Interim Report 2014

Voith in figures

2013-10-01 to
2014-03-31

2012-10-01 to
2013-03-31

2,779

2,632

2,604

2,717

Return on sales in %

125
4.8

125
4.6

Income before tax2)

53

59

Net income2)30

63Cash flow from operating activities

76

-23

Total cash flow

-20

-180

Investments

68

92

in € millions

Orders received
Sales
Profit from operations

1)

1,104

1,142

Equity ratio in %2)

19.8

19.8

Balance sheet total2) , 3)

5,578

5,762

Employees3) , 4)42,613

43,134Equity2) , 3)

See “Notes on segment reporting“ in the notes to the Group interim financial statements.
Previous year adjusted (see section “Adjustment of previous year”
in the notes to the Group interim financial statements).
3)
Reference date March 31, 2014, compared to September 30, 2013.
4)
Without apprentices.
1)
2)

Contents

Foreword

01
02

Voith Interim Report 2014

Group interim management report
I.

Business and economic environment

8

II.

Business development and earnings position of the Group

9III. Business development and earnings position of the Group Divisions

14

IV. Net assets and financial position

22

V.

24

Subsequent events

VI. Risks and opportunities

24

VII. Forecast report

25Group interim financial statements
Consolidated statement of income

30

Consolidated statement of comprehensive income

31

Consolidated balance sheet

32

Statement of changes in equity

34

Consolidated cash flow statement

36

Notes to the interim consolidated financial statements

37

Notes on segment reporting

43

Segment information by business segment

44

Notes to the statement of income and the balance sheet

46		

Other notes		

49		

Responsibility statement

54		

3

Foreword

Ladies and Gentlemen,
A sound first half-year for Voith came to an end on 31 March 2014. The Group
maintained its position overall in a slightly improved macroeconomic climate, won
a significantly larger number of orders, demonstrating that it had started to reverse
the trend in new business. Group sales, on the other hand, declined slightly on
the comparable figure from the previous year. This was mainly caused by negative
currency effects in the period under review, which were also reported by manyother German companies.
Despite the decline in sales, the operational result before non-recurring items rosein comparison to the previous year. The net income was down on the comparative
figure from the previous year as positive non-recurring effects in the financial result
and in income taxes in the same period of the previous year distort the picture.
Adjusted for these non-recurring effects, the net income was 20 percent higher
than in the previous year.
The positive development of the operational result in the first half of the fiscal year
demonstrates that the Voith 150+ measures introduced as part of the Group-wide
success program are beginning to take effect. Alongside more efficient structuresand processes, the focus is on optimizing the existing portfolio and thus utilizing
and exploiting growth potential in a targeted manner. We continue to press forward as planned with the implementation of this extensive success program anda large number of strategic and operational initiatives.
We remain conservative in our forecast for the rest of the fiscal year and anticipate a subdued development to continue. We presume that the environment for

4

Voith Interim Report 2014

mechanical and plant engineering companies will remain challenging on accountof the subdued investment climate in a large number of regions, despite signs thatthe recovery will continue. In light of this, we do not anticipate any fundamental
improvements in our target markets of energy, oil & gas, paper and raw materials
over the course of the second half of the fiscal year. We are more optimistic about
the Transport & Automotive market.
In view of these developments, our forecast for the 2013/14 fiscal year is cautious
from today’s perspective: All Group Divisions will continue to return a clear profit
from operations, although their sales and orders received will develop differently,
depending on their markets.
For Voith Industrial Services and Voith Turbo we anticipate a generally positive
second half of the fiscal year. In the Voith Hydro Group Division, we expect thatbusiness will calm down after a strong first half of the fiscal year. In the Voith Paper
Group Division we anticipate higher sales in the second half of the fiscal year,
which means that, in contrast to the period under review, this Group Division will
also succeed in returning a clear profit over the full fiscal year.
For the Voith Group we anticipate a stable level of orders received for the full fiscal year with Group sales roughly at the same level as in the previous year. Voith
anticipates that there will be a slight decrease in the operational result before
non-recurring items in comparison to the previous year. As the greater part of therestructuring expenses were already incurred in the 2013 fiscal year, Voith expects
a substantial increase in net income. A continuation of the unfavorable development of exchange rates remains an uncertainty in our forecast as it could negatively impact sales, orders received and all key earnings indicators. Irrespective of
all this, the net income should nevertheless see a significant rise, as announced.
The environment in which we operate remains challenging, but the sound development over the last six months confirms that we are on the right track. We can seethat our intense groundwork of recent fiscal years is beginning to bear fruit. The
Voith Group is well on its way to returning to a sustainable profitable growth path.

Best regards

Dr. Hubert Lienhard
President and CEO

Voith Interim Report 2014

5

6

Voith Interim Report 2014

Group interim management reportfor the period from October 2013 to March 201401

Voith Interim Report 2014

I. Business and economic environmentII.	Business development andearnings position of the Group
III.	Business development andearnings position of the Group Divisions
IV. Net assets and financial position
V. Subsequent events
VI. Risks and opportunities
VII. Forecast report

8
9
14
22
24
24
25

7

I. Business and economic environment

Slight recovery in the global
economy, challenging environment
for the capital goods industry
In the first half of Voith’s 2013/14 fiscal
year, the economy recovered slightly albeit not quite as strongly as anticipated.
Following global economic growth of
3.0 % in 2013, the International Monetary Fund (IMF) is expecting growthto accelerate to 3.6 % in 2014. Signsof economic brightening can be seen
in industrialized nations (IMF forecast
for 2014: growth of 2.2 %). Of the mature economies, the US is expected toreturn one of the highest growth rates(2.8 %) in 2014; their gross domestic
product (GDP) will benefit both fromhigh domestic demand and strong exports. The IMF forecasts the euro zone
as a whole to grow 1.2 % in 2014, although it was still in recession in 2013.
Nevertheless, the economies of thehighly indebted Southern European
countries continue to be hampered bybudgetary consolidation efforts. Germany, the largest economy in the eurozone, is expected to see above-average growth of 1.7 %. However, according to the German Engineering Federation [“Verband Deutscher Maschinenund Anlagenbau e.V.”: VDMA], orders
on hand deteriorated in the first half ofVoith’s 2013/14 fiscal year.

8

Some emerging economies did not develop as positively as expected when
our Annual Report was published towards the end of 2013. In spring 2014,
for instance, the IMF made a downward
adjustment of its growth forecast for anumber of countries in Asia and Latin
America in comparison to the figures
published in the fall of 2013. Seen asa whole, emerging markets continue toreturn growth (IMF forecast for 2014:
growth of 4.9 %) at significantly higher
percentage rates than the industrializedcountries. Over the full year 2014,
emerging and developing economies
are expected to grow by 4.9 %. The IMF
expects GDP in China to rise by 7.5 %(previous year: 7.7 %) and in the ASEAN
countries, which include Indonesia, Malaysia, the Philippines, Thailand andVietnam, by an average of 4.9 % (previous year: 5.2 %). India’s GDP is forecast to grow by 5.4 % (previous year:
4.4 %), which constitutes a more dynamic development than in the two previous years. Growth impetus remains
comparatively low in Brazil, with grossdomestic product forecast to increaseby a mere 1.8 % in 2014 according to
the IMF.

there was a deterioration in the fundamental data from emerging markets aswell as political unrest in some of thecountries (the Crimean crisis, to namebut one). As a consequence, Brazil, Turkey, South Africa, India, Russia and various ASEAN countries saw their currencies depreciating rapidly.
In the three late-cycle target markets
served by Voith (energy, oil & gas andraw materials), the investment climate
remained very subdued. The willingness
to commit to investments saw relatively positive developments in the early-­
cycle transport & automotive market.
In the paper market, which is similarly ­early-­cycle, cyclic effects were overshadowed by structural ones, whichmeant that investment activity remained
at a low level overall.

The financial markets remain highly volatile. A number of emerging markets
suffered from the impact of capital drain
and bearish share and bond markets
over the period under review. This was
triggered by the US Federal Reserve’s
announcement to taper off its bond purchase program and the prospect of rising US interest rates. At the same time,

Voith Interim Report 2014

II. Business development andearnings position of the Group

Sales Groupin € millions

2,604

2,717

2012/132013/14Full fiscal year

First half-year

Sales total € 2,604 million
by Group Division
Voith ­Turbo
26 %Voith ­Hydro
26 %Voith ­Paper
26 %Voith ­Industrial­Services
22 %First half-year 2013/14

II.1.

II.2.

Overall view

Sales

Sound business development

Group sales down slightly,
as anticipated

Voith looks back at a first half of the
fiscal year in which business remainedmodest but stable. The Voith 150+ measures introduced in 2013 as part of theGroup-wide success program are showing their first effects. In an economic environment which has brightened slightly,
we identified a few impulses from ourmarkets which we were able to exploit.
This permitted us to boost our orders
received once again, both at Group level
and in the four Group Divisions. Groupsales fell slightly on account of currency
effects. As we succeeded in lowering
expenses in comparison to the previous
year, all the Group’s key earnings indicators nevertheless remained stable orrose. The Group returned net income,but fell short of the previous year’s level,
which had been inflated by non-recurring special effects.
Some figures from the previous year
have been adjusted in the interim consolidated financial statements for the
first half of the 2013/14 fiscal year. Explanations of these changes can befound in the “Adjustment of previous
year” section in the notes to the interim
consolidated financial statements. These
adjustments are taken into account in
the following sections.

The Voith Group generated sales of€ 2,604 million in the first half of the
2013/14 fiscal year. This represents a
decrease of 4 % or € 113 million on thecomparable period of the previous year(€ 2,717 million).
The decline in sales is attributable tocurrency effects of around € 120 million.
As a consequence of a rapid decline inexchange rates in some markets, oursales in these countries turned out tobe significantly lower, when translated
into euros, than expected as at the date
our Annual Report 2013 was published.
All four Group Divisions were impacted
by this effect. Adjusted for currency effects, Group sales were slightly higher
than in the previous year.
Developments in the four Group Divisions were not uniform. While sales fellby 11 % at Voith Paper and 5 % at Voith
Turbo, Voith Hydro generated slight
growth (up 1 %) and Voith I­ndustrial­Services saw sales remaining stable (up0.1 %). Detailed information on the development of sales in each of the Group
Divisions can be found in Section III. of
this interim management report, “Business development and earnings positionof the Group Divisions”.
There was a relatively even distributionof sales among the four Group Divisions: 22 % of sales were attributable
to Voith ­Industrial ­Services and 26 % toeach of the three other Group Divisions.

Voith Interim Report 20149

II.3.

Orders received
Orders received up 6 %After the decrease seen in the 2012/13
fiscal year, we succeeded in significantly boosting orders received in the period under review. All in all, the Voith
Group secured new orders totaling€ 2,779 million in the first half of the
2013/14 fiscal year (previous year:€ 2,632 million). This is 6 % up on thecomparable period of the previous year.
The Group’s orders received were similarly impacted by the negative currency
effects in the region of € 100 million. Adjusted for currency effects, growth inorders received came to 9 %. All Group
Divisions saw a higher or at least stablelevel of new business: with growth of
14 %, Voith Hydro returned the highest
level of growth in comparison to thesame period of the previous year. Voith
Paper and Voith Turbo boosted orders
received by 5 % and 2 %, respectively.
In the Industrial Services Group Division,
where the volume of orders on hand is

not recorded separately owing to theshort throughput times of orders, business was stable (sales up 0.1%).
Each of the four Group Divisions contributed between 21 % (Voith ­Industrial­Services) and 27 % (Voith Hydro, Voith
Turbo) to the orders received by theGroup. As at March 31, 2014, orders
on hand stood at € 5,198, up on the
figure seen at the end of the previous fiscal year (September 30, 2013:€ 5,134 ­million).

Orders received Groupin € millions

2,779

2,632

2012/132013/14

Orders on hand Groupin € millions
5,134

5,198

2012/132013/14Full fiscal year

First half-year

Orders received total € 2,779 million
by Group Division
Voith ­Turbo
27 %Voith ­Hydro
27 %Voith ­Paper
25 %Voith ­Industrial­Services
21 %First half-year 2013/14

10

Voith Interim Report 2014

II.4.

Employees
Job cuts lead to drop in headcountEmployees Group

43,13442,613

2012/132013/14Full fiscal year

First half-year

Employees total 42,613
by Group Division
Voith ­Turbo
15 %Voith ­Hydro
13 %Voith ­Paper
21 %Voith ­Industrial­Services
49 %

Other
2%

First half-year 2013/14

Voith Interim Report 2014

As at March 31, 2014, the Voith Group
had 42,613 employees (full-time equivalents, excluding apprentices). This nets
at 521 or 1 % fewer jobs than at the endof the previous fiscal year (September
30, 2013: 43,134). The decrease in thenumber of staff is mainly attributable to
the restructuring of the Voith Paper
Group Division and capacity adjustments at the Heidenheim location. We
intend to implement the personnel-­related measures as quickly as possible
under the contractual agreements inorder to bring the job cuts to a conclusion before the end of the 2014/15 fiscal year.

under review. Voith Paper, the second-largest Group Division in terms of
employees, had 8,906 employees,
equivalent to 21 % of the Group’s total
headcount. Voith Turbo employed
6,420 staff at the end of the period
under review, accounting for 15 % of
the Group’s workforce. Voith Hydro employed 13 % of the Group’s total headcount (5,441). Regarding the change inthe headcount in the Group Divisions,see also Section III. of this interim management report, “Business development
and earnings position of the Group­Divisions”.

The distribution of employees acrossthe Group Divisions has changed only
slightly compared to the 2012/13 fiscal
year. Just under half of Voith’s employees (49 %) are employed at Voith­Industrial ­Services. 20,793 people were
working there at the close of the period

11II.5.

Results
Operational result before
non-recurring items improved
In the first half of the 2013/14 fiscal year,
the Group generated net income of€ 30 million. This was significantly downon the previous year’s figure (previous
year: € 63 million, down 52 %) although
all operational earnings indicators remained stable or rose. The decline in
the net income arises from one-time
effects in the same period of the previous year in the financial result and inincome taxes. If these effects are nottaken into account, this year’s net income is 20 % higher than in the comparative period of the previous year.
In line with sales, total output fellby 4 %, a reduction of € 115 ­millionto € 2,639 million (previous year:€ 2,754 million). There was only a slightchange in inventories and other own
work capitalized (down € 2 million). As
was the case with sales, total output
did not develop uniformly between theGroup Divisions (Voith Paper down 11 %,Voith Turbo down 6 %, Voith Hydro up
1 % and Voith ­Industrial ­Services up 1 %).
For the development of sales, pleaserefer to Section II.2. of this interim management report.

12

The operating expense items were in
decline. For example, cost of material
fell to € 1,021 million (previous year:€ 1,115 million, down 8 %). The ratio of
the cost of material to total output decreased to 38.7 % (previous year:
40.5 %) The fall in sales at Voith Paper
made a contribution to this development, especially in the business withnew machines and major rebuilds which
consumes a greater amount of material. In addition, some plant engineering
projects at Voith Hydro had reachedtheir final stages, where the share ofmaterial is typically lower.
Personnel expenses fell to € 1,072 million (previous year: € 1,079 million, down1 %). The ratio of personnel expenses
to total output increased to 40.6 % (previous year: 39.2 %). The savings in personnel costs achieved so far could not
yet make up for the fall in sales at Voith
Paper and Voith Turbo. The cost savings from the capacity adjustment programs implemented did not develop
their full effect in the period under review, as anticipated.

Voith Interim Report 2014 perational result before non-recurring itemsOGroupin € millions

105

103

2012/13

In terms of percentage, the changes inamortization and depreciation (down€ 6 million) and the balance of other operating expenses and income (down€ 10 million) essentially correspond to
the development of total output, whichmeans that the ratio of these expense
types to total output remains virtuallyunchanged.

2013/14

The operational result before non-recurring items rose by 2 % to € 105 million(previous year: € 103 million).

Net income Groupin € millions
63*

30

2012/132013/14Full fiscal year

First half-year* Previous year adjusted.

Voith Interim Report 2014

The result from non-recurring items inthe year under review comes to€-20 million (previous year: €-24 million).
This figure includes follow-up effects relating to the restructuring measures initiated in the previous year. These are
essentially personnel-related expenses
for which it was not possible to recognize provisions in the previous year. Further structural or market-related capacity adjustment measures as well as expenses arising in connection with thediscontinuation of operations similarly
contributed to the result from non-recurring items. In detail, Voith Paper accounts for €-3 million of the result from
non-recurring items (previous year: € 0),
Voith Turbo for €-4 million (previous year:€-23 million), Voith Hydro for €-5 million(previous year: € 0), Voith ­Industrial­ ervices for €-7 million (previous year:S€-1 million) and entities with holding
functions €-1 million (previous year: € 0).
The balance of interest expenses andinterest income came to a net interest
expense of € 35 million (previous year:
net interest expense of € 33 million). The
main reason for the higher interest expense was an interest payment in connection with a tax backpayment in aforeign country.
The other financial result fell to € 0 (previous year: € 9 million). The figure fromthe previous year mainly arose from a
one-time effect in the form of a dividend
received from a financial i­nvestment.
Income taxes totaled €-23 million (previous year: € 4 million). In the same period of the previous year, this item included income from the release of tax
provisions for previous years amounting
to € 29 million.

13

III. Business development andearnings position of the Group Divisions
III.1.

Voith Hydro
Satisfactory performance in thefirst half of the year
Voith Hydro looks back on a satisfactory first half of the 2013/14 fiscal year.
The Group Division saw growth in bothsales and orders received.
Hydropower market remains stable
In the period under review, the globalhydropower market outperformed theprevious year. At the end of a strong
first half of the 2013/14 fiscal year, morethan half of the project volume anticipated for the full year had already been
assigned, which permits us to assess
the overall market situation as stable.
The large hydro market remained thestrongest segment, stimulated by orders placed for several major projects
in the period under review. The smallhydro segment (power plants with agenerating capacity of up to 30 MW
per turbine) remained subdued. The
service business for maintenance andspare parts continued to develop positively. Significant stimulus came once
again from modernization projects on
account of the growing installed hydro­
power base. Although, with their ability
to store energy, pumped storage power
plants still play an important supplementary role in the expansion of renewableenergies, hardly any orders for projects
have been placed in this segment on
account of regional political or economic

14

hurdles of varying nature. South andNorth America in addition to Asia, Russia and Eastern Europe remain significant hydro­power markets and we also
see increasing potential in Africa.
Slight rise in sales

Sales Voith Hydroin € millions

668

659

In the first half of the 2013/14 fiscal
year, Voith Hydro generated sales of€ 668 million (previous year: € 659 million,
up 1 %). For the full year, we reconfirm
our forecast of a slight decline in sales.

2012/132013/14Significant increase in orders
received
Orders received Voith Hydro

Voith Hydro operated successfully in themarket in the interim reporting period,
winning orders worth € 747 million. As
a result, orders received were 14 % up
on the comparable period of the previous year (€ 656 million). The rate of
growth is expected to be lower in thesecond half of the fiscal year on accountof the uneven distribution of the volumeof orders placed over the fiscal year. We
continue to anticipate a slight increasein orders received for the full year. As at
March 31, 2014, orders on hand stoodat € 2,883 million, roughly at the samelevel as at the end of the last fiscal year
(September 30, 2013: € 2,880 million).

in € millions

747

656

2012/132013/14The largest order placed in the period
under review came from Pakistan andhad a volume of around € 200 million.

Voith Interim Report 2014

We will be supplying the entire electro-mechanical equipment for the extension of Tarbela hydro­power plant, which
was originally built in 1974. The extension will increase the power plant’s installed output by around 40 % to 4.9 GW.
In addition to Central Asia, Southeast
Asia is also gaining in importance as ahydro­power market. In this area we received orders to equip small hydropower
plants in Indonesia, for instance, in the
period under review.

Employees Voith Hydro

5,323

5,441

2012/132013/14

We also succeeded in winning significant contracts in the important hydro­
power markets of South and North
America. For instance, we will be modernizing three generators at Kettle power
plant in Canada’s Manitoba Province.

Profit from operations Voith Hydroin € millions

51

53*

2012/132013/14Full fiscal year

First half-year* Previous year adjusted.

Voith Interim Report 2014

The established hydro­power markets ofRussia and Eastern Europe most of allprovide potential for modernization. In
the first half of the 2013/14 fiscal year,
Voith won the contract for the extensive
modernization of Zvornik hydro­power
plant in Serbia. In the period under review, we were awarded the contract
for the third stage of the modernization work relating to four further turbine
units for Russia’s Saratovskaya hydro­
power plant. This modernization project
has been ongoing since 2011.

Voith Hydro also won orders in thechallenging pumped storage segmentin Europe. The Austrian energy supplier Vorarlberger Illwerke AG awarded us
the contract to supply two pumps andone pump turbine for the two projects
Obervermuntwerk II and Rellswerk.
As at March 31, 2014, Voith Hydro
employed 5,441 staff worldwide. Thismeans that headcount was up slightly
on the previous year’s level (September 30, 2013: 5,323, up 2 %). The risein headcount is primarily attributable
to temporary contracts in connection
with assembly work for large projects
in South America.
Profit from operations downslightly
In the first half of the 2013/14 fiscal year,
Voith Hydro generated a profit from operations of € 51 million (previous year:€ 53 million, down 4 %). The return onsales came to 7.6 % (previous year:
8.1 %). The reason for the profit fromoperations being slightly down on thecomparative figures from the previous
year, despite the positive developmentof sales, stems from the scheduling ofsome individual projects. This will balance out over the full year.

15

III.2.

Voith ­Industrial ­Services
Sales at previous year’s level
Following a first half of the 2013/14 fiscal year with stable sales and a slightly lower profit from operations, Voith­Industrial S­ ervices anticipates a stronger second half of the fiscal year.
In the period under review, Voith­Industrial ­Services generated sales of€ 574 million which is at the previous
year’s level (previous year: € 573 million).
Adjusted for the effects of changes in
the consolidated group, Voith ­Industrial
Services generated minor growth in­sales, stemming from the Automotiveand Energy-Petro-Chemicals divisions.
Owing to the short throughput timesof service contracts, Voith I­ndustrial­Services does not record the volumeof orders on hand, which means thatorders received are identical to sales.
Automotive and Energy-PetroChemicals divisions show growth
In the Automotive division we succeeded in increasing sales once again following three years with strong volume
growth. In Europe we are benefitingfrom our focus on premium manufacturers whose exports to the Americas
and Asia remain at a high level. The
good development of business in China
also contributed to the division’s sales
growth.

16

We achieved a significant boost to sales
in the Energy-Petro-Chemicals divisionin the first half of the 2013/14 fiscal year,
which was first and foremost due to excellent business with the petrochemical industry in Central Europe. In addition to several turnaround maintenanceprojects for oil and gas refineries, we
performed automation orders within theframework of plant optimization work.
The outcome of the national elections inGermany has provided electricity generators planning certainty with regard to
the residual operating periods of nuclear
power plants in Germany, which meansthat deferred inspection work has now
been scheduled. The number of projectinquiries for turnaround maintenance isalso slowly on the increase, which permits us to anticipate higher sales in thisdivision in the second half of the year.

Sales /Orders received Voith ­Industrial ­Servicesin € millions

574

573

2012/132013/14

In the Engineering Services division,
which offers contract engineering forthe aerospace, automobile, commercial and rail vehicle industries, sales
declined in the period under review.
The disposal of the Dutch entity Voith­Railservices contributed to this development (for more details, please refer
to Section IV.4. “Financial assets/participating interests”). The performanceof the road & rail segment was virtually stable. As the move to outsourceengineering services is continuing in
the automotive industry, in particular

Voith Interim Report 2014

at European premium manufacturers,
we intend to expand our expertise in
the field of engineering services to thissegment. The building-up of the necessary structures and human resources began in the period under review. In
contrast, the major aircraft manufacturers called fewer engineering services in
the period under review as they havecompleted the basic development workfor their new aircraft programs and are
now concentrating their work on different versions.

Employees Voith ­Industrial ­Services

21,032

20,793

2012/132013/14

Profit from operations Voith ­Industrial ­Servicesin € millions11

As at March 31, 2014, Voith I­ndustrial­Services employed a total of 20,793
persons (September 30, 2013: 21,032,
down 1 %). The decrease in headcountis mainly attributable to the disposal of
the Dutch entity.

9

2012/132013/14Full fiscal year

Voith Interim Report 2014

The Industries division, which offers
regional services for the operation ofindustrial locations in Germany andAustria, has been operating in a stableeconomic environment, and generated
sales roughly at the previous year’s level.

Profit from operations fallen on
account of special effects
Voith I­ndustrial ­Services recorded a
profit from operations of € 9 million in
the first half of the 2013/14 fiscal year
(previous year: € 11 million, down 18 %).
The profit from operations came underpressure from the costs for expanding
automotive expertise in the Engineering
Services division, which is expected tomake a noticeable contribution to sales
from the 2014/15 fiscal year onwards.
Return on sales came to 1.5 % (previous year: 1.9 %) in the period under review. In anticipation of strong sales inthe second half of the fiscal year andas a consequence of cost savings fromefficiency drives, we are working on theassumption that profit from operations
and return on sales will improve in thesecond half of the fiscal year.

First half-year17III.3.

Voith ­Paper
The market for paper machinesremains weak with positive
stimulus from Asia
Voith Paper looks back at a challen­
ging first half of the 2013/14 fiscal year
in which sales and profit from operations deteriorated, but orders received
saw slight growth again.
The production of graphic papers ison the decline worldwide, whereas theboard & packaging paper and the tissue
segments experienced growth in someregions. Even though global paper production remains on the rise overall, supported by relatively good developments
in China, this slight growth is c
­ urrently
covered by the production capacity already installed. There was a corresponding reluctance on the part of paper manufacturers to invest in new machines.
In the first half of the 2013/14 fiscal
year, Voith Paper’s sales fell by 11 % to
€ 673 million (previous year: € 757 million). The decline in sales solely affects
project business (new machines andlarge rebuilds) and is primarily due tothe lower level of orders received in previous years. In addition, there continued
to be project delays caused by customers in the current fiscal year. Sales
in the business with products, consumables and services remained stable. From a regional perspective, China
remained our market with the highest
level of sales.

18

Slight increase in orders received
In the first half of the 2013/14 fiscal
year, we achieved an increase in orders
received for the first time again after adownward trend for the last three years.
All in all, we won new contracts totaling€ 709 million (previous year: € 672 million, which represents an increase of
5 %. As at March 31, 2014, orders on
hand had risen slightly in comparison
to the end of the previous fiscal year to€ 1,152 million (September 30, 2013:€ 1,134 million).
There was an increase in orders received in the business with products,
consumables and services as well as
in the project business. In this respect,
we have achieved satisfactory successes, in particular on the Asian market
which is slowly recovering. In the period
under review, we succeeded in winningorders for new machines for the manufacture of board and packaging paper;
the greatest demand being for midsized machines. We further received anorder from Asia for a new tissue machine. Under our cooperation agreement with the textile machine manufacturer Trützschler Nonwovens, we won
two projects from Spain and China formachines to produce nonwoven fabrics. In the board and packaging paper
machines segment we received several
orders for large rebuilds. We succeeded in winning rebuild orders even in the
declining segment for graphic papers

Sales Voith ­Paperin € millions

757

673

2012/132013/14

Orders received Voith ­Paperin € millions

709

672

2012/132013/14Voith Interim Report 2014

and in the specialty paper segment (oneproject in each segment).

Employees Voith ­Paper

9,223

8,906

2012/132013/14At the end of the period under review
as at March 31, 2014, the headcountin the Voith Paper Group Division fell
to 8,906 employees, which constitutes
317 fewer jobs than as at September
30, 2013 (9,223 employees, down 3 %).
The fall in headcount stems from thedownsizing in Europe under the ongoing
restructuring of the Projects businessline (new machines and large ­rebuilds).
Profit from operations negative asat the end of the half-year

Profit from operations Voith ­Paperin € millions

4-5
2012/132013/14Full fiscal year

Voith Interim Report 2014

First half-year

In the first half of the 2013/14 fiscal year,
the profit from operations was negative, standing at €-5 million (previous
year: € 4 million). While further savingsin personnel costs and other operating expenses were achieved following
the restructuring measures, the reduction in costs, which mainly stem fromthe speed of implementation of the job
cuts in Germany, did not fully balanceout the decrease in sales in the period
under review. In the second half of the
fiscal year we are expecting to see asignificantly positive profit from operations due to higher sales and a greater
impact from the cost-saving measuresalready implemented.

19III.4.

Voith Turbo
Good level of orders received
although the market environment
remains challenging
The Voith Turbo Group Division increased
the level of its orders received in the period under review in a generally adverse
market environment and improved its
profitability with the aid of the measuresinitiated under the Group-wide successprogram Voith 150+.
Voith Turbo introduced a new organizational structure as at October 1, 2013.
The new Mining & Metals division and
the Power, Oil & Gas division are thesuccessors to the former Industry division. The former Marine division was
also allocated to the latter in the form ofa business unit. The other two divisions,
Commercial Vehicles (formerly: Road)
and Rail, were restructured internally.
Voith Turbo’s global sales organization
was also restructured and linked moreclosely to the four divisions.
Sales down on the previous year
Voith Turbo’s total sales came to€ 682 million in the period under review,
5 % down on the comparative figure forthe previous year (€ 722 million). Adjusted for the activities of the Locomotive
business, which is undergoing a strategic realignment, Voith Turbo’s core business grew slightly by 1 %.

20

Developments in the individual divisions
were not at all uniform. We achieved asignificant rise in sales in the Commercial Vehicles division. Power, Oil & Gas
matched the previous year. The Mining & Metals and the Rail divisions did
not reach the sales seen in the previous year.

Sales Voith Turboin € millions

Orders received on the rise
In the first half of the 2013/14 fiscal
year, Voith Turbo won new orders worth€ 742 million (previous year: € 724 million) thus boosting orders received by
2 %. As at March 31, 2014, orders on
hand stood at € 1,163 million, slightly
improved in comparison to the end of
the previous fiscal year (September 30,
2013: € 1,120 million).
The Commercial Vehicles division saw
pleasing developments in a generally
positive environment. The transition to
the Euro 6 emissions standard led tosignificant rises in the sales of our European truck business in the first quarter.
Our city bus business continued its stable development. A series of attractive
contracts were received in Europe andthe growth regions worldwide.

682

722

2012/132013/14

Orders received Voith Turboin € millions

742

724

2012/132013/14The level of orders received by the Mining & Metals division in the first half ofthe 2013/14 fiscal year was below theprevious year’s level. On account ofVoith Interim Report 2014

the overheating commodities market,
producers are still having to contend
with slightly falling commodity prices.
This leads to cost pressure and a lower
level of investment activity on the partof mine operators and mining companies. We won most of our new orders
from commodity producers in Asia andAustralia. The steel industry expanded
its production slightly, but remains characterized by excess capacities. Our machine tools business operated in a stable environment.

Employees Voith Turbo

6,485

6,420

2012/132013/14

Profit from operations Voith Turboin € millions

57

48*

2012/132013/14Full fiscal year

First half-year

There was a decline in orders received
by the Power, Oil & Gas division. Thiswas mainly due to the weak market for
power plant technology in our core markets of China and India on account ofpending political decisions and deterior­ating macroeconomic data. The market
for petrochemical plants and equipment
has cooled significantly in China, following years of strong growth. In contrast,
our business benefited from a strong
market for oil and gas equipment, especially in North America and the Middle East.

* Previous year adjusted.

Voith Turbo saw the strongest growthin orders received in the Rail division.
The upswing in the global market forrail vehicles continued. The recovery inthe high-speed segment continued on
the important Asian market. The ongoing urbanization in China and India

Voith Interim Report 2014in particular is leading to massive investment in the area of undergroundrail systems. We received a major orderfrom the Korean rail vehicle manufacturer Hyundai Rotem in connection withthe extension of the Delhi metro systemserving this Indian city with 16 million
inhabitants. We also succeeded in increasing the level of new business on
the European market with orders from
Russia and the UK, among others.
As at March 31, 2014, Voith Turbo employed a total of 6,420 persons (September 30, 2013: 6,485, down 1 %).
Significant rise in profit
from operations
Voith Turbo increased its profit from operations in the first half of the 2013/14
fiscal year by 19 % to € 57 million (previous year: € 48 million). This increase isattributable to the positive developmentin the Commercial Vehicles segment
and the fact that the negative special
effects from the previous year no longer
apply. On the other hand, intense competition and pressure on prices in thebusiness with mining companies andmine operators tend to have a negative
impact on profits. The return on sales
improved to 8.3 % (previous year: 6.5 %).

21

IV. Net assets and financial position
IV.1.

Balance sheet
Equity ratio stable
As at March 31, 2014, the balance sheetof the Voith Group displays a healthy
structure of assets and equity and lia­
bilities. Total assets fell by € 184 million in comparison to September 30,
2013 to € 5,578 million (previous year:€ 5,762 million, down 3 %).
Non-current assets decreased to a
total of € 2,423 million (previous year:€ 2,487 million, down 3 %). The intangible assets and property, plant andequipment contained in this figure fellin total by € 37 million, essentially on account of currency effects and a higher
level of amortization, depreciation andimpairment losses in comparison tocapital expenditure. Non-current securities dropped by € 24 million to € 192 million chiefly on account of measurement
differences posted to other comprehensive income.
There was a reduction in current assetsof € 120 million to a total of € 3,154 million (previous year: € 3,274 million, down4 %). In this context, inventories andtrade receivables decreased on aggregate by € 65 million to € 1,867 million. This is mainly attributable to Voith
Paper (down € 37 million) and Voith
Turbo (down € 30 million), which reported the corresponding reduction
in sales and total output, respectively.
Cash and cash equivalents decreasedby € 36 million to € 865 million (further

22

information on this can be found in Section IV.2. “Liquidity”). Current securities
saw a reduction of € 25 million on account of reclassifications to other cash
investments (previous year: € 58 million).
Non-current liabilities decreased slightly
by € 9 million to € 1,864 million (previous
year: € 1,873 million, down 0.5 %). On
the one hand, pension provisions decreased by € 14 million essentially on
account of measurement effects andpayments into existing plan assets tocover pension obligations; on the other,long-term liabilities to banks rose by€ 8 million, mainly on account of an increase in long-term debt in China (up€ 8 million).
Current liabilities fell by € 136 million to € 2,610 million (previous year:€ 2,746 million, down 5 %). The current
other provisions included in this figure
decreased by € 54 million, essentially on account of a lower level of order-related provisions (down € 10 million) and a reduction in provisions forseverance payments (down € 28 million).
The item bonds, bank loans and otherinterest-bearing liabilities decreased by€ 34 million, mainly on account of therepayment of short-term liabilities tobanks including the repayment of shortterm debt in China (down € 9 million).
Trade payables dropped by € 84 million,
primarily caused by Voith Paper due tothe reduction in the volume of business(down € 26 million) and at Voith Hydro(down € 37 million) as some of the projects in this Group Division have reachedtheir final stages where less material
is consumed. Other financial liabilities
decreased by € 42 million, essentiallyas a result of a reduction in personnel-related liabilities. The opposite effect came from other liabilities whichrose by € 93 million mainly on accountof a rise in prepayments received from
customers (up € 76 million).
Equity decreased by € 39 million to€ 1,104 million (previous year: € 1,142 million). Equity was reduced by measurement effects on securities, dividend distributions and currency translation effects and, by contrast the net income
positively affected the equity. The equity
ratio remained stable at 19.8 % (previous year: 19.8 %).

Voith Interim Report 2014

IV.2.

IV.3.

Liquidity

Investments andR&D expenses

Significant improvement in
total cash flow
In the period under review, cash flowfrom operating activities came to€ 76 million in the period under review,thus significantly exceeding the previous year’s figure of €-23 million. The improvement of € 99 million is essentially
due to the change in net working capitalwhich is in turn attributable to the development of prepayments received from
customers associated with the higher
level of orders received.

In total, there was a cash outflow in the
period under review of € 20 million (previous year: € 180 million). For more details on the development of cash flow,
please refer to the cash flow statement.
Net debt, measured as the difference
between interest-bearing financial liabilities and liquid financial assets, amounted to €-10 million (= net asset position;
September 30, 2013: €-55 million). This
constituted a considerable improvement
on March 31, 2013, when there was a
net debt position of € 144 million.

The cash flow from investing activities
moved to €-39 million (previous year:€-94 million). The lower cash outflow
mainly results from the lower level of investing activities and from the change
in cash investments.
The cash flow from financing activities
stood at €-57 million (previous year:€-63 million). This effect can be explained to a great extent by a lower
level of expenditure for the acquisitionof shares from non-controlling interests
and a slight reduction in cash outflow
from the net repayment of liabilities tobanks.

Further investment in productivity
Following the high volume of investment
seen in recent years, we have the installed base to realize our mid-termgoals and have reduced our investment
volume in the current fiscal year, as announced. In the first half of the 2013/14
fiscal year, we invested € 68 million in
the Voith Group (previous year: € 92 million, down 27 %). The Voith Paper andVoith Turbo Group Divisions saw thehighest additions to property, plant andequipment. The ratio of investment toconsolidated sales stood at 2.6 % (previous year: 3.4 %). From a regional perspective, investments focused on Germany and China. Based on the higher
investment volumes seen in previous
years, amortization, depreciation andimpairment losses came to € 82 million.
In the period under review, the researchand development expenses came to€ 112 million (previous year: € 122 million, down 7 %). The ratio of R&D expenses to sales for the six-month period was therefore 4.3 % (previous year:
4.5 %).

Cash flowsin € millions

First half-year First half-year
2013/142012/13

Cash flow from operating activities

76

-23

Cash flow from investing activities

- 39

- 94

Cash flow from financing activities

-57

-63

Total cash flow

-20

- 180

Voith Interim Report 201423

V. Subsequent
eventsVI. Risks andopportunities

There were no significant events after
the close of the first half of the 2013/14
fiscal year (March 31, 2014).

Risk management oriented
to increasing the value of theCompany

IV.4.

Financial investments/
participating interests
Disposals at Voith I­ndustrial­ ervices and at Voith TurboS
The Voith I­ndustrial ­Services Group Division sold its wholly owned subsidiary
Voith Railservices B.V., Twello (the Netherlands), in October 2013. This entity,
which has four locations and around
100 employees, performed maintenancework for a number of railway operators and used to be fully consolidated
in the consolidated financial statementsof Voith GmbH. The sale does not impact engineering services for rail vehicle manufacturers which are provided
by Voith I­ndustrial ­Services.
In February 2014, Voith Turbo spun off
the waste heat recovery business unit
by way of a management buyout. The
newly created entity, which is completely independent of Voith, is trading as
SteamDrive GmbH and will in future
focus on products for use in combined
heat and power plants, i.e. the market
for local energy generation.

24

Entrepreneurial activity includes making
decisions under conditions of uncertainty. To safeguard against risks that could
jeopardize the Group and/or its companies as a going concern, Voith operates a consistent and binding Groupwide risk management system. Voith
has a distributed risk management system. It is intended to contribute to increasing the value of the Group and its
companies by reducing potential risks
and the probability of their occurring. At
the same time, the system is intended
to produce a state of equilibrium between correctly assessed risks and the
exploitation of opportunities. Risk andquality management are interlinked andintegrated in a comprehensive internal
controlling system.
To the best of our knowledge at the time
this report went to press, there are no
risks which could jeopardize the ability of the Voith Group to continue as agoing concern. The investment grade
rating given by Moody’s Investors Service first issued in 1999 was confirmed
at Baa2 in December 2013. The outlook was downgraded from “stable” to“negative”. The statements made in the“Risks and opportunities” section of theAnnual Report 2012/13 otherwise remain valid.

Voith Interim Report 2014

VII. Forecast report
VII.1.

Business environment
Global economic recovery
remains fragile
The available economic indicators point
to an ongoing recovery of the global
economy in the second half of Voith’s
2013/14 fiscal year, although the environment for mechanical and plant engineering companies remained challenging on account of the subdued investment climate in a large number ofindustries.
The International Monetary Fund (IMF)
forecasts that the rate of global growth
will rise from 3.6 % in 2014 to 3.9 % in
the following year. For the industrialized nations, the IMF is anticipating average growth of 2.2 % (2014) or 2.3 %(2015). The main drivers behind thisdevelopment are a loose fiscal policy
in conjunction with an ongoing expansive monetary policy. The US is experiencing growth, driven among otherthings by low energy prices, at ratesof 2.8 % (2014) and 3.0 % (2015), faster than most other mature economies.
The IMF forecasts growth in the grossdomestic product of the euro zone asa whole, following three years of recession (2014: up 1.2 %; 2015: up 1.5 %),with lower growth rates in the highly
indebted Southern European countries.
Once again, Germany is expected to be
the economic powerhouse of the eurozone with forecast growth of 1.7 % and1.6 % in these two years.

Voith Interim Report 2014

Following GDP growth of 4.9 % forecast for 2014, emerging and developing economies are expected to returnto stronger growth (up 5.3 %), among
other things on account of increasing
exports to the recovering industrialized
nations. China should make a significant contribution to this growth (2014:
up 7.5 %; 2015: up 7.3 %). India (2014:
up 5.4 %; 2015: up 6.4 %) could overcome its backlog of reforms and likethe ASEAN countries (2014: up 4.9 %;2015 up 5.4 %) benefit from successful
exports on account of recent depreciations in their currencies, thus boosting
growth impetus. Less dynamic growth
rates of 1.8 % (2014) and 2.7 % (2015)
are expected for Brazil.

Review for banks to be performed by
the European Central Bank, despite thefirst positive economic news from thecountries suffering from the euro crisis.
Our forecast business development isbased on the assumption that no economic or political shocks occur.
For our target markets of energy, oil &gas, paper and raw materials, we do
not anticipate any fundamental improvements over the course of the second
half of the fiscal year. We are optimistic
about the Transport & Automotive
market.

The current fragile recovery in the global
economy is subject to a number of risks
which, if they eventuate, could have asignificant impact on the global economy and therefore also on Voith. These
include geopolitical risks such as a potential escalation of the Ukraine conflict
between Russia, the US and Europe
and a number of flash points in the Middle East. Further currency turbulence
would reduce the competitiveness ofWestern products and services in the
countries affected, increase general insecurity and exert a harmful effect on
the investment climate. An additional
detrimental impact would come froma significantly more negative outcome
than expected to the Asset Quality

25VII.2.

Future development of the Group
Forecast for the year generally
confirmed
Based on developments in the period
under review, we confirm the outlook forthe 2013/14 fiscal year that we madewhen the Annual Report was publishedin December 2013: for the full 2013/14
fiscal year we anticipate Group sales
roughly at the level of the previous year,
based on the high level of orders on
hand and stable new business. In contrast to December 2013, we now antici­
pate a slight decline in the operational result before non-recurring items on
account of the developments at Voith
Paper. The net income of the Group,
which was heavily burdened by restructuring expenses and other non-recurring items in the previous year, is expected to rise significantly.
Our original forecast was based on our
corporate planning drawn up in the fallof 2013 and the exchange rates prevailing at that time. A continuation of
the unfavorable development of a number of exchange rates will have a negative impact on our business. Should

26

the exchange rates over the rest of theyear remain at the low level seen in thefirst half of the fiscal year, this will generally negatively impact sales, orders
received and all key earnings indicators of the Voith Group. We expect that
the Group’s net income for the year will
nevertheless rise significantly in comparison to the previous year.
All four Group Divisions returna profit
If exchange rate fluctuations are nottaken into account, we likewise confirm the forecasts for our four Group
Divisions. All Group Divisions, including Voith Paper, which is undergoing restructuring, will continue to return a clear
profit from operations, although theirsales and orders received will d­ evelopdifferently, depending on their markets.
For Voith Hydro we anticipate a weaker development in the second half ofthe fiscal year on account of the uneven distribution over the year following a strong first half of the year, as described above. Based on the above, we

assume that sales will fall slightly overthe full 2013/14 fiscal year on accountof the lower level of orders received inprevious years, as already predicted in
the Annual Report 2013. The return onsales is expected to improve slightly,
which means that the profit from operations will roughly match the high levelof the previous year. Based on stable
market volume, we anticipate for thefull 2013/14 fiscal year a level of orders
received slightly above the previous year.
For Voith I­ndustrial S­ ervices we antici­
pate a good second half of the fiscal
year. As already forecast in the Annual
Report 2013, sales for the full 2013/14
fiscal year should remain stable at theprevious year’s level. After adjusting forthe effects of changes in the consolidated group, we expect a rise in sales. Dueto the measures introduced to improveearnings, the return on sales is anticipated to rise in comparison to the previous year and the profit from operations
to be higher than in the previous year.
In the Voith Paper Group Division we
anticipate higher sales in the second

Voith Interim Report 2014

half of the fiscal year, in which a profit
from operations will also be generated.
On account of the low level of orders received in previous years, we anticipate
a decrease in sales for the full year, as
in our original forecast. In contrast to
the situation in the period under review,
Voith Paper will succeed in returninga clear profit in the full 2013/14 fiscal
year. The cost savings from the restructuring measures will make a contribution to this development. These will takeincreasing effect in the second half ofthe fiscal year. In this context, the profit
from operations will fall below the previous year somewhat more clearly thanoriginally expected. Under the assumption that the slight recovery in the paper
machine market in Asia will continue,
we anticipate a slight rise in orders received for the full 2013/14 fiscal year.

the assumption that the profit from operations will rise significantly even in a
year-on-year comparison on the backof the efficiency drives launched anddue to the absence of the extraordin­
ary burdens reported in the previous
year. We expect a continued recovery
in orders received, with this figure in the2013/14 fiscal year significantly exceeding the previous year.

Voith Turbo anticipates slightly improved
sales in the second half of the fiscal year
in comparison to the period under review, which means that it is still possible
to achieve the target of generally stablesales development seen on the basisof the full year. We are still working on

Voith Interim Report 2014

27

28

Voith Interim Report 2014

Group interim financial statements
for the period from October 2013 to March 201402

Voith Interim Report 2014

Consolidated statement of income
Consolidated statement of comprehensive income
Consolidated balance sheet
Statement of changes in equity
Consolidated cash flow statement
Notes to the interim
consolidated financial statements
Notes on segment reporting
Segment information by business segment
Notes to the statement of income
and the balance sheet
Other notes
Responsibility statement

30
31
32
34
36
37
43
44
46		
49		
54		

29

Consolidated statement of income
for the period from October 1, 2013 to March 31, 20142013-10-01 to
2014-03-31

2012-10-01 to
2013-03-31*

2,603,952

2,716,841

35,41337,0752,639,365

2,753,916

149,863

144,244

Cost of material-1,021,461-1,115,135

Personnel expenses

in € thousands

Sales
Changes in inventories and other own work capitalized
Total output
Other operating income-1,072,253-1,078,796

Depreciation and amortization-82,291-87,809

Other operating expenses-508,053-512,832

Operational result before non-recurring items

105,170

103,588

Result from non-recurring items-20,184-23,862

Operational result

84,986

79,726

Income from companies accounted for using the equity method

3,226

2,943

Interest income

6,188

5,611

Interest expenses-41,495-38,172

159

9,080

Income before taxes

53,064

59,188

Income taxes-23,401

3,688

Net income

29,66362,876· Net income attributable to shareholders of the parent company

19,26551,247· Net income attributable to holders of non-controlling interests

10,398

11,629Other financial result* Previous year adjusted (see section “Adjustment of previous year”).

30

Voith Interim Report 2014

Consolidated statement of comprehensive income
for the period from October 1, 2013 to March 31, 20142013-10-01 to
2014-03-31

2012-10-01 to
2013-03-31*

29,66362,876

Remeasurement of defined benefit plans

3,899

5,983

Taxes on components of other comprehensive income that will not be recycled through profit orloss in later accounting periods-1,508-2,346in € thousands

Net income
Components of other comprehensive income that will not be recycled through profit orloss in later accounting periods:

Components of other comprehensive income that will be recycled through profit orloss in later accounting periods
Gains/losses on available-for-sale financial assets-23,994-3,054-312-1,429Gains/losses on currency translation-18,839-9,387

Gains/losses from the currency translation of net investments in foreign operations

Gains/losses on cash flow hedges-1,315-1,146

Share of associates in other comprehensive income

063

Taxes on components of other comprehensive income that will be recycled through profit orloss in later accounting periods

7

1,272

Other comprehensive income-42,062-10,044

Total comprehensive income-12,399

52,832· Total comprehensive income attributable to shareholders of the parent company-19,006

43,934· Total comprehensive income attributable to holders of non-controlling interests

6,607

8,898

-12,399

52,832* Previous year adjusted (see section “Adjustment of previous year”).

Voith Interim Report 201431

Consolidated balance sheet
as at March 31, 2014

Assetsin € thousandsA.

Non-current assets

I.

Intangible assets

II.

Property, plant and equipmentIII.

2014-03-31

2013-09-30*

753,372

762,659

1,169,304

1,197,087

Investments in associates

40,746

37,663

IV.

Securities

191,682

215,856

V.

Other financial assets

28,30927,012VI.

Other financial receivables

71,312

71,465

VII. Other assets

24,271

27,747

VIII. Deferred tax assets

144,337

147,658

Total non-current assets

2,423,333

2,487,147

758,318

738,112B.

Current assets

I.

Inventories

II.

Trade receivables

1,108,455

1,193,848

III.

Securities

32,69357,781IV.

Current income tax assets

73,42580,721V.

Other financial receivables

121,837

114,233

VI.

Other assets

195,049

177,327

VII. Cash and cash equivalents

864,641

900,967

3,154,418

3,262,989

0

11,436

Total current assets

3,154,418

3,274,425

Total assets

5,577,751

5,761,572

VIII. Assets held for sale

* Previous year adjusted (see section “Adjustment of previous year”).

32

Voith Interim Report 2014

Equity and liabilitiesin € thousands

2014-03-31

2013-09-30*

A.

EquityI.

Issued capital

120,000

120,000

II.

Revenue reserves

832,114

832,485

III.

Other reserves-12,71328,437

IV.

Profit participation rights

6,600

6,600

Equity attributable to shareholders of the parent company

946,001

987,522V.

Profit participation rights

96,80096,800VI.

Other interests

Equity attributable to holders of non-controlling interests
Total equity

60,764

58,147

157,564

154,947

1,103,565

1,142,469

B.

Non-current liabilities

I.

Provisions for pensions and similar obligations

633,423

647,290

II.

Other provisions

219,996

214,863

III.

Income tax liabilities

852

869

IV.

Bonds, bank loans and other interest-bearing liabilities

865,403857,832

V.

Other financial liabilities

18,84018,076VI.

Other liabilities

56,931

58,176

VII. Deferred tax liabilities

68,49375,586

Total non-current liabilities

1,863,938

1,872,692

C.

Current liabilities

I.

Provisions for pensions and similar obligations

26,997

26,544II.

Other provisions

280,532

334,785

III.

Income tax liabilities

93,775

104,706

IV.

Bonds, bank loans and other interest-bearing liabilities

274,834

308,514V.

Trade payables

479,262

562,983

VI.

Other financial liabilities

275,581

317,968

1,179,267

1,085,511

2,610,248

2,741,011

0

5,400

Total current liabilities

2,610,248

2,746,411

Total equity and liabilities

5,577,751

5,761,572

VII. Other liabilities

VIII. Liabilities directly associated with assets classified as held for sale

* Previous year adjusted (see section “Adjustment of previous year”).

Voith Interim Report 201433

Statement of changes in equity
Equity attributable to shareholders of the parent companyin € thousands

2013-10-01 (as published)

Issuedcapital

Revenue
reserves

Available-for-salefinancial assets

Cash flow
hedgesCurrencytranslation

120,000

1,007,826

38,122-1,040-715

Adjustments
2013-10-01 (after adjustment)*-175,341
120,000

832,485-1,072
38,122-1,040-1,787

Net income

19,265

Other comprehensive income

2,879-24,124-312-15,859

22,144-24,124-312-15,859

13,998-1,352-17,646

Total comprehensive income

0

Allocation of reserves to profit
participation rights-5,501

Acquisition of non-controlling interests

771

Share of income attributable to profit
participation rights
Dividends-15,000

Capital increases by holders of noncontrolling interests-1,564Non-controlling interests – put options-738

Other adjustments
2014-03-31-483
120,000

832,114

Equity attributable to shareholders of the parent companyin € thousands

2012-10-01 (as published)

Issuedcapital

Revenue
reserves

Available-for-salefinancial assets

Cash flow
hedgesCurrencytranslation

120,000

990,030

57,116-864

54,808Adjustments
2012-10-01 (after adjustment)*-183,391
120,000

806,639-3,20057,116-864

51,608Net income

51,247

Other comprehensive income

3,521-1,962-1,366-6,74854,768-1,962-1,366-6,74855,154-2,23044,8600Total comprehensive income
Allocation of reserves to profit
participation rights-5,412Acquisition of non-controlling interests-4,916

Share of income attributable to profit
participation rights
Dividends-15,000

Capital increases by holders of noncontrolling interests
Non-controlling interests – put options-906

Other adjustments
2013-03-31

3,419
120,000

838,592* Previous year adjusted (see section “Adjustment of previous year”).

34

Voith Interim Report 2014

Equity attributable to holders of non-controlling interests
Net investments inforeign operations

Profit participationrights

Total

Profit participationrightsOtherinterests

Total

Total equity-6,8586,600

1,163,935

96,80058,030154,830

1,318,765

117

117

-176,296

58,147

154,947

1,142,469

19,265

10,398

10,39829,663-38,271-3,791-3,791-42,062

6,607

6,607

-12,399

5,138

0-3,024-3,024-2,253-5,138-5,501-17,954-176,413-6,858

6,600

-855
-855

987,52296,8000-19,006

0363-5,138

5,138

771
-363

-363

-5,138-15,000-2,954-2,954-1,564

1,809

1,809

245

-738

528

528

-210

-483
-7,7136,600

946,001

96,800

-349

-349

-832

60,764

157,564

1,103,565

Equity attributable to holders of non-controlling interests
Net investments inforeign operations

Profit participationrights

Total

Profit participationrightsOtherinterests

Total

Total equity-5,8946,600

1,221,796

91,80069,942

161,742

1,383,538

-60

-60

-186,651

69,882

161,682

1,196,887

51,247

11,629

11,62962,876-7,313-2,731-2,731-10,044

8,898

8,898

52,8325,049

0-5,384-5,384-10,300-5,049-5,412-3,228-18,228-186,591-5,894

6,600

-758
-758

1,035,205

91,800043,9340363-5,0495,049-4,916-363-363-5,049-15,000-3,228

0

2,000

2,000

2,000

-906

-4,567-4,567-5,473

3,419-6,652

Voith Interim Report 2014

6,600

1,056,324

91,800

-129

-129

3,290

67,472

159,272

1,215,596

35

Consolidated cash flow statement

2013-10-01 to
2014-03-31

2012-10-01 to
2013-03-31*

Income before taxes

53,064

59,188Depreciation and amortization

84,172

110,576

Interest expenses/income

35,30732,561Other non-cash items

5,231

631

Gains/losses from the disposal of property, plant, equipment and intangible assets

4,011

1,204

in € thousands

Gains/losses from investments-40-8,980-89,284-67,885

Change in net working capital

18,729-113,624Interest paid

-10,979-7,801

6,339

5,271

Changes in other provisions and accruals

Interest received
Dividends received

1,174

9,613

Tax paid-31,894-44,121

Cash flow from operating activities

75,830-23,367

Investments in property, plant, equipment and intangible assets-67,578-92,187

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

2,616

2,305

Investments in financial assets-3,207-3,676

Acquisitions of subsidiaries
Sale of subsidiaries
Proceeds from the disposal of financial assets

0-7,126

4,663

0

957

12,724

Changes in investments in securities

24,137-6,334

Cash flows from investing activities-38,412-94,294

Dividends paid

-22,517-23,640

Contributions from holders of non-controlling interests
Acquisition of non-controlling interests
Sale of non-controlling interests

0

2,000

-6,825-10,300

245

0

New bonds, banks loans and overdrafts

53,37583,420

Repayment of bonds, banks loans and overdrafts-69,901-103,374

Changes in other interest-bearing financial receivables and liabilities-11,422-10,003

Cash flow from financing activities-57,045-61,897

Total cash flow

-19,627-179,558

Exchange rate movements, valuation changes and changes in the consolidated Group-16,699-3,431

Cash and cash equivalents at the beginning of the period

900,967

916,894

Cash and cash equivalents at the end of the period

864,641

733,905* Previous year adjusted (see section “Adjustment of previous year”).

36

Voith Interim Report 2014

Notes to the interim consolidated financial statements
Basis of the interim consolidated financial statements and accounting policies
Voith GmbH (Voith) is a company founded in Germany withinternational activities. The Company’s registered offices arelocated in Heidenheim an der Brenz at St. Pöltener Strasse
43. Voith is entered in the commercial register at the Registration Court in Ulm, Germany, under the number HRB
725621. The interim consolidated financial statements prepared by Voith are filed with the Bundesanzeiger [German
Federal Gazette] in German. As a domestic issuer of debt
securities pursuant to Sec. 2 (1) Sentence 1 German Securities Trading Act (WpHG), Voith prepares this half-year­financial report in accordance with the provisions of Sec.
37w WpHG and the requirements of IAS 34 “Interim Financial Reporting”.
The interim consolidated financial statements for the first halfof the 2013/14 fiscal year were prepared in accordance with
the International Financial Reporting Standards (IFRS) for interim financial reporting as endorsed by the European Union.
In comparison to the full annual report as at September 30,
2013 the interim consolidated financial statements are of acondensed scope.
The unaudited interim consolidated financial statements do
not include all of the information and disclosures requiredfor consolidated financial statements and must therefore

be read in conjunction with the consolidated financial statements for the year ending September 30, 2013. The interim
financial statements are presented in euros and the figures
have been rounded using standard commercial principles.
Within the framework of preparing the interim consolidated
financial statements pursuant to IFRS, it is necessary to
make certain estimates, judgments and assumptions that
could have an impact on the amount and presentation of theassets and liabilities recognized in the reporting as well as
the disclosures on contingent assets and contingent liabilities on the reporting date and on the income and expenses
reported for the period. Actual amounts may differ from theestimates. Changes in estimates, judgments and assumptions could have a material impact on the interim financial
reporting.
The accounting policies applied by the Group in these interim consolidated financial statements generally correspondto the accounting policies applied in the IFRS consolidated
financial statements for the previous fiscal year. Income
taxes are recorded on the basis of an estimate of theweighted average annual tax rate expected for the full year
taking account of the tax impact of any circumstances thatcan only be allocated to the respective period under review.
In the first half of the 2013/14 fiscal year, the following new
and revised IAS and IFRS were adopted for the first time:Standard/interpretation

Amendment/new standard or interpretation

Effects

IAS 19 “Employee Benefits”

See below, section “Adjustment of previous year”

See below, section “Adjustment of previous year”

IFRS 13 “Fair Value
Measurement”

IFRS 13 defines fair value, provides a framework
for measuring fair value in one IFRS and prescribes
disclosures on the measurement of fair value

No material effects on the net assets, financial position
and results of operations; extended disclosures, seesection “Additional information on financial instruments”

Annual improvements
project (2009–2011)

Amendments to IFRS 1, IAS 1, 16, 32 and 34

No material effects on the net assets, financial position
and results of operations

Voith Interim Report 201437

Adjustment of previous year
(1) Amendments to IAS 19
The most significant amendment to IAS 19 is that in future
cumulative actuarial gains and losses will be recognized directly in equity. The corridor method to smooth unexpectedfluctuations in pension obligations and the corresponding
plan assets has been eliminated, including the recognition
in profit or loss of actuarial gains and losses exceeding the
10 % corridor. As Voith used the corridor method in the past,
there will be larger fluctuations in equity in future. The netinterest approach is also being introduced. According to this,the net defined benefit liability is discounted with the discount rate used in the measurement of the defined benefit
obligation. This calculation assumes a return on plan assets
at the discounted interest rate instead of the expected return. As a result of the amended definition of termination
benefits under IAS 19, the top-up amounts agreed in “Altersteilzeit” (German phased retirement) agreements from now
on constitute other long-term employee benefits. In future,
this will mean a pro rata accumulation of top-up amounts
over the active service period of the employees taking partin the phased retirement scheme. This results in a reductionin provisions for phased retirement schemes. Due to theclarifications presented in the revised IAS 19, enhancementsof post-employment benefits in connection with measures
stemming from termination benefits are accounted for in thesame way as post-employment benefits. These benefits will
therefore be presented under provisions for pensions andsimilar obligations in future and no longer under other provisions. Any resulting actuarial gains or losses are recorded
directly in equity.

38(2) Owing to non-compliance in the first half of the 2013/14
fiscal year with the accounting policies relating to the accounting for inventories, trade receivables and provisions inprevious years at a subsidiary, a need for corrections forthese balance sheet items was determined.
(3) While incorporating the results of the tax field audit for
the years 2002 to 2006 in subsequent periods, it was determined in the first half of the 2013/14 fiscal year that thecalculations of the corporate income tax and trade tax forthe years 2006/07 to 2011/12 required significant correction. This renders tax back payments necessary, on the one
hand requiring corrections in the form of tax provisions andon the other hand resulting in a need to recognize impairment losses for the deferred tax assets on account of thedecrease in unused tax losses.
Voith has adjusted the published previous-year figures pursuant to IAS 8 to reflect the effects from the amendments
to IAS 19 as well as from the findings described above. In
detail, the following changes were made in the comparative
periods:

Voith Interim Report 2014

Effects on the consolidated balance sheetin € thousands

2012-10-01
Before adjustments

2012-10-01
Adjustment (1)2012-10-01
Adjustment (2)2012-10-01
Adjustment (3)2012-10-01
After adjustments

Other financial assets

36,857-850

36,007

Inventories

860,220-578

859,642

Trade receivables

1,213,821

Equity1,383,538-134,273

Provisions for pensions and similar obligations

456,909226,289

Other provisions

519,440-23,767

1,234,081-7,197

Bonds, bank loans and other interest-bearing
liabilities-7,308

Income tax liabilities

106,662

Net deferred tax assets

20,40761,052

2013-09-30
Before adjustments

2013-09-30
Adjustment (1)in € thousands-9,525

1,206,513-42,853

1,196,887
683,198

789

496,462
1,226,884

2013-09-30
Adjustment (2)21,740128,402-21,11360,3462013-09-30
Adjustment (3)2013-09-30
After adjustments

Other financial assets

27,862-850

27,012Inventories

738,642-530

738,112Trade receivables

1,201,161

Equity1,318,765-121,253

Provisions for pensions and similar obligations

459,378

214,456

Other provisions

588,258-39,274

1,172,365-6,019Bonds, bank loans and other interest-bearing
liabilities
Income tax liabilities

80,383Net deferred tax assets

44,656Voith Interim Report 2014

-7,313

47,910-9,357

1,193,848-45,686

1,142,469
673,834

664

549,648
1,166,346
25,192

105,575-20,494

72,07239

Effects on the consolidated statement of income

First half of 2012/13
Before adjustments

First half of 2012/13
Adjustment (1)First half of 2012/13
Adjustment (2)-1,083,911

4,970

145

-1,078,796

Other operating expenses-508,242-4,60010-512,832

Interest expenses

in € thousands

Personnel expenses

First half of 2012/13
Adjustment (3)First half of 2012/13
After adjustments-41,278

3,106-38,172

Income taxes

4,674

-986

3,688

Net income

60,2312,490

155

62,876

Net income attributable to shareholdersof the parent company

48,6712,421

155

51,247

Net income attributable to non-controllinginterests

11,56069

11,629Effect on consolidated statement of comprehensive incomein € thousands

Net income

First half of 2012/13
Before adjustments

First half of 2012/13
Adjustment (1)First half of 2012/13
Adjustment (2)60,2312,490

155First half of 2012/13
Adjustment (3)First half of 2012/13
After adjustments

62,876

Items that will not be recycled through profit
or loss in later accounting periods
Remeasurement of defined benefit plans

5,983

5,983

Taxes on components of comprehensive
income that will not be recycled throughprofit or loss in later accounting periods-2,346-2,346237-9,387

Items that will be recycled through profit
or loss in later accounting periods
Gains/losses on currency translation-9,624

Other comprehensive income-13,918

3,874

Total comprehensive income

46,3136,364

155-10,044
52,832

Total comprehensive income attributable
to shareholders of the parent company

37,626

6,153

155

43,934

Total comprehensive income attributable
to holders of non-controlling interests

8,687

211

8,898

The disclosures have been adjusted accordingly. This results
in reclassifications of certain items in the cash flow statement under cash flow from operating activities. Certain ratios
in the segment reporting have also been adjusted.

40

Voith Interim Report 2014

Business combinationsin the 2013/14 fiscal year
Had items been accounted for pursuant to the unrevised
version of IAS 19, provisions for pension and similar obligations would have been € 207 million lower, other provisions€ 39 million higher, the item bonds, bank loans and otherinterest-bearing liabilities € 6 million higher and equity after
considering deferred taxes € 116 million higher in the consolidated balance sheet as at March 31, 2014. In the consolidated statement of income, the operational result would
have been € 1 million higher, interest expenses € 4 million
higher and net income € 2 million lower.

There were no business combinations in the first half of the
2013/14 fiscal year.

Business combinationsin the 2012/13 fiscal year
Acquisition of ThyssenKrupp Services Ltd.,
United Kingdom

Consolidated GroupThe following companies are included in the consolidated
financial statements:
2014-03-31

2013-09-30

Germany

61

60

Other countries

139

143

Total fully consolidated companies

200

203

Voith GmbH and its fully consolidated
subsidiaries:

Voith ­Industrial ­Services acquired all of the interests and voting rights in ThyssenKrupp Services Limited in the first half ofthe 2012/13 fiscal year. With this acquisition, Voith ­Industrial­Services intended to consolidate its position as one of theleading service providers for the automotive industry in the
United Kingdom. The company provides facility management
services, technical cleaning and process management.

Companies accounted for using
the equity method:
Germany

6

6

Other countries

13

13

Total companies accounted for using
the equity method

19

19

The following companies were fully consolidated for the firsttime in the period under review:
 oith I­ndustrial SV­ ervices Auslandsbeteiligungen GmbH,
Stuttgart• 
Voith Engineering Services GmbH & Co. KG, Stuttgart• 
Voith Paper Mexico S. de R.L. de C.V., Mexico (D.F.), Mexico•

Intercompany mergers between Group companies in Germany and other countries reduced the number of fully consolidated companies.

Voith Interim Report 201441

Acquisition in the 2013/14 fiscal yearof further interests in companies overwhich the Group already has control
The following amounts resulted from the assets and liabilities
acquired in the combination:
Balance sheet itemin € thousands

Acquisition
date fair value

Intangible assets

2,925

Other non-current assets

933

Inventories

145

Receivables

5,507

Other assets

560

Cash and cash equivalents

2,225

Provisions-3,298

Liabilities-3,391

Carrying amount

5,606

Goodwill

2,978

Purchase price of the interests purchased

8,584

Cash and cash equivalents-2,225

Cash outflows

6,359

Acquisition of Vortex Hydrosystems Inc., Canada
In February 2013, Voith Hydro acquired 80 % of the interestsand voting rights of the Canadian firm Vortex Hydrosystems
Inc. The company supplies mechanical equipment to hydro­
power plants. The purchase price of the interests purchasedwas € 718 thousand.

42

Voith Hydro acquired the remaining 20 % of the interests in Voith Hydro Ocean Current Technologies GmbH& Co. KG, Germany, in the first half of the 2013/14 fiscal
year. In addition, Voith Paper acquired the remaining 50 %of the interests in Voith EcoSolutions GmbH & Co. KG, Germany. The purchase price for the two transactions totaled€ 6,825 thousand.

Acquisition in the 2012/13 fiscal year offurther interests in companies over which
the Group already has control
Voith Hydro acquired a further 49 % of the interests in VG
Power AB, Västerås, Sweden, in the first half of the 2012/13
fiscal year. The Group now wholly owns the company andalso holds 100 % of the voting rights. The purchase pricewas € 10,300 thousand.

Disposals in the 2013/14 fiscal year
In the course of streamlining the product portfolio, Voith­Industrial S­ ervices and Voith Turbo each sold one productsegment. A total loss of € 3,528 thousand was incurred as aresult of the disposals which was posted to the result from
non-recurring items. The purchase price for the two transactions totaled € 4,663 thousand.

Voith Interim Report 2014

Notes on segment reporting

The structure of the segments and the methods used to calculate the segment information have remained unchanged
since September 30, 2013.
When calculating the profit from operations, the following
profit/loss components are taken into consideration unchanged compared to the last consolidated financial
statements:
Operating interest income
Operating interest income is defined as interest received by
the Company on the long-term financing of receivables from
customers or as the imputed interest effect attributable tothat portion of customer advances that is not used to finance inventories and PoC receivables.

Voith Interim Report 2014

Other adjustments
Other adjustments contain effects which, based on their operating character, are normally shown as other operating income and expenses in the consolidated statement of income.
In determining the profit from operations, these adjustments
are eliminated as non-recurring effects so as to facilitate theassessment of the operating activities by segment.
The capital employed as at the reporting date March 31,
2014 is an average value derived from the values as at theend of the current period under review and as at the reporting date of the previous period under review. The capital employed presented as a comparative figure as at September
30, 2013 is an average value derived from the values as at
the end of the period ended September 30, 2013, the reporting date for the previous interim financial statements and as
at the end of the previous period ended September 30, 2012.

43

Segment information by business segment
Voith ­H ydroin € millions

External sales
Sales with other segments

Voith ­Industrial ­S ervices

2013/142012/132013/142012/13

668

659

574

573

2

2

13

14

Total segment sales

670

661

587

587

Profit from operations

51

532)

9

11

Average capital employed
Employees3)

448

505

237

238

5,441

5,323

20,793

21,032

Subtotal for Voith Hydro, Voith I­ndustrial ­Services, Voith Paper and Voith Turbo.
Previous year adjusted (see section “Adjustment of previous year”).
3)
Statistical number of persons employed as at the reporting date compared with September 30, 2013.

1)

2)

44

Voith Interim Report 2014

Voith ­Paper

Voith ­Turbo

Total core business1)

Reconciliation

Total

2013/142012/132013/142012/132013/142012/132013/142012/132013/142012/13

673

757

682

722

2,597

2,711

7

6

2,604

2,717

9

15

3

3

27

34

-27

-34

0

0

682

772

685

725

2,624

2,745

-20

-28

2,604

2,717

-5

4

57

482)

112

116

13

9

125

125

922

943

772

797

2)

2,379

2,483

152

157

2,531

2,6402)

8,906

9,223

6,420

6,485

41,56042,063

1,053

1,071

42,613

43,134

The two defined components “Operating interest income”
and “Other adjustments” are not shown directly in the consolidated statement of income and are therefore disclosed
separately in the following reconciliation of the profit fromoperations to income before taxes.

2)

Reconciliation of total profit from operations to theGroup’s income before taxes:in € millions

2013/142012/13*

Profit from operations

125

125

Operating interest income

-20

-18

Other adjustments

0-3

Result from non-recurring items

-20

-24

Share of profits from associates

3

3

-35

-33

Other financial result

Interest result

09Income before taxes

53

59* Previous year adjusted (see section “Adjustment of previous year”).

Voith Interim Report 201445

Notes to the statement of income and the balance sheet

The following notes are restricted to those matters thatprovide useful additional information for understanding theamounts reported in the statement of income and the balance sheet.

Selected notes to the statementof incomein € thousands

2013/142012/13

Income from the utilization of contractspecific provisions

49,981

59,379

Income from the reversal of provisions
and accruals

29,66024,976

Foreign exchange gains

27,07924,196

Recovered bad debts

2,746

3,219

564

959

Rental and lease income

2,375

1,907

Income from insurance indemnification
payments

3,812

10,797

Other income46

in € thousands

33,646

18,811

149,863

144,244

2013/142012/13*

Increase in provisions and accruals

78,294

94,036

Other selling expenses

170,952

168,276

Other administrative expenses

119,071

130,124

Foreign exchange losses

33,231

23,936

Rent for buildings and machinery

38,87137,907

Bad debt allowances

4,199

3,739

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

Other operating income

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

Other operating expenses

Other expenses

821

2,163

62,61452,651

508,053

512,832* Previous year adjusted (see section “Adjustment of previous year”).

Result from non-recurring items
The result from non-recurring items in the year under review
comes to €-20 million. Of this total, Voith Paper contributed€-3 million and entities with a holding function €-1 million inconnection with the restructuring measures initiated in theprevious year. These are essentially personnel-related expenses for which it was not possible to recognize provisions
in the previous year. Further structural or market-related capacity adjustment measures at Voith Hydro (€-5 million) andVoith I­ndustrial S­ ervices (€-7 million) contributed to the result
from non-recurring items. Voith Turbo’s share (€-4 million)
primarily contains losses from the disposal of a business unit.
The previous-year result from non-recurring items of €-24 million mainly contained an impairment loss recorded on intangible assets and property, plant and equipment in connection
with the revised business plan for a product group in theVoith Turbo Group Division.

Voith Interim Report 2014

Selected notes to the balance sheet
Other financial resultin € thousands

Intangible assets
2013/142012/13

Income from investments

40

8,980

Impairment of other investments and loans

-9

-39

128

139

159

9,080

Sundry other financial result

In the first half of the 2013/14 fiscal year, an amount of€ 7 million (previous year: € 14 million) was invested in intangible assets. Amortization amounted to € 14 million (previous
year: € 16 million) and impairment losses to € 0 (previous year:€ 6 million).
Property, plant and equipment

Income taxes
Income taxes totaled €-23 million (previous year [adjusted]:€ 4 million). In the same period of the previous year, this item
included income from the release of tax provisions for previous years amounting to € 29 million.

Investments in property, plant and equipment amounted to€ 61 million in the first six months of the 2013/14 fiscal year
(previous year: € 78 million). Property, plant and equipment
originating from business combinations of € 0 was added(previous year: € 2 million). Depreciation amounted to€ 68 million (previous year: € 72 million) and impairment lossesto € 2 million (previous year: € 17 million).
Inventories
Inventories consist of the following items:in € thousands

2014-03-31

2013-09-30*

Raw materials and supplies

241,749

241,802

Work in progress

281,596

270,067

Finished goods and merchandise

149,005

141,683

Prepayments

85,96884,560758,318

738,112* Previous year adjusted (see section “Adjustment of previous year”).

EquityA dividend of € 0.13 per share was distributed from the unappropriated retained earnings of Voith GmbH. This equates to€ 15,000 thousand (previous year: € 15,000 thousand). Distributions totaling € 5,501 thousand were made to holders
of profit participation capital (previous year as at March 31,
2013: € 5,412 thousand). Dividends totaling € 2,954 thousand
were distributed to other holders of non-controlling interests(previous year as at March 31, 2013: € 3,228 thousand).

Voith Interim Report 201447

Bonds, bank loans and other interest-bearing financial liabilities
Financial liabilities include the following items:in € thousands

Current

Non-current

2014-03-31

Current

Non-current

2013-09-30*

Bonds

133,664

705,341

839,005

138,994

707,885

846,879

Bank loans

82,03586,220168,255

112,540

77,732

190,272

Financial liabilities from leases

428

1,608

2,036

681

1,675

2,356

Notes payable

302

0

302

335

0

335

Other financial liabilities

58,40572,234130,639

55,96470,540126,504

274,834

865,4031,140,237

308,514857,832

1,166,346* Previous year adjusted (see section “Adjustment of previous year”).

48

Voith Interim Report 2014

Other notes

Contingent liabilities, contingent assets andother financial obligations

Moreover, other financial obligations are as follows:in € thousands

In the previous year, possible tax risks existed outside Germany concerning the tax recognition of expenses amounting
to € 13 million. Due to the development in the period underreview, the occurrence of the risk is, in the meantime, regarded as remote.
In connection with the recognition of transfer prices outside
Germany, there are additional risks of € 5 million (previous
year: € 5 million) and of € 17 million (previous year: € 23 million) for legal disputes. A successful outcome is currently
expected in both cases.

2014-03-31

2013-09-30

Purchase commitments for capital
expenditures

17,04325,898

Obligations arising from non-cancelable
operating leases

138,920

140,440

1,204

910

157,167

167,248

Other

Owing to failure, due to an end customer, to comply withspecific rules concerning the receipt of tax incentives outside Germany, the recognition of tax privileges was disputedby the tax authorities in previous years. The risk amounted
to a maximum of € 9 million as at September 30, 2013. The
proceedings were concluded in the first half of the 2013/14
fiscal year and resulted in € 5 million being paid to the tax
authorities.
Neither Voith GmbH nor any of its Group companies are
involved in any current or foreseeable taxation, legal or arbitration proceedings that could materially influence their economic situation.
In connection with the ongoing tax field audit of the German
companies, further changes may be made to tax items.
From the Voith Group’s perspective, the Group might haverights to offset tax liabilities due to the tax authorities totaling
approximately € 7 million (previous year: € 9 million) outside
Germany. There are potential VAT credits of € 3 million inGermany (previous year: € 8 million).
The Company has guarantee obligations of € 19,114 thousand (previous year: € 36,649 thousand).

Voith Interim Report 201449

Additional information on financial instruments
Carrying amounts, amounts recognized in the balance sheet and fair values by measurement category.
Amount recognized in the balance sheet
in accordance with IAS 39

Amount recognized in
the balance
sheet inaccordancewith IAS 17

IAS 39measure­ment
category

Carrying
amount2014-03-31

Amortized
cost

Cash and cash equivalents

LaR

864,641864,641864,641

Trade receivables

LaR

792,644792,644792,644

Receivables from construction
contracts

LaR

315,811315,811315,81130,05730,057in € thousands

Acquisition
cost

Fair value
through
equityFair value
through profit or loss

Fair value
2014-03-31

Assets:Other financial assets and securities

252,684· Financial assets, loans and receivables

LaR

30,057· Available-for-sale financial assets

AfS

217,154· Financial assets at fair value throughprofit or loss

FafvtplDerivative financial instruments· Derivatives not used for hedging· Derivatives used for hedging

22,063

195,091

5,473

195,0911)
5,473

5,473

5,935

5,935

28,31628,31634,251
FAHfT
n.a.

Other receivables

5,935
28,316

0

158,899· Financial receivables

LaR

48,405

48,405

48,405· Sundry financial assets

LaR

110,494

110,494

110,494

Equity and liabilities:
Trade payables

FLAC

469,581469,581469,581Bonds/bank loans/notes

FLAC

1,007,562

1,007,562

1,092,830

n.a.

2,036

FLHfT

2,276

n.a.

7,720

Other financial liabilities

FLAC

130,639

130,639

130,639

Sundry financial liabilities

FLAC

284,425

284,425

284,425

Loans and receivables (LaR)

LaR

2,162,052

2,162,052

Available for sale (AfS)

AfS

217,154

Financial assets held for trading (FAHfT)

FAHfT

5,935

5,935

Financial assets at fair value throughprofit or loss (Fafvtpl)

Fafvtpl

5,473

5,473

Financial liabilities measured atamortized cost (FLAC)

FLAC

1,892,207

Financial liabilities held for trading(FLHfT)

FLHfT

2,276

Financial liabilities from leases
Derivative financial instruments· Derivatives not used for hedging· Derivatives used for hedging

2,036

9,996

181

2,276

2,276

7,539

7,720

IAS 39 measurement categories:1)

22,063

195,091

1,892,207
2,276

Available-for-sale financial assets (AfS) include investments whose
fair value could not be determined reliably.

50

Voith Interim Report 2014

Amount recognized in the balance sheet
in accordance with IAS 39*

Amount recognized in
the balance
sheet inaccordancewith IAS 17

IAS 39measure­ment
category

Carrying
amount2013-09-30*

Amortized
cost

Cash and cash equivalents

LaR

900,967

900,967

900,967

Trade receivables

LaR

926,400

926,400

926,400

Receivables from construction
contracts

LaR

267,448

267,448

267,448

53,796

53,796in € thousands

Acquisition
cost

Fair value
through
equityFair value
through profit or loss

Fair value
2013-09-30*

Assets:Other financial assets and securities

300,649· Financial assets, loans and receivables

LaR

53,796· Available-for-sale financial assets

AfS

241,831· Financial assets at fair value throughprofit or loss

FafvtplDerivative financial instruments· Derivatives not used for hedging· Derivatives used for hedging

20,897

220,934

5,022

220,9341)
5,022

5,022

8,063

8,063

29,40829,57037,633
FAHfT
n.a.

Other receivables

8,063
29,570162

148,065· Financial receivables

LaR

35,41835,41835,418· Sundry financial assets

LaR

112,647

112,647

112,647

Equity and liabilities:
Trade payables

FLAC

544,881544,881544,881Bonds/bank loans/notes

FLAC

1,037,486

1,037,486

1,132,419

n.a.

2,356

Financial liabilities from leases
Derivative financial instruments· Derivatives not used for hedging

2,356

15,991
FLHfT

3,141

n.a.

12,850

Other financial liabilities

FLAC

126,504

126,504

Sundry financial liabilities

FLAC

320,053

314,053

Loans and receivables (LaR)

LaR

2,296,676

2,296,676

Available for sale (AfS)

AfS

241,831

Financial assets held for trading (FAHfT)

FAHfT

8,063

8,063

Financial assets at fair value throughprofit or loss (Fafvtpl)

Fafvtpl

5,022

5,022

Financial liabilities measured atamortized cost (FLAC)

FLAC

2,028,924

Financial liabilities held for trading(FLHfT)

FLHfT

3,141

· Derivatives used for hedging

183

3,141

3,141

12,667

12,850126,504

6,000

320,053

IAS 39 measurement categories:
20,8972,022,924

220,934

6,000
3,141

Available-for-sale financial assets (AfS) include investments whose
fair value could not be determined reliably.
* Previous year adjusted (see section “Adjustment of previous year”).

1)

Voith Interim Report 201451

Fair value hierarchyin € thousands

2014-03-31

Level 1

Level 2

Level 3

Assets

The three-level fair value hierarchy divides the input factors
used in the measurement techniques to measure the fairvalue into three levels.
Level 1:
Fair values are determined on the basis of quoted market
prices in active markets for identical assets or liabilities for
the Company on the measurement date.

Other financial
assets andsecurities

200,564

200,56400Derivative
financial
instruments

34,251034,2510

Level 2:
Fair values are determined using valuation techniques inwhich the inputs are based on observable market data.

9,996

0

9,996

0

Level 3:
Fair values are determined using valuation techniques where
the inputs are not based on observable market data.

2013-09-30

Level 1

Level 2

Level 3Liabilities
Derivative
financial
instrumentsin € thousands

AssetsOther financial
assets andsecurities

225,956

225,95600Derivative
financial
instruments

37,633037,6330

15,9920

15,9920Cash and cash equivalents, trade receivables and other­financial receivables are subject to floating interest and fall
due within one year. For this reason, their carrying amounts
approximate their fair values on the reporting date.
Because trade payables and other financial liabilities generally have short residual terms, the carrying amounts approximate the fair values.

Liabilities
Derivative
financial
instruments

52

The market values of unlisted bonds, bank loans and otherfinancial liabilities are calculated as the present value of thepayments associated with the liabilities, based on the applicable term structure of interest rates and Voith GmbH’s
credit spread curve determined for different currencies.

Voith Interim Report 2014

Related parties
Transactions with related parties continue to be conducted
at arm’s length conditions. The majority of intercompany deliveries and services to related parties are shown in the twotables below:
in € thousands

2014-03-31

2013-09-30

Liabilities to family shareholders

27,421

27,915

Receivables from associates, incl. advances
paid

3,736

3,452

Liabilities to associates

3,428

3,410

Receivables from other investments, incl.
advances paid

9,703

8,651

Impairment of receivables from otherinvestments

-412

-412

Liabilities to other investments, including
advances received

23,52525,215

Receivables from joint ventures

2,738

192

Liabilities to joint ventures

828

827

Receivables from the ultimate parent
company

198

144

4,317

4,345

2013/142012/13

4,638

2,001

49

672

Services purchased from other investments

1,097

1,396

Services rendered to other investments

9,103

7,423

Services purchased from joint ventures

2,306

2,216

59

356

5,170

5,230

348

385

Liabilities to the ultimate parent companyin € thousands

Services purchased from associates*
Services rendered to associates*

Services rendered to joint ventures
Services purchased from the ultimate parent
company
Services rendered to the ultimate parent
company

Guarantees of € 11,836 thousand (previous year:€ 11,836 thousand) were issued in favor of one associate,€ 1,411 thousand (previous year: € 1,693 thousand) in favorof one joint venture and € 195 thousand in favor of other investments (previous year: € 378 thousand).
Obligations from outstanding orders payable to the ultimate parent amount to € 2,239 thousand (previous year:€ 4,634 thousand) and those payable to associates amountto € 1,625 thousand (previous year: € 2,230 thousand).
Capital increases of € 1,006 thousand (previous year:€ 1,781 thousand) were carried out in favor of joint ventures.

Events after the period under review
There were no significant events after the balance sheet date.

Heidenheim, May 6, 2014
Voith GmbH
The Board of Management
Dr. Hubert Lienhard
Dr. Hermann Jung
Dr. Hans-Peter Sollinger
Martin Hennerici
Bertram Staudenmaier
Dr. Roland Münch
Carsten J. Reinhardt* Previous year adjusted

Voith Interim Report 201453

Responsibility statement

To the best of our knowledge, and in accordance with theapplicable reporting principles for the interim financial reporting, the interim consolidated financial statements give atrue and fair view of the assets, liabilities, financial positionand profit or loss of the Group in accordance with German
accepted accounting principles, and the interim Group management report includes a fair review of the development
and performance of the business and the position of theGroup, together with a description of the material opportunities and risks associated with the expected developmentof the Group for the remaining months of the financial year.

Heidenheim, May 6, 2014
Voith GmbH
The Board of Management
Dr. Hubert Lienhard
Dr. Hermann Jung
Dr. Hans-Peter Sollinger
Martin Hennerici
Bertram Staudenmaier
Dr. Roland Münch
Carsten J. Reinhardt

54

Voith Interim Report 2014

Imprint
Publisher:
Voith GmbH
St. Pöltener Str. 43
89522 Heidenheim
Germany
Phone: +49 7321 37-0
Fax: +49 7321 37-7000
E-mail: info@voith.com
www.voith.com

Respecta Silk 60, used for this Voith
Interim Report 2014, is a recycled
paper manufactured in accordancewith the international FSC® standard.
The cellulose is partly manufactured
from certified, i.e. responsibly managed, forests. Careful forestry practiceensures, among other things, that biological diversity and ecological processes are not disturbed when wood
products are removed from the forest. The paper was manufactured with
Voith equipment.
Printed in Germany© Voith GmbH, 2014-05

This interim report is also available inGerman. Both versions and other information are available on the Internet
for download.
www.voith.com

Voith GmbH
St. Pöltener Straße 43
89522 Heidenheim, Germany
Phone +49 7321 37- 0
Fax +49 7321 37- 7000
www.voith.com