ber 30, 2023
in € thou­s ands

Note2022 /23

2021 /22

Sales

(1)

5,505,687

4,881,346

Changes in inventories and other own work capitalized

(2)

6,984

81,5805,512,671

4,962,926

Total output
Other operating income(3)358,328

482,820

Cost of materials(4)- 2,548,699- 2,404,314

Personnel expenses(5)- 1,774,417- 1,581,749

Depreciation and amortization- 201,983- 179,968

Impairment losses on trade receivables and contract assets, net(14)- 44,040- 15,403

Other operating expenses(6)- 1,120,368- 1,128,793

181,492

135,519- 693- 3,622

Operational result
Share of profit/loss from companies accounted for using the equity method
Interest income(7)48,101

12,299Interest expenses(7)- 72,344- 49,006

Other financial result

(7)

10

21,164

156,566

116,354- 83,910- 86,704

Net result

72,65629,650· N et result attributable to shareholders of the parent company

72,62519,190· N et result attributable to holders of non-controlling interests

31

10,460Result before taxes
Income taxes(8)

Voith Annual Report 2023
Consolidated Financial Statements
Consolidated statement of comprehensive income

87

Consolidated statement ofcomprehensive income
for the period from October 1, 2022 to Septem­ber 30, 2023
in € thou­s ands

2022 /23

2021 /22

Net result

72,65629,650Remeasurement of defined benefit plans

12,505

262,736

Taxes on components of other comprehensive income that will not be recycled through profit or loss inlater accounting periods

1,243

- 977

Components of other comprehensive income that will not be recycled through profit or loss inlater accounting periods:

Components of other comprehensive income that will be recycled through profit or loss inlater accounting periods:
Gains/losses on financial assets and marketable securities746- 3,075

Gains/losses on cash flow hedges

204

14,822- 114,823

144,248- 2,935

12,345211- 7,216

Other comprehensive income- 102,849

422,883

Total comprehensive income- 30,193

452,533· Total comprehensive income attributable to shareholders of the parent company- 24,297

440,876· Total comprehensive income attributable to holders of non-controlling interests- 5,896

11,657- 30,193

452,533

Gains/losses on currency translation
Gains/losses on net investment in foreign operations
Taxes on components of other comprehensive income that will be recycled through profit or loss inlater accounting periods

Further information can be found in section 19.

88Voith Annual Report 2023
Consolidated Financial Statements
Consolidated balance sheet

Consolidated balance sheet
as at Sep­tember 30, 2023

Assetsin € thou­s ands

A.

Note

2023-09-30

2022-09-30

Non-current assets

I.

Intangible assets(9)

1,116,384

1,159,589

II.

Property, plant and equipment(10)

1,059,758

1,081,034

III.

Investments accounted for using the equity method(11)43,85743,583

IV.

Securities(16)

10,50910,985V.

Other financial assets(16)

168,866

184,581

VI.

Other financial receivables(15)

72,98973,224

VII.

Other assets(15)

40,46941,633

VIII.

Deferred tax assets(8)

94,126

98,1672,606,958

2,692,796

829,690878,631

Total non-current assets
B.

Current assets

I.

Inventories

(12)

II.

Trade receivables(13)

870,175

882,037

III.

Contract assets(14)660,317715,432

IV.

Securities(16)

60,071

58,595V.

Current income tax assets

66,31151,006VI.

Other financial receivables(15)

95,920102,322

VII.

Other assets(15)

126,032

153,538

VIII.

Cash and cash equivalents(17)412,842

411,892

3,121,358

3,253,453

0

9,704

Total current assets

3,121,358

3,263,157

Total assets

5,728,316

5,955,953

IX.

Assets held for sale(18)

Voith Annual Report 2023
Consolidated Financial Statements
Consolidated balance sheet

89

Equity and liabilitiesin € thou­s ands

Note2023-09-30

2022-09-30

120,000

120,000

A.

EquityI.

Issued capital

II.

Revenue reserves

1,231,278

1,178,451

III.

Other reserves- 124,362- 13,782

IV.

Profit participation rights

6,600

6,600

1,233,516

1,291,269

Equity attributable to shareholders of the parent company
V.

Profit participation rights

96,80096,800VI.

Other interests

36,50648,011

133,306

144,811(19)

1,366,822

1,436,080

Equity attributable to non-controlling interests
Total equity
B.

Non-current liabilities

I.

Provisions for pensions and similar obligations(20)525,263545,223

II.

Other provisions(21)

114,873

116,499

III.

Income tax liabilities

1,600

313

IV.

Bank loans and other interest-bearing liabilities(22)

833,537

839,009

V.

Other financial liabilities(24)

27,05038,421VI.

Other liabilities(24)

45,22044,315

VII.

Deferred tax liabilities(8)

Total non-current liabilities

84,71598,501

1,632,258

1,682,281

C.

Current liabilities

I.

Provisions for pensions and similar obligations(20)

33,161

32,867II.

Other provisions(21)

339,530

325,425

III.

Income tax liabilities

51,23852,011IV.

Bank loans and other interest-bearing liabilities(22)

225,814262,119V.

Trade payables(23)

651,637

729,446

VI.

Contract liabilities(14)989,943

1,008,444

VII.

Other financial liabilities(24)

291,357

280,385

VIII.

Other liabilities(24)

146,556

146,895

Total current liabilities

2,729,236

2,837,592

Total equity and liabilities

5,728,316

5,955,953

90

Voith Annual Report 2023
Consolidated Financial Statements
Consolidated statement of changes in equity

Consolidated statement of changes in equity
Equity attributable to shareholdersof the parent companyin € thou­s ands

Issuedcapital

Revenue
reserves

Financial assets
and marketablesecurities

Cash flow
hedgesCurrencytranslation

2022-10-01

120,000

1,178,451- 50,363

14,51041,799Net result

72,625

Other comprehensive income

13,658590

148- 108,806

86,283590

148- 108,806

Total comprehensive income

0

Allocation of profit participation rights- 5,590

Share of net result attributable to profit
participation rights
Dividends- 20,000

Non-controlling interests – put options- 6,503

Reclassifications- 20,477

Other adjustments
2023-09-30- 1,363
120,000

1,231,278- 49,773

14,658- 87,484

Equity attributable to shareholdersof the parent companyin € thou­s ands

Issuedcapital

Revenue
reserves

Financial assets
and marketablesecurities

Cash flow
hedgesCurrencytranslation

2021-10-01

120,000

925,988- 47,593- 290- 101,429

254,083- 2,770

14,800143,228

273,273- 2,770

14,800143,228- 50,363

14,51041,799Net result

19,190

Other comprehensive income
Total comprehensive income

0

Allocation of profit participation rights- 5,590

Share of net result attributable to profit
participation rights
Dividends- 20,000

Non-controlling interests – put options

3,823

Other adjustments
2022-09-30

Further information can be found in section 19.

957
120,000

1,178,451

Voith Annual Report 2023
Consolidated Financial Statements
Consolidated statement of changes in equity

91

Equity attributable
to non-controlling interests
Net investment
in foreign
operations

Profitparticipationrights- 19,728

6,600- 2,512- 2,512

Total

ProfitparticipationrightsOtherinterests

Total

Total
equity1,291,269

96,80048,011

144,811

1,436,080

72,62531

3172,656- 96,922- 5,927- 5,927- 102,849- 5,896- 5,896- 30,193

5,227

0

0

- 24,2970363- 5,227

5,227

- 363

- 5,227- 363

20,477- 5,227- 5,590- 20,000- 5,550- 5,550- 25,550- 6,503

- 46

- 46

- 6,54900- 1,363- 1,763

6,600

1,233,516

96,800- 13- 13- 1,376

36,506

133,306

1,366,822

Equity attributable
to non-controlling interests
Net investment
in foreign
operations

Profitparticipationrights- 32,073

6,600

Total

ProfitparticipationrightsOtherinterests

Total

Total
equity871,203

96,80046,774

143,574

1,014,777

10,46010,46029,65019,19012,345
12,345- 19,728

421,686

1,197

1,197

422,883

11,657

11,657452,533

5,227

5,227

0

- 5,227- 5,227- 5,5900440,876

0363- 5,227

- 363

- 363

6,600

- 20,000- 5,904- 5,904- 25,904

3,823- 4,524- 4,524

- 701

957

8

8

965

48,011

144,811

1,436,080

1,291,269

96,800

92

Voith Annual Report 2023
Consolidated Financial Statements
Consolidated cash flow statement

Consolidated cash flow statementin € thou­s ands

2022 /23

2021 /22

Result before taxes

156,566

116,354

Depreciation and amortization

207,535

174,451

Interest expenses/income

24,24336,707

Other non-cash items

4,470- 2,612- 462- 9,067

Gains/losses from investments

Gains/losses from the disposal of property, plant and equipment and intangible assets- 15,147- 5,049

Changes in provisions and accruals

42,798- 10,212

Change in net working capital

19,162- 134,500

Interest paid

- 48,666- 19,308

Interest received

17,773

7,963

Dividends received

6,662

6,190

Taxes paid

- 108,826- 68,357

Cash flow from operating activities

306,108

92,560Investments in property, plant and equipment and intangible assets- 131,163- 116,244

Proceeds from the disposal of property, plant and equipment and intangible assets

22,033

22,276

Investments in financial assets- 14,147- 138,771

Acquisitions of consolidated subsidiaries minus cash and cash equivalents- 42,692- 192,095

Proceeds from the disposal of financial assets

31,406

26,891

1)

Proceeds from the disposal of securities

152,895

208,847

Payments for the acquisition of securities- 158,692- 212,133

Cash flow from investing activities- 140,360- 401,229- 32,313- 32,248

Dividends paid
Acquisition of non-controlling interests

2)

New bank loans and overdrafts
Repayment of bank loans and overdrafts
Changes in other interest-bearing financial receivables and liabilities- 5,550- 15,334

73,792

328,791- 118,649- 69,491- 47,173- 40,372- 129,893

171,346

Total cash flow

35,855- 137,323

Exchange rate movements and valuation changes- 34,905

38,050Cash and cash equivalents at the beginning of the period

411,892

511,165

Cash and cash equivalents at the end of the period

412,842

411,892

Cash flow from financing activities

1)
2)

Further information can be found in “Business combinations in the 2021/22 fiscal year and in the 2022/23 fiscal year” in the notes to the consolidated financial statements.
	Further information can be found in “Classification of non-controlling interests of third-party shareholders in limited partnerships based on termination rights of holders
of non-controlling interests and put options – a) Put options” in the notes to the consolidated financial statements.

Further information can be found in the section entitled “Notes to the consolidated cash flow statement”.

Voith Annual Report 2023
Consolidated Financial Statements­N otes to the consolidated financial statements for the 2022/23 fiscal year93

­ otes to the consolidatedN
financial statements for the2022/23 fiscal year
General information
Voith GmbH & Co. KGaA (Voith), which has its headquarters at St. Pöltener Str. 43, Heidenheim an
der Brenz, is registered at the commercial register in Ulm, Germany (HRB 735450) and is the parent
company of the Voith Group. The Board of Management of Voith Management GmbH (commercial
register number HRB 735126) is responsible for the strategy and operative management of theVoith Group. Voith Management GmbH is the personally liable shareholder (general partner) of, andresponsible for, the management of the business of Voith GmbH & Co. KGaA.
Voith GmbH & Co. KGaA prepares its own consolidated financial statements as at September 30,
2023, in accordance with IFRS as endorsed by the EU, and a Group management report. JMV SE &Co. KG, as parent of the largest group of companies requiring consolidation, prepares consolidated
financial statements as at September 30, 2023, in accordance with IFRS as endorsed by the EU, and aGroup management report for the largest consolidated group of companies. Both sets of consolidated
financial statements are published in the German company register. The Board of Management ofVoith Management GmbH authorized the consolidated financial statements for presentation to theSupervisory Board on November 29, 2023.
The preparation of the consolidated financial statements for the 2022/23 fiscal year in accordancewith IFRS as endorsed by the EU, and the interpretations of the International Financial Reporting
Interpretations Committee (IFRIC) was undertaken on a voluntary basis because Voith does notparticipate in capital markets as defined by EU Regulation (EC) No. 1606/2002. In preparing these
consolidated financial statements, Voith has applied all pronouncements which are mandatory for listedcompanies issued by the International Accounting Standards Board (IASB) as well as the additional
requirements of German commercial law pursuant to Sec. 315e HGB (German Commercial Code).
The consolidated financial statements have been prepared in euros. Except where explicitly statedotherwise, all amounts are stated in thou­sands of euros (€ thou­sand). Minor rounding differences
may occur.
The Voith Group is divided into three segments: Hydro, Paper and Turbo. Details of the businessactivities pursued by the Group’s segments are provided in the explanatory notes on segment reporting.

94

Voith Annual Report 2023
Consolidated Financial Statements­N otes to the consolidated financial statements for the 2022/23 fiscal year

Consolidated group
In addition to those entities acting as holding companies, the consolidated financial statements also
include all the Group’s manufacturing, service and sales companies both in Germany and in othercountries as at September 30 of each fiscal year. The financial statements of the subsidiaries areprepared for the same period as their parents’ financial statements, using consistent accounting
policies.
Subsidiary companies are consolidated in full from the date on which the Group obtains control. They
are no longer included in the consolidation as soon as the parent company ceases to have control. For
five companies (previous year: five), control over companies included in the consolidation is obtained
due to the fact that the Group has a majority of voting rights in the relevant decision-making bodies.
The following companies are included in the consolidated financial statements:
2023-09-30

2022-09-30

Voith GmbH & Co. KGaA and its fully consolidated subsidiaries:· Germany

23

25· Other countries

135

133

158

158

· Germany44· Other countries

6

5

10

9

Associates and joint ventures:

The following significant companies are included in the consolidated
financial statements:
VZ
Voith GmbH & Co. KGaA, Heidenheim an der Brenz, Germany
VZB
J.M. Voith SE & Co. KG, Heidenheim an der Brenz, Germany
VZUS-VO Voith US Inc., Appleton (WI), USA
VHH
VHY
VHP
VHPO
VHM
VHS
VHFK
VHN

Voith Hydro GmbH & Co. KG, Heidenheim an der Brenz, Germany
Voith Hydro Inc., York (PA), USA
Voith Hydro Ltda, São Paulo (SP), Brazil
Voith Hydro GmbH & Co. KG, St. Pölten, Austria
Voith Hydro Inc., Brossard (QC), Canada
Voith Hydro Shanghai Ltd., Shanghai, China
Voith Fuji Hydro K.K., Kawasaki-shi, Kanagawa, Japan
Voith Hydro Private Limited, New Delhi, India

Voith Annual Report 2023
Consolidated Financial Statements­N otes to the consolidated financial statements for the 2022/23 fiscal year

VPP
VPIT
VPC
VPFI
VPTA
VPTI
VPBE

Voith Paper Máquinas e Equipamentos Ltda., São Paulo (SP), Brazil
Voith IHI Paper Technology Co., Ltd., Tokyo, Japan
Voith Paper (China) Co., Ltd., Kunshan, Jiangsu, China
Voith Paper Fabrics Ipoh Sdn. Bhd., Chemor, Perak Darul Ridzuan, Malaysia
Voith Paper S.A., Ibarra (Guipúzcoa), Spain
Toscotec S.p.A., Marlia (LU), Italy
BTG Eclépens S.A., Eclépens, Switzerland

VTKT
VTCN
VTPA
VTGB
VTAU
VTIV
VTEM
VTYD
VTRB

Shanghai Voith Schaku KTK Coupler Technology Co., Ltd., Shanghai, China
Voith Turbo Power Transmission (Shanghai) Co., Ltd., Shanghai, China
Voith Turbo Ltda., São Paulo (SP), Brazil
Voith Turbo Limited, Croydon, United Kingdom
Voith Turbo Pty. Ltd., Smithfield (N.S.W.), Australia
Voith Turbo S.r.l., Reggio Emilia, Italy
ELIN Motoren GmbH, Preding/Weiz, Austria
ARGO-HYTOS GmbH, Kraichtal-Menzingen, Germany
Voith Turbo Transmission CZ s.r.o., Brno, Czech Republic

95

An exhaustive list of the companies and other investments included in the consolidated financial
statements can be found in the consolidated financial statements. The consolidated financial statementsof Voith GmbH & Co. KGaA are filed with the German company register pursuant to Sec. 264b No. 4
HGB and Sec. 264 (3) No. 5 HGB.
Non-controlling interests are held in the following significant subsidiary companies:
Voith Hydro Holding GmbH & Co. KG, Heidenheim an der Brenz, Germany

Non-controlling shareholdings, in %2023-09-30

2022-09-30

35

35

The voting share capital held by Voith Hydro GmbH & Co. KG is equal to the percentage of sharecapital held.

96

Voith Annual Report 2023
Consolidated Financial Statements­N otes to the consolidated financial statements for the 2022/23 fiscal year

The following table shows the financial data of significant subsidiary companies with non-controllingshareholders (the figures are those of the Voith Hydro Holding GmbH & Co. KG segment):
Voith Hydro Holding GmbH & Co. KG, Heidenheim an der Brenz, Germanyin € thou­s ands

2023-09-30

2022-09-30

Sales

1,191,479

1,052,240

Net result- 46,265- 36,159

Net result attributable to non-controlling interests- 16,503- 14,860

Other comprehensive income- 30,445

72,593

Total comprehensive income- 76,710

36,434

Total comprehensive income attributable to non-controlling interests- 26,092

11,199

1,072,892

1,091,895

Current assets
Non-current assets

241,449

273,435

Current liabilities

1,164,144

1,107,038

Non-current liabilities

100,830

126,839

Net assets

49,367

131,453

Net assets attributable to the non-controlling interests

7,262

33,431

Cash flow from operating activities- 3,007

48,952

Cash flow from investing activities- 14,552- 3,689

Cash flow from financing activities

32,493- 48,392

Total cash flow

14,934- 3,129

Net foreign exchange difference- 3,019

2,541

Net increase/decrease in cash and cash equivalents

11,915- 588

Voith Annual Report 2023
Consolidated Financial Statements­N otes to the consolidated financial statements for the 2022/23 fiscal year

97

Business combinations in the 2021/22 fiscal year
ARGO-HYTOSOn August 2, 2022, Voith acquired 79.5 % of the shares in ARGO-HYTOS Group AG and its 19 subsidiaries (Argo-Hytos). Voith gained control through the acquisition of the majority of shares and voting
rights. Based in Baar, Switzerland, this company develops and produces components for hydraulics
and system solutions with a focus on the off-highway sector (agricultural machinery, construction
equipment and vehicles).
As a components and system supplier, Argo-Hytos serves customers in the field of mobile working
machinery and of general mechanical engineering. The family business with more than 1,600 employees
has more than 70 years’ experience in fluid and motion control and filtration technology in mobile
and industrial hydraulics. Argo-Hytos has become an innovation leader particularly in the area ofmobile hydraulics. It owns a number of patents and, in many cases, has set new standards in its
industry. With production companies in Germany, the Czech Republic, Poland, India and China, as
well as numerous own international distribution and assembly companies, the Argo-Hytos Group has
operations worldwide.
Under the terms of the business combination, Voith agreed to acquire the remaining 20.5 % of theshares at a later date, with the non-controlling shareholder having fixed exercise periods within which
he is able to sell his shares to Voith (put option). Over and above this, Voith has the right to acquire thenon-controlling interest within fixed exercise periods (call option). The accounting treatment of the put
option gives rise to an obligation of € 46.2 million that was reported in non-current financial liabilities.
The amount of this obligation was determined using discounted earnings indicators on the basis of
the contractually agreed terms, an assumption as to the expected exercise date and an interest rateof 8.9 %.
The company and its 19 subsidiaries have been fully consolidated since August 1, 2022, and areallocated to the Group Division Turbo.
The business combination was presented using the anticipated acquisition method in combination withthe full goodwill method.
The difference between the purchase price and the acquired net assets revalued to their respective fairvalues amounting to € 84.2 million has been reported as goodwill, and represents the future economic
benefit of acquired assets that cannot be identified individually and reported separately. The goodwill
is not tax-deductible.
Since August 1, 2022, Argo-Hytos contributed an additional € 36.5 million to the Group’s sales in the2021/22 fiscal year. The share in net result for the same period amounted to € 1.5 million (this figure
includes depreciation and amortization of the assets identified within the scope of the purchase priceallocation of € 1.9 million).

98

Voith Annual Report 2023
Consolidated Financial Statements­N otes to the consolidated financial statements for the 2022/23 fiscal year

If Argo-Hytos had been included in the Group for the whole 2021/22 fiscal year, it would have generated
additional sales of € 186.1 million and a net result of € 10.8 million.

in € thousands

Acquisition datefair value

Intangible assets

72,682

Property, plant and equipment

55,985Inventories

55,140Receivables and other assets

47,189Cash and cash equivalents

22,012

Pension obligations- 5,283

Other liabilities and accruals- 46,373

Bank loans- 17,185

Option – financial liability- 46,222

Deferred tax liabilities- 13,436

Net fair value of equity

124,509

Goodwill- 84,232

Purchase price of the interests acquired

208,741

Cash and cash equivalents- 22,012

Cash outflows

186,729

The purchase price of the interests acquired was paid by means of the outflow of cash and cash
equivalents (€ 204.2 million) and the taking out of a loan (€ 4.5 million).
There are no significant differences between the gross value and the fair value of the receivables.
Suzlon Generators Ltd.
At the beginning of April 2022, Voith acquired the remaining 75 % of the shares in the Indian company
Suzlon Generators Ltd. Before the share purchase, the company was operated jointly with the Indian
partner Suzlon Energy and accounted for as an associate.
Suzlon Generators specializes in the manufacture of generators for onshore wind turbines. With theacquisition, Voith is expanding its expertise in the wind generator business.
The remeasurement of the 25 % shareholding in Suzlon Generators previously accounted for using
the equity method gave rise to a gain of € 1.6 million that was recognized in the Group’s statementof income in the item “Share of profit/loss from companies accounted for using the equity method”.

Voith Annual Report 2023
Consolidated Financial Statements­N otes to the consolidated financial statements for the 2022/23 fiscal year

99

The remeasured 25 % shareholding and the purchase price for the 75 % shareholding acquired in the2021/22 fiscal year are listed in the table shown below.
The company has been fully consolidated since April 1, 2022, and is allocated to our Group Division
Turbo. Until March 31, 2022, the 25 % shareholding was accounted for using the equity method.
The difference between the purchase price and the acquired net assets revalued to their respective fairvalues amounting to € 4.1 million has been reported as goodwill, and represents the future economic
benefit of acquired assets that cannot be identified individually and reported separately.
Since April 1, 2022, Suzlon Generators Ltd. contributed an additional € 5.8 million to the Group’s sales
in the 2021/22 fiscal year. The share in net result for the same period amounted to € -0.2 million.
If the company had been included in the Group for the whole 2021/22 fiscal year, it would havegenerated additional sales of € 13.3 million and a net result of € -1.8 million.

in € thousands

Acquisition datefair value

Property, plant and equipment

4,321

Receivables

1,469

Other assets

1,870

Cash and cash equivalents

670

Other liabilities and accruals- 3,705

Deferred tax liabilities- 651

Net fair value

3,974

Goodwill

4,074

Fair value of the 100 % shareholding held by Voith

8,048

thereof: fair value of the 25 % shareholding already held

2,012

Purchase price of the 75 % shareholding newly acquired

6,036

Cash and cash equivalents- 670

Cash outflows

5,366

Business combinations in the 2022/23 fiscal year
IGW RailAt the beginning of October 2022, Voith acquired 100 % of the shares and voting rights of IGW Railand thus gained control of the company. Based in Brno, Czech Republic, this is a high-tech company
with worldwide operations at four production locations and around 500 employees; it has specializedin customized gear unit and coupling solutions for the rail vehicle industry.

100

Voith Annual Report 2023
Consolidated Financial Statements­N otes to the consolidated financial statements for the 2022/23 fiscal year

With IGW Rail’s product and service portfolio, Voith is further expanding its range of offerings and isstrengthening its position as global provider of rail vehicle components.
The acquired units have been fully consolidated since October 1, 2022, and are allocated to the Group
Division Turbo.
The difference between the purchase price and the acquired net assets revalued to their respective fairvalues amounting to € 1.7 million has been reported as goodwill, and represents the future economic
benefit of acquired assets that cannot be identified individually and reported separately.
Since October 1, 2022, IGW Rail contributed an additional € 51.0 million to the Group’s sales. The sharein net result for the same period amounted to € -0.9 million (this figure includes depreciation and amortization of the assets identified within the scope of the purchase price allocation of € 0.9 million).

in € thousands

Intangible assets

Acquisition datefair value

2,787

Property, plant and equipment

21,988Inventories

23,250Receivables and other assets

18,169Cash and cash equivalents

6,206

Pension obligations- 137

Other liabilities and accruals- 20,923

Bank loans- 3,273

Deferred tax liabilities
Fair value of the net assets
Goodwill- 915
47,152
1,746

Purchase price of the interests acquired

48,898Cash and cash equivalents- 6,206

Cash outflows

42,692The purchase price was € 48.9 million and was paid in cash. Incidental acquisition cost totaled€ 1.3 million and was recognized in other operating expenses at € 0.8 million in the current fiscal year
(in the previous year at € 0.5 million).

Voith Annual Report 2023
Consolidated Financial Statements­N otes to the consolidated financial statements for the 2022/23 fiscal year

101

Basis of consolidation
Acquisition accounting is performed using the acquisition method in accordance with IFRS 3.
Accordingly, the consideration transferred to the seller plus any non-controlling interests and thefair value of the previously held equity interests in the acquiree are offset against the fair value of theacquired assets and liabilities as at the acquisition date. Any excess of cost over carrying amount isrecognized as goodwill. Any excess of carrying amount over cost is recognized in profit or loss.
Any contingent consideration is recognized at acquisition date fair value. Subsequent changes tothe fair value of the contingent consideration, which represents an asset or liability, are recognizedeither in profit or loss or in other comprehensive income in accordance with IFRS 9. If the contingent
consideration is classified as equity, it is not remeasured and its subsequent settlement is accounted
for within equity.
In the case of business combinations achieved in stages that give rise to control over an entity, or in
the case of disposals of shares which result in a loss of control, the previously held or remaining equity
interests are remeasured at fair value through profit or loss.
A change in the parent’s ownership interest in a subsidiary that does not result in a loss of control is
accounted for as an equity transaction. Accordingly, business combinations achieved in stages where
the Group already has control or disposals of shares without a loss of control have been recognizeddirectly in equity without affecting the result for the period from the 2009/10 fiscal year onwards.
Companies in which Voith GmbH & Co. KGaA has the power to directly or indirectly exercise asignificant influence on financial and operating policy decisions (associates) are accounted for using
the equity method, as are joint ventures over which common control is exercised together with othercompanies. Changes in the share of the associate/joint venture’s equity that are not recognized in profit
or loss are likewise recognized directly in equity in the consolidated financial statements. The sameaccounting policies are used to determine Voith’s share in equity of all companies accounted for using
the equity method.
Receivables and liabilities between the consolidated companies are eliminated on consolidation.
Intercompany profits in inventories and non-current assets are eliminated in the consolidated statementof income. Intercompany sales and other intercompany income are netted against the corresponding
expense. Deferred tax is recognized for consolidation transactions.

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Foreign currency translation
The consolidated financial statements are presented in euros, which is Voith GmbH & Co. KGaA’s
functional currency. Financial statements prepared by subsidiaries that use a different functional
currency are translated as follows:
The equity of foreign companies included in the consolidated financial statements is translated athistorical rates. All other items on the balance sheet are generally translated to the presentation
currency at the rates applicable as at the reporting date. Goodwill arising from business combinations
before transition to IFRS reporting is an exception to this rule. This goodwill continues to be translated
at historical exchange rates.
In the statement of income, income and expenses are translated at average exchange rates. Retained
earnings and losses are translated using the relevant historical exchange rate.
Differences arising from currency translation are netted with other reserves.
Foreign currency transactions in local financial statements are translated at the historical exchange
rates. At fiscal year-end the resulting monetary items are measured at the closing rate, and any
exchange rate gains or losses are recorded as foreign exchange gains or losses under other operating
income/expenses.
Exchange rate gains or losses resulting from long-term loans and liability balances, both between
Group companies and on external balances, as well as valuation effects arising from their associatedhedging instruments, are reported within financial results in the statement of income.
Currency translation differences arising from loans denominated in foreign currencies (where these areused to hedge a net investment in foreign operations) are recognized in other comprehensive income
until the underlying net investment is disposed of. These currency translation differences give rise todeferred tax items that are also recognized under other comprehensive income.

Accounting policies
Consistent accounting policies are used to prepare the separate financial statements for the companies
included in the consolidated financial statements. Significant accounting policies are described below.
Sales
In accordance with IFRS 15, revenue is recognized upon transfer of control of the goods or services tothe customer. The amount of revenue is determined on the basis of the transaction price, taking accountVoith Annual Report 2023
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of variable consideration. The latter is only included in determining the transaction prices if it is highly
probable that there will be no subsequent sales reversals. The “most likely amount” method is generally
chosen for estimating such variable consideration. The performance obligations identified are realized
both over time and at a point in time.
Specifically with construction contracts for customer-specific plant and equipment at Voith Paper
and Voith Hydro, revenue is recognized over time if the transaction meets the criteria of IFRS 15.35.
Such contracts are consequently recognized in accordance with the percentage-of-completion (PoC)
method. The percentage of completion per contract to be recognized is calculated as the ratio of
the actual costs incurred to the anticipated total costs of the project (“cost-to-cost method”). If theoutcome of a construction contract cannot be estimated reliably, it is not possible to calculate contract
revenue and costs based on the percentage of completion. In such cases, revenue is recognizedat the amount of costs incurred for the construction contract to date, with the contract costs being
recognized immediately and in full in the period in which they are incurred. Expected losses on suchcontracts are based on recognizable risks. In the case of contracts that are presented using the PoC
method, there is essentially only one performance obligation. In addition, revenue is recognized overtime in the case of service contracts and customer-specific products from the Group Divisions Turboand Paper. In the latter case, the criterion of no alternative use will, in some instances, only be met at
a later point in time, therefore recognition over time is not performed until this criterion is met.
For all other products, revenue is recognized at the point in time at which the customer obtains
control. This is generally the case when merchandise has been delivered or services performed andthe risk of ownership has been transferred to the customer. If, in the case of consignment warehouseagreements, control has already been transferred upon warehousing at the customer’s premises,
revenue is recognized at this point in time.
Voith uses the practical expedients pursuant to IFRS 15.129 and does not adjust transaction prices
for significant financing components, as the period between transfer of the goods or provision of theservice and payment by the customer is less than one year. Furthermore, the costs of obtaining acontract are not capitalized and amortized over the life of the contract as the amortization period would
be less than one year. In the case of contracts with a term of less than one year, the transaction prices
for obligations not yet fulfilled are not disclosed in accordance with the practical expedients of IFRS 15.
Other income and expenses
Interest expenses and income are recorded as they arise (using the effective interest method, i.e., theeffective interest rate at which the estimated future cash flows from the asset are discounted to thefinancial asset’s net book value over the expected term to maturity of the financial instrument).
Dividend income is recognized when the Group’s right to receive the payment is established.

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Operating expenses are recognized as expenditure at the time when a service is used and other salesrelated expenses are recognized as incurred. Taxes on income are calculated in accordance with tax
law in the countries in which the Group operates.
For all measurement categories recognized in accordance with IFRS 9, net gains or losses as definedin IFRS 7 result from the measurement or disposal of financial instruments. At Voith, such income andexpense items mainly consist of foreign exchange gains and losses, impairments, and gains/losses
from the sale of financial instruments. Neither current interest income and expenses nor dividend
income are included.
Intangible assets
Intangible assets acquired for monetary consideration are recognized at acquisition cost and amortizedon a straight-line basis over their estimated useful lives. Amortization is recognized on a straight-line
basis over the following useful lives:
Useful life
Brands

25 years

Customer relationships

5 to 17 years

Technology

5 to 19 years

Development costs

1 to 5 years

Internally generated intangible assets are capitalized as development costs based on their production
costs, provided that manufacture of these assets meets the recognition criteria stated in IAS 38 and,in particular, that the generation of future economic benefits is probable. The production costs include
all costs which are directly attributable to the development process and a proportionate share ofoverheads. These assets are amortized using the straight-line method from the date of completion,i.e., the start of production, over a defined period which is usually between three and five years. If therequirements for capitalization are not satisfied, expenses are recognized in profit or loss in the fiscal
year in which they were incurred.
Impairment losses are recorded in accordance with IAS 36 if the carrying amount of the asset exceeds
its recoverable amount. The recoverable amount is the higher of an asset’s value in use, the present
value of expected future cash flows from the use of the asset and the fair value less costs to sell. Should
the reasons for impairment losses recognized in previous periods no longer apply, these impairment
losses are reversed.
The reversal posted through profit or loss is limited so that the carrying amount of the asset does notexceed its recoverable amount, nor exceed the carrying amount that would have been determined, netof amortization, had no impairment loss been recognized for the asset in previous years.
Impairment losses are generally shown in the statement of income under depreciation and amortization.
Reversals of impairment losses are reported under other operating income. Borrowing costs that are
directly attributable to intangible assets are capitalized as part of the cost of those assets.

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Goodwill is tested for impairment at least annually. For impairment testing, goodwill is assigned toessentially three groups of cash-generating units. In line with the management’s internal reporting
practices, these are identified on the basis of the Group’s operating activities. Voith has therefore
defined the segments Hydro, Paper and Turbo as relevant groups of cash-generating units. Goodwill
recognized on acquisition of some ventures that to date have been treated as their own cash-generating
units will be tested for impairment on a stand-alone basis at the level of the respective unit. The units
Ray Sono AG and FlowLink Systems Private Ltd. come into this category. As of October 1, 2022,
Pilotfish Networks AB has been allocated to the Voith Turbo cash-generating unit. It is at this levelthat the goodwill of this unit is tested for impairment. At the time of the reclassification, there was no
indication of a need to record impairment of goodwill.
The Voith Group generally determines whether goodwill is impaired by reference to the fair value lesscosts to sell. This is based on the discounted cash flow projections taken from the latest businessplanning prepared by management. The planning assumptions are adjusted to reflect the current
information available. Key assumptions on which calculations of fair value are based include assumptions
about the trend in orders received and sales, growth rates, extrapolated cash flow forecasts beyond
the planning horizon, and discount rates. Due account is taken of reasonable assumptions regarding
macroeconomic trends and historical developments. Based on the value in use measurement ofthese assets there was no indication of a need to record an impairment loss on goodwill at the cashgenerating units Hydro, Paper and Turbo or FlowLink Systems Private Ltd. The need for impairment of€ 3.2 million was, however, identified at Ray Sono AG and is disclosed in depreciation and amortizationin the statement of income.
For the purposes of the impairment tests the following assumptions were made concerning the cashgenerating units:
Voith Hydro:
After an extraordinarily good level of orders received in 2022/23, Voith Hydro anticipates a return to alevel seen in previous years. Despite the high volume of orders on hand, a perceptible decline in sales
is to be expected. Improved contractual arrangements with regard to price increases and expansion of
the service business should lead to a rise in net result. With regard to an order for a customer in Angolathat is not included in orders on hand, reference is made to the information on this contained in section
II.4.1 of the management report.
Voith Paper:
A stable development in orders received is to be expected in 2023/24. The Group Division Paper
anticipates a slight decline in sales. The net result should rise as a result of efficiency gains, lower
warranty-related costs and a change in the sales mix.
Voith Turbo:
A stable development in orders received and sales is to be expected. A perceptible increase in EBIT isenvisaged based on results of an efficiency program.

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Ray Sono AG:
A constant rise in orders received and sales is planned. The objective is for EBIT to rise as a result of
improved pricing to end customers and a reduction in purchased services.
FlowLink Systems Private Ltd.:A slight decrease in orders received and sales is to be expected in 2023/24 but the intention is to reachother markets through diversification. EBIT is impacted by high personnel costs and investments.
The cash flow forecast is based on the detailed finance budget for the coming two years and aqualified top-down projection for years three to five. Cash flows for periods after the fifth fiscal year are
extrapolated at a constant growth rate of approximately 1 % (Ray Sono AG: 2 %). These growth rates
do not exceed the average long-term growth rates of the business segment in which the corresponding
cash-generating unit operates.
The discount rates are arrived at by determining the weighted average cost of capital, which is basedon the financing costs of comparable competitors for each of the cash-generating units. The discountrates used reflect the specific equity risk associated with the respective cash-generating units.

in %2022 /23

2021 /22

Discount rate

Discount rate

after taxes

before taxes

after taxes

before taxes

Voith Hydro

7.4

9.6

5.3

6.9

Voith Paper

7.3

9.9

6.3

8.6

Voith Turbo

7.9

10.6

6.6

9.2

Ray Sono

7.8

11.0

6.3

8.3

FlowLink

7.5

10.1

6.3

8.6

The potential changes in the discount rate of +1 percentage point and in the anticipated future cash
flow of -5 % assumed by the management for the segments Voith Paper, Voith Turbo and Voith Hydro
as well as FlowLink Systems Private Ltd., do not give rise to any impairment. In this scenario, Ray Sono
would be subject to a further impairment loss of € 14 million.
The brands acquired in the 2019/20 fiscal year as part of the acquisition of BTG and Toscotec wereclassified as intangible assets with an indefinite useful life. Since then, the brands have been subject toimpairment testing at least once a year. In the 2022/23 fiscal year, impairment testing was performed
as at March 31, 2023, using a discounted cash flow method. Since April 1, 2023, these brands havebeen qualified as intangible assets with a definite useful life and amortized on a straight-line basis. The
residual useful life is 25 years.

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The carrying amount of the BTG brand as at March 31, 2023, is € 42.8 million (€ 38.8 million as at theacquisition date) and the carrying amount of the brand Capstone is € 2.9 million (€ 2.9 million as at theacquisition date). The changes since the acquisition date are exclusively attributable to exchange rate
differences.
For the purpose of impairment testing, the BTG and Capstone brands were allocated to the “BTG”
and “Capstone” cash-generating units. As part of impairment testing, the recoverable amount wasdetermined by establishing the value in use on the basis of the present value of future cash flows basedon 25-year financial planning. To determine the present values of future net cash inflows, an after-tax
interest rate of 7.3 % was used for BTG and Capstone (previous year: 6.3 %). The discount factor (before
taxes) for the future cash flows is 9.0 % (previous year: 8.5 %) for BTG and 9.7 % (previous year: 8.0 %)for Capstone, respectively, for the 2022/23 fiscal year.
As at March 31, 2023, the carrying amount of the Toscotec brand came to € 24.7 million, unchanged
from the acquisition date.
For the purpose of impairment testing, the Toscotec brand was allocated to the “Toscotec” cashgenerating unit. As part of impairment testing, the recoverable amount was determined by establishingthe value in use on the basis of the present value of future cash flows based on 25-year financial
planning. To determine the present values of future net cash inflows, an after-tax interest rate of 7.3 %was used for Toscotec. The discount factor (before taxes) for the future cash flows is 10.7 % (previous
year: 8.6 %) for the 2022/23 fiscal year.
From its acquisition in the previous fiscal year and until March 31, 2023, the Argo-Hytos brand wasclassified as an intangible asset with an indefinite useful life and was correspondingly subject toimpairment testing at least once a year. Since April 1, 2023, this brand has been qualified as anintangible asset with a definite useful life and amortized on a straight-line basis. The residual useful life
is 25 years.
As at March 31, 2023, the carrying amount came to € 33.3 million (€ 34.1 million at the acquisition date).
The changes since the acquisition date are exclusively attributable to exchange rate differences.
For the purpose of impairment testing, the Argo-Hytos brand was allocated to the “Argo-Hytos” cashgenerating unit. As part of impairment testing, the recoverable amount was determined by establishingthe value in use on the basis of the present value of future cash flows based on 25-year financial
planning. To determine the present values of future net cash inflows, an after-tax interest rate of 7.9 %was used for Argo-Hytos (previous year: 6.6 %). The discount factor (before taxes) for the future cash
flows is 10.2 % (previous year: 8.9 %) for the 2022/23 fiscal year.
The impairment testing performed as at March 31, 2023, did not lead to any need to recognize
impairment losses on the brands.
The potential changes in the discount rate of +1 percentage point and in the anticipated future cash
flows of - 5 percentage points assumed by management for all brands capitalized did not result in aneed to record an impairment loss as at March 31, 2023.

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According to new estimates relating to the Voith Group’s strategies and the most recent developments
within the divisions concerned, the decision was made to classify the useful lives of the brands as
definite instead of indefinite. The useful life is 25 years. The amortization of the brands is disclosed
within depreciation and amortization in the consolidated statement of income. Amortization of thebrands totaling € 2.1 million was recorded and disclosed for the first time in the 2022/23 fiscal year.
There was no indication of a need for recognizing impairment from April 1 to September 30, 2023. Fromthe 2023/24 fiscal year onwards, amortization of the brands on the basis of the exchange rates for the2022/23 fiscal year of € 4.2 million will be deducted each year from the result before taxes. Deferred
tax income arising from this effect will amount to € 667 thou­sand.
The Voith Group aims to achieve growth with the acquired brands and although the brands will bepreserved, customers will over time come to see them as Voith Group products. Synergies arising in
the future will likewise promote this process.
Property, plant and equipment
Property, plant and equipment are stated at cost less depreciation and after deduction of any impairment
losses. The production cost of internally produced property, plant and equipment includes all directly
attributable production costs and an appropriate share of production overheads. Depreciation isrecognized on a straight-line basis over the following useful lives:
Useful life
Buildings

40 to 50 years

Plant and machinery

4 to 15 years

Other equipment, furniture and fixtures

4 to 12 years

The carrying amount of property, plant and equipment capitalized is tested for impairment if unusual
events or market developments give rise to indications of impairment. To this end, the carrying amountof an asset or cash-generating unit is compared with its recoverable amount, which is defined as thehigher of fair value less costs to sell and value in use. Impairment losses are reversed if the fair value ofa previously impaired asset subsequently increases again.
The reversal posted through profit or loss is limited so that the carrying amount of the asset does notexceed its recoverable amount, nor exceed the carrying amount that would have been determined, netof depreciation, had no impairment loss been recognized for the asset in previous years.
Impairment losses are generally shown in the statement of income under depreciation and amortization.

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Reversals of impairment losses are reported under other operating income. Repair and maintenancecosts are recognized as expenses at the time when they are incurred. Any major renewals or
improvements are capitalized. Borrowing costs that are directly attributable to property, plant andequipment are capitalized as part of the cost of those assets.
LeasesIFRS 16 defines a lease as a contract (or part of a contract) that conveys the right to use an identifiable
asset (the underlying asset) for an agreed period of time in exchange for consideration. In this context,
a contract is an agreement between two or more parties (lessor and lessee) that creates enforceable
rights and obligations. In accordance with IFRS 16, the Voith Group, acting as lessee, generally
recognizes all leases in the form of a right of use and a corresponding liability. The lease liability isrecognized at the present value of future lease payments taking into account extension, terminationand purchase options that are reasonably certain to be exercised. The right of use is calculated with theamount of the lease liability plus all lease payments made upon or prior to provision of the leased asset
and initial direct costs and estimated costs for the disassembly, disposal or restoration of the leased
asset, less all incentive payments received from the lessor. The right of use is amortized on a straightline basis and the lease liability is accreted applying the effective interest method taking account of
the incremental borrowing rate of the lessee and the lease payments. To determine its incremental
borrowing rate, the Voith Group obtains interest rates from various external sources of finances andmakes certain adjustments to take into account the terms of the lease and the type of asset. Lease
payments are split into a principal component and interest payments. In the cash flow statement, theinterest component is disclosed in the cash flow from operating activities, whereas the repayments oflease liabilities are shown as part of the cash flow from financing activities.
The Voith Group makes use of the simplifications contained in IFRS 16 for short-term and low-value
leases (up to USD 5 thou­sand). Payments under such leases are recognized as expenses directly inthe statement of income. The provisions of IFRS 16 on the accounting treatment of leases are notapplied to leases for intangible assets. Similarly, leases within the Group are not accounted for inaccordance with IFRS 16 so that for the segment reporting pursuant to IFRS 8 the lease payments
under these lease arrangements will continue to be recorded in profit or loss over the term of the leaseusing the straight-line method. At every reporting date, the carrying amounts of rights of use underlease arrangements are assessed for any indication of impairment. If there are any such indications, animpairment test will be performed.
Financial instruments
A financial instrument is any contract that simultaneously gives rise to a financial asset of one party to thecontract and a financial liability or equity instrument of the other party to the contract. Financial assets
and liabilities are recorded for the first time on the trading date and recognized in the consolidatedbalance sheet when Voith is a contract party to a financial instrument.

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For the classification of financial instruments, the Group distinguishes between the following
measurement categories: measured at amortized cost (AC), measured at fair value through othercomprehensive income (FVOCI) and measured at fair value through profit or loss (FVTPL).
Financial assets (debt instruments) – measured at amortized cost (“AC”)
The Group recognizes debt instruments at the date they are originated. Such assets are initiallyrecognized either at fair value plus directly attributable transaction costs or, in the case of tradereceivables, at the transaction price. Subsequent to initial recognition, they are measured at amortizedcost (AC) to the extent that the objective of the business model is to hold the financial assets in orderto realize the contractual cash flows. In this respect, the cash flow condition (“SPPI criterion”) is met
when the contractual terms of the financial asset give rise to cash flows at determined points in timethat constitute solely payments of principal and interest (SPPI).
Financial assets (equity instruments) – measured at fair value through othercomprehensive income (“FVOCI”)
Generally speaking, equity instruments are to be measured at fair value through profit or loss upon initialrecognition. During first-time recognition, it is possible to exercise an irrevocable option of classifying
equity instruments as measured at fair value through other comprehensive income. Equity instruments
may be classified as measured at fair value through other comprehensive income only if they areneither held for trading nor constitute contingent consideration as part of a business combination(OCI option). Voith exercised the OCI option for equity instruments held as a strategic investment
in order to supplement the Group’s business operations. These are measured at fair value throughother comprehensive income. Furthermore, the Group holds financial assets to cover future pension
obligations. These pension funds are not held for trading. Consequently, Voith also exercised the OCI
option for these instruments, with the underlying financial assets being measured at fair value throughother comprehensive income (FVOCI). There is no intention to generate short-term gains on disposalof any material amount from such instruments. For this reason, fluctuations in the measurementof investments and the financial assets used for securing pensions should not have any effect on
the statement of income. Changes in the market value arising from subsequent measurement andaccumulated gains/losses in the event of derecognition at a later date are posted directly in equity andare never reclassified with an effect on profit or loss.
Financial assets (equity instruments) – measured at fair value through profit or loss (“FVTPL”)
Voith decided not to exercise the OCI option for financial assets that are not held as a strategic
investment. These equity instruments are held with a view to generating income from the financial
instruments. For this reason, gains and losses from the disposal of shares and fluctuations in themeasurement of the investments are to be recorded in the statement of income.

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Financial liabilities – measured at amortized cost (“AC”)
Non-derivative financial liabilities are measured on initial recognition at fair value less attributabletransaction costs. Subsequent to initial recognition, the Group classifies them as other financial liabilities
measured at amortized cost.
Derivative financial instruments – measured at fair value through profit or loss (“FVTPL”)
All derivative financial instruments are recognized at fair value on the trading date. The derivative
financial instruments are classified as held for trading and thus assigned to the measurement category“FVTPL” (measured at fair value through profit or loss) unless they are designated as being a hedging
instrument and are effective as such.
Fair value
The fair value of investments for which an organized market exists is determined by the quoted market
price at the reporting date. Where no active market exists, valuation techniques are used to determine
the fair value. The techniques used by Voith for this purpose aim to reflect objective criteria as accurately
as possible and to simulate an active market. This is done, for example, by analyzing discounted cash
flows, referring to arm’s length transactions between knowledgeable, willing and independent partners,
and drawing on comparisons with the current fair value of other financial instruments which are identicalin all significant aspects.
Derivative financial instruments and hedging
Voith uses a variety of financial derivatives – such as forward exchange contracts and interest rate
swaps – to hedge underlying transactions. Essentially, the Group applies fair value hedge accounting offirm commitments to hedge operating business transactions. The Group continues to use the provisionsof IAS 39 for the recognition of hedges.
At the inception of a hedge relationship, the Group formally designates and documents both theunderlying transaction and the hedging instrument as well as the risk management objective andstrategy for entering into the hedge. This documentation includes identification of the hedging
instrument, the hedged item or transaction, the nature of the risk being hedged, and how the Groupwill assess the hedging instrument’s effectiveness in offsetting the exposure to changes in the hedged
item’s fair value that is attributable to the hedged risk.
Such hedging relationships are considered to be highly effective in offsetting the risks of fair valuechanges. Currency hedges are used in line with the contracts in question (term, volume). Their
effectiveness is assessed on an ongoing basis to determine whether they have been highly effective
throughout the financial reporting periods for which the hedge was designated.

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Hedges that meet the strict criteria for hedge accounting are accounted for as described below:
Fair value hedges
Fair value hedges are hedges of the Group’s exposure to changes in the fair value of a recognized asset
or liability or an unrecognized firm commitment that is attributable to a particular risk and could affectprofit or loss for the period. In the case of fair value hedges, the carrying amount of a hedged item isadjusted by the profit or loss that is attributable to the hedged exposure, and the difference is reported
in profit or loss. The derivative financial instrument is remeasured at its fair value and any gains or losses
arising as a result are recognized in profit or loss.
For fair value hedges relating to hedged items carried at amortized cost, the adjustment to the carrying
amount is amortized through profit or loss over the remaining term to maturity.
When an unrecognized firm commitment is designated as a hedged item, the subsequent accumulatedchange in the fair value of the firm commitment that is attributable to the hedged risk is recognized as
an asset or liability and the corresponding gain or loss is recognized in the profit or loss for the period.
Changes in the fair value of the hedging instrument are also recognized in the profit or loss for theperiod.
The Group discontinues fair value hedge accounting if the hedging instrument expires, is sold,terminated or exercised, or if the hedge no longer meets the criteria for hedge accounting. Everyadjustment to the carrying amount of a hedged financial instrument is released to income using theeffective interest method. The reversal may begin as soon as an adjustment exists and shall begin nolater than when the hedged item ceases to be adjusted for hedging gains and losses.
Cash flow hedges
Hedging transactions are classified as cash flow hedges when the transactions hedge the risk ofchanges in cash flows which can be attributed to a risk affecting a recognized asset, a recognizedliability or a planned transaction, and could affect profit or loss for the period. The effective portion of
the gain or loss on a hedging instrument is recognized directly in equity, whereas the ineffective portionis recorded in the statement of income.
The amounts recorded in equity are reclassified to the statement of income in the period in which thehedged transaction affects the profit or loss for the period, e.g., in which the hedged financial income
or expense is recorded or in which a planned sale or purchase is made. If the underlying hedgedtransaction is the acquisition of a non-financial asset or a non-financial liability, the amounts recordedin equity are included in the initial carrying amount of the non-financial asset or a non-financial liability.

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If the planned transaction is no longer expected to occur, the amounts recorded previously in equity
are transferred to the profit or loss for the period. When the hedging instrument expires, is sold,terminated or is exercised without a hedging instrument being replaced or rolled over into anotherhedging instrument or when the Group ceases to designate a hedging instrument as such, the amounts
previously recorded remain as a separate item in equity until the planned transaction occurs. If theplanned transaction is no longer expected to occur, the amount is recognized in profit or loss.
Embedded derivatives
Pursuant to IFRS 9, embedded derivatives where the underlying is a financial asset covered by thestandard are never accounted for separately. Instead, the hybrid financial instrument as a whole isassessed with regard to classification.
In the event of there being embedded derivatives for which separate recognition is required, suchderivatives are classified as held for trading and thus assigned to the measurement category “FVTPL”(measured at fair value through profit or loss). Embedded financial derivatives with positive fair values
are stated under other financial receivables; those with negative fair values are stated under bank loans
and other interest-bearing liabilities or other financial liabilities.
Inventories
Raw materials and supplies, merchandise, work in progress and finished goods are all stated underinventories at the lower of cost and net realizable value. In addition to direct costs, cost includes anappropriate portion of necessary materials and production overheads as well as production-related
depreciation that can be directly allocated to the production process. The average cost, or cost basedon the first-in, first-out (FIFO) method, is capitalized in the balance sheet. Appropriate allowance
is made for inventory risks associated with slow-moving stocks, reduced salability, etc. When thecircumstances that previously caused inventories to be written down below cost no longer exist, thewrite-down is reversed.
Contract assets and contract liabilities
Contract assets constitute an entity’s right to consideration in exchange for goods already transferredor services already performed. In the Voith Group, contract assets essentially consist of long-term
projects at Voith Hydro and Voith Paper, which are recognized over time in accordance with IFRS 15.35.
Contract assets are disclosed at the percentage of completion to be recognized less any customer
payments already received.
The customer payments are contractually agreed and are generally dependent on project progress
and/or predetermined milestones.

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If customer payments exceed the performance already completed, the resulting balance is disclosed
under contract liabilities. Furthermore, contract liabilities include advances received from customers
for products where revenue is recognized at a specific point in time.
Receivables and other assets
Receivables and other assets (with the exception of derivatives) are assigned to the measured atamortized cost (“AC”) measurement category and are initially recognized either at fair value plus
directly attributable transaction costs or, in the case of trade receivables, at the transaction price.
Subsequent to initial recognition they are measured at amortized cost. They are regularly tested for
impairment on an individual basis. Where objective evidence of a potential loss exists (for example, if the
debtor is experiencing significant financial difficulty, if it is highly probable that insolvency proceedings
will be opened against the debtor, if the debtor defaults on or is in arrears with interest or principal
payments, if significant adverse changes in the technological, economic or legal environment of thecontracting partner occur, if there is a significant or prolonged decline in the fair value of a financial
instrument below its cost or if legal proceedings are opened), individual allowances are recorded using
an allowance account to reflect these factors. Furthermore, the estimated aggregate credit losses arecalculated using a forward-looking credit risk management system based on CDS spreads. In doing
so, the receivables are segmented according to common default risk features. A decline in the volumeof receivables brings about a corresponding decrease in such provisions and vice versa. Impaired
receivables are derecognized when they are assessed as uncollectible. Interest-free or low-interest
receivables due in more than one year are discounted.
Cash and cash equivalents
Cash and cash equivalents include cash in hand and checks, cash at banks and cash equivalents. Cashat banks includes both daily deposits and time deposits with fixed maturities of up to three months.
Discontinued operations and non-current assets held for saleNon-current assets and disposal groups held for sale are classified as non-current assets held for saleor as liabilities directly associated with assets classified as held for sale, respectively, if their carrying
amount is to be recovered through sale rather than through continuing use. This condition is regarded
as met when the sale is highly probable and the asset or disposal group is available for immediate salein its present condition. In this case, management has decided to sell the asset and it is expected thatthe sale will take place within 12 months from the date of classification. Non-current assets held forsale are measured at the lower of their carrying amount and their fair value less costs to sell. Assets
held for sale are not subject to depreciation and amortization.
Discontinued operations are recognized as soon as any component of an entity with businessactivities and cash inflows and outflows that can be clearly distinguished from the rest of the entity
for operational and accounting purposes is classified as held for sale or has already been disposedof, and such Group Division either (1) represents a separate major line of business or a geographicalVoith Annual Report 2023
Consolidated Financial Statements­N otes to the consolidated financial statements for the 2022/23 fiscal year

115

Group Division, and (2) is part of a single coordinated plan to dispose of a separate major line ofbusiness or geographical Group Division, or (3) is a subsidiary exclusively acquired with a view toresale. The net result of discontinued operations is reported separately from income and expenses
from continuing operations in the consolidated statement of income. Figures shown for previous years
are presented on a comparable basis. Cash inflows and outflows from discontinued and continuing
operations are not presented separately in the consolidated cash flow statement, and figures shownfor previous years in the cash flow statement are not restated. Figures disclosed in the notes to theconsolidated financial statements for items in the consolidated statement of income relate to continuing
operations. Information on discontinued activities is provided in the section “Disposals and discontinued
operations”. Sales and expenses generated within the Group have been eliminated in order to present
the financial effect of the discontinued operations with the exception of sales and expenses which are
expected to continue after the sale of the discontinued operations.
Deferred and current taxes
In accordance with IAS 12, deferred tax assets and liabilities are recognized for temporary differences(temporary concept). Deferred tax assets are also recognized for tax losses carried forward, interest
carryforwards and tax credits insofar as it is reasonable to expect that they will be realized in the near
future. Taxes that relate to items recognized under other comprehensive income are also themselves
recognized in equity. Deferred taxes are calculated based on the tax rates enacted or substantively
enacted by the reporting date that apply or are expected to apply in the countries concerned at the timeof realization. Deferred tax assets on tax losses carried forward, interest carryforwards and tax creditsthat are not likely to be realized or that are not covered by deferred tax liabilities are either written downor not recognized at all. Deferred tax assets and deferred tax liabilities are presented on a net basis if
the Group has a legal right to offset current tax assets against current tax liabilities and they relate toincome taxes levied by the same taxation authority. No deferred taxes are recognized in connection
with the first-time recognition of goodwill or in the case of initial recording of an asset or a liability fortransactions that do not constitute business combinations and do not have any effect on the reported
or taxable earnings.
Current taxes are calculated and reported in accordance with the tax laws and regulations valid foreach company.
Profit participation rights
Profit participation rights amounting to € 103,400 thou­sand are reported as a separate component of
the Group’s equity, in accordance with IAS 32. Interest is not reported as interest expenses, but istreated in a similar manner to a dividend obligation.
Provisions for pensions and similar obligations
Provisions for pension obligations are measured based on actuarial valuation methods using theprescribed projected unit credit method for defined benefit plans as required by IAS 19. This method

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Voith Annual Report 2023
Consolidated Financial Statements­N otes to the consolidated financial statements for the 2022/23 fiscal year

considers not only the pensions and future claims known at the end of the reporting year but also
future anticipated increases in salaries and pensions. Defined benefit obligations are measured basedon the proportion of future benefits accrued at the reporting date. Measurement includes assumptions
about the future development of certain parameters that could affect the actual future benefit amount.
The expenses for these benefit plans are divided into service cost and interest expenses on the net
debt from the obligations and plan assets. Both expense items are recognized in the statement ofincome. Revaluations of the net debt recognized are disclosed under other comprehensive income netof deferred taxes.
Other provisions
Provisions are recognized for all discernible risks and uncertain obligations at the amount that is likely
to be realized. These provisions are not netted against recourse claims. Provisions are recognizedwhen the Group has a present obligation to a third party as a result of a past event and it is probablethat an outflow of resources will be required whose amount can be estimated reliably. Provisions forwarranty claims are based on historical claim trends and estimated future trends. Specific provisions
are set up for known claims. Provisions for outstanding expenses, onerous contracts and otherbusiness-­related obligations are measured based on services still to be rendered, usually at the amountof the costs to sell.
Provisions which do not lead to an outflow of resources in the following year are carried at thediscounted settlement amount at the reporting date. The discount rate used is derived from market
interest rates. The settlement amount also includes the estimated cost increases. If an amount set
aside as a provision is expected to be refunded (through an insurance claim, for example), the refund
amount is stated separately as an asset only if it is virtually certain. Income from refunds is not netted
against expenses.
Liabilities
Current liabilities are stated at the amount needed to settle the obligation. Financial liabilities aremeasured at their amortized cost. Amortized cost corresponds to the cost of the financial liabilities
adjusted for repayments, issue costs and the amortization of any debt discounts or debt premiums.
Where liabilities are accounted for as hedged transactions, they are measured taking into account themarket value of the hedged risk. Gains and losses are recognized in profit or loss.
Liabilities arising from leases are recognized at the present value of the minimum lease payments atthe start of the lease and subsequently stated under financial liabilities at their amortized cost. Lease
payments are split into an interest component and a principal component. The interest component ofeach payment is recognized as an expense in the statement of income.

Voith Annual Report 2023
Consolidated Financial Statements­N otes to the consolidated financial statements for the 2022/23 fiscal year

117

Classification of non-controlling interests of third-party shareholders in limited partnerships
based on termination rights of non-controlling shareholders and put options
In accordance with IAS 32, financial instruments that entitle the holder to repayment of the capitalmade available to the partnership must be classified as liabilities. In companies that operate as limited
partnerships, partners have the right under German law to demand repayment of the capital they havemade available to the partnership. This right cannot be excluded by the partnership agreement. This
provision also extends to other comparable repayment rights of holders of non-controlling interests
with a settlement agreement. Put options create sale rights for the holder of the put pursuant to IAS 32.
a) Put options
Where the right to terminate on the part of non-controlling interests exists in the form of a put option,
the corresponding non-controlling interests are not derecognized but are treated as a component ofequity during the reporting year. Based on this, a share of net result for the year is allocated to holders
of non-controlling interests. At each reporting date, it is assumed that the put option will be exercised
and the corresponding non-controlling interests are reclassified from equity to financial liabilities. Thisfinancial liability is recognized in the amount of the estimated compensation obligation and measured
at fair value. The difference between this liability and the share of equity attributable to non-controllinginterests is treated as a transaction between owners and has been recognized from the 2009/10
fiscal year onwards as a change in equity without any effect on the statement of income. Up until andincluding the 2008/09 fiscal year, such transactions were regarded as a business combination achievedin stages and the difference stated as goodwill. The Group elected to retain these amounts under thetransitional arrangements provided for under IAS 27 (2008).
One option was exercised in the current fiscal year. By doing so, Voith acquired further shares in thecompany. A total of € 5,550 thou­sand was paid for exercising the put option.
Two material options were exercised in the previous year. By doing so, Voith acquired 100 % of theshares in the companies. A total of € 15,092 thou­sand was paid for exercising the put options.
The amounts reclassified from equity to financial liabilities came to a total of € 78,094 thou­sand in the2022/23 fiscal year (previous year: € 77,494 thou­sand).
b) Limited partnerships
Liabilities from interests held in limited partnerships as well as non-controlling interests with comparable
termination rights are measured at amortized cost. The measurement-related changes in the liability arerecognized in the interest result in the consolidated statement of income.
If the non-controlling interests in limited partnerships are terminated or if the respective comparable
termination rights or put options are exercised, the financial liabilities recognized prior to termination or
exercise of the put options are reclassified as other financial liabilities.

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Voith Annual Report 2023
Consolidated Financial Statements­N otes to the consolidated financial statements for the 2022/23 fiscal year

Financial guarantee contracts
Financial guarantee contracts issued by the Group are those contracts that require a payment to bemade to reimburse the holder for a loss it incurs because the specified debtor fails to make a payment
when due in accordance with the terms of a debt instrument. These financial guarantee contracts aretreated as insurance contracts as defined by IFRS 4, i.e., the financial guarantee contracts are disclosed
as contingent liabilities until utilization becomes probable. When this is the case, the corresponding
obligation is recognized.
Exercise of judgment and estimates by management
The presentation of net assets, financial position and earnings position in the consolidated financial
statements requires the exercise of judgment by management. Management has exercised judgmentin the following instances:· Income taxes: Management must make assessments on whether deferred tax assets are impaired
and on risks from uncertain tax items.
· Determining the requirement for, and measuring the amount of, impairment of intangible assets andproperty, plant and equipment· Determining the requirement for allowances against doubtful receivables· Sales recognized in accordance with the percentage-of-completion method: determining thepercentage of completion· Measurement of provisions and assessment of the likelihood of their utilization· Meeting the recognition criteria described in IAS 38 for capitalization of development costs
Some accounting policies require critical estimates that involve complex and subjective assessments
and the use of assumptions, some of which are inherently uncertain and subject to change. These criticalaccounting estimates can vary from period to period and significantly impact a company’s financial
position and/or earnings. The management explicitly points out that future events will often deviate fromplanning assumptions, and that it is normal for estimates to have to be adjusted.
Significant estimates and assumptions have to be made in the following areas of accounting:
Revenue recognition over time in the case of long-term projects
Specifically in the case of long-term projects involving customer-specific plant and equipment, revenue
is recognized over time using the PoC method if the criteria of IFRS 15.35 are met.
Accurate estimates of the percentage of completion are of vital importance under this method.
Depending on the method used to measure the percentage of completion, the most significant
estimates concern the total contract cost, the remaining costs to complete the contract, the total
contract revenue and contract risks.

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Consolidated Financial Statements­N otes to the consolidated financial statements for the 2022/23 fiscal year

119

The management of operating subsidiaries reviews all estimates that are needed for revenue recognition
over time using the PoC method on an ongoing basis and makes adjustments as and when necessary.
Such examinations are part of management’s normal accounting activities at operating level. Refer tonotes 1 and 14 for details of the carrying amounts.
Trade and other receivables
Determining allowances for doubtful receivables requires significant judgment on the part of management
as well as an analysis of the individual debtors that covers their creditworthiness, current and future
economic trends and an examination of historic default scenarios. Refer to note 13 for details of thecarrying amounts.
Impairment of goodwill
Determining the recoverable amount of a Group Division to which goodwill was allocated involves
estimates by management. The value in use is measured based on planning for the first five years,
which is based on taking management’s expectations and adjusting them for economic trends andhistoric developments. Estimates of growth, the weighted average cost of capital and tax rates are
likewise based on reliable information that reflects the risks associated with operating business in eachgiven industry or Group Division. Refer to note 9 and to the segment reporting for details of the carrying
amounts.
Development costs
Development costs are capitalized if the recognition criteria described in IAS 38 are met. Initial
capitalization is based on management’s estimate that the technical and economic feasibility isdemonstrated; the forecast of the expected future economic benefit to be gained from assets isessential to the decision whether or not costs are to be capitalized. Refer to note 9 for details of thecarrying amounts.
Pension obligations
Estimates of pension obligations depend significantly on key assumptions including discount factors,
expected salary increases, mortality rates and healthcare trends. The assumptions used to calculate thediscount factor reflect the interest rates that can be realized on high-quality fixed-income instrumentswith appropriate maturities. Refer to note 20 for details of the carrying amounts.
Other provisions
Recognizing provisions for anticipated losses on contracts, warranty-related costs and litigation involves
the use of significant estimates. Voith recognizes provisions for anticipated losses in all cases where
current estimates of the total contract costs exceed expected contract revenues. Onerous contracts are
identified by estimating the total costs of the contract, which requires significant judgment. Estimates
are also necessary for assessing obligations from warranties and litigation. Provisions for restructuring
are based on detailed plans for expected activities which are reviewed and approved by the Board ofManagement. Refer to note 21 for details of the carrying amounts.

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Consolidated Financial Statements­N otes to the consolidated financial statements for the 2022/23 fiscal year

Taxes
The Voith Group has business operations in many countries and is subject to many different tax laws.
Both current and deferred taxes on income must be calculated for each individual taxable entity. To
calculate deferred tax assets on tax losses carried forward and temporary differences, for example,
assumptions must be made about the possibility of realizing sufficient taxable income in the future
and the interpretation of complex tax laws and regulations. Refer to note 8 for details of the carrying
amounts.
In the event that it is unlikely that amounts reported in the tax returns can be realized (uncertain tax
items), tax liabilities are recognized. The amount is determined from the best possible estimate of
the expected tax payment (anticipated value or most probable value of the uncertain tax item). Tax
receivables from uncertain tax items are recognized when it is probable that they will materialize. Only incases where there is a tax loss carried forward or an unused tax credit is no tax liability or tax receivable
recognized for these uncertain tax items, and instead the deferred tax assets are adjusted for the as
yet unused tax losses carried forward and tax credits.
Determining fair values
Within the scope of business combinations, purchase price allocations are subject to not insignificant
estimates. The specification of planning values and discount rates should be specifically mentioned inthis context. The specification of useful lives is, however, also subject to not inconsiderable assumptions.
Adoption of amended and new standards and interpretations
Changes in accounting and measurement policies due to first-time adoption of revised andnew IFRS and IFRIC
The following new and revised IAS and IFRS standards were applied for the first time in the 2022/23
fiscal year:
Standard/interpretation

Amendment/new standard or interpretation

Amendments to IFRS 3
Business Combinations

The amendment updated an obsolete reference to the conceptual
framework without modifying the provisions in the standard in any
significant manner.

Amendments to IAS 12
Income Taxes

The amendments relate to a temporary, mandatory exemption fromaccounting for deferred taxes arising from the introduction of the
global minimum taxation.

Amendments to IAS 16
Property, Plant and Equipment

The amendment governs the handling of any proceeds stemmingfrom the sale of items that are produced while bringing that asset
to the location and condition necessary for it to be capable ofoperating in the manner intended.

Amendments to IAS 37
Provisions, Contingent Liabilities
and Contingent Assets

The amendment governs which costs an entity must take into
account for the fulfilling of a contract when it is assessing whether acontract is onerous.

Improvements to IFRS (2018–2020)

Amendments to standards IFRS 1, IFRS 9, IFRS 16 and IAS 41.

All IAS and IFRS standards applied for the first time had no significant effect on the net assets, financial
position and earnings position of the Group.

Voith Annual Report 2023
Consolidated Financial Statements­N otes to the consolidated financial statements for the 2022/23 fiscal year

121

The adoption of the following revised and newly issued IFRS and IFRIC was not yet mandatory in the2022/23 fiscal year, and/or they had not yet been endorsed by the European Commission for adoption
in the European Union.
Standard/interpretation

Amendment/new standard or interpretation

Mandatory effective date

Amendments to IFRS 16
Leases

The amendment relates to the accounting treatment of lease liabilities
from sale-and-leaseback transactions.

Periods beginning on or afterJanuary 1, 2024

IFRS 17
Insurance Contracts, including
amendments to IFRS 17

IFRS 17 establishes principles for the identification, recognition,measurement, presentation and disclosure in the notes for insurance
contracts.
The amendments to IFRS 17 primarily included a deferral of the effective
date.

Periods beginning on or afterJanuary 1, 2023

Amendments to IFRS 17
Insurance Contracts

First-time application of IFRS 17 and IFRS 9 – Comparative information:
The minor (“narrow scope”) amendment to IFRS 17 introduced the option
to apply a “classification overlay approach” if certain criteria are met.
This can increase the informative value of the comparative information
on financial instruments in the year prior to the first-time application of
IFRS 17.

Periods beginning on or afterJanuary 1, 2023

Amendments to IAS 1
Presentation of Financial Statements

Improvement in consistency regarding the classification of liabilities as
current or non-current. Specifically, the intention is to provide rules on
the classification of liabilities with an uncertain settlement date.

Periods beginning on or afterJanuary 1, 2024

Amendments to IAS 1
Presentation of Financial Statements,
Practice Statement 2 andAmendments to IAS 8 Accounting
Policies, Changes in Accounting
Estimates and Errors

Clarification that in future information only has to be provided on“material” and no longer on “significant” accounting policies.
Furthermore, the term “accounting estimate” used in IAS 8 has been
redefined.

Periods beginning on or afterJanuary 1, 2023

Amendments to IAS 7
Statements of Cash Flows and
IFRS 7
Financial Instruments

The amendments relate to disclosure in connection with supplierfinance agreements.

Periods beginning on or afterJanuary 1, 2024

Amendments to IAS 12
Income Taxes

The amendments relate to an exemption from the initial recognition
exemption in closely specified cases. These lead to a situation wheredeferred taxes, for instance on leases recognized at the lessee and on
decommissioning obligations, must be recognized.

Periods beginning on or afterJanuary 1, 2023

Amendments to IAS 12
Income Taxes

The amendments contain targeted disclosures in the notes forthe companies affected in order to provide users of financial
statements with an understanding of the degree to which an entity
will be affected by the minimum tax, specifically before legislation
comes into effect.

Periods beginning on or afterJanuary 1, 2023

Amendments to IAS 21
The Effects of Changes in
Foreign Exchange Rates

Addition of provisions and corresponding disclosure requirements
to determine the exchange rate in the event of a long-term lack of
exchangeability.

Periods beginning on or afterJanuary 1, 2025

None of the revised and newly issued IFRS and IFRIC that are subject to mandatory adoptions as of
the 2023/24 fiscal year will have any significant effect on the net assets, financial position and earnings
position of the Voith Group. The impact of revised or newly issued standards and interpretations thatwill be subject to mandatory adoption by the Voith Group at a later date is currently being investigated.
At present, the Voith Group does not plan to adopt the new or amended standards and interpretations
early.

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Voith Annual Report 2023
Consolidated Financial Statements
Notes to the consolidated statement of income

Notes to the consolidated statementof income

01.

Sales
2022 /23
in € thousands

Over
time

2021/22

At a point
in time

Total

Over
time

At a point
in time

Total

Voith Hydro

1,189,250

01,189,250

1,047,848

0

1,047,848

Voith Paper

1,355,473

882,965

2,238,438

1,373,749

822,5032,196,252

2,544,723

882,965

3,427,688

2,421,597

822,5033,244,100

Sales of € 1,993,855 thou­sand (previous year € 1,556,507 thou­sand) at Voith Turbo and the other salesof € 84,144 thou­sand (previous year: € 80,739 thou­sand) were mainly recognized at a specific point
in time.
Sales of € 2,007,508 thou­sand (previous year: € 1,397,603 thou­sand) are expected in future periods fromcurrently not, or only partially, completed performance obligations.

02.

Changes in inventories and other own work capitalizedin € thousands

Changes in inventories of finished goods and work in progress
Other own work capitalized

2022 /23

2021 /22

558

70,446

6,426

11,134

6,984

81,580Voith Annual Report 2023
Consolidated Financial Statements
Notes to the consolidated statement of income

03.

04.

05.

123

Other operating incomein € thousands

2022 /23

2021 /22

Income from the use of provisions

91,892

94,658

Income from the reversal of provisions and accruals

73,162

74,111

Foreign exchange gains

129,170

199,752

Gains on the disposal of intangible assets and property, plant and equipment

3,829

12,472

Rental and lease income

2,521

2,083

Income from insurance indemnification payments

10,242

17,937

Other income

47,51281,807358,328

482,8202022 /23

2021 /22

Cost of raw materials and supplies andof purchased merchandise

2,143,760

1,943,511

Cost of purchased services

404,939460,8032,548,699

2,404,314

2022 /23

2021 /22

1,460,766

1,300,560

313,651

281,189

1,774,417

1,581,749

Cost of materialsin € thousands

Personnel expenses
in € thousands

Wages and salaries
Social security, pension and other benefit costs

The costs of post-employment benefits total € 36,628 thou­sand (previous year: € 37,779 thou­sand).

124

Voith Annual Report 2023
Consolidated Financial Statements
Notes to the consolidated statement of income

Number of employees
Annual average

Direct production employees
Administration staff/indirect production

Apprentices and students

As at the reporting date

2022 /23

2021 /22

2023-09-30

2022-09-30

11,536

10,326

11,675

10,943

10,762

9,813

10,804

10,54822,29820,13922,47921,491

745

720

745

720

23,043

20,85923,224

22,211

Number of employees by region
Annual average2022 /23

06.

As at the reporting date
2021 /22

2023-09-30

2022-09-30

Germany

7,918

7,498

7,931

7,863

Europe excluding Germany

5,197

4,299

5,169

5,002

Americas

3,988

3,532

4,177

3,643

Asia

5,029

4,648

5,032

4,823

Other

166

162

170

160

22,29820,13922,47921,491in € thousands

2022 /23

2021 /22

Increase in provisions and accruals

213,829

245,343

Other selling expenses

320,581286,289

Other administrative expenses

270,004

266,173

Foreign exchange losses

152,777

192,226

Rental and lease expenses

40,80623,961

Losses on the disposal of intangible assets and property, plant and equipment

3,506

3,404

118,865

111,397

1,120,368

1,128,793

Other operating expenses

Other expenses

Voith Annual Report 2023
Consolidated Financial Statements
Notes to the consolidated statement of income

07.

125

Interest result and other financial result
Interest income of € 48,101 thou­sand (previous year: € 12,299 thou­sand) primarily includes interest incomeof € 26,170 thou­sand (previous year: interest expense of € 11,199 thou­sand) from the measurement of theobligations arising from termination rights of holders of non-controlling interests in limited partnerships.
Interest expenses of € 72,344 thou­sand (previous year: € 49,006 thou­sand) mostly consist of interest
from external loans (€ 30,379 thou­sand, previous year; € 11,084 thou­sand) and expenses from thediscounting of pension obligations (€ 22,377 thou­sand, previous year: € 10,531 thou­sand).
The other financial result consists of:in € thousands

2022 /23

2021 /22

Gains/losses from investments

15,147

5,049

Reversal of impairment/impairment of other investments and loans- 5,552

5,517

608

507

Currency gains on long-term financing positions

Income from securities and loans

15,64029,590Currency losses on long-term financing positions- 23,824- 18,750

Measurement of derivatives used to hedge financial transactions- 2,009- 749

10

21,164

Gains/losses from investments and reversal of impairment/impairment of other investments and loans
relate to financial instruments in the “at fair value through profit or loss” (FVTPL) measurement category.
The currency gains and losses on long-term financing positions result from currency gains and losses onlong-term intragroup and external loans and liability balances. The measurement effects of derivatives
used to hedge financial transactions relate to the hedging instruments associated with these long-term
financing positions.

08.

Income taxesin € thousands

2022 /23

2021 /22

Current taxes- 99,319- 63,472- 5,959

5,249

15,409- 23,232- 83,910- 86,704

thereof taxes from previous periods
Deferred taxes

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Voith Annual Report 2023
Consolidated Financial Statements
Notes to the consolidated statement of income

Current taxes include domestic income taxes and comparable foreign income taxes that are calculated
in accordance with the local tax laws valid for each subsidiary.
Deferred taxes are recognized for temporary differences between carrying amounts for tax reporting andcarrying amounts recognized under IFRS at the individual Group companies as well as for consolidation
measures. Deferred tax assets are also recognized for tax losses carried forward that can be reasonably
expected to be realized in the near future. The average income tax rate for German companies is29.125 % (previous year: 29.125 %).
Deferred taxes are calculated at the tax rates prevailing in the respective countries. The deferred tax
income from temporary differences amounted to € 22,640 thou­sand (previous year: tax expense of€ 26,516 thou­sand).
The deferred tax expense from tax losses carried forward amounted to € 7,231 thou­sand in the 2022/23
fiscal year. This primarily includes the impairment of deferred tax assets of € 9,115 thou­sand which wererecognized in the 2021/22 fiscal year, an increase in deferred tax assets on tax losses carried forward of€ 1,347 thou­sand as a result of adjustments of tax losses carried forward from the previous year, incomeof € 6,653 thou­sand from the initial recognition of deferred tax assets on tax losses carried forward,
expenses of € 16,316 thou­sand from the utilization of tax losses recognized in the previous year andincome of € 12,679 thou­sand from the initial recognition of previously unrecognized tax losses.
The deferred tax income from tax losses carried forward amounted to € 3,284 thou­sand in the 2021/22
fiscal year. This primarily includes the impairment of deferred tax assets of € 2,833 thou­sand whichwere recognized in the 2020/21 fiscal year, an increase in deferred tax assets on tax losses carriedforward of € 1,534 thou­sand as a result of adjustments of tax losses carried forward from the previous
year, income of € 2,195 thou­sand from the initial recognition of deferred tax assets on tax losses carriedforward, expenses of € 3,803 thou­sand from the utilization of tax losses recognized in the previous
year and income of € 9,497 thou­sand from the initial recognition of previously unrecognized tax losses.
In addition, the current income tax charge was reduced by the use of deferred tax assets on tax lossesof € 4,343 thou­sand unrecognized in the previous year (previous year: € 3,651 thou­sand).
As at September 30, 2023, no deferred tax assets were recognized on German trade tax losses of€ 1,026,313 thou­sand (previous year adjusted*: € 913,109 thou­sand), German corporate income taxesof € 432,839 thou­sand (previous year adjusted*: € 503,696 thou­sand) and interest carryforwards under
German tax law of € 76,358 thou­sand (previous year: € 36,950 thou­sand) as it is not likely that thesetax losses carried forward can be utilized in the near future.
No deferred tax assets were recorded on tax losses carried forward for foreign federal tax of€ 303,662 thou­sand (previous year: € 255,897 thou­sand) or foreign state taxes of € 32,858 thou­sand(previous year: € 57,916 thou­sand) due to the fact that the utilization of the losses is not probable in
the near future.

* Adjustments on account of external tax audits and subsequent effects.

Voith Annual Report 2023
Consolidated Financial Statements
Notes to the consolidated statement of income

127

No deferred tax assets were recognized on temporary differences of € 190,257 thou­sand (previous year:€ 204,028 thou­sand) as utilization of the losses is not probable in the near future. The decrease arises
from the reduction in the temporary differences mainly in the provisions for pensions.
In Germany, tax losses carried forward can be carried forward indefinitely. Outside Germany, tax losses
can usually be carried forward for a limited period of no more than five to ten years.
2022-10-01

in € thousands

2023-09-30

Net

Recognized in
Recognizedconsolidated
in otherstatement of comprehensive
incomeincomeBusiness
combinations

Currency

Net

Deferredtax assets

Deferredtax liabilities

Intangible assets- 89,729

8,210

0

- 147

- 619

- 82,285

10,987- 93,272

Property, plant andequipment- 48,893- 7,221

0

- 768

1,612

- 55,270

3,800- 59,070

Financial assets andsecurities- 1,500

222

259

0

16

- 1,003206- 1,209

Inventories andreceivables- 87,242

17,37900- 2,861- 72,724

55,160- 127,884

Other assets- 34,660

3,952

8

0

- 387

- 31,087

12,187- 43,274

Pension provisions

7,689- 1,078

1,243

0

- 289

7,565

8,522

- 957

Financial liabilities

34,232

6,590

- 56

0

- 310

40,45644,545- 4,089

Other provisions andliabilities

157,657- 6,95300- 2,509148,195

178,090- 29,895

Tax effect on
distributable earningsof Group companies- 2,649

1,539

0

0

0

- 1,1100- 1,110

Tax losses carriedforward64,761- 7,231

0

0

- 856

56,67456,67400- 276,045

276,045

9,411

94,126- 84,715

Netting0- 334

15,409

1,454

- 915

- 6,203

128

Voith Annual Report 2023
Consolidated Financial Statements
Notes to the consolidated statement of income

2021-10-01

in € thousands

2022-09-30

Net

Recognized in
Recognizedconsolidated
in otherstatement of comprehensive
incomeincomeBusiness
combinations

Currency

Net

Deferredtax assets

Deferredtax liabilities

Intangible assets- 79,508

3,978

0- 15,778

1,579- 89,729

9,223- 98,952

Property, plant andequipment- 45,189

982

0- 3,159- 1,527- 48,893

5,470- 54,363

Financial assets andsecurities- 1,984

3,392- 2,91002- 1,50025- 1,525

Inventories andreceivables- 63,096- 29,446

0

1,883

3,417

- 87,242

59,070- 146,312

Other assets- 18,596- 10,535- 4,254- 27- 1,248- 34,660

7,536- 42,196

Pension provisions

17,551- 10,053

- 977

656

512

7,689

9,171

- 1,482

Financial liabilities

35,125- 2,577

- 52

1,792

- 56

34,232

41,690- 7,458

Other provisions andliabilities

137,914

14,901

0

546

4,296

157,657

187,742- 30,085

Tax effect on
distributable earningsof Group companies- 5,491

2,842

0

0

0

- 2,6490- 2,649

Tax losses carriedforward62,167

3,284

0

0

- 690

64,76164,76100- 286,521

286,521- 334

98,167- 98,501

Netting

038,893- 23,232- 8,193- 14,087

6,285

Reconciliation of expected and effective tax expense:
The income of Voith GmbH & Co. KGaA and its subsidiaries in Germany is subject to corporate income
tax and trade tax as well as the solidarity surcharge. Profits earned outside Germany are taxed at theprevailing rates in the countries concerned. The expected tax expense was calculated based on a tax
rate of 29.125 % (previous year: 29.125 %) that takes into account the legal structure of the Voith Group
relevant for tax purposes.
in € thousands

2022 /23

2021 /22

Result before income taxes

156,566

116,354

Expected tax expense (+)/tax income (-)

45,60033,888

Deviations from expected tax rate

- 5,067- 8,84048- 1,093

Tax-free income- 24,454- 10,430

Non-deductible expenses

45,44020,952

Taxes relating to other periods

2,940- 8,861

Change in impairments of deferred tax assets

20,08061,996

Effect of changes in tax rates

Other tax effects

- 677

- 908

Income taxes

83,91086,70453.6

74.5

Effective tax rate (in %)Voith Annual Report 2023
Consolidated Financial Statements
Notes to the consolidated statement of income

129

The non-deductible expenses contain withholding taxes of € 12,417 thou­s and (previous year:€ 8,936 thou­sand).
No deferred tax liabilities were recorded on temporary differences in connection with investments
in subsidiaries of € 99,990 thou­sand (previous year: € 93,733 thou­sand), as the criteria specified in
IAS 12.39 were met.
When distributions by foreign subsidiaries are made in Germany, 5 % of the distribution is subject
to German taxation. In addition, withholding taxes and dividend-related taxes abroad may also be
incurred. Further income tax implications must also be observed in the case of distributions fromsubsidiaries abroad to another foreign company.
Global minimum taxation
In order to address concerns about large, multinational companies having an unfair ability to distributeprofits and choose where they are taxed, various agreements were reached at a global level, including
an agreement between 135 countries on the introduction of a global minimum tax rate of 15 percent.
In December 2021, the OECD published a proposal for a legal framework, followed by further detailed
guidance in March 2022 and July 2023 that is intended to be used by the individual countries thathave signed the agreement to amend their local tax legislation. As soon as the amendments to the tax
legislation in the countries in which the Voith Group has operations apply, or will shortly apply, the Voith
Group may be subject to the minimum taxation. In Germany, the federal parliament (Bundestag) passed
the federal government’s bill on the global minimum taxation on November 10, 2023.
As at the date on which the consolidated financial statements were approved for publication, thetax legislation in connection with the minimum tax had been passed in countries in which Voith has
operations; these are: the UK, Japan, Indonesia, Malaysia and South Korea. The rules are applicablein these countries for the first time in periods beginning after December 31, 2023.
The Board of Management is monitoring closely the progress of the legislative procedure in every
country in which the Voith Group has operations.
As at September 30, 2023, the Voith Group did not have sufficient information to be able to determine
the potential quantitative impact.

130

Voith Annual Report 2023
Consolidated Financial Statements
Notes to the consolidated balance sheet

Notes to the consolidated balance sheet

09.

Intangible assets
Development of intangible assets from October 1, 2022 to September 30, 2023
Franchises,industrial rights
and similar rights
and assets as wellas licenses in suchrights and assets

Goodwill

Development
costs

Prepayments

Total

483,782

922,316

174,890190

1,581,178

891

1,746

1,896

0

4,533

- 6,304- 10,763- 254

1- 17,320

Additions

8,353

0

3,112

9

11,474

Disposals- 12,0690- 9,051

0- 21,120

4

0

12

0

16

Transfers

1,571

0

28

- 62

1,537

Cost
2023-09-30

476,228

913,299

170,633138

1,560,298

Accumulated amortizationand impairment 2022-10-01- 225,775- 54,179- 141,635

0- 421,589

2,650

0

123

0

2,773

- 30,1650- 10,0690- 40,234- 301- 3,220- 2,260

0- 5,781

11,958

0

8,972

0

20,930

- 13

0

0

0

- 13

Accumulated amortizationand impairment 2023-09-30- 241,646- 57,399- 144,869

0- 443,914

Carrying amounts 2023-09-30

234,582

855,900

25,764138

1,116,384

in € thousands

Cost
2022-10-01
Business combinations
Currency translation differences

Other adjustments

Currency translation differences
Amortization
Impairment losses
Disposals
Other adjustments

The impairment losses on development costs include the write-down of a project in the Group Division
Hydro amounting to € 2,230 thou­sand that needed to be recognized for this project on account of adeterioration in the sales prospects.

Voith Annual Report 2023
Consolidated Financial Statements
Notes to the consolidated balance sheet

131

Development of intangible assets from October 1, 2021 to September 30, 2022
Franchises,industrial rights
and similar rights
and assets as wellas licenses in suchrights and assets

Goodwill

Development
costs

Prepayments

Total

Cost
2021-10-01

395,459

808,081

169,58201,373,122

Business combinations

71,24388,3061,254

185

160,988

Currency translation differences

10,32425,276- 83

035,517

Additions

12,634

653

5,441

5

18,733

Disposals- 7,143

0

- 715

0

- 7,858

3

0

- 13

0

- 10

Transfers

1,262

0

- 576

0

686

Cost
2022-09-30

483,782

922,316

174,890190

1,581,178

Accumulated amortizationand impairment 2021-10-01- 211,358- 54,179- 132,361

0- 397,898

Currency translation differences- 2,778

0125

0- 2,653

Amortization- 18,753

0- 8,684

0- 27,437

0

0

- 979

0

- 979

7,116

0

264

0

7,380

-2

0

0

0

-2

Accumulated amortizationand impairment 2022-09-30- 225,775- 54,179- 141,635

0- 421,589

Carrying amounts 2022-09-30

258,007868,137

33,255190

1,159,589

in € thousands

Other adjustments

Impairment losses
Disposals
Other adjustments

In the previous year, the franchises, industrial rights and similar rights and assets as well as licenses insuch rights and assets contained brands with an indefinite useful life of € 107.5 million, thereof addition
from business combinations in 2021/22 of € 34.1 million.
Since April 1, 2023, the useful life of the brands is classified as definite at 25 years. For more information,refer to the accounting policies for intangible assets.

132

Voith Annual Report 2023
Consolidated Financial Statements
Notes to the consolidated balance sheet

10.

Property, plant and equipment
Development of property, plant and equipment from October 1, 2022 to September 30, 2023

in € thousands

Cost
2022-10-01
Business combinations
Currency translation differences
Additions
Capitalized interest

Land and buildings, including
buildings on
third-party land

Plant andmachinery

927,627

1,576,979

557,191

11,1694,662

794- 40,883- 78,935- 11,415

6,174

45,18429,480

0

0

0

284

Other equipment,
Prepayments
furniture and and assets underfixturesconstruction

Rightsof useTotal

62,943

180,780

3,305,520

813

4,550

21,988- 2,799- 6,415- 140,447

38,85043,051

162,739

0

284

0

0

0

0

13,395

13,395

Disposals- 2,402- 24,233- 17,396- 6,197- 12,568- 62,796

Transfers

3,438

22,366

6,022- 32,488- 875- 1,537

Remeasurements

Reclassification to assets held for sale

0

0

0

0

0

0

Other adjustments

10

87

- 141

- 656

- 1,001- 1,701

Cost
2023-09-30

905,133

1,546,110

564,535

60,750220,917

3,297,445

Accumulated depreciationand impairment 2022-10-01- 457,074- 1,242,112- 447,985- 240- 77,075- 2,224,486

Currency translation differences

18,452

59,918

8,471

0

3,345

90,186

Depreciation- 19,736- 58,876- 32,959

0- 34,087- 145,658

Impairment losses- 5,146- 4,158

- 704

0

- 302

- 10,310

Disposals

1,270

21,53916,4660

12,30951,584

Transfers

18

- 953

615

0

320

0

Reclassification to assets held for sale

0

0

0

0

0

0

Reversal of impairment losses

1

11

0

0

0

12

Other adjustments

57

13

201

0

714

985

Accumulated depreciationand impairment 2023-09-30- 462,158- 1,224,618- 455,895- 240- 94,776- 2,237,687

Carrying amounts 2023-09-30

442,975

321,492

108,640

60,510126,141

1,059,758

Voith Annual Report 2023
Consolidated Financial Statements
Notes to the consolidated balance sheet

133

Development of property, plant and equipment from October 1, 2021 to September 30, 2022
Land and buildings, including
buildings on
third-party land

Plant andmachinery

862,955

1,509,075

534,108

Business combinations

29,163

7,130

Currency translation differences

44,311

Additionsin € thousands

Cost
2021-10-01

Other equipment,
Prepayments
furniture and and assets underfixturesconstruction

Rightsof useTotal

49,377

155,963

3,111,478

11,466

2,795

9,752

60,306

95,915

11,870

3,501

3,225

158,822

6,073

29,79722,391

39,25020,186

117,697

Capitalized interest

0

0

0

127

0

127

Remeasurements

0

0

0

0

6,343

6,343

Disposals- 8,069- 84,182- 26,439- 1,328- 12,188- 132,206

Transfers

7,514

19,383

6,102- 31,087- 2,598- 686- 14,265- 94- 2,24600- 16,605

- 55

- 45

- 61

308

97

244

Cost
2022-09-30

927,627

1,576,979

557,191

62,943

180,780

3,305,520

Accumulated depreciationand impairment 2021-10-01- 416,430- 1,183,846- 434,674- 240- 56,516- 2,091,706

Currency translation differences- 20,785- 74,629- 9,6670- 1,874- 106,955

Depreciation

Reclassification to assets held for sale
Other adjustments- 18,830- 57,665- 31,6820- 31,329- 139,506

Impairment losses- 7,597- 4,462

- 90

0

0

- 12,149

Disposals

1,193

79,072

24,962

0

11,676116,903

Transfers

- 677

- 843

655

0

865

0

Reclassification to assets held for sale

6,028

89

1,915

0

0

8,032

Reversal of impairment losses

0

3

11

0

103

117

Other adjustments

24

169

585

0

0

778

Accumulated depreciationand impairment 2022-09-30- 457,074- 1,242,112- 447,985- 240- 77,075- 2,224,486

Carrying amounts 2022-09-30

470,553334,867

109,206

62,703

103,705

1,081,034

134

Voith Annual Report 2023
Consolidated Financial Statements
Notes to the consolidated balance sheet

The impairment losses are included in the consolidated statement of income item “Depreciation andamortization”. Impairment losses include impairments on land and buildings of € 5,139 thou­sand andon plant and machinery of € 3,890 thou­sand as well as on other equipment, furniture and fixtures of€ 696 thou­sand, which had to be recognized on account of the impairment of a production plant in
Russia of the Group Division Hydro as a consequence of the deterioration in the prospects for the
future of this cash-generating unit. Impairment losses were already recognized on land and buildingsof € 5,824 thou­sand and on plant and machinery of € 4,198 thou­sand in this context in the previous
year. The recoverable amount of the cash-generating unit amounting to € 2.7 million corresponds tothe fair value less costs to sell. The fair value less the costs to sell was measured on the basis of thecurrent planning prepared by management applying the discounted cash flow method (level 3 of thefair value hierarchy).
An interest rate of 2.96 % was used to calculate capitalized interest (previous year: 1.6 %).
The prepayments and assets under construction include buildings of € 3,794 thou­sand (previous year:€ 2,621 thou­sand), plant and machinery of € 50,887 thou­sand (previous year: € 54,046 thou­sand) andnon-production-related equipment of € 5,829 thou­sand (previous year: € 6,036 thou­sand).
As at September 30, 2023, the carrying amounts of the rights of use under leases contained landand buildings of € 88,724 thou­s and (previous year: € 68,682 thou­s and), plant and machinery of€ 8,946 thou­sand (previous year: € 7,625 thou­sand), leased vehicles of € 18,774 thou­sand (previous
year: € 16,304 thou­sand) and other of € 9,697 thou­sand (previous year: € 11,094 thou­sand).
The depreciation and impairment losses on the rights of use under leases break down as follows:€ 20,145 thou­sand (previous year: € 18,794 thou­sand) on land and buildings, € 1,412 thou­sand (previous
year: € 374 thou­sand) on plant and machinery, € 10,545 thou­sand (previous year: € 9,824 thou­sand) on
leased vehicles and € 2,287 thou­sand (previous year: € 2,337 thou­sand) on other.

11.

Investments accounted for using the equity method
Associates
The following table summarizes the financial information for associates; all amounts relate to the Group’s
proportionate share of the respective associates:in € thou­s ands

2023-09-30

2022-09-30

39,10038,600

Net result of continuing operations- 653- 5,480

Other comprehensive income

- 240

527

Total comprehensive income- 893- 4,953

Carrying amount of the investments in associates
Share of:

Voith Annual Report 2023
Consolidated Financial Statements
Notes to the consolidated balance sheet

135

The acquisition of 20 % of the shares in Yangi AB gave rise to an addition to the carrying amounts ofthe shares in associates of € 2,937 thou­s and. This addition relates to the Voith Paper segment.
The net result of continuing operations includes income from associates of € 873 thou­s and (previous
year: € 680 thou­s and) and expenses of € 1,526 thou­s and (previous year: € 6,160 thou­s and). In the2022/23 fiscal year, a loss of € 9,293 thou­s and (previous year: € 1,872 thou­s and) was not disclosed in
the statement of income.
Joint ventures
The Group has interests in joint ventures which are not individually material. The following table summarizes
the financial information for these joint ventures; all amounts relate to the Group’s proportionate shareof the respective joint ventures:in € thou­s ands

2023-09-30

2022-09-30

4,757

4,983

Net result of continuing operations

- 40

268

Other comprehensive income

- 186

137

Total comprehensive income

- 226

405

Carrying amount of the interests in joint ventures
Share of:For one joint venture, a loss of € 249 thou­sand (previous year: € 1,402 thou­sand) was not disclosed in
the statement of income.
In some cases, the companies accounted for using the equity method have reporting periods which do
not end on September 30, as the reporting dates are aligned to those of the controlling shareholder.
Accordingly, some companies prepare interim financial statements as at September 30. For othercompanies the effects of the different reporting periods are not significant for the Voith Group’s earnings
position and net assets.

12.

Inventoriesin € thou­s ands

2023-09-30

2022-09-30

Raw materials and supplies

328,435

338,991

Work in progress

199,597234,546

Finished goods and merchandise

207,145

203,034

Prepayments

94,513102,060

829,690878,631

136

Voith Annual Report 2023
Consolidated Financial Statements
Notes to the consolidated balance sheet

Write-downs of inventories recognized as expenses amounted to € 18,492 thou­sand (previous year:€ 3,712 thou­s and). Obligatory reversals of write-downs totaling € 8,212 thou­s and (previous year:€ 6,139 thou­sand) were made. These amounts are recognized in the cost of materials.

13.

Trade receivables
Trade receivables consist of the following items:in € thou­s ands

2023-09-30

2022-09-30

Trade receivables

913,909924,270

Bad debt allowances- 43,734- 42,233

870,175

882,037

Trade receivables are classified as current assets. As at September 30, 2023, the volume ofreceivables that is not expected to be realized within one year is € 11,029 thou­sand (previous year:€ 11,183 thou­sand).
Movements in the allowance account for the impairment of trade receivables were as follows:in € thou­s ands

2023-09-30

2022-09-30

Impairment at the
beginning of the fiscal year

- 42,233- 33,791

Additions- 23,191- 18,311

Utilization

4,886

6,720

Reversal

13,0095,691

Changes in consolidated group/exchange differences

1,823- 2,857

Expected credit losses

1,972

315

Impairment at theend of the fiscal year

- 43,734- 42,233

The total reversal of € 13,009 thou­sand (previous year: € 5,691 thou­sand) consists of a reversal of specificbad debt allowances of € 12,966 thou­sand (previous year: € 5,691 thou­sand) and further expectedcredit losses of € 43 thou­sand (previous year: € 0). Additions of € 23,191 thou­sand (previous year:€ 18,311 thou­sand) include additions to specific bad debt allowances of € 23,191 thou­sand (previous
year: € 16,694 thou­sand) and further expected credit losses of € 0 (previous year: € 1,617 thou­sand).

Voith Annual Report 2023
Consolidated Financial Statements
Notes to the consolidated balance sheet

14.

137

Contract assets and contract liabilities
Notes on material changes in contract assets and contract liabilities:in € thou­s ands

2023-09-30

2022-09-30

Contract assets as at October 1

715,432

573,952

Exchange rate differences- 30,369

32,730Change as a result of project progress, taking account of customer
payments received

509,149

487,818

Reclassification from contract assets to trade receivables- 505,392- 427,317

Impairments- 31,538- 2,541

Other changes

3,035

50,790Contract assets as at September 30

660,317715,432

Contract liabilities as at October 1

1,008,444

938,859- 35,522

42,499Exchange rate differences
Business combinations

1,600

540

Sales included in contract liabilities at the beginning of the period- 437,776- 395,045

Increase as a result of customer payments received less figure recognized
as sales over the period

419,601

368,798

Other changes

33,596

52,793Contract liabilities as at September 30

989,943

1,008,444

The item “Impairment losses on trade receivables and contract assets, net” in the statement ofincome contains impairment losses on trade receivables and contract assets pursuant to IFRS 9 of
€ 66,517 thousand. Of this amount, impairment losses totaling € 31,645 thousand are attributable toa project in the Hydro segment in Russia. Otherwise, income from the reduction and the utilization of
impairment losses on trade receivables and contractual assets are offset in this item of the statementof income.

138

Voith Annual Report 2023
Consolidated Financial Statements
Notes to the consolidated balance sheet

15.

Other financial receivables and other assets
Other financial receivablesin € thou­s ands

Current

Non-current

2023-09-30

Current

Non-current

2022-09-30

Derivatives used to hedge
operational transactions

21,654

6,052

27,70631,02919,201

50,230Derivatives used to hedge
financial transactions

2,148

14,58016,728112

14,60914,721

Financial receivables

26,455537

26,992

20,275372

20,647

Sundry financial assets*

45,663

51,82097,48350,90639,042

89,94895,92072,989168,909102,32273,224

175,546in € thou­s ands

Current

Non-current

2023-09-30

Current

Non-current

2022-09-30

Prepaid expenses

38,151

4,200

42,351

34,0398,249

42,288Other taxes (without income
taxes)

87,881

36,269124,150

119,499

33,384

152,883

126,032

40,469166,501

153,538

41,633

195,171

Other assets

16.

Other financial assets and securities
The financial assets mainly consist of a loan to a related company amounting to € 121 million.
Further information on the other financial assets and securities can be found in the section “Additional
information on financial instruments”.

* Includes assets totaling € 24,803 thou­sand (previous year: € 24,933 thou­sand) which are not financial instruments and which
are accordingly excluded from the disclosures made in the section “Additional information on financial instruments”.

Voith Annual Report 2023
Consolidated Financial Statements
Notes to the consolidated balance sheet

17.

139

Cash and cash equivalentsin € thou­s ands

2023-09-30

Cash on hand
Cash equivalents
Cash at bank2022-09-30

94

106

6,818

4,865

405,930

406,921412,842

411,892

Cash at banks earns interest at floating rates based on daily bank deposit rates.
Short-term deposits are made for varying periods of between one day and three months, depending on
the cash requirements of the Group. These deposits earn interest at the respective short-term deposit
rates.
On account of foreign exchange controls in one country, the Group currently has no access to cash
and cash equivalents of € 6,105 thou­sand (previous year: € 7,563 thou­sand).

18.

Assets held for sale and liabilities directly associated with assets
classified as held for sale
As at the reporting date, there were no assets held for sale (previous year: € 9,704 thou­sand, relatingexclusively to property, plant and equipment).

140

Voith Annual Report 2023
Consolidated Financial Statements
Notes to the consolidated balance sheet

19.

EquityIssued capital
The share capital of Voith GmbH & Co. KGaA of € 120,000 thou­sand comprises 108,000 thou­sandordinary shares with a nominal value of € 1.00 each and 12,000 thou­sand preference shares with anominal value of € 1.00 each.
Revenue reserves and other reserves
The revenue reserves and other reserves consist of retained earnings generated by Voith GmbH &Co. KGaA and its consolidated subsidiaries as well as the effects of the remeasurement of defined
benefit plans, the currency translation of foreign subsidiaries, the valuation of net investments in foreign
operations, gains/losses on available-for-sale investments and financial assets recognized directly inequity without effect on profit or loss and cash flow hedges pursuant to IAS 39.
The statement of comprehensive income shows the measurement effects of the individual components
of other comprehensive income. Other comprehensive income consists of:in € thou­s ands

2022 /23

2021 /22

Remeasurement of defined benefit plans

12,505

262,736· Gains/losses in the current period

12,505

262,736

Gains/losses on the valuation of financial assets and marketable securities746- 3,075· Gains/losses in the current period893- 3,075· Transfers to profit and loss

- 147

0

Gains/losses on cash flow hedges

204

14,822· Gains/losses in the current period

204

14,4150407· Transfers to profit and loss
Gains/losses on currency translation- 114,823

144,248· Gains/losses in the current period- 114,823

144,248

0

0

Gains/losses from the currency translation of net investments
in foreign operations- 2,935

12,345· Gains/losses in the current period- 2,935

12,345

0

0

1,454

- 8,193- 102,849

422,883· Transfers to profit and loss

· Transfers to profit and loss
Tax on components of other comprehensive income
Other comprehensive income

Voith Annual Report 2023
Consolidated Financial Statements
Notes to the consolidated balance sheet

141

Deferred taxes on the components of other comprehensive income are as follows:
2022 /23

2021 /22in € thou­s ands

Beforetaxes

Deferred
taxes

After
taxes

Beforetaxes

Deferred
taxes

After
taxes

Remeasurement of defined
benefit plans

12,505

1,243

13,748262,736- 977

261,759

Gains/losses on the valuation offinancial assets and marketablesecurities

746

- 164

582

- 3,075291- 2,784

Gains/losses on cash flow
hedges

204

- 48

156

14,822- 4,306

10,516

Gains/losses on currencytranslation- 114,823

0- 114,823

144,2480

144,248

Gains/losses from the currencytranslation of net investments
in foreign operations- 2,935423- 2,512

12,345- 3,201

9,144

Other comprehensive income- 104,303

1,454- 102,849

431,076- 8,193422,883

Profit participation rights
Profit participation rights with a nominal volume of €103,400 thou­sand (previous year: € 103,400 thou­sand) qualify as Group equity under the IAS 32 criteria. The rights are lower-ranking bearer profit
participation rights with variable compensation, no fixed maturity date and no right of termination on
the part of the creditors. Profit participation rights of €96,800 thou­sand were issued by a subsidiary ofVoith GmbH & Co. KGaA. Profit participation rights of €6,600 thou­sand were issued by Voith GmbH &Co. KGaA. Subject to the approval of the appropriate governing body, profits totaling €5,590 thou­sand(previous year: €5,590 thou­sand) are scheduled to be distributed on the sum total of these rights forthe 2023/24 fiscal year.
Non-controlling interests
The majority of non-controlling interests are held by the co-owners of the subsidiaries Shanghai CRRC
Voith Transmission Technology Co., Ltd., China, Rif Roll Cover Srl, Italy, Voith Fuji Hydro K.K., Japan,
Voith IHI Paper Technology Co., Ltd., Japan, Voith Hydro Shanghai Ltd., China and Voith Paper Fabrics
India Ltd., India. Of the profit participation rights totaling € 103,400 thou­sand, € 96,800 thou­sand is
attributable to non-controlling interests.
Appropriation of retained earnings at Voith GmbH & Co. KGaA
The Board of Management proposes to pay a dividend of € 0.17 per share (€ 20,000 thou­sand in total) outof the unappropriated retained earnings of Voith GmbH & Co. KGaA and to carry forward the remaining
amount. Of the total dividends proposed, € 2,000 thou­sand is attributable to preference shares. Dividend
payments in the fiscal year amounted to € 20,000 thou­sand (previous year: € 20,000 thou­sand). The
distribution per share in the fiscal year amounted to €0.17 (previous year: €0.17).

142

Voith Annual Report 2023
Consolidated Financial Statements
Notes to the consolidated balance sheet

Additional disclosures on capital management
Voith is a family-owned company. As such, it is obliged to maintain a robust and sustainable financial
profile that enables the Group to meet its earnings and growth targets.
Voith manages its capital with the aim of maximizing the return on capital. The Group’s managed capitalconsists of equity and interest-bearing financial liabilities.

in € thou­s ands

2023-09-30

2022-09-30

Equity1,366,822

1,436,080

Interest-bearing financial liabilities

1,059,351

1,101,128

2,426,173

2,537,208

Equity decreased by 4.8 % compared to the previous year. It was mainly the negative effects fromcurrency translation of foreign subsidiaries that contributed to this development. Interest-bearing
financial liabilities decreased by 3.8 %. The composition of interest-bearing financial liabilities is
described in note 22.
The articles of incorporation and bylaws of Voith GmbH & Co. KGaA do not prescribe any specificcapital requirements.

20.

Provisions for pensions and similar obligations
Provisions for pensions are recognized for benefit obligations in the form of retirement, invalidity andsurviving dependents’ benefits payable under pension plans. The benefits provided by the Group vary
according to local legal, tax and economic conditions in the respective countries and are usually basedon the length of employee service and the level of remuneration.
The Group’s post-employment benefits include both defined benefit plans and defined contributionplans. In the case of defined contribution plans, the Company pays contributions to state or private
pension schemes based on either legal or contractual requirements or on a voluntary basis. Once thecontributions have been paid, there are no further obligations for the Company. Current contributions
are recognized as pension expenses in the period concerned and total € 119,834 thou­sand for the Voith
Group as a whole (previous year: € 104,809 thou­sand).
The majority of the pension plans are defined benefit plans that take the form of provisions-based or
externally funded schemes.
The pension provisions for defined benefit plans are determined in accordance with IAS 19 using theinternationally recognized projected unit credit method. For this purpose, the future obligations aremeasured on the basis of the pro rata employee benefit obligations earned at the end of the fiscal year.

Voith Annual Report 2023
Consolidated Financial Statements
Notes to the consolidated balance sheet

143

Pension provisions are measured taking into account development assumptions for those factors which
affect the benefit amount. All defined benefit plans require actuarial valuations. These are preparedannually by qualified actuaries.
The amount of the individual benefit payments is generally measured based on the wage or salary level
and/or position in the corporate hierarchy, as well as the length of service. The features and relatedrisks of the defined benefit plans available to employees vary according to local legal, tax and economic
conditions in the respective countries. The features of the material defined benefit plans at Voith aredescribed below.
Pension plans in Germany and Austria
The pension plans in Germany generally include retirement, invalidity and surviving dependents’
benefits. Traditionally, the pension commitments are measured on the beneficiary’s final salary. In
recent years, these benefits have been increasingly replaced by capital savings models. Under capitalsavings models, the amount of the benefit is measured as the sum of the (annual) savings modules. The
individual modules are measured from the defined salary-based contribution using a variable conversion
factor for age and interest rates for a defined retirement age.
Numerous Group companies have introduced capital savings models to satisfy their obligation to pay
an employer contribution.
In accordance with the German Company Pensions Act, current benefit payments are regularly reviewed
with regard to the increase in the consumer price index.
In contrast to the older final-salary-based pension commitments, which involve a relatively high risk ofextra funding requirements arising from salary trends, from external input parameters (e.g., the income
threshold for the statutory pension insurance scheme) and from the adjustment of current pensions,the current capital savings models ultimately only involve the risk of a change in the interest rates usedin the calculation.
Pension provisions are recognized for all pension commitments. Funding is therefore only obtained in
exceptional cases. The plan assets of German companies take the form of insurance policies. They do
not include any financial instruments issued by companies of the Voith Group.
For mortality and invalidity, the RT 2018G mortality tables by Heubeck are used. Employee turnoverprobabilities were calculated specifically for the Group.
In Austria, the obligations result primarily from a severance benefit scheme (“Abfertigungen”). Benefits
become due upon termination of the employment relationship (provided the employee is not culpablefor the termination), i.e., also upon retirement. Austrian severance benefits all qualify as capital savings.
A few years ago, the nature of these benefits changed for new hires to post-employment benefits on
account of new statutory requirements. These qualify as defined contribution plans and are organized
via legally independent employee welfare funds. The employer’s obligation is limited to payment of thecontribution. In addition, obligations exist for retirement, invalidity and surviving dependents’ benefits
on the basis of individual commitments and a pension plan, which closed to new hires a long time ago,at the St. Pölten location.

144

Voith Annual Report 2023
Consolidated Financial Statements
Notes to the consolidated balance sheet

The following amounts were recorded in the consolidated financial statements for post-employment
defined benefit pension plans:
Defined benefit
obligationin € thou­s ands

Fair value ofplan assets

Net carrying amount fromdefined benefit plans

2023-09-30

2022-09-30

2023-09-30

2022-09-30

2023-09-30

2022-09-30

Germany and Austria

555,393

574,486- 24,846- 25,223

530,547

549,263

Other

108,621104,189- 80,744- 75,362

27,877

28,827664,014678,675- 105,590- 100,585

558,424

578,090

Fair value ofplan assets

Total

Movements in the net liability from defined benefit plans:
2023-09-30

2022-09-30

Present valueof defined
benefitobligations

Fair value ofplan assets

Total

Present valueof defined
benefitobligations

Balance, October 1

678,675- 100,585

578,090

1,068,109- 235,400

832,709

Current service cost

11,600-11,60019,286-

19,286in € thou­s ands

Past service cost from plan curtailments (income)

- 638

-

- 638

- 4,379-- 4,379

26,697- 3,862

22,835

14,258- 3,731

10,527

Losses (+ ) / gains (-) from changes
in demographic assumptions

- 179

-

- 179

353

-

353

Losses (+ ) / gains (-) from changes
in financial assumptions- 23,372-- 23,372- 287,368-- 287,368

8,608

-

8,608

7,412

-

7,412

Remeasurement of plan assets(without amounts included in interest result)

-

2,322

2,322

-

24,53824,538

Employer contributions to the fund-

- 3,787- 3,787-- 3,507- 3,507

Employee contributions to the fund-

- 2,214- 2,214-- 1,575- 1,575

Interest expenses (+ ) / interest income (-)
Remeasurements:

Losses (+ ) / gains (-) fromexperience adjustments

Benefits paid

- 41,264

7,920- 33,344- 179,148

146,622- 32,526

Change to the Group’s structure

- 104

0

- 104

5,283

0

5,283

Other

6,476

- 7,089- 613- 2,999

4,654

1,655

Currency translation differences on foreign plans- 3,3211,705- 1,616

36,495- 32,186

4,309

836

-

836

1,373

-

1,373

664,014- 105,590

558,424

678,675- 100,585

578,090

Addition to termination benefits inaccordance with IAS 19.159 et seq.
Balance, Septem­b er 30

Voith Annual Report 2023
Consolidated Financial Statements
Notes to the consolidated balance sheet

145

Movements in the net liability from defined benefit plans:Germany and Austria
2023-09-30

2022-09-30

Total

Present valueof defined
benefitobligations

Fair value ofplan assets

Total- 25,223

549,263

814,807- 25,003

789,804-

8,961

15,875-

15,875Present valueof defined
benefitobligations

Fair value ofplan assets

Balance, October 1

574,486

Current service cost

8,961

in € thou­s ands

Past service cost from plan curtailments (income)

50

-

50

- 693

-

- 693

22,749- 999

21,750

10,580- 333

10,247

Losses (+ ) / gains (-) from changes
in demographic assumptions

0

-

0

0

-

0

Losses (+ ) / gains (-) from changes
in financial assumptions- 24,414-- 24,414- 236,245-- 236,245

9,831

-

9,831

4,748

-

4,748

Remeasurement of plan assets(without amounts included in interest result)

-

- 36

- 36

-

- 638

- 638

Employer contributions to the fund

-

- 243

- 243

-

0

0

Employee contributions to the fund

-

0

0

-

0

0

- 33,822

1,655- 32,167- 33,177

1,373- 31,804

Interest expenses (+ ) / interest income (-)
Remeasurements:

Losses (+ ) / gains (-) fromexperience adjustments

Benefits paid
Change to the Group’s structure
Other
Currency translation differences on foreign plans
Addition to termination benefits inaccordance with IAS 19.159 et seq.
Balance, Septem­b er 30

- 104

0

- 104

2,412

0

2,412

- 3,1800- 3,180- 5,108- 622- 5,730

0

0

0

0

0

0

836

-

836

1,287

-

1,287

555,393- 24,846

530,547

574,486- 25,223

549,263

146

Voith Annual Report 2023
Consolidated Financial Statements
Notes to the consolidated balance sheet

Costs for defined benefit plans break down as follows:in € thou­s ands

2023-09-30

2022-09-30

11,60019,286- 638- 4,379

22,835

10,527

Current service cost
Past service cost
Interest expenses from pension obligations and plan assets

Current service cost and past service cost relating to the obligation are stated under personnel
expenses. Interest expenses on the obligation and interest income on plan assets are stated in theinterest result. Past service cost includes the effects of the increase in the actuarial interest rate for thecapital savings plans.
The plan assets consist of the following components:
Quoted prices
in an active marketin € thou­s ands

2023-09-30

No quoted prices
in an active market

2022-09-30

2023-09-30

Total

2022-09-30

2023-09-30

2022-09-30

Equity instruments

4,743

5,012

0

0

4,743

5,012

Debt instruments

3,551

4,756

0

0

3,551

4,756

968

1,028

0

0

968

1,028

Real estate
Cash andcash equivalents
Other*

237

401

0

0

237

401

9,962

16,117

86,12973,271

96,091

89,38819,461

27,314

86,12973,271

105,590

100,585

The calculation of pension provisions was based on the following assumptions:
Germany and Austriain %2023-09-30

2022-09-30

Discount rate

4.55

4.07

Pension increases

2.20

2.00

The inputs used in the calculation of the defined benefit obligation (DBO) include assumed discountrates, wage and salary trends, as well as mortality rates. These vary depending on the state of theeconomy and other factors in the respective country.

*P rimarily employer’s pension liability insurance.

Voith Annual Report 2023
Consolidated Financial Statements
Notes to the consolidated balance sheet

147

Changes to the relevant actuarial assumptions would have had the following impact on the defined
benefit obligation:
2023-09-30

2022-09-30

in € thou­s andsin %in € thou­s andsin %Discount rate

up 0.50 % points- 38,313- 5.8- 39,703- 5.9

down 0.50 % points

42,565

6.4

44,1306.5

Pension increases

up 0.25 % points

10,518

1.6

11,283

1.7

down 0.25 % points- 10,077- 1.5- 10,844- 1.6+ 1 year

17,028

2.6

18,182

2.7Life expectancy

The sensitivity analyses presented here show the effect of changes to one assumption with no change
in the other assumptions, i.e., possible correlations between the individual assumptions are notconsidered.
Increases or decreases in the discount rate, the wage and salary trends and the mortality rates do
not have the same impact in absolute terms on the defined benefit obligation (DBO), primarily on
account of discounting the obligation to net present value. If a number of assumptions are changed
simultaneously, the total impact does not necessarily equate to the sum of the effects attributable to theindividual assumptions changed. In addition, the sensitivity of the DBO to a change in an assumption
is only a reflection of the specific magnitude of the change. If an assumption changes by a different
magnitude to that assumed here, the impact on the DBO will not necessarily be linear.
Future cash flows
Contributions of € 4,894 thou­sand are expected to be paid into the plans in the next reporting period.
The weighted average term of the DBO is 13 years.

148

Voith Annual Report 2023
Consolidated Financial Statements
Notes to the consolidated balance sheet

21.

Other provisions
The provisions consist of the following:2022-09-30

Changein scopeof consolidation

Utilization

Additions

Reversals

Personnel-related provisions

70,505137- 10,062

18,865- 2,745in € thou­s ands

Transfers

Discounting
effectCurrencytransla­t ion
differ­e nces2023-09-30

0

235

- 538

76,397Warranty provisions

212,408906- 54,648

84,073- 21,791- 3,153- 812- 6,736

210,247

Other order-related provisions

111,0450- 20,082

62,539- 23,607- 1,05211- 5,164

123,690

Other provisions

47,966-5- 16,013

18,266- 3,857- 1,412

- 223

- 653

44,069441,924

1,038- 100,805

183,743- 52,000- 5,617- 789- 13,091

454,4032023-09-30
in € thou­s ands

Personnel-related provisions

2022-09-30< 1 year> 1 year< 1 year> 1 year

25,24751,15023,986

46,519Warranty provisions

166,920

43,327

169,832

42,576

Other order-related provisions

122,338

1,352

108,214

2,831

Other provisions

25,02519,044

23,393

24,573

339,530

114,873

325,425

116,499

Other provisions include restructuring provisions and provisions for personnel adjustments totaling€ 20.5 million (previous year: € 20.2 million).
Personnel-related provisions mainly comprise the phased retirement scheme (“Altersteilzeit”) and longservice bonuses. In the case of provisions for phased retirement, the amount and maturity of the future
payments to be made to the beneficiaries are uncertain. Warranty provisions are recorded based on
past experience or on the basis of individual assessments and represent the legal and contractual
warranty obligations as well as goodwill commitments to customers. The provisions generally represent
amounts that will be payable within the next two fiscal years. Other contract-related provisions include
obligations for services still to be rendered on customer orders or parts of orders that have been billed,
obligations for service and maintenance contracts, and commission provisions. In these cases, theamount and timing of future expenses are dependent on completion of the orders concerned.

Voith Annual Report 2023
Consolidated Financial Statements
Notes to the consolidated balance sheet

22.

149

Bank loans and other interest-bearing liabilities
Financial liabilities include the following:in € thou­s ands

Current

Non-current

2023-09-30

Current

Non-current

2022-09-30

Bank loans

153,779

626,593

780,372

193,968

628,552

822,520

Financial liabilities from leases

35,271

88,660123,931

30,07071,640101,710

2

0

2

0

0

0

Derivatives used to hedge
financial transactions

5,046

404

5,450

332

0

332

Other interest-bearing liabilities

31,716

117,880

149,596

37,749138,817

176,566

225,814

833,537

1,059,351

262,119

839,009

1,101,128

Notes payable

Other interest-bearing liabilities contain obligations from the classification of non-controlling interests inlimited partnerships based on termination rights of holders of non-controlling interests and put options.
The Voith Group’s current and non-current bank loans are denominated in the following currencies:in € thou­s ands

2023-09-30

2022-09-30

Euro763,358

813,856

Indian rupee

14,429

0

116

3,019

2,469

5,645

780,372

822,520

US dollar
Other currencies

23.

Trade payables
Trade payables of € 34 thousand (previous year: € 266 thousand) are due after more than one year.

150

Voith Annual Report 2023
Consolidated Financial Statements
Notes to the consolidated balance sheet

24.

Other financial liabilities and other liabilities
Other financial liabilitiesin € thou­s ands

Current

Non-current

2023-09-30

Current

Non-current

2022-09-30

Derivatives used to hedge
operational transactions

23,772

7,567

31,33938,705

15,57454,279Personnel-related liabilities

123,305

3,127

126,432

101,363

2,981

104,344

Sundry financial liabilities

144,280

16,356160,636

140,317

19,866160,183

291,357

27,050318,407280,385

38,421

318,806

Personnel-related liabilities at fiscal year-end included outstanding annual bonus payments andoutstanding payments for wages, salaries and social security contributions.
Other liabilitiesin € thou­s ands

Current

Non-current

2023-09-30

Current

Non-current

2022-09-30

Tax liabilities

59,183

11,66370,846

61,784

11,63573,419Prepaid expenses

3,432

4,626

8,058

5,722

4,637

10,359Other liabilities

83,941

28,931

112,872

79,38928,043

107,432

146,556

45,220191,776

146,895

44,315191,210

Tax liabilities principally relate to sales taxes (VAT).

Voith Annual Report 2023
Consolidated Financial Statements
Notes to the consolidated cash flow statement

151

Notes to the consolidated
cash flow statement
Non-cash changes
Changes arisingfrom the acquisition/disposalof companies

Changes due
to currency
effects

Changes infair valuein € thou­s ands

2022-10-01

Cashchanges

Bank loans

822,520- 44,857

3,273

- 753

Financial liabilities from leases

101,710- 37,358

4,550- 3,164

0

2

0

0

Notes payable
Derivatives used to hedge
financial transactions
Other interest-bearing liabilities

Other financial receivables

Other
effects

2023-09-30

0

189

780,372

058,193

123,931

0

0

2

332

0

0

78

5,040

0

5,450

176,566

- 386

0

- 213

- 25,197- 1,174

149,596

1,101,128- 82,599

7,823- 4,052- 20,157

57,2081,059,351- 38,717- 9,4310

1,644- 2,020414- 48,110

1,062,411- 92,030

7,823- 2,408- 22,177

57,622

1,011,241

Non-cash changes
Changes arisingfrom the acquisition/disposalof companies

Changes due
to currency
effects

Changes infair value

Other
effects

2022-09-30

in € thou­s ands

2021-10-01

Cashchanges

Bank loans

546,724

259,300

17,185

- 846

0

157

822,520

Financial liabilities from leases

98,189- 32,421

7,989

1,507

0

26,446

101,710

1

-1

0

0

0

0

0

Notes payable
Derivatives used to hedge
financial transactions
Other interest-bearing liabilities

Other financial receivables

291

0

0

55

- 14

0

332

142,404- 9,873

46,306351- 3,515893

176,566

787,609

217,005

71,4801,067- 3,529

27,496

1,101,128- 26,397

1,923

0

382

- 14,621-4- 38,717

761,212

218,928

71,4801,449- 18,150

27,492

1,062,411

152

Voith Annual Report 2023
Consolidated Financial Statements
Notes on segment reporting

Notes on segment reporting
Information on the segment data
The business is managed according to the different products and business segments and corresponds
to the structure of internal reporting to the Board of Management of Voith Management GmbH.
EBIT adjusted for non-recurring items (extrapolation of result from increasing the carrying values upon
first-time consolidation (PPA depreciation) and restructuring expenses and other exceptional items)
forms the central performance indicator for the operating result. Reconciliation of EBIT adjusted for
non-recurring items to the Group’s result before taxes contains effects which are, as a rule, shownas other operating income and expenses, and depreciation and amortization in the consolidated
statement of income on account of their operating nature. In the course of calculating EBIT, these items
are adjusted as non-recurring effects in order to facilitate a better assessment of segments’ business
operations.
Segment information is generally based on the same presentation and measurement methods as theconsolidated financial statements. Intercompany sales are effected at market prices, and intersegment
transactions and business are all reported in accordance with the accounting policies used for the
consolidated financial statements.
In the Voith Group, the key indicator for assessing and managing an individual segment is return on
capital employed (ROCE). ROCE is calculated by bringing EBIT and the average capital employed
into relation with each other. Capital employed designates the funds tied up within the business witha view to generating sales. This essentially comprises property, plant and equipment and net working
capital. Calculating the ratio of a performance indicator from the statement of income (“EBIT”) to a figure
based on the balance sheet (“capital employed”) is in compliance with generally accepted standards
for holistic business management and with value-based management.
The capital employed on the reporting date is an average value derived from the values as at the end of
the fiscal year, as at the reporting date for the previous six-monthly financial statements and as at theend of the previous year. In contrast to the requirements of IAS 21, the assets and liabilities of foreignsubsidiaries are translated at the average exchange rate for the reporting year. Owing to the use of
averages, capital employed cannot be reconciled to the figures in the consolidated balance sheet on
any given reporting date.
Consolidation entries were taken into account in full in calculating capital employed.

Voith Annual Report 2023
Consolidated Financial Statements
Notes on segment reporting

153

Capital expenditures relate to intangible assets (excluding goodwill) and property, plant and equipment.
Furthermore, the remeasurements from IFRS 16 are also disclosed as investments. Additions due tobusiness combinations are not included.
Sales are broken down regionally, based on the customer’s registered office. Non-current assets,consisting of property, plant and equipment including rights of use, goodwill and other intangible
assets, are allocated based on the location of the asset.

Information on the activities of the segments presented
As a full-line supplier for equipping hydropower plants, the Group Division Hydro is one of the world’s
leading industrial partners for hydropower plant operators. This applies both to the field of electricity
generation and to the pumped storage of energy. Voith Hydro’s portfolio of products and services
covers the entire life cycle and supplies all major components for large and small hydropower plants:from generators, turbines, pumps, automation systems and digital solutions for smart hydropower rightthrough to aftermarket business in spare parts and maintenance services, as well as training services.
As a leading partner and pioneer in the paper industry, the Group Division Paper provides technologies,
products and services for the entire paper manufacturing process, all from a single source. A constantstream of innovations allows the technology group to optimize the paper manufacturing process
on an ongoing basis. Voith Paper focuses on developing resource-saving products which reducethe consumption of energy, water and fibers. Furthermore, the Group Division Paper offers a broad
service portfolio for all sections of the paper manufacturing process. The Company’s Papermaking 4.0
concept also allows papermakers to link up their equipment in the best possible way and improve theircompetitiveness through effective and secure use of the data generated.
The Group Division Turbo is a supplier of components and systems for intelligent drive technology anda provider of customized services. With innovative and smart products, Voith Turbo offers the highest
levels of efficiency and reliability. Customers from highly diverse industries, such as oil & gas, energy,
mining and mechanical engineering, ship technology, rail and commercial vehicles, rely on the advanced
technologies and digital solutions provided by Voith Turbo.

154

Voith Annual Report 2023
Consolidated Financial Statements
Segment information by business segment

Segment information bybusiness segment­H ydroin € millions­Paper­­Turbo2022 /23

2021 /22

2022 /23

2021 /22

2022 /23

2021 /22

1,189

1,048

2,239

2,196

1,994

1,557

2

4

22

20

8

7

1,191

1,052

2,261

2,216

2,002

1,564

EBIT

6

2

145

131

80

48

Depreciation andamortization of property,
plant and equipment andintangible assets 2)

23

23

59

59

61

50

Capital spending 3)

18

24

83

54

65

43

Segment goodwill

18

18

507

516

277

271

Sales with third parties
Sales withother segments
Segment sales, total

Average capital
employed

192

205

572

500

1,021

975

ROCE

2.9 %

1.0 %

25.4 %

26.2 %

7.8 %

5.0 %

Employees 4)

4,092

3,444

7,898

7,825

8,037

7,732

Sub-total of Hydro, Paper and Turbo.
Depreciation and amortization does not include depreciation and amortization recorded in the non-recurring result as it is not included in EBIT.
Without additions due to business combinations and financial assets.
4)
Statistical headcount on reporting date.
1)

2)

3)

Voith Annual Report 2023
Consolidated Financial Statements
Segment information by business segment

Total core business1)

Reconciliation

155

Total

2022 /23

2021 /22

2022 /23

2021 /22

2022 /23

2021 /22

5,422

4,801

84

80

5,506

4,881

32

31

- 32

- 31

0

0

5,454

4,832

52

49

5,506

4,881

231

181

14

19

245

200

143

132

25

23

168

155

166

121

22

22

188

143

802

805

54

63

856

868

230

230

1,785

1,680

12.9 %

10.8 %

20,02719,001

2,452

2,490

2,015

1,910

12.1 %

10.5 %

22,47921,491

Reconciliation of EBIT to the Group’s result before taxes:in € millions

2022 /23

2021 /22

EBIT

245

200

Non-recurring result

- 62

- 66

thereof PPA depreciation and amortization

- 25

- 12

thereof restructuring expenses

- 11

- 15

thereof expenses relating to other periods from legal disputes

0

- 18

thereof impairment losses on property, plant and equipment*

- 10

- 10

thereof other exceptional items

- 16

- 11

Other adjustments-1

2

Share of profit/loss from companies accounted for using the equity method-1-4Interest income/expense

- 24

- 37

Other financial result

021Result before taxes

157

116

* Further information on this in section 10. Property, plant and equipment.

156

Voith Annual Report 2023
Consolidated Financial Statements
Segment information by region

Segment information by region
External sales (registered office of customer)­H ydro­Paper­­Turbo

ReconciliationTotal

in € millions

2022 /23

2021 /22

2022 /23

2021 /22

2022 /23

2021 /22

2022 /23

2021 /22

2022 /23

2021 /22

Germany

48

39

193

186

493

408

44

46

778

679

Foreigncountries

1,141

1,009

2,046

2,010

1,501

1,149

40

34

4,728

4,202

thereof Europe

360

227

587

570

758

554

7

7

1,712

1,358

thereof
Americas

403

379

650

584

237

182

26

22

1,316

1,167

thereof Asia

302

329

778

835

426

340

6

5

1,512

1,509

· of which China

120

121

536

615

253

194

0

1

909

931

thereof others

76

74

31

21

80

73

1

0

188

168

1,189

1,048

2,239

2,196

1,994

1,557

84

80

5,506

4,881

Non-current assets
in € millions

2023-09-30

2022-09-30

Germany

781

784

1,395

1,457

754

767

· of which Switzerland

292

298

thereof Americas

293

301

·o
 f which USA

244

249

thereof Asia

343

383

·o
 f which China

253

290

thereof others

5

6

2,176

2,241

Foreign countries
thereof Europe

Voith Annual Report 2023
Consolidated Financial Statements
Other notes

157

Other notes
Contingent liabilities, contingent assets andother financial obligations
Appropriate provisions have been recognized in the relevant Group companies to cover potential
financial obligations arising from taxation, legal and arbitration proceedings.
Over and above this there are risks from tax-related legal disputes and ongoing taxation proceedingsin Brazil. There are risks of € 17.9 million relating to income taxes. Likewise, tax risks in connection with
VAT, among other things, were identified; no estimate of the financial effect is disclosed for reasons ofpracticability, as it is impossible to make any reliable estimate. The current assessment of the situationis that the proceedings will be brought to a successful conclusion and, therefore, there will be nooutflow of economic resources.
Owing to the ongoing tax field audit of German companies, further changes may be made to tax items.
There are also risks related to legal disputes amounting to € 29.9 million (previous year: € 30.8 million).
Other financial obligations from purchase commitments for capital expenditures amount to € 31.4 million (previous year: € 32.4 million).

158

Voith Annual Report 2023
Consolidated Financial Statements
Other notes

Contingent liabilities
The contingent liabilities listed below are stated at face value. No provisions were recognized for thesecontingencies, as the probability of occurrence is regarded as low:in € thou­s ands

Guarantee obligations
Provision of collateral for third-party liabilities

2023-09-30

2022-09-30

3,389

2,442

0

500

3,389

2,942

Most of the guarantee obligations expire in 2026.

Leases
The rental and lease agreements in the Voith Group mainly relate to buildings, passenger vehicles andmachinery. The agreements mainly have terms of one to 15 years. Some companies have the optionof extending their rental agreements.
Liabilities of € 35,999 thou­sand in connection with lease agreements were repaid (previous year:€ 31,617 thou­sand). Including the interest payments, cash outflows totaled € 37,358 thou­sand (previous
year: € 32,421 thou­sand).
The interest expenses from the compounding of lease liabilities are disclosed in the financial result andamounted to € 1,830 thou­sand in the 2022/23 fiscal year (previous year: € 881 thou­sand).
Lease expenses include expenses for short-term leases of € 12,322 thou­s and (previous year:€ 10,650 thou­sand) and expenses for leases of low-value assets of € 1,118 thou­sand (previous year:€ 3,543 thou­sand) that are disclosed in other operating expenses.
Future cash outflows of an immaterial amount were not included in the lease liabilities as it is notreasonably certain that the lease agreements will be extended or not terminated.
Income from the sublease of rights of use as well as gains and losses from sale-and-leaseback
transactions are immaterial in the Voith Group.

Voith Annual Report 2023
Consolidated Financial Statements
Other notes

159

Additional information on financial instruments
Carrying amounts, amounts recognized in the balance sheet and fair values by measurement category as at September 30, 2023.
Amount recognized in the balance sheet inaccordance with IFRS 9

Not assigned
to an IFRS 9
measurement
category

IFRS 9measurement
category

Carrying
amount2023-09-30

Amortized
cost

Cash and cash equivalents

AC412,842

412,842

412,842

Trade receivables

AC

870,175

870,175

870,175

Contract assets

n. a.

in € thou­s ands

Fair value
through
equityFair value
through
profit or loss

Fair value
2023-09-30

Assets:Other financial assets and securities· F inancial investments· Loans

660,317

AC

54,27354,273
125,533

AC

125,533

FVOCI/n. a.

8,367· Investments (financial investments)

FVTPL

34,966· S ecurities

FVOCI

16,307· Investments (strategic)

660,317660,317

239,446

Derivative financial instruments

54,273
125,533
132

8,235
34,966132
34,966

16,307

16,30744,434· Forward exchange contracts

FVTPL· Forward exchange contracts(fair value hedges)

n. a.

11,816

11,816

11,816· Interest rate swaps (cash flow hedges)

n. a.

14,58014,58014,580· F inancial receivables

AC

26,992

26,992

26,992· S undry financial assets

AC

72,68072,68072,680Trade payables

AC

651,637

651,637

651,637

Bank loans/notes

AC780,374

780,374

754,979

Financial liabilities from leases

n. a.

123,931

Other receivables

18,03818,03818,03899,672

Liabilities:

Derivative financial instruments

123,931

36,789· Forward exchange contracts

FVTPL

19,550· Forward exchange contracts(fair value hedges)

n. a.

17,23917,23917,239· Forward exchange contracts(cash flow hedges)

n. a.

0

0

0

Other interest-bearing liabilities· Other interest-bearing liabilities· L iabilities arising from the acquisition of
investment shareholdings
Sundry financial liabilities

19,55019,550149,596
AC72,950

FVTPL

76,646

AC

287,068

72,950205,689
65,712

287,068

10,934

76,646
287,068

160

Voith Annual Report 2023
Consolidated Financial Statements
Other notes

Carrying amounts, amounts recognized in the balance sheet and fair values by measurement category as at September 30, 2022
Amount recognized in the balance sheet inaccordance with IFRS 9IFRS 9measurement
category

Carrying
amount2022-09-30

Amortized
costAC

411,892

411,892

Trade receivables

AC882,037

882,037

Contract assets

n. a.

715,432in € thou­s ands

Fair value
through
equityFair value
through
profit or loss

Not assigned
to an IFRS 9
measurement
category

Fair value
2022-09-30

Assets:Cash and cash equivalents

Other financial assets and securities

411,892
882,037
715,432

715,432

254,161· F inancial investments

AC53,20353,20353,203· Loans

AC

124,391

124,391

124,391· Investments (strategic)

n. a.

10,966· Investments (financial investments)

FVTPL

49,224· S ecurities

FVOCI

16,377

Derivative financial instruments

137

10,82949,224

137
49,224

16,377

16,37764,951· Forward exchange contracts

FVTPL

27,91427,91427,914· Forward exchange contracts(fair value hedges)

n. a.

22,43022,43022,430· Interest rate swaps (cash flow hedges)

14,607

14,607

14,607

Other receivables

85,662· F inancial receivables

AC

20,647

20,647·S
 undry financial assets

AC65,01565,01565,015

AC729,446

729,446

729,446

Bank loans/notes

AC822,520

822,520

Financial liabilities from leases

n. a.

101,710

Liabilities:
Trade payables

Derivative financial instruments

783,021
101,71054,611· Forward exchange contracts

FVTPL

28,214· Forward exchange contracts(fair value hedges)

n. a.

26,165

26,165

26,165· Forward exchange contracts(cash flow hedges)

n. a.

232

232

232

Other interest-bearing liabilities· O ther interest-bearing liabilities· L iabilities arising from the acquisition of
investment shareholdings
Sundry financial liabilities

28,21428,214

176,566
AC

98,267

FVTPL

78,299AC

264,527

98,267

184,836
67,362

264,527

10,93778,299264,527

Voith Annual Report 2023
Consolidated Financial Statements
Other notes

161

Fair value hierarchy for the financial assets and liabilities recognized at fair value listed in the table above:in € thou­s ands

2023-09-30

Level 1

Level 2

Level 3

16,307

16,30700Derivative financial instruments

44,434044,4340Investments

35,0980035,098Derivative financial instruments

36,789036,7890Liabilities arising from the acquisitionof investment shareholdings

76,6460076,6462022-09-30

Level 1

Level 2

Level 3

16,377

16,37700AssetsSecurities

Equity and liabilitiesin € thou­s ands

AssetsSecurities
Derivative financial instruments

64,951064,9510Investments

49,3610049,361

Derivative financial instruments

54,611054,6110Liabilities arising from the acquisitionof investment shareholdings

78,2990

078,299Equity and liabilities

The three-level fair value hierarchy divides the input factors used in the measurement techniques tomeasure the fair value into three levels, as follows:
Level 1:
Input factors quoted in active markets accessible to the Company for identical assets or liabilities on
the measurement date.
Level 2:Other inputs than those at level 1 for which observable market data which relates directly or indirectly
to the financial assets or liabilities is available.
Level 3:
Input factors for which there is no observable market data.
Within the Group, transfers between fair value hierarchy levels are performed at the end of the reporting
period. No transfers were made between the levels of the fair value hierarchy in the 2022/23 and2021/22 fiscal years.

162

Voith Annual Report 2023
Consolidated Financial Statements
Other notes

The fair values of derivative financial instruments allocated to level 2 of the fair value hierarchy aretaken from the daily observable exchange rates, associated forward rates and the term structure ofinterest rates. In addition, fair value measurement includes both the counterparty credit risk and theGroup’s own credit risk. Input factors that take account of counterparty credit risk can be obtained fromobservable credit default swaps (CDS) from the banks participating in the respective transaction. At theVoith Group, the market CDS rates were used to calculate the Group’s own credit risk.
€ 35 million (previous year: € 49 million) of the investments allocated to level 3 of the fair value hierarchy
relate to those held by the Group as investments with a view to generating income. These investments
are therefore measured at fair value through profit or loss (FVTPL). The fair values of the investments
were determined by firstly calculating the fair value for each investment resulting in each case fromthe total of the shares held and cash and cash equivalents available as at the measurement date. The
equity value of the respective investment is determined on the basis of a market-oriented measurement
approach, the multiplier method, and is calculated in each case from the total value of the Company
less the net financial position. In the present case, multipliers derived from representative externaltransactions are used, taking account of current developments up to the measurement date. These
multipliers are multiplied by the average of operating results (EBITDA) achieved in the past in relation
to the total enterprise value. In a second step, the fair values of the investments attributable to theVoith Group are calculated in accordance with the existing ownership structure. One investment in thismeasurement category with a market value of € 12.5 million was sold in the previous year.
Furthermore, investments that the Group would like to hold over the long term for strategic purposes,
and for which it exercised the OCI option, are allocated to level 3 of the fair value hierarchy. Both in thecurrent year and in the previous year, market values of an immaterial amount were determined for theseinvestments. No dividends were recognized in profit or loss from the equity investments designated as
FVOCI in the 2022/23 fiscal year.
A rise (fall) in the projected figures or falling (rising) interest rates would give rise to an increase (decrease)in the fair value of the investment.
The fair values of liabilities arising from business combinations that are allocated to level 3 relate
to put options held by non-controlling shareholders as well as contractually agreed purchase priceinstallments for the future acquisition of shares. Contractually agreed purchase price installments aremeasured through profit or loss. The fair values of purchase price installments that are not contractuallyspecified are measured directly in equity. The fair values were determined on the basis of the current
planning prepared by management using the discounted cash flow method. The planning assumptions
are adjusted to reflect the current information available. A risk-adjusted discount rate (WACC) wasused for discounting. Agreements concluded under company law generally contain a fixed formulafor calculating the purchase price in the event of the put options being exercised. In this respect,
the purchase prices result from the gross business values of the investments determined using themultiplier method in accordance with a contractually agreed definition, minus the net debt, multiplied

Voith Annual Report 2023
Consolidated Financial Statements
Other notes

163

by the non-controllers’ shareholdings. If the put options can be exercised only at a later date, thepurchase prices are discounted to the reporting date using an interest rate (WACC) appropriate for theterm involved.
If the business value of the underlying companies were to increase (decrease), this would lead to anincrease (decrease) in the liabilities from the acquisition of investment shareholdings. In contrast, rising(falling) interest rates would lead to a fall (rise) in the liabilities arising from the acquisition of investment
shareholdings.
The changes in the fair values of assets and liabilities classified as level 3 in the fair value hierarchy
were as follows:in € thou­s ands

Balance, October 1
Acquisition of investments
Exercise of put options

2023-09-30

2022-09-30- 28,938

8,761

9,202

10,101

5,550

15,092

Disposal of investments FVTPL- 18,533- 26,478

Disposal of investments FVOCI-50

Put options from business combinations

0- 46,222

Change in valuation policy

0137- 4,927

6,081

Fair value changes in liabilities from the acquisition of investment shareholdings
recorded in the financial result

Fair value changes of the investments recorded in the financial result

20

329

Fair value changes in liabilities from the acquisition of investment shareholdings
not affecting net income- 3,917

3,261

Balance, Septem­b er 30- 41,548- 28,938

The fair values of financial assets and financial liabilities measured at cost or amortized cost, which need
to be determined to meet disclosure requirements, are calculated as follows:
Cash and cash equivalents, trade receivables and other financial receivables are subject to floatinginterest and fall due within one year. For this reason, their carrying amounts approximate their market
values on the reporting date.
Because trade payables and other financial liabilities generally have short residual terms, their carrying
amounts approximate the market values.
The market value of the note loan of € 395 million (previous year: € 419 million) is calculated in the same
way as the market values of unlisted bonds, bank loans and other financial liabilities as the present
value of the payments associated with the liabilities, based on the effective yield curve and Voith GmbH& Co. KGaA’s credit spread curve determined for different currencies (fair value hierarchy level 2).
The market value of other financial liabilities totaling € 140 million (previous year: € 120 million)
was determined based on internal planning data. These are measured using the discounted cash164

Voith Annual Report 2023
Consolidated Financial Statements
Other notes

flow projections taken from the latest business planning prepared by management. The planningassumptions are adjusted to reflect the current information available (fair value hierarchy level 3).
Net gains and losses recognized in profit or loss for each measurement category of financial instruments:in € thou­s ands

2022/232021/22

Financial assets measured at amortized cost (AC)- 13,430

65,777572

529

Financial assets and liabilities measured atfair value through profit or loss (FVTPL)

10,57014,839Financial liabilities measured at amortized cost (AC)- 19,084- 43,599

Financial assets measured at fair value throughother comprehensive income (FVOCI)For details of net gains and losses from financial assets recognized in other comprehensive income,refer to note 19.
Net gains and losses recognized on financial assets measured at amortized cost (AC) mainly relate totrade receivables.
Interest income of € 21,925 thou­sand (previous year: € 10,653 thou­sand) and interest expenses of€ 40,353 thou­sand (previous year: € 16,166 thou­sand) for financial assets or financial liabilities relate
to those assets or liabilities measured at amortized cost. No interest was recorded for financial assets
measured at fair value through other comprehensive income or for financial assets measured at fairvalue through profit or loss.
Offsetting of financial instruments
The following table shows the volume that can potentially be offset under master netting agreements.
The agreements do not meet the criteria required for net presentation in the balance sheet due to thefact that the Group does not have a present legal right to offset the amounts recognized, as the rightto offset is conditional on the occurrence of future events.
Derivative financial instruments
Assetsin € thou­s ands

Equity and liabilities

2023-09-30

2022-09-30

2023-09-30

2022-09-30

Gross presentation in balance sheet

44,43464,95136,78954,611

Volume that can potentially beoffset against under master netting
agreements

22,11731,277

22,11731,277

Potential net amount

22,31733,674

14,672

23,334

Voith Annual Report 2023
Consolidated Financial Statements
Other notes

165

Collateral
As at the reporting date, the financial assets include non-current securities totaling € 6,497 thou­sand (previous year: € 7,118 thou­sand) that are used to cover future pension obligations. Furthermore,€ 115 thou­sand of the sundry financial assets (previous year: € 114 thou­sand) has been provided ascollateral for liabilities and contingent liabilities. They may be drawn on if the underlying obligations are
not fulfilled or if the contingent liabilities are realized.
Assets of € 131 thou­sand (previous year: € 159 thou­sand) have been provided as collateral for financial
liabilities.

Risk management
Principles of financial risk management
The Voith Group is a global business and is exposed to risks arising from changes in interest rates andexchange rates in the course of its ordinary business activities which affect its liabilities, assets andtransactions. These risks could affect its net assets, financial position and earnings position. The aimof financial risk management is to manage and limit these risks.
The principles of the Group’s financial policy are laid down by the Voith GmbH & Co. KGaA Board ofManagement and monitored by the Supervisory Board. Corporate Finance, a corporate department ofVoith GmbH & Co. KGaA, implements the financial policy and regularly reports to the Chief Financial
Officer on the financial position of the Group and its current risk exposures. Certain financial transactions
require special approval by the Corporate Board of Management. Long-term refinancing is obtained byVoith GmbH & Co. KGaA.
Derivative financial instruments are used to limit the currency and interest rate risks arising both fromthe operating business and from the resultant financing requirements. These instruments are used inaccordance with clearly defined, consistent, Group-wide guidelines. Compliance with these guidelines
is verified on an ongoing basis. Hedge transactions and cash investments are placed only with financial
institutions that have first-class credit ratings.
Credit risk
The Voith Group does business only with recognized, creditworthy third parties. Customers who wish
to do credit-based business with the Group are subject to creditworthiness verification.
Cash and cash equivalents and other financial assets:
For the purposes of internal risk management, other financial assets consist essentially of cash andshort-term securities. Counterparty default risks associated with term deposits are limited by selecting

166

Voith Annual Report 2023
Consolidated Financial Statements
Other notes

solvent banking partners and by spreading cash across multiple counterparties. For banks, a ratingsbased limit (derived from credit default swaps/rating) is monitored constantly. If a defined threshold isexceeded with the CDS rates, the limits are reduced and funds have to be allocated. In addition, theVoith Group invests in securities and monitors the associated risks of these centrally. The low credit
risk exemption is applied. The Voith Group allocates cash investments primarily to business partners
with investment grade ratings. In addition, all counterparties are continually monitored using a risk
management system based on CDS rates.
With respect to credit risk arising from the Group’s other financial assets, the Group’s exposure to credit
risk arises from default of the counterparty, with a maximum exposure equal to the carrying amountof these instruments. For details of financial guarantees, please refer to the discussion of contingent
liabilities. This kind of loss can occur if individual business partners fail to meet their contractual
obligations. As a rule, no collateral exists for such an eventuality.
For determining the expected credit losses (ECL) for other financial instruments, Voith uses an evaluation
model in which determination of the ECL is based on probabilities of default observable in the capital
market and that are applied in each case to the individual counterparties and the associated exposures.
Market-orientated probabilities of default for the relevant counterparties are derived on the basis of
the corresponding credit default swap (CDS) rates that reflect the future expected credit losses. In the
consolidated financial statements, the ECL for other financial instruments is of secondary importance,
which means that no further quantification is necessary.
A significant rise in credit risk is assumed if the financial assets are more than 30 days overdue. An
event of default is assumed if the financial assets are more than 90 days overdue. Objective evidenceof impairment exists, for example, in a situation where the debtor is in significant financial difficulties orthere has been a breach of contract such as an overdue payment.
Trade receivables:
Credit risk arising from the delivery of goods and services stems from manufacturing risks and receivable
risks. Management of these risks is governed by rules that are binding throughout the Voith Group. The
maximum default risk is limited to the carrying amount of trade receivables, which is € 870,175 thou­sand(previous year: € 882,037 thou­sand). The maximum default risk for contract assets is € 660,317 thou­sand(previous year: € 715,432 thou­sand). Based on the collateral held, the maximum default risk for tradereceivables is reduced by € 152,455 thou­sand (previous year: € 105,331 thou­sand) and that for contract
assets by € 92,775 thou­sand (previous year: € 75,755 thou­sand).
All orders above a defined contract value are subject to general risk assessment requirements. Without
special permission from the relevant decision-making bodies, Group companies do not accept
unsecured orders from customers whose credit rating is below a defined threshold and who cannot
furnish an adequate guarantor.
Political manufacturing and receivables risks with a Euler Hermes Country Risk Level of 3 or higher
must, as a rule, be hedged, unless approval is issued by the decision-making bodies in individual cases.
Further risk assessment is also activated for orders upward of defined contract values. Necessary credit

Voith Annual Report 2023
Consolidated Financial Statements
Other notes

167

insurance is obtained via export credit agencies (ECAs), in the private insurance market or by meansof bank products.
The impairment model in IFRS 9 involves a risk allowance for expected credit losses (ECL). This meansthat the accounting method is close to the forward-looking credit risk management and necessitatesa model for measuring expected credit losses on trade receivables and also for contract assets thattakes account of macroeconomic factors (“forward-looking information”). IFRS 9 does not contain any
regulations on the specific design of the model.
IFRS 9 does not permit mere extrapolation of credit losses observed in the past, which means that acertain likelihood of default exists even for customers who have always had a first-class rating.
Voith uses a simplified evaluation model in which determination of the ECL is based on probabilities ofdefault observable in the capital market and that are applied in each case to the portfolio of receivables
and the contract assets (exposure) for each individual region and Group Division. In this context,
allocation of total exposure to the relevant regions is derived from the regional distribution of sales in thepast fiscal year. Market-orientated probabilities of default for the relevant regions and Group Divisions
are derived on the basis of the corresponding credit default swap (CDS) rates that reflect the future
expected credit losses. Any impaired and hedged receivables still contained in the exposure are taken
into account as necessary.
In principle, expected credit losses should be determined at the level of individual instruments, but,for the purpose of simplification, clustering is deemed permissible and is customary in practice. With
regard to clustering, it should be noted that the clusters must be comprised of financial instrumentswith homogeneous characteristics. In this respect, the assumption is made that each of the outstanding
receivables have similar risk features and are thus subject to similar default probabilities. Voith performs
clustering according to the Group Divisions Hydro, Paper, Turbo and Others, and according togeographical regions.
The following structure of external default risk rating classes is derived from the ECL model:in € thou­s ands

External
ratingBreakdown ofreceivables

Gross carrying
amount*Impairment
loss

Net carrying
amountLoss rate

AAA to BBB-

88 %1,458,921- 8,147

1,450,774

0.56 %

2023- 09- 30
Low riskMedium risk
High risk

BB+ to BB-

6%97,784-638

97,1460.65 %

B+ to B-

6%

97,665- 6,641

91,0246.80 %AAA to BBB-

91 %1,553,327- 12,538

1,540,789

0.81 %

BB+ to BB-

7%61,003- 739

60,2641.21 %

B+ to B-1%

117,110- 4,750

112,360

4.06 %

2022- 09- 30
Low riskMedium risk
High risk* Gross carrying amount less impairments and without taking account of deduction of provisions on the assets side.

168

Voith Annual Report 2023
Consolidated Financial Statements
Other notes

The impairment model applied is based on an event of default of the receivable after a maturity of
365 days. None of the financial instruments in the ECL has a credit rating impeding their use.
Prior to application of the model at Group level, the Voith companies examined the portfolio ofreceivables with regard to objective evidence of impairment, such as delayed payment on the part ofthe debtor for no apparent reason, significant levels of debt or breach of contract. The gross carrying
amount of the impaired receivables from customers is ultimately derecognized when the debtor has
become insolvent and insolvency proceedings have been opened.
The Voith Group is not exposed to any material concentration of risks. Corporate policy is to avoid
concentration of credit risk in a single financial institution. Instead, the Group invests with a variety ofcreditworthy financial institutions. The Group’s customer structure is not materially concentrated in any
particular geographic region. The Group tests doubtful accounts for impairment considering certain
customers, historical trends, branches of industry and various other information.
Liquidity risk
To ensure that it can always meet its financial obligations, the Voith Group has negotiated sufficient cashlines and syndicated credit facilities with its banking partners.
In February 2020, Voith took out a note loan of € 400 million with terms of five, seven and ten years.
Fixed rate interest (€ 169 million) or floating rate interest on the basis of the 6M Euribor (€ 231 million)
is payable on the tranches. The variable interest was fixed in the 2021/22 fiscal year by means ofinterest rate swaps. Of the long-term loans amounting to € 200 million taken out in the 2021/22 fiscal
year, floating interest based on the Euribor is payable on € 100 million and fixed interest on the other€ 100 million. No new long-term loans were taken out in the 2022/23 fiscal year.
The euro loan of € 600 million successfully refinanced in October 2022 was extended by one year in the2022/23 fiscal year, as scheduled. The credit line has not been drawn on and is available as a strategic
liquidity reserve until 2028, plus one renewal option until 2029. It contains an option to increase thevolume of the facility up to a maximum of € 800 million subject to the banks’ consent.
The revolving syndicated loan in China, which was refinanced in 2019, will be available for financing
local working capital until June 2024; it is for an amount of RMB 1,400 million. This facility is currently
not being utilized.
The credit facilities are subject to the customary market conditions and contractual terms and conditions
based on Voith’s rating. As in previous years, all contractual terms and conditions were complied within full in the 2022/23 fiscal year. The rating given by Moody’s rating agency remains unchanged at Ba1
stable.
The liquidity of Group companies is ensured by means of cash pools, intercompany loans and theallocation of external bank credit lines to individual operating units. Corporate Finance producesmonthly finance status reports for the entire Group. Balances of central bank and cash pool accounts
and bank guarantees are available on a daily basis.

Voith Annual Report 2023
Consolidated Financial Statements
Other notes

169

The table below lists the undiscounted, contractually agreed cash outflows for financial instruments:in € thou­s ands

2023-09-30

Cash flows< 1 year

Cash flows
1–5 years

Cash flows> 5 years

Trade payables

651,637

651,60341

0Bank loans/notes

780,374

175,504

617,775

46,847

Financial liabilities from leases

123,931

34,951

74,16420,940

Other interest-bearing liabilities

149,596

31,716

74,232

43,648Other financial liabilities

287,068

267,586

18,860622

Derivative financial instruments

36,789· Outflows

709,518

187,938

0· Inflows- 676,918- 175,037

02,029,395

1,193,960

797,973

112,0572022-09-30

Cash flows< 1 year

Cash flows
1–5 years

Cash flows> 5 yearsin € thou­s ands

Trade payables

729,446

729,445282

0Bank loans/notes

822,520

203,734

601,073

48,862Financial liabilities from leases

101,71030,66862,1999,865

Other interest-bearing liabilities

176,566

39,02664,70673,951Other financial liabilities

264,527

243,986

20,7602,087

Derivative financial instruments

54,611· Outflows

789,226

175,841578· Inflows- 748,185- 154,494- 501

1,287,900

770,367

134,842

2,149,380

Solvency is ensured and liquidity managed using cash equivalents and short-term securities which canbe transformed into cash at any time.
Derivatives include cash outflows for derivative financial instruments with negative market values forwhich gross cash settlement has been agreed. The cash outflows for these financial derivatives arematched by corresponding cash inflows which are shown separately in the table above under inflows
and outflows (gross). On the other hand, where a net cash settlement is effected, cash outflows arepresented on a net basis.
There are no expectations that cash flows presented in the maturity analysis could be incurredsignificantly earlier, or that there will be significant changes to the cash flow amounts.

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Voith Annual Report 2023
Consolidated Financial Statements
Other notes

Financial market risk
Foreign exchange risk:
Its global production and trading activities expose the Voith Group to risks arising from fluctuations
in exchange rates. Foreign exchange risks exist in particular wherever receivables, liabilities, cash
and cash equivalents, and orders received (fixed obligations/forecast transactions) are or will bedenominated in a currency other than the functional currency of the Group company concerned.
Most currency hedging is undertaken by Corporate Finance and its Regional Finance Center. Transaction
risks arising from the international delivery of goods and services are mainly limited by forward exchange
contracts. In general, all foreign currency transactions at the Voith Group are hedged. Major balance
sheet items and orders are hedged individually within the framework of hedge accounting (full fair value
method). Based on this, the foreign currency risk essentially corresponds to the nominal value of theforward exchange contracts.
In the project business, both the hedge relationship and the risk management objectives and strategies
must be documented in respect of the underlying hedged item or transactions before external hedges
are entered into.
Hedges must be highly effective to be in compliance with the Voith Group’s risk management strategy.
Where hedges are demonstrated to be effective, the transactions qualify for hedge accounting. The
Group uses the dollar offset and critical term match method to assess whether the derivative designatedin each hedge will probably be effective and has been effective. As a result, fluctuations in the exchange
rate do not affect profit or loss, nor do they influence project costing.
The main causes for these hedges being ineffective can be firstly the impact of the credit risk of thecounterparties and the Group on the fair value of the forward exchange contracts that are not reflectedin the change in the fair value of the hedged cash flows and that are attributable to the change in theexchange rates, and secondly changes in the timing of the hedged transaction.
In the Voith Group, derivative financial instruments are traded externally by Corporate Finance on behalfof Group companies. Group companies in countries subject to foreign exchange restrictions hedge theircurrency risks locally. A Group-wide treasury management software tool is used for central scheduling,
monitoring and documentation of all foreign currency hedges entered into by Corporate Finance orGroup companies.
Changes in the US dollar exchange rate are significant for the Voith Group. The net USD exposureamounted to € 125 million as at September 30, 2023 (previous year: € 191 million). Based on therelevant balance sheet items, the effects on the net result and consolidated equity are as follows: if
the US dollar falls by 5 %, the result before taxes increases by € 873 thou­sand (previous year: increaseof € 652 thou­sand) and other comprehensive income increases by € 1,710 thou­sand (previous year:
increase of € 3,464 thou­sand). If, on the other hand, the US dollar rises by 5 %, the result before taxes
decreases by € 873 thou­sand (previous year: decrease of € 652 thou­sand) and other comprehensive

Voith Annual Report 2023
Consolidated Financial Statements
Other notes

171

income decreases by € 1,710 thou­sand (previous year: decrease of € 3,464 thou­sand). In addition,changes in the CNY exchange rate are also material within the Voith Group. The CNY net exposure
included in the sensitivity analysis for the first time as at September 30, 2023, amounted to € 50 million
as at September 30, 2023. The effects on the net result and consolidated equity are, taking accountof the relevant balance sheet items, as follows: if the CNY falls by 5 %, the result before tax decreasesby € 3,036 thou­sand, and other comprehensive income by the corresponding amount. If, on the other
hand, the CNY appreciates by 5 %, the result before taxes and, correspondingly, other comprehensive
income, increase by € 3,036 thou­sand. The exposure to SEK amounting to € 63 million (previous year:€ 112 million) was not included in the sensitivity analysis.
Interest rate risk:
The Voith Group’s exposure to interest rate risks arising from external refinancing is analyzed andmanaged centrally by Corporate Finance. Medium- to long-term assets and liabilities with fixed interest
rates are the main source of interest rate risks at the Group, as changes in market rates of interest
can cause the value of a financial instrument to fluctuate. The risk to the market value of fixed-interest
receivables and liabilities and the interest rate risk with floating-rate receivables and liabilities is hedged
on a case-by-case basis, for example by means of interest rate swaps and, where appropriate, hedge
accounting is applied.
The Voith Group’s risk management strategy requires highly effective hedges. When demonstrated
to be effective, the hedge transactions qualify for hedge accounting status. The critical term match
method and the dollar offset method are used to prove the effectiveness of the hedge. As a result,interest rate fluctuations do not affect the interest result.
The main causes for these hedges being ineffective can be firstly the impact of the credit risk of thecounterparties and the Group on the fair value of the interest rate derivatives that are not reflected in
the change in the fair value of the hedged interest payments, and secondly changes in the timing of
the hedged exposures.
The relevant asset items are essentially cash at banks that is invested in the money market and/or isused to fund the existing cash pools. The Group companies that participate in the cash pool operate adaily zero-balancing policy and therefore have no exposure to external interest rate risks.
On the cost side, interest rate risks arise from a note loan and a variety of bank loans.

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Voith Annual Report 2023
Consolidated Financial Statements
Other notes

The carrying amounts of the Group’s significant financial instruments that are exposed to interest raterisks are grouped by their contractually agreed maturities in the following table:
Less than
1 year

1–2 years

2–3 years

3–4 years

4–5 years

More than
5 years

Total

Cash and cash equivalents

412,842

0

0

0

0

0

412,842

Bank loans

153,043

100,711

711

711

588

0

255,764736

200,586

21,719261,028

737

39,802524,608

Less than
1 year

1–2 years

2–3 years

3–4 years

4–5 years

More than
5 years

Total

Cash and cash equivalents

411,892

0

0

0

0

0

411,892

Bank loans

155,236

101,109

711

711

711

887

259,365

38,732

737

200,480

21,711

260,967

40,528563,1552023-09-30
in € thou­s ands

Floating interest rate

Fixed interest rate
Bank loans

2022-09-30
in € thou­s ands

Floating interest rate

Fixed interest rate
Bank loans

The variable part of the note loan is presented in the fixed interest liabilities as it has been hedged using
interest rate swaps. In the event of an increase in the interest rate of 100 basis points, the market valueof the interest rate swaps, and correspondingly the other comprehensive income, would increase by€ 4.4 million (previous year: € 6.3 million). A decrease by 100 basis points would bring about a reductionin the market values of the interest rate swaps and correspondingly of the other comprehensive incomeof € 4.5 million (previous year: € 6.3 million).
The interest result from the other material floating-rate financial instruments would have been € 1.6 million
higher (lower) (previous year: € 1.5 million higher (lower)) if the market rate of interest had been 100 basis
points higher (lower) as at September 30, 2023. This effect mainly results from floating-rate financial
instruments denominated in CNY (€ 1.3 million, previous year: € 1.4 million) and denominated in EUR(€ -1.6 million, previous year: € -1.7 million). The remainder breaks down into immaterial amounts invarious currencies, in particular USD, INR, BRL and CAD.
Risks relating to securities and stock prices:
The Voith Group holds securities in the “at fair value through other comprehensive income” (FVOCI)
measurement category of € 16 million (previous year: € 16 million). A 10 % change in the underlying stock
prices would cause equity to change by 10 % of the carrying amount of the stocks concerned.
It should be noted that all existing stock price risks are analyzed continuously and suitable counteraction
is taken accordingly.

Voith Annual Report 2023
Consolidated Financial Statements
Other notes

173

Commodity price risk:
The Voith Group is exposed to risks arising from changes in commodity prices, as these also affect mostof the semi-finished goods that it needs. Voith’s Corporate Purchasing regularly reviews the nature,
volume and scheduling of the Group’s materials requirements. On request by Corporate Purchasing andin consultation and agreement with Group companies, suitable forward commodity contracts can bearranged by Corporate Finance to limit any latent commodity price risks. The Group had no commodity
contracts during the fiscal year.
Hedge relationships:
The following items are used to hedge foreign exchange and interest rate risks:2023-09-30

Nominal values*in € thousands< 1 year> 1 year< 1 year> 1 year< 1 year> 1 year

Forward exchange contracts(fair value hedges)

425,236

157,787

9,366

2,450

12,407

4,832

Forward exchange contracts(cash flow hedges)

0

0

0

0

0

0

Interest rate swaps(cash flow hedges)
Other derivatives

Positive market values

231,500

Negative market values

14,58000867,649

124,164

14,436

3,602

16,4113,139

1,292,885

513,451

23,802

20,632

28,8187,971

2022-09-30

Nominal values*in € thousands< 1 year> 1 year< 1 year> 1 year< 1 year> 1 year

Forward exchange contracts(fair value hedges)

457,869

143,191

13,404

9,026

19,752

6,413

Forward exchange contracts(cash flow hedges)

1,237

0

0

0

232

0

0

231,500

0

14,60700821,786

211,912

17,737

10,177

19,0539,161

1,280,892

586,603

31,14133,81039,037

15,574

Interest rate swaps(cash flow hedges)
Other derivatives

Positive market values

Negative market values

Positive market values are disclosed at the reporting date as other financial assets and negative market
values as financial liabilities (in the case of financial transactions) or as other financial liabilities (in thecase of operational transactions).

* Nominal values refer to the volume of the hedged transaction in local currency, translated at the closing rate.

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Voith Annual Report 2023
Consolidated Financial Statements
Other notes

The market values of the forward exchange contracts were determined as present values of the cash
flows taking account of the respective contractually agreed forward rates and the forward rate on thereporting date. The average rates of the forward exchange contracts entered into for material currency
pairs are as follows as at September 30, 2023:
Average hedged rates

USD/EUR< 1 year> 1 year

1.04

1.14

CNY/EUR

7.84

9.01

BRL/USD

5.23

5.65

CNY/USD

6.95

6.71

INR/USD

83.33

87.64

The average interest rate for the interest rate hedges is 1.003 %.
Fair value hedges:
The Group uses fair value hedges primarily to hedge foreign exchange risks.
In the 2022/23 fiscal year, a loss of € 1,688 thou­sand was recorded on derivative financial instruments
classified as fair value hedges (previous year: a loss of € 4,597 thou­sand). Since the hedges have been
mainly classified as highly effective, measurement of the hedged transactions at the reporting date
produced an offsetting gain/loss in the same amount.
The following table presents the measurement effects of the underlying hedged transactions (“firmcommitments”) and the change in the value of the underlying transactions that are used as a basis fordetermining whether the hedge is ineffective. The change in the value of the hedging instruments thatwere used as a basis for determining whether the hedge is ineffective corresponds to the change invalue of the underlying hedged transactions.
Firm commitmentsin € thou­s ands

2023-09-30

2022-09-30

Balance sheet item
Sundry financial assets

15,80915,251

Financial liabilities/sundry financial liabilities

12,253

15,812

Change in the value of the underlying hedged transactions that were used
as a basis for determining whether the hedge is ineffective- 5,423- 3,735

In the 2022/23 fiscal year, negative effects on profit or loss of € 3.2 million arose from ineffective hedges(previous year: positive effects of € 3.4 million) that are contained in other expenses.

175

Voith Annual Report 2023
Consolidated Financial Statements
Other notes

Changes in the value of derivative financial instruments that do not meet the requirements for hedge
accounting under IAS 39 are recognized as income or expenses in profit or loss at the reporting date.
Cash flow hedges:
As at September 30, 2023, there were cash flow hedges in place that are subject to interest rate risks.
Hedge relationships designed to hedge interest rate risks were classified as highly effective. Accordingly,
an unrealized loss of € 27 thou­sand (previous year: gain of € 14,415 thou­sand) was recognized withinconsolidated equity in other reserves as at September 30, 2023.
The following table presents the measurement effects of the underlying hedged transactions (“forecast
transactions”) and the change in the value of the underlying transactions that are used as a basis fordetermining whether the hedge is ineffective. The change in the value of the hedging instruments thatwere used as a basis for determining whether the hedge is ineffective corresponds to the change invalue of the underlying hedged transactions.
Foreign exchange risk
Forecast transactionsin € thou­s ands

Change in the fair values of theunderlying transactions
Hedge reserve
Change in the value of the underlying
hedged transactions that were used
as a basis for determining whether thehedge is ineffective2023-09-30

Interest rate risk
Floating interest rate instruments

2022-09-30

2023-09-30

2022-09-30

- 81

192

27

- 14,607

0- 231

14,58014,607

- 81

192

27

- 14,607

There were no effects on profit or loss from ineffective hedges in the 2021/22 and 2022/23 fiscal years.
In the 2022/23 fiscal year, there was a reclassification from other reserves of € 150 thou­sand (previous
year: € 407 thou­sand) to other operating expenses in the statement of income on account of thetermination of hedges. No effects were reclassified in the statement of income relating to the interest
rate swaps.
Research and development costs
In the 2022/23 fiscal year, research and development costs totaled € 231,884 thou­sand (previous year:€ 212,544 thou­sand).
Of this amount, development costs of € 3,112 thou­s and (previous year: € 5,441 thou­s and) were
capitalized in the balance sheet. The remaining costs represent activities for non-customer-specificnew developments and improvements of € 169,751 thou­sand (previous year: € 155,702 thou­sand)and development activities of € 59,021 thou­sand (previous year: € 51,401 thou­sand) capitalized forcustomer-specific contracts.

176

Voith Annual Report 2023
Consolidated Financial Statements
Other notes

Transactions with related parties and individuals
In the course of its ordinary business activities, Voith GmbH & Co. KGaA maintains relationships bothwith the subsidiaries listed in these consolidated financial statements and with other related companies
and individuals (family members who are shareholders, and members of the Supervisory Board and of
the Board of Management).
In the 2007/08 fiscal year, one subsidiary of Voith GmbH (as it was known at the time) was sold to family
shareholders in a transaction under common control. That company, JMV GmbH & Co. KG, Heidenheim
an der Brenz, Germany, was merged into JMV SE & Co. KG, Heidenheim an der Brenz, Germany, in the
2019/20 fiscal year. Since then, it has been the ultimate parent company of the Voith Group.
All business transactions with related parties are on principle conducted at arm’s length conditions.
Members of the Board of Management of Voith Management GmbH, members of the Supervisory Boardof Voith GmbH & Co. KGaA and family member shareholders also serve on the supervisory boardsof other companies with which Voith maintains relationships in the course of its ordinary businessactivities. Any transactions involving these companies are conducted at arm’s length conditions.
A total of € 600 thou­sand (previous year: € 680 thou­sand) was paid at customary market rates tomembers of the Supervisory Board and former members of the Board of Management for consulting
and other services. Consulting services for a total of € 460 thou­sand were provided by other relatedparties (previous year: € 460 thou­sand), where the last quarterly invoicing was taken into account in
the form of a provision totaling € 115 thousand (previous year: € 0). This means there were no trade
payables as at September 30, 2023 (previous year: € 115 thousand).

Voith Annual Report 2023
Consolidated Financial Statements
Other notes

177

The majority of goods and service transactions with related parties (entities and individuals) are shownin the table below:
in € thou­s ands

2022 /23

2021 /22

4,757

9,165

Services purchased from associates

749

261

Services rendered to associates

290

292

Receivables from associates

871

437

Liabilities to associates

700

1,073

Services purchased from other investments

3,717

2,732

Services rendered to other investments

19,053

12,020Receivables from other investments, including advances paid

22,411

12,891

- 354

- 354

Liabilities to other investments and to Voith Management GmbH34,02129,018Loans to JMV Hydro Beteiligungen GmbH

121,000

120,600

Services purchased from joint ventures

1,388

2

Services rendered to joint ventures

1,128

9

Receivables from joint ventures

529

170

Liabilities to joint ventures

1,142

971

13,06812,999

1,417

1,393

0

676

12,269

11,208

Liabilities to family shareholders

Impairment of receivables from other investments

Services purchased from the ultimate parent company
Services rendered to the ultimate parent company
Receivables from the ultimate parent company
Liabilities to the ultimate parent company

The loan to JMV Hydro Beteiligungen GmbH is subject to a qualified subordination in the amount of€ 20,000 thou­sand.
Liabilities to family shareholders include current floating-rate clearing accounts and pension obligations.
For more information on the profit participation rights of €103,400 thou­s and (previous year:€103,400 thou­sand) granted to family shareholders, please refer to note 19.
In the 2022/23 fiscal year, guarantees of € 3,371 thou­sand (previous year: € 2,424 thou­sand) were issued
in favor of other investments.
No capital increases in favor of associates were performed in the 2022/23 fiscal year (previous year:€ 1,003 thou­sand).

178

Voith Annual Report 2023
Consolidated Financial Statements
Other notes

Compensation of governing bodies
The compensation for members of the Board of Management of Voith Management GmbH, including
pension expenses, totaled € 11,720 thou­sand in the fiscal year (previous year: € 9,416 thou­sand). Due tothe fact that these expenses are recharged by Voith Management GmbH to Voith GmbH & Co. KGaA,
they are presented in the Voith Group’s consolidated statement of income wholly within personnel
expenses. This amount includes short-term benefits totaling € 11,062 thou­s and (previous year:€ 8,515 thou­sand) and post-employment benefits of € 658 thou­sand (previous year: € 901 thou­sand).
The compensation for members of the Board of Management under commercial law totaled€ 10,056 thou­sand (previous year: € 7,741 thou­sand).
As a consequence of bringing together the Corporate Board of Management at Voith Management
GmbH, the pension commitments to this group of individuals existing prior to their appointment to theVoith Corporate Board of Management were transferred to Voith Management GmbH at the respective
fulfillment amount under commercial law. In the 2022/23 fiscal year, around € 520 thou­sand (previous
year: € 0) were transferred.
The present value as at September 30, 2023, of the defined benefit obligations to the Corporate Boardof Management at Voith Management GmbH amounted to € 6,498 thou­sand (including entitlementsfrom deferred compensation; previous year: € 6,258 thou­sand).
The present value of defined benefit obligations toward past members of the Board of Management
totaled € 66,109 thou­s and (previous year: € 67,588 thou­s and). Of this amount, € 1,890 thou­s and(previous year: € 2,311 thou­sand) relates to obligations on the part of the former parent of the Group,
J.M. Voith SE & Co. KG, toward past members of the Corporate Board of Management.
Plan assets for former members of the Board of Management total € 38,226 thou­sand (previous year:€ 38,977 thou­sand).
These amounts are included in note 20.
The compensation for past members of the Board of Management totaled € 5,957 thou­sand (previous
year: € 4,624 thou­sand). Of this amount, € 347 thou­sand (previous year: € 411 thou­sand) relates tocompensation for the members of the Board of Management of the former parent of the Group,
J.M. Voith SE & Co. KG.
The members of the Supervisory Board of Voith GmbH & Co. KGaA received (short-term) compensationof € 414 thou­sand (previous year: € 378 thou­sand).

Voith Annual Report 2023
Consolidated Financial Statements
Other notes

179

Auditor’s fees and services
The following fees (including reimbursement of expenses) were paid to the independent auditor for theservices rendered in the 2022/23 fiscal year:in € thou­s ands

2022 /23

2021 /22

Annual audit

3,099

3,102

Other assurance or valuation services
Tax advisory services
Other services

0

41

535

778

0

49

3,634

3,970

Subsequent events
Dr. Stefan Kampmann is stepping down as a member of the Corporate Board of Management as ofNovember 30, 2023.
No additional significant developments have occurred since the close of the 2022/23 fiscal year.

180

Voith Annual Report 2023
Consolidated Financial Statements
Other notes

Corporate Board of Management
The following were appointed members of the Board of Management of Voith Management GmbH in
the 2022/23 fiscal year:
Dr. Toralf Haag
Stephanie Holdt
Dr. Stefan Kampmann
Andreas Endters
Uwe Wehnhardt (until October 31, 2022)
Dr. Tobias Keitel (from November 1, 2022)
Cornelius Weitzmann

Heidenheim an der Brenz, November 29, 2023
The Board of Management of Voith Management GmbH

Dr. Toralf Haag
Stephanie Holdt
Dr. Stefan Kampmann
Andreas Endters
Dr. Tobias Keitel
Cornelius Weitzmann

The German language consolidated financial statements of Voith GmbH & Co. KGaA as at September 30, 2023, as authorized for issue and the unqualified audit opinion issued thereon by KPMG
Wirtschaftsprüfungsgesellschaft, Munich, will be filed with the German company register. They can beviewed at www.unternehmensregister.de.

Voith Annual Report 2023
Consolidated Financial Statements
Responsibility statement181

Responsibility statement
To the best of our knowledge and in accordance with the applicable reporting principles, the consolidated
financial statements give a true and fair view of the net assets, financial position and earnings positionof the Group, and the Group management report includes a fair review of the development andperformance of the business and the position of the Group, together with a description of the principal
opportunities and risks associated with the expected development of the Group.

Heidenheim an der Brenz, November 29, 2023
The Board of Management of Voith Management GmbH

Dr. Toralf Haag
Stephanie Holdt
Dr. Stefan Kampmann
Andreas Endters
Dr. Tobias Keitel
Cornelius Weitzmann

Contact
Voith Group
Phone: +49 7321 37 0
Fax: +49 7321 37 7000
E-mail: info@voith.com
Group Communications
Phone: +49 7321 37 2877
Fax: +49 7321 37 7107
E-mail: info@voith.com
Investor Relations
Phone: +49 7321 37 2332
Fax: +49 7321 37 7010
E-mail: info@voith.com

Imprint
Publisher
Voith Group
Voith GmbH & Co. KGaA
St. Pöltener Str. 43
89522 Heidenheim, Germany
Phone: +49 7321 37 0
Fax: +49 7321 37 7000
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Typography
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Photo Credits
Thomas Dashuber,
Munich, Germany

This annual report is also available in German.
Both versions, as well as other information, canbe downloaded at www.voith.com.
© Voith GmbH & Co. KGaA, 2023-12