Annual Report 2009/2010

The Voith Group in Figures2009 /10

2008 /09

Orders received

5 300

4 958

Sales1)

5 198

5 085

Operational result before
non-recurring result

353

324

Return on Sales in %

6.8

6.4

Income before tax

234

155

Net income

121

77

Cash flow from operating activities

390

304

Total cash flow

199

370

Investments

234

255

Research and development

266

254

in % of sales

5.1

5.0

€ in millions

1)

Equity1)

1 107

950

Equity ratio in %

18.8

17.8

Balance sheet total1)

5 902

5 341

Employees2)

39 75439 3291)Previous year values adapted.

2)

Without apprentices.

Voith—one company,
four divisions …

Voith AG*
Corporate Central Functions

Voith Hydro

Voith Industrial Services

Voith Paper

Voith Turbo

Orders received: €972 million

Orders received: €962 million

Orders received: €2 009 million

Orders received: €1 351 million

Sales: €1 158 million

Sales: €962 million

Sales: €1 723 million

Sales: €1 349 million

Employees: 5 238

Employees: 19 119

Employees: 9 353

Employees: 5 422

Head Organization:

Head Organization:

Head Organization:

Head Organization:

Voith Hydro Holding

Voith Industrial Services

Voith Paper Holding

Voith TurboGmbH & Co. KG,

Holding GmbH & Co. KG,

GmbH & Co. KG,

GmbH & Co. KG,

Heidenheim/Germany

Heidenheim/Germany

Heidenheim/Germany

Heidenheim/Germany*Voith GmbH since October 1, 2010.

… at home around the world
with over 39 000 employees.

Represented worldwide

North America

EuropeAsia, Australia, Oceania€719 million in sales€2 554 million in sales€1 340 million in sales

5 157 employees

24 163 employees

3 979 employees

Central and South America

Africa€512 million in sales€73 million in sales

6 343 employees

112 employees

Contents

02 The Voith Group02

A word from the Board of Management

04

The Board of Management

06

Interview with Dr. Hubert Lienhard,President and CEO

10 About the Diversity at Voith

57 Management Report

107 Financial Statement

1258

Report of the Supervisory Board

108

Consolidated Statement of Income

62

The Supervisory Board

109

Consolidated Statement of64

I. Business and Economic Environment

68

II. Business Development and

Cowriting a Far-Eastern SuccessStory—Voith in China

20

In the Background, but Indispensable—
Drive Technology for Industry

26

The Moody Forces of Nature—
The Energy Market of the Future

32“Especially Good for Urban Areas”—
The Urban Mill Concept

36

110

Consolidated Balance Sheet

Earnings Position of the Group112

Statement of Changes in Equity

III. Business Development and114

Consolidated Cash Flow Statement

115

Notes to the Consolidated Financial

Earnings Position of the Group Divisions
88

IV. Asset and Financial Position

92

V. Research and Development

94

VI. Non-Financial Performance Indicators

95

VII. Events after the Balance Sheet Date

96

VIII. Report on Risks and Opportunities

Company for Your Entire Life102

IX. Forecast Report

In Good and Bad Times—Industrial

105

Corporate Governance Report

Burning for an Idea—
No Development without Engineers

40

Projects and Products with a Future42

For a Great Climate—Innovative Drives

48

Decades for Voith—Working at One

52

75

Services for the Automotive Industry

Comprehensive Income

Statements
138

Notes to the Consolidated Statementof Income142

Notes to the Consolidated Balance
Sheet

163

Notes to the Consolidated Cash Flow
Statement

164

Notes to the Segment Report169

Other Information

188

Responsibility Statement

189

The Voith Group and Its Shareholdings

A Word from the Board of Management
Ladies and Gentlemen,
Business Partners and Friends of Voith GmbH,The 2009/2010 fiscal year was another very successful year for Voith. We slightly
increased our sales and operating results in an environment that continues to bevery competitive in many areas. Overall, we saw a significant increase in theGroup’s profits since we no longer had to incur any major outstanding expenses
for restructuring. Total orders received rose more than revenues, and our backlog
is noticeably above last year’s level. This shows that Voith did not live off its substance, but continued to strengthen its fundamentally healthy base thanks to its
excellent market position.
With the pleasing performance of the past year, one thing is clear: Voith passed
the stress test – the most serious financial crisis in decades for companies in all
sectors. We were one of the few comparable corporations that did not suffer adrop in either sales or earnings, but continually grew despite the crisis.
The good results are additional proof that our strategy is right. We possess anintelligently balanced product portfolio that we use to serve both late- and earlycycle markets. The paper industry experienced a weakening economy early on,
but picked up again quickly in the recovery. In our figures, this is primarily evident
in the recent sharp increase in orders received – whereby the majority of these arefrom booming China. In the area of transport, we are seeing a similar economic
pattern, which on balance is reflected in the clear rise in sales and primarily in the
sharp increase in orders received in the second half of the year. The hydro powerbusiness is different and has declined as a late consequence of the crisis, after
being able to compensate for declines in other markets the year before. On theother hand, our service business stabilized noticeably with the general economic
revival.
In the past fiscal year, we have again profited not only from the diversification of
our product portfolio, but also from our broad international approach. Early on,
we prepared ourselves for rising demand from countries such as China, India andBrazil and we are reaping the benefits of these decisions today. The share of sales
from emerging markets has continued to rise. Again, we have systematically expanded our presence there, for example with new production facilities for Voith
Hydro in India and Brazil, and with the expansion of the Voith Paper City in Kunshan. Simultaneously, we continue to invest in Germany, too. We have opened a
new production facility for mechanical drives in trains in Heidenheim. The example

2

Voith Annual Report 2009/2010

shows that the internationalization that we continue to pursue does not hurt Germany. We can also produce competitively here.
The number of employees in Germany remained almost the same in the past fiscal
year. In the Group as a whole, we have slightly increased staff after the decline in
the previous year. This is a very pleasing development for us, since Voith feels
especially obligated at all times to fulfill its responsibility as a reliable, safe employer. We know that we must thank our employees for our success. And for theirtireless dedication, I would like to explicitly thank them on behalf of my colleagues
on the Board of Management! Furthermore, we would also like to thank our customers for their positive collaboration and last but not least our shareholders andthe Shareholders’ Committee and the Supervisory Board for their support andtrust.
Our ownership structure guarantees financial independence and simultaneously
facilitates corporate action with a long-term orientation. In this sense, the change
in the legal form from an AG to a GmbH on October 1, 2010, is a symbol of continuity and a declaration of the shareholders’ belief in their company and the­values for which Voith stands: reliability and solidity coupled with the drive to
be a technology leader, and a company which has sustained profitable success.
This step will not change anything with regard to our high internal and externaltransparency in ­recent years; if nothing else, this has been demonstrated by ouropen handling of the accounting irregularities at a subsidiary in the USA.
Our strategy will also remain unaffected by the change in the legal form. We willcontinue to systematically pursue the adopted course and resolutely seize themajor opportunities for profitable growth in all our markets. Voith will courageously and confidently face the challenges of a rapidly changing world – and still
remain true to itself in the future.
Sincerely yours,

Hubert Lienhard

Introduction

3

4

1

2

3

4

5

6

Voith Annual Report 2009/20107

1 Hubert Lienhard, President and CEO
2 Hermann Jung, Finance and Controlling
3 Hans-Peter Sollinger, Voith Paper
4 Bertram Staudenmaier, Voith Paper
5 Martin Hennerici, Voith Industrial Services
6 Peter Edelmann, Voith Turbo
7 Roland Münch, Voith Hydro“Voith did a good job of overcoming
the economic crisis.
An intelligently diversified portfolio,
our global presence, our technology
leadership, our solid business
policies and last but not least our
ex­cellent employees make us
ideally set up to achieve profitable
growth in the future by ourselves.
In the process, Voith will also
continue to remain true to itself.”
The Board of Management

The Board of Management

5

“Voith is set upvery well for the future.”Interview with Hubert Lienhard,President and CEO, on the subject ofstrategy and future prospects.
Mr. Lienhard, the German economy is on a clear growth course after over­coming the crisis. How is business at Voith?
Business is going very well for us. The crisis is largely behind us, and we areconfident that we will continue to see profitable growth in the next few years.
That said, we are not blind to the existing uncertainties from the lack of sta­bility on financial markets. Against this backdrop, we are moving ahead with ahealthy dose of optimism and a cool head. Our eye is focused on the opportunities.
Many corporate executives, yourself included, forecast during the crisis thatthe world would be different afterwards. Now it seems as if everything is­going forward as usual.
By no means. The speed of the changes increased dramatically, and it willremain high. Furthermore, the crisis accelerated the shift in focus to emerging
market regions. And last but not least it encouraged a selection process inmany sectors. With regard to us: We saw that our strategy is correct, also in
the hardest conceivable market environment. We made it through the crisis
without a drop in revenues or earnings, and did not have to rediscover ourselves in the crisis. Today, we are proud to say: We have passed the stresstest.
6

Voith Annual Report 2009/2010

What is the secret to this success?
Above all, our portfolio. Many generations of managers at Voith have workedon this success. The Voith portfolio possesses a very intelligent mixture ofactivities. We serve both early- and late-cycle markets, which means that we
can compensate for temporary weaknesses in individual markets throughother activities. A corporation that only stands on one leg cannot do that aswell as us with our four strong pillars. We have a good mixture of service,product and system business, and are represented in the large regions of theworld, generating roughly 25 percent of our sales there.
That almost sounds as if you just inherited the successful recipe and only
had to sit out the crisis.
With mere administration we would not have gotten far in this very challenging
time for our entire company. On the contrary, we used it to continue improving
our processes and structures. Today, Voith is even quicker and more efficient– athletic, if you will – than before the crisis. In my opinion, this is an indis­
pensable prerequisite for belonging to the winners over the long term in an
increasingly volatile world with rapidly changing market and competitive­conditions.

“The Voith portfolio has
an intelligent mixture ofoperations.”

An impressive portfolio, streamlined processes and tighter management: Is
that enough to hold one’s ground in the “new normal” when faced withgrowing competition, for example from emerging markets?
That is definitely a good start. But there are two other important points. Firstof all, our diversified portfolio has the most significant megatrends on its side:
the growing role of mobility in a globalized world, the unstoppable advance of
renewable energy with climate change and our customers’ constantly increasing need for environmentally friendly and resource-conserving technologies.
Secondly, we benefit from our strong presence in emerging regions of thisworld. Today, we are broadly diversified in terms of geography, but this development is by no means at its end. To summarize briefly: Voith is a well managed company with an intelligently balanced portfolio in terms of content andregions, and has competitive products for high-growth markets. This makes
us ideally set up for the future.
Asia seems to be the great hope for German industry. What future plans do
you have in this region?
The importance of Asia for our business is enormous. In the paper market, forexample, the majority of our new business comes from China. In other areas
such as the expansion of rail infrastructure, the opportunities for growth arealso tremendous. For us, that means: We must and will expand our presencein Asia. In the medium term, the continent could make up half of our sales.
Are you not making yourself too dependent on China in the long term?
First of all, I believe that China’s growth will continue. Second: Other countries
in the region will follow this development, above all India. There, the next
boom is already waiting for us. Third: By no means are we relying only on Asia.
We are excellently positioned in other emerging markets such as Brazil andare also not neglecting developed markets. And fourth: We cannot leave­China to others only because there is the risk that bad times could return »Corporate Strategy

7again. That would be negligent. Voith wants to continue growing. For this, weneed international markets, and therefore we must become even stronger in
Asia in the future. That is the great challenge that I currently see for us.
What does that mean in concrete terms?

“We profit from our strong
presence in the growing­regions of the world.”

To reach our full potential in emerging markets such as China or India, we­increasingly need local products, i.e. customized solutions for the local unique
circumstances and special requirements of customers in the given countries.
We can only develop and produce such products on-site with local managers
and local experts. Voith in China is already a Chinese company today. In ten
to fifteen years, we want to be just as embedded there as in Germany today.
And we will also pursue the same development in other countries. Voith has
long been an international company – anchored in Germany and at home in
the world.
Will the greater international orientation bring a change in identity, possibly
even a break with your culture?
There will not be a break with our culture. However, what we will need andexperience is constant change. This involves preserving tradition and simultaneously making Voith strong for the future. That is no contradiction to me. An
example of internationalism: Growth abroad also benefits Germany. At ourheadquarters in Heidenheim we had 3,000 employees ten years ago; today,
there are 4,500. These figures speak for themselves.
And how does it look with the culture? How much of a family company can
Voith afford in the future as a global player?
If you equate a family company with social romanticism, staidness and an
unwillingness to change, then of course very little. But that is not Voith. Everyday we try to unite the best of two complementary worlds – a traditional family company and a professionally led corporation, globally according to thesame business principles with an identical philosophy and equal values. We
pursue a clear umbrella brand strategy. Wherever Voith is written, Voith is also
in it: in all regions and all markets.
What distinguishes Voith, what intrinsic aspect will hold together this com­pany, with its 280 individual businesses in 50 countries, in the future?
First of all, it will be reliability, durability and solidity – those values that we­possess at all times as a family-owned company and will also foster in the
future. For us as management, it is also essential to maintain our financial independence. We must generate sustainably competitive returns for this. Onlyin this way can we generate the funds to ensure the future and the f­inancing
of growth. Only in this way will we be in a position in the future to develop
products and solutions that our customers need. Only in this way will ourshareholders enjoy their future involvement in Voith and be able to be proud of
the company. And only in this way can we ensure jobs and create new ones,in Germany and the world.

8

Voith Annual Report 2009/2010

Will the relationship between Voith and its employees change in the futurewith the globalization that is also taking place in your own ­company?
No. Voith was, is and will remain a fair and reliable employer. We know that our
success is fundamentally based on the performance of our 40,000 employees. They are only motivated and satisfied when they have exciting jobs, personal future prospects and finally the security that they will also be needed
tomorrow. We as management would like to give them this feeling of security,
also in the future. That has nothing to do with social romanticism. On the contrary, it involves a real community of interests, carried by performance andmutual respect.
You describe the model of a modern family company: thinking over the longterm, but also successful in the short term. Where are you and your col­leagues leading Voith with this model in the next few years?
We do not see any reason why we cannot grow as strongly in the next ten
years as in the decades before the economic crisis. As a result, we would almost double within ten years. We have the strategy, the products, the knowhow and the right employees to do it. And by ourselves. We will grow with ourexisting portfolio, expand our presence in the emerging regions and supplement them with acquisitions. And in all this, Voith will remain true to itself in the
future, too.
Will you be able to finance the growth from your own funds? You have justeliminated the possibility of obtaining capital on the stock exchange due tothe recent change in the company’s legal form, back to a GmbH (limited­liability company).
First of all, we have access to the capital market at any time, as our successful bond issuances in the past year have shown. We continue to work onsustainably improving our returns, also over the short and medium term. That
will let us finance our growth with our own funds without having to issue debt
and with an increasing equity ratio. These goals are based on very solid­calculations. Despite all this cosmopolitanism: When it comes to money, we
remain cautious and Swabian through and through.
‹Corporate Strategy

910Voith Annual Report 2009/2010

About the Diversity of Voith
12	Cowriting a Far-Eastern Success Story		
20 In the Background, but Indispensable
26

The Moody Forces of Nature

32“Especially Good for Urban Areas”

36

Burning for an Idea

40

Projects and Products with a Future42

For a Great Climate

48

Decades for Voith

52

In Good Times and Bad

TEXTE

11

Cowriting a Far-Eastern
Success Story
In just one generation, China has changed from an agrariannation to a powerful industrial state. For this rapid transforma­tion and the building of its infrastructure, the enormous country
needs almost everything that Voith develops. The challenge
here is to adapt Voith’s products to the requirements of theChinese market.

12

Voith Annual Report 2009/2010

M

any an Asian country enchants visitors with the charmof its citizens and the beautyof the landscape. People who travel toone of China’s pulsing economic cen­ters are overwhelmed by the former
empire and its breathtaking speed inalmost all areas. Even experts of thecountry are continually impressed by
new aspects. “When I arrived in
Shanghai in January 2009, they werelaying the first concrete pillars for the
new high-speed train to Beijing,” recalls Thomas Koller, who was starting
his work for Voith in Kunshan at thattime. “In July 2010, the first parts of
the route were already opened,” says
the manager in astonishment. Now thehigh-speed train covers the 301 kilo­
meters from Shanghai to Nanjing, thecapital of the neighboring province
Jiangsu, in only 73 minutes, almost
one hundred times a day.
As if on fast forward, the People’s
Republic has transformed from anagrarian nation to a leading industrial
state within one generation. For thedramatic development of the economy
and infrastructure, the enormous
country needs almost everything that
Voith develops – and a lot of it: frontend systems for trains, transmissions
for buses, couplings for mines, generators and turbines for hydro power
stations or machines for paper production. “Many of our products belong
to the fundamental equipment of an
economy,” explains Klaus-Günther
Strack, Director of Corporate Devel­
opment at the Voith headquarters. “A
few months ago, the Chinese Ministryof Commerce announced that it had »Picture on the left: Voith employees atthe Huatai paper mill, a customer. In the
background, rolls are ready for installation
in a new paper machine.

Successfully On-Site
25 times in China
Shenyang
Liaoyang

TaiyuanBeijing
TianjinTangshanDalianDong Ying

Chengzhou
Nanjing
PinghuChongqing

FoshanKunshan
ShanghaiFuzhouGuangzhou
Hong Kong

Voith locations

In China since 1910
1910	Voith delivers the first
turbines to China for the
Shi Long Ba hydroelectric
power station in theprovince of Yunnan.
1937	The first paper machine
in China is started up at
Shanghai Zhong Ban Paper.
1965	Voith delivers the first turbo
transmission to ChineseState Railways.
1986	The first Voith automatictransmissions are built into
Shanghai city buses.
1994	The world’s largest pumped
storage plant, Guangzhou
II, receives generators andturbines.
1997	Order from the Three
Gorges Dam for six
generators and turbines forthe world’s most powerfulhydro power station.
2004	Industrial Services wins
BMW Brilliance in Shenyang
as a customer.
2005	Benz Automotive in Beijing
and Shanghai Volkswagen

	Powertrain Company areadded as customers.
2007	The first order in the foodindustry for Voith Industrial
Services.
2008	Xiluodu order for thedelivery of three generatorsand three Francis turbines,
784 MW each.
2009	Voith wins a customer in
the airplane industry andassumes the servicing of
the production equipmentin the final assembly.
2010	In Kunshan, the mostmodern and largest
production and service
center in Asia is opened forthe paper industry.
2010	Voith delivers couplings,
front-end systems andwheelset transmission
systems for the Chinese
high-speed train, the fastest
passenger train in theworld.
2010	The largest fine paper
machine ever built, Hainan
PM 2, goes into operation.

Cowriting a Far-Eastern Success Story

13

passed Japan to become the secondlargest economy in the world.” But
that is not the end of it: Sooner or­later, China will surpass the USA as
the largest economy in the world.
World Bank experts assume that this
could happen as early as 2025.

­ ffice nine years later. The road mapohas already been sketched out. “In ten
to 15 years, we want to be as embedded in China as we are in Germany –a Chinese company that merely has
German shareholders,” stresses Hubert
Lienhard, President and CEO of Voith.

Since the Chinese government opened
the country to the world twenty years
ago, the sales of foreign companies
have grown rapidly. All of Voith’s divisions are present in China and suc-

One of the most dynamic economic
regions lies on the east coast of China.
There, in the vicinity of the hectic port
and finance city, Shanghai, you willfind multiple Voith branches and pro-“In 10 to 15 years, we want to be
as embedded in China as we arein Germany.”
Hubert Lienhard, Voith GmbH
cessfully operate in the market. The
relationships have a past. Back in
1910, Voith delivered turbines to the
Shi Long Ba hydroelectric power station in the province of Yunnan, the firstof its kind in the former empire. The
first paper machine from Heidenheim
followed in 1937; a branch was openedin Hong Kong in 1985 and a Beijing

duction facilities. Just recently, in July
2010, Voith Paper officially opened its
large, new production facility in Kunshan, near the city of millions. Here, allof its divisions are united: Voith Paper
does an ideal job of meeting the requirements made by many customers,that they receive all their paper technology from one source.

“Our country has morethan enough cheap
products.”
Mingming Liu, Voith Paper Asia,
explains what the Chinese
appreciate about the Germans,
and why sometimes it canbe incorrect when Europeans
imitate the Chinese.

14

Voith Annual Report 2009/2010

The new service center in Kunshan
produces roll covers and offers ser­vices related to covering fabric, covers
and other special products for the­paper industry. “It is a very modern
production facility, comparable to theautomotive industry,” enthuses Robert
Kietaibl, Senior Vice President of Voith
Paper Fabric & Roll Systems Asia. The
Voith Paper City in Kunshan is also a
production site for major projects.
Here, the added value is ­focused on ahigh local share, which is facilitatedby a fixed supplier base in China andanother production facility in Liaoyang.
In Kunshan, paper ­machines are produced under excellent quality assurance in order to install them afterwards
at the customer’s location, so that
­operation can start without delay. Thishas proven to be a successful strategy
for Voith Paper.
This produces the exceptional qualitythat has made the company number
one in the industry in the country
where paper was born. “Business isgoing great,” confirms Thomas Koller.
“Our name prompts excellent associations over here.”

Ms. Liu, you act as a mediator between two worlds,­European and Asian culture. Is it a difficult job?
To tell you the truth, it is difficult. The cultures are very
different. I must spend 60 percent of my energy in conversations with Chinese customers or European man­agers explaining the differences. The Germans under­
estimate the speed, the dynamic of the Chinese market
and also the ambitiousness of my people. We learn very
quickly.
Do these differences make collaboration between Chi­nese and German companies more complicated?
No, not at all. Only sometimes it does not go fast enoughfor the Chinese. To them, Germans always seem to­consider a lot and are always very cautious. But overall,

1

The world’s largest paper machine
to date was installed by Voith employees a few months ago, a gigantic system more than 10 meters wide andmore than 550 meters long. While
German specialists assembled the finepaper machine, the factory was built
around it. Hundreds of Chinese workers poured reinforced concrete walls,
welded frames, laid electricity cables
and paved the newly created street
around the plant. That was one of themost spectacular projects, but cer-2

tainly not the only one. “In recent
1	Paper production in China. The paper web
runs through the system at an average
years, the world’s largest, quickest
speed of 100 km/h.
and most modern paper machines2	Discussion: Voith assembler with ahave been installed in China,” explains
Chinese customer’s papermakers.
Voith Paper Asia President Mingming
Liu. The company was recently able toobtain multiple large orders in China.
One of the largest paper producers inAsia contracted Voith to build the second-largest packaging paper machinein the world. Another manufacturer­ordered a large deinking system forthe recycling of waste paper, a sign »German culture has a very good image in our country.
Germans are considered honest, reliable and down-­toearth – all character traits that we appreciate.
Did you have to struggle a lot in your industry in China
during the global recession?
On the contrary. Voith had just had two very successful
years in Asia before the recession. Primarily, the finan­cial
crisis cleaned out the bad companies. For good com­panies, it also offered opportunities. For example, we
optimized our processes and bundled all our existing
forces in Asia. Now we are using the speed and qualitythat grows out of better cooperation.

When you look back on this phase, what are you par­ticularly proud of?
That we were able to maintain our high standards ineconomically difficult times. That should not be taken
for granted. China is a very productive country. The­products are usually cheap, but also of lower quality.
Some European companies come to China and lower
their standards to the Chinese level. They believe they
can only be profitable in this way. That is incorrect. Our
country has more than enough cheap products. We
need something else. And Voith knows it. The company
supports the highly developed art of engineers, maintains quality and thinks over the long term. Chinese­paper producers are proud to tell you when they havefinally been able to afford a machine from Voith.

Cowriting a Far-Eastern Success Story

15

that environmental technologies andrecycling are also becoming more
­important in the Asian market. “Thisyear alone, the government closed­numerous paper mills with a total offour million tons in annual production,
mostly small companies with old technology and high environmental pollution,” Mingming Liu confirms the trend.
New paper mills only receive approval
if they use environmentally friendly andenergy-efficient machines, like theones Voith provides.
However, last year the economic crisis was also a subject in China. “Forour mostly young staff, it was initiallyan extremely confusing experience,”
reports Koller. “They had known only
one direction in their short professional life till then: forward.” Voith’s longterm strategy paid off; the distraction
was only brief. By the end of 2009,
things were moving straight ahead as
usual. Koller will probably be able toenjoy this boom for a long time. Demand for all kinds of paper is very highin China. While each German uses anaverage of 247 kilograms per year andtrending down, the Chinese are only at
70 kilograms. In 15 years, paper consumption in China should increase toroughly 106 kilograms per person,

Paper for Culture and Comfort
Consumption in kg per person in China
106.5
94.7
81.7
70.0
46.5
29.7
17.1

1992

21.5

1995

2000

Source: Risi, Pöyry

forecasts Pöyry, an international consulting company.
Also promising are the prospects fora myriad of industrial components
from Voith. The company was able toincrease the sales of drives for conveyor belts in coal mines alone by afactor of six in the last four years. And
with components for trains, Voith isalso at the fore. In the middle of theevents in the world’s largest market for“The largest, fastest and mostmodern paper machines arebeing installed in China.”
Mingming Liu, Voith Paper

16

Voith Annual Report 2009/2010

2005

2010

2015*

2020*

2025*
* Forecast

trains is Birgit Suberg, Managing Director of Voith Turbo China. The economist with a doctorate in economy
loves her exciting life in the metropolison the Yangtze. Here, Voith Turbofounded a branch nine years ago andit has grown rapidly since. A strong,countrywide sales and service teamsupports customers on the Chinesecontinent. The work in such an exciting era motivates the Chinese employees tremendously. “Voith is like a large

family. That is really something special,” says Wei Chengming, who, as aservice technician for Voith Turbo
Power Transmission, has supported
customers in the province of Shandong for the last two years. “I havelearned a tremendous amount aboutcommunication with customers andabout very interesting products from
Voith,” stresses the 39-year-old. In
Shanghai, components are also as-a high-speed network of more than
10,000 kilometers in length should bebuilt. In 2012, the CRH3-380 highspeed train will race at much morethan 300 kilometers per hour in fourand a half hours from Shanghai to­Beijing. These targeted records do notallow the Chinese to relax by anymeans. “Soon they are planning toreach over 500 kilometers per hourwith a test train and set a new world

requirements in this area,” says
Suberg. With its involvement here, theChinese state does not just want toprotect the environment. Electric mobility is also a way for the energy-hungry country to make itself independentof oil imports.
China can produce large quantitiesof power today and in the future fromcoal and hydro power. The east Asian“Voith is like a large family.
That is really something special.”
Wei Chengming, Voith Turbo

sembled for trains and commercial­vehicles. Suberg is enthusiastic about
the incoming orders: “Whether it is industry, railways, road vehicles or marine, in all areas there is great interestin our products,” the Voith manager
says happily. “We have caught a goodtime.” The government is particularly
intent on pressing ahead with the expansion of the rail network. In 2009
alone, 5,557 kilometers of new train
tracks were built. In the next few years,

1

record,” reports Suberg. Voith will also
benefit from this development. “Therail business is booming,” says the
China ­expert, “and we are very happy
to ­participate with our couplings,
transmissions, front ends and coolant
systems.” Similar to the expansion of
the rail system, the government is also
forcing the development of electricaland hybrid mobility, particularly for
public bus transportation. “We also
have concepts suited for the Chinesecountry possesses gigantic quantitiesof the black energy source, with whichit covers approximately two-thirds of
its energy needs. The country obtains
roughly 16 percent of its energy fromhydro power according to the Hydropower & Dams World Atlas 2010. The »1	Assembly hall at Voith Turbo Shanghai.
2	Mechanic in the final assembly of afron-end system for the new Chinese
high-speed train.

2

TEXTE

17

Construction of the Long Tan power planton the Hongshui river.

18

Voith Annual Report 2009/2010

potential of this nearly inexhaustible
resource has only been utilized to justunder 40 percent despite countlesslarge hydroelectric power projects inpast years. Currently, the installed total capacity of the hydro power plants
is 260 gigawatts. By 2020, the capacity should increase to 330 gigawatts.
“The prospects for the development ofhydro power in China are exceptional,”raves Tang Xu, Marketing Director ofVoith Hydro Shanghai. “The profitably
usable potential currently amounts to

400 gigawatts, even 500 gigawatts
depending on the development of theenergy costs.” Voith belongs to theleading manufacturers of equipment
for hydro power plants, particularly
with large generators and turbines.
Since the opening of the branch inShanghai in 1997, the company hasdelivered more than 100 units for morethan 30 Chinese power plants. “Ourhighly productive, modern production
facility in Shanghai and 95 percent local added value let us outperform our“For the Chinese,interpersonal relationships
are very important.”
Birgit Suberg, Voith Turbories built for this. Currently 40 employees in Xiluodo are working on the three784-megawatt turbines that the power
plant operator ordered two years ago.
Here, in the mid-section of the Yangtze, a system of four hydro power
plants is being built. These should provide twice as much power as the power plant at the Three Gorges Dam, andhelp China meet its emissions goals
in climate protection. “For the Three
Gorges project, Voith also delivered atotal of six machines,” adds Cheng
Guoquing. After completion in 2015,
Xiluodu will achieve a capacity of morethan 14,000 megawatts and thus be
the third-largest hydroelectric power
plant in the world.

competitors. Very good quality, customized solutions for customers andthe excellent execution of the order
on-site speak for us,” says Chen Guoquing, Director of Project Management in Shanghai.
Since in some cases it is impossible totransport the gigantic turbines andgenerators over many kilometers,
Voith is also producing the components in the immediate vicinity of the
future power plant in one of the facto-

The area of industrial services will
also soon be swept up in the generalboom in China. “The strategy that has
proven itself in Western industry,where a company concentrates on its
core expertise and has other things
handled by external specialists, is notas widespread there,” says Gerwin
Gädigk from Voith Industrial Services
in Shanghai. “Often this market muststill be created.” Nonetheless, inShanghai, Voith Industrial Services
has still succeeded in building up a
regular customer base, primarily
among automotive suppliers andmanu­facturers, in recent years. But
also in other areas it has succeededin gaining a foothold. In the past year,
it succeeded in obtaining Airbus in
Tianjin as a customer. Here, the A320
and the A319 are produced for the
Asian market. The Voith team is responsible for the entire service of theassembly lines and the enameling lines
as well as the production logistics. The
business will rapidly increase for thehigh-demand model. In the meantime,
the service sector in China is growing
more rapidly than industry and agriculture.
Voith manager Suberg has also experienced many changes in recent
years. She has been repeatedly impressed by the high speed of the­Chinese: “When they undertake something, they pursue it extremely
efficiently and very quickly.” In themeantime, the economist knows theculture of the land very well. “For the
Chinese, interpersonal relationships
are very important; their entire cultureis based on this,” explains Suberg,
who speaks the local language fluently. In China there may be the sayingthat a good relationship is halfway tothe order, “but this does not allow you
to make an error or deliver inferior
quality,” warns the manager. Confidence means responsibility.
‹

Cowriting a Far-Eastern Success Story

19

In the Background,
but Indispensable
Mostly invisible and always indefatigable, the couplings,
gears and many other Voith components perform their work
both above and below ground. In power plants and mines
they help prevent the power for coal, oil and gas production
from being cut off – the stuff that keeps industry running.

20

Voith Annual Report 2009/2010

An extensive network of gas pipelines
runs through British Columbia in
Canada.

T

he production of fossil fuels requires a very delicate
touch. Where for centuries people worked at it arduously by hand, today modern systems handle mostof it automatically and very efficiently. The extraction of­ancient raw materials for the future of mankind intrigues­Jürgen Zeschky every day and brings him to new discoveries: “Mining and energy production form the fundamental
basis of our life and culture,” says the Executive Vice President of Voith Turbo and the President of the Industry division. And the world’s appetite for energy is huge. For ashort time, investments in the commodities sector notice­
ably declined after the eruption of the financial and economic crisis in 2008. Companies planned less oil and gas drilling; they cut back on investments in refineries, pipelines andpower plants. Many planned projects were initially postponed or even cancelled entirely, says the International­Energy Agency in Paris. However, the demand for commodities will remain high over the long term, above all, for thematerials that keep industry running, such as coal, oil, gas
and ores.

“We must understandprecisely how our­prod­ucts will be used.”
Jürgen Zeschky, Voith Turbo

In arduous work, the valuable raw materials are wrested
from the earth, mostly in mines above and below ground.
Transport components such as couplings or gears are used
here, and this is a problem. Extreme heat and cold, dust,
stones, sludge: The machines must defy the most adverse
conditions and may not show any weaknesses. Day andnight – kilometers of conveyor belts transport coal or ores totheir destination without interruption. The mine operators
can thank the creativity of engineers for enabling them to
run their conveyor belts so smoothly that they have no­dangers to fear. There is neither the risk of a belt rippingor that the valuable freight will slip off it. And this shows
another feature of Voith couplings: their enormous reliability.
Producing machine parts that have worked smoothly underthe most extreme conditions for decades requires morethan just extensive experience. “Whether in mining, oil or »In the Background, but Indispensable

21

Its Name Is the Program1	Miners in the San Juan mine in New Mexico(USA). The reinforced tooth roller in the
background mills studs from the stone.

Voith Vorecon
Vorecon is composed of the first letters of Voith Regulates Economically.
In Vorecon we find a hydrodynamic torque converter and a planetary
gear. Vorecon’s job in the drive train is to regulate the speed of a workmachine. It is primarily used in power plants and the oil and gas industry.

Oil filling

Converter

Fixedplanetary gear

Drive shaft forelectric motor

Constant speed(motor)Revolvingplanetary gear3	A powerful cutting roller gnaws strip after strip
from the rock layer.

Output shaft

Changing speeds(work machine)

gas facilities – we must also understand precisely how and­under what conditions our products will be used,” says
­Zeschky, explaining the successful recipe.
Quality and reliability are critical
Many mines today work like a gigantic, computer-controlled
logistics company, perfected and optimized down to the lastdetail. The high expense is worth it. The business with raw
materials is one of the most profitable in the world. But eventhe most minor malfunction can completely cripple the sophisticated machinery and cause enormous costs. Above
all, underground, it is a real battle. There, huge chunks ofthe mountain crash down onto a transport chain. An ordeal
for the machines. “In a worst case scenario, that can destroy the entire drive train,” says Benno Morlock, Senior Vice
President of Start-up Components at Voith Turbo. “In larger
operations, an hour-long failure can cost multiple 100,000
euros.” The oil industry must calculate even higher damage
and risks. In Brazil, off the coast of Rio de Janeiro, Voith’sdrive technology helps pump the black gold from a rig in theocean to the shore. “Roughly 800,000 barrels of oil per day
are produced here,” says Ralf Dreckmann, President of

22

2	The conveyor belts bring the coal above
ground. The longest one in the San Juan Mineis 2.5 kilometers and is driven by six motors
with 750 hp each.

Voith Annual Report 2009/2010

Voith Turbo in Brazil, providing an example. “If a coupling
fails, that can cost up to two million dollars per hour,­depending on the current price of oil.” That is why customers in this area are glad to invest in good products. For mostof them, it is the quality and reliability that are critical, not theprice.
And ultimately it is not only money that is at stake. The system operators also bear great responsibility for people andthe environment. For this reason, Voith engineers are notrelaxing with state-of-the-art technology. It is also always
possible for proven products to be improved, made safer
and more environmentally friendly. Consequently, a coupling
profile has just been developed and will now help customers
achieve the same performance with smaller coupling sizes
and operate their system even more efficiently.
Another example shows how components that initially seem
expensive can thoroughly pay off in the end. At the present
moment in South Africa, the Medupi power station, the firstnew power plant in twenty years on the continent, is being
built with a planned output of 4,749 megawatts. Originally,
the operator awarded the contract to a company that »

1

2

3

TEXTE

23

1

­ ffered the frequency converter for the boiler feed pumps.
o
But after a more precise calculation over a service life of­25 years, the operators of the power station discovered aseries of additional costs. As a result, the electronic solution

2

Josef Braun, Sales Manager for Asia, explains with regard to
the high hurdles. Elsewhere, too, we have achieved breakthroughs: a high-performance Vorecon was put into operation this year in the USA at the compressor facility Williams“Mining companies in India must significantly
expand capacity in the next few years.”Narsim Shenoy, Voith India Advisory Board

performed significantly worse in maintenance and energy
consumption than the hydrodynamic variable speed gear
offered by Voith. For a few months now, the 18 ordered
Vorecons, each with a 19 megawatt output, are being delivered one after the other to South Africa.
Used in all regions of the world
The South African order was a very special achievement as
it opened a completely new market. “Before that, we had
only sold Vorecons with a low output for this type of application. That is why this reference project is enormously important, since the oil and gas customers usually buy only products that have already been proven elsewhere. That makes
it very difficult to penetrate higher performance classes,”

24

Voith Annual Report 2009/2010

Station 100, connected with a gigantic gas pipeline. “With
30 megawatts, this has one of the highest, built-in outputs,”
says Braun. The engineer is equally proud of a liquefied gas
project in China. For the system of the energy provider
Ningxia Hanas Natural Gas, Voith will deliver two Vorecons
for refrigerant compressors for the first time. “It is not the
Vorecons that are unusual here, but rather the completely
new area of use for our aggregates,” stresses Braun. Other
interested parties from the industry have already inquired forthis reason.
Globally growing energy needs
Above all, Asia needs more and more energy. Narsim­Shenoy, Chairman of the Voith India Advisory Board, sees1	Vorecon at a gas compression station in
Oman. It reacts to the changing pressuresand densities of natural gas and ensuresthe correct speed of gas compression.
2	Jobs in the oil and gas industry are
popular. They are considered safe against
crisis and are well paid.
3	Endless space: a tanker on the road to the
Yibal oil and gas field in Oman.

3i­ncreasing demand for production technology in India. The
mining companies there must significantly expand their­mining and excavation capacity in the next few years. The
growing demand of the manufacturing industry alone requires an annual increase of eight to ten percent in the production of coal, he continues. Since 1989, Voith has produced couplings for Indian power plant construction andmining at the company’s own facility there. “This is currently
growing very rapidly,” confirms Debashis Basu, President ofVoith Turbo in India.
And China’s appetite for energy is even greater. This year,
the rapidly emerging country outstripped the USA in totalenergy consumption for the first time and is currently thelargest coal producer in the world. Total output in just thelast five years, between 2004 and 2009, has almost doubled
from 1.3 billion to 2.4 billion tons. By 2015, China wants tofurther increase its production of coal by almost a third. Demand for production technology is also increasing: almost
half of all systems produced by Voith for the commodities
industry are now being used in Asia.
More effective production technology
The impact of more effective production technology is not
only impressive in unconventional cases such as oil in tar
sands and shale deposits. Conventional deposits also benefit from new and more advanced drives and machines. If

the exploitation of all conventional oil fields increases by just
one single percent, that would result in 20 to 30 billion morebarrels of oil, approximately the current annual consumptionof oil around the world, according to the energy company
Shell. “By 2030, improved techniques for conventional oil
will make up 20 percent of all production,” says Willem
Schulte, scientist for production technology at Shell. Voithis also involved in the development of new production technology. In a joint project subsidized by the EU, engineers
and scientists are working on small pumping stations thatare built on the ocean floor and send oil or gas to the ocean
surface. That requires a completely new approach rightfrom the ­design, since such devices are not easy to service
regularly.
But those are future visions. And already today, Voith’stechnology is very popular in the raw materials sector. “Wehave really succeeded in decoupling ourselves from the­recession to open up new markets and regions,” says
­Zeschky. The manager identifies another important reason
for Voith’s success: “For us, the sales transaction may becompleted with the delivery of the product, but the customer relationship does not end. We make sure that customers
are ideally supported from the day of their order and on
through the entire service life of a product. That means ensuring that they can smoothly operate their systems with ourdevices. We offer them this service.”‹

In the Background, but Indispensable

25

Cana Brava hydro power plant in Brazil

The Moody
Forces of NatureIndustrial nations are planning a radical
conversion of their energy systems.
­Water, sun and wind are supposed to
become the basis for the generationof electricity. Only pumped storage
plants can effectively save the electricity
from volatile natural resources.

T

housands of visitors from politics, economics andthe natural sciences descended on the Indian capitalof New Delhi at the end of October for the fourth international conference on renewable energies. The subject
is hot. Global warming requires a rapid and drastic reduction in CO2 emissions and a complete conversion of global
energy systems. Sun, wind, water and other natural resources are supposed to ensure the supply of electricity inthe future and reduce the damaging effect of greenhousegases. Around the world, this job is at the very top of many
countries’ agendas. According to a resolution by the European Union, every member country should generate at least18 percent of their electricity from renewable sources by
2020; in the USA, it should be 20 percent by that date, andJapan is planning to obtain ten percent of its primary energy
from such resources. Many countries have adopted evenhigher goals. Globally, countries alone have set aside a totalof $ 57 billion in 2009 for the production of electricity fromrenewable energy and biofuel, estimates the International
Energy Agency (IEA). In the scenario of these new generalconditions for energy policies, electricity production from renewable sources will triple between 2008 and 2035. This
increase is primarily due to wind and hydroelectric power,
whereby the latter will continue to dominate, according to
the IEA.
No intelligent use without intelligent storage
The new energy mix signifies an outright revolution. And it
has its price. Globally, electricity grids must be expanded
and retrofitted. In the European Union alone, according to
the EU commission, 1 trillion euros must be invested in theelectricity grids over the next ten years. “The renewable energy will be obtained where it produces the highest returns,” »26

Voith Annual Report 2009/2010

TEXTE27

says Professor Jürgen Schmid, Director of the Fraunhofer
Institute for Wind Energy and Energy System Technology in
Kassel. They must be able to transport the electricity fromwind and water from the north and the electricity from thesun in the south over long stretches to urban centers. “To
do this, we need high-performing electricity grids. National
grid plans quickly reach their limits,” the researcher knows.
Nature is moody. The wind does not always blow when

When there is excess electricity, water is pumped into a­basin that lies higher. If electricity is needed, the water falls
down again and drives turbines. “Currently, there is no othereven roughly comparable popular and tested technology forthe large-scale storage of electricity,” confirm experts fromthe German Energy Agency in their “Analysis of the Necessity of Expanding the Pumped Storage Plants and Other
Electricity Storage Systems for the Integration of Renewable“Pumped storage power plants are becoming
more important with the increasing share of
renewable energy.”
Jürgen Schmid, Fraunhofer Institute for Wind Energy and Energy System Technology

electricity is needed and the sun in the best case scenario
only shines during the day. Energy depots must compensate for excesses and shortages. “These storage facilities
are becoming increasingly important with the increasing
share of renewable energy. One of the most attractive possibilities is offered by the expansion of the existing pumped
storage plants,” says Schmid. Their operation is simple:

Energies” from September 2010. At the same time, pumped
storage plants with their sophisticated technology and efficiency of up to 85 percent are exceptionally effective. “If thehighly volatile wind energy increases significantly, as isplanned almost everywhere, we need many more pumped
storage plants,” says Siegbert Etter from Voith Hydro. Grid
operators must often use polluting coal power plants to en-

Sophisticated and Very Effective Technology
The principle

Upper basin

Current input

Pressure pipe

Upper basin
Power grid

Motor generator
Pump turbine

Current output

Pressure pipe

Lower basin

Power grid

Motor generator
Pump turbine
Lower basin

Storage of electricity – pump operation

Generation of electricity – turbine operation

1. Current is taken from the power grid to run the electric motor.
2. The electric motor drives the pump turbine.
3. The water from the lower basin is pumped into the upper basin.

1.	The water is fed from the upper basin through a pressure shaft
to the pump turbine and drives it.
2.	The turbine drives the generator, which produces electricity andreleases it into the grid.
3. The water flows into the lower basin.

28

Voith Annual Report 2009/2010

View of the Raccoon Mountain pumped storage plant on the Tennessee River.

sure the constant flow of electricity. For this reason, Voith
assumes that the share of pumped storage power plants asa percentage of the entire hydroelectric power market willmore than double in the coming five years – from three percent today to seven in 2015.
But not every country offers good conditions for this. Mountains are ideal. The best conditions are found in Norway with
its extensive water and mountains, but only sparsely populated land. “New grids must also facilitate a connection to
the high-performing storage systems in Norway,” says theenergy expert Schmid. Today, storage plants in the Alp
countries of Switzerland and Austria regulate the transport
of energy in Germany via an integrated grid. Consequently,
Vorarlberg has one of the world’s most modern pumped
storage plants, the Kopswerk II. In Upper Carinthia, Verbund AG, Austria’s largest electricity company, has juststarted building a very special pumped storage plant,
Reißeck II. And the highlight: the new power station is almost invisibly integrated into nature. The project combines
two close, but separately operating, power plants with amore than five-­kilometer-long water tunnel and can thereby
use the existing system. “This hydraulic connection keeps
the intrusion into ­nature to a bare minimum,” stresses Ulrike
Baumgartner-Gabitzer, Member of the Board of Verbund
AG. As of 2014, the underground hydroelectric power station is supposed to deliver valuable compensation energy.

Other possibilities for expansion: hydroelectric power
Water provides its enormous energy significantly more predictably than the sun and wind. Nonetheless, one of thegreatest potential areas often plays only a secondary role in
the new power mix. This may be due to the fact that hydropower is often not regarded as a source of renewable­energy. The last Kyoto Protocol views this completely dif­ferently, however: the large hydroelectric power station is“Tremendous potential
for hydroelectric power inSouth America, Africa andAsia is not being used.”Richard Taylor, International Hydropower Association
explicitly defined as renewable energy there. This assessment is confirmed by the fact that hydroelectric power today
is the largest supplier of environmentally friendly power,with an installed output of 1,000 gigawatts. With a share of
16 percent of the global generation of power, it is the only
renewable source of energy that already makes a notable »The Moody Forces of Nature

29

Growth of Environmentally Friendly Electricity
The global energy market and its share of renewable energy

Percentages withinrenewable energy

Renewableenergy18,000 TWh

Conventionalsources ofenergySolar energy
0.1 %
Ocean
< 0.1 %
Geothermal
1.9 %Wind energy
3%
Biomass
7%
Water
88 %

2004 / 2005

contribution to the supply of electricity to people. Yet only agood quarter of water’s power around the world has beenutilized. This makes it particularly interesting for rapidly
growing countries whose Achilles heel is the supply of­energy. “In South America, Africa and Asia, the tremendous ­potential for hydroelectric power is not being used,”says ­Richard Taylor, Managing Director of the International
Hydropower Association. No wonder that we find bustlingbuilding activity on rivers around the world.
Voith manager Etter anticipates annual growth of 25 gigawatts per year, and the company is at the fore in this field.
A large portion of the electricity from hydro power aroundthe world is produced with generators and turbines from
Voith. With a market share of almost 18 percent, the systembuilder is number two in hydro power.
In search of ideal solutions“Besides large hydro power stations, small hydro power
stations are also extremely important. Normally, they can
only cover a modest share of a country’s electricity needs.
But nonetheless, their impact often exceeds their small size
– and since they work without special dam systems, they
can be easily integrated into nature,” explains the Voith
manager.

30

Voith Annual Report 2009/2010

Percentages withinrenewable energy
34,000 TWh
RenewableenergyOcean
0.3 %Geothermal
2%
Solar energy
3%
Biomass
12.7 %
Wind energy
19 %
Water
63 %

Conventionalsources ofenergy2030

Sources: IEA, Voith

To date, environmental protectionists have also attested toa similarly limited impact on the environment from thosetechnologies that use the ocean’s energy – wave and tidal
current power stations. “In our pilot station for obtaining­energy from waves on the island of Islay in Scotland, thefacility makes do without movable parts and the majority of
it sits on land,” explains Jochen Weilepp, Head of Ocean­Energies at Voith. “We discussed our air pump concept,
among others, with animal and environmental protectionists, who did not voice any objections to it.” This concept
works with an air turbine rather than a water one. It is built
into a collector facility erected along the coast, which
stretches into the water like a roof and has an opening tothe ocean. The waves penetrate the room and then pull outof it again. The resulting difference in pressure inside thepower station sets the air in motion, which drives so-calledwave turbines in time with the waves. For ten years, the pilot
station on the west coast of Scotland has supplied the residents of the island with electricity in this way.
Tidal current power stations use the ocean’s tidal energy. At
the moment, one of the world’s largest power stations of
this kind is being developed for the Seaturtle Tidal Park off
the coast of the South Korean province Jeollanam-do. The
first pilot turbine for this was developed and built by Voith.
“The location is ideal, and that is why the project is so exciting for us,” says Weilepp. The water must pass between
many islands off the coast. This increases its speed andthus the potential exploitation of its energy.
Fundamentally, ocean energy possesses enormous potential. Roughly 70 percent of the earth is covered by water thatis almost constantly in motion. But this source of energy is
not so easy to use. “The technologies are in the development phase in which wind energy was more than twenty
years ago,” says the Voith expert, lowering high expectations. Almost all systems for obtaining ocean energy are stillin various testing stages. Work is being done on very different technological concepts for both wave and tidal current
power stations. It is still unclear which will be successful inthe end. Only one thing is certain so far. “It must be a robust
technology,” says Weilepp. Because the ocean can be very
rough. As soon as these problems are resolved, Weilepp iscertain that the ocean’s forces will play an important role in
the future mix of renewable energy. But an exact determination of this potential is difficult for experts. However, Weilepp estimates that it will be a similar order of magnitude as
wind energy.

Wind power on the rise
On the other hand, experts do agree when it comes to wind.
“Wind power will see the greatest growth. We expect thatby 2020 new wind power stations with a total output of 137
gigawatts will be built, which means 117 gigawatts more
­installed output as compared to 2007,” the analysts from
Roland Berger forecast. Other calculations also unanimously agree on a promising future for wind power. The dramatic
performance of the sector is also causing rapid growth in
the need for turbine services. Today, Voith Industrial Ser­
vices is supporting more than 500 wind power stations inGermany and Austria. 24 service teams monitor the stations
remotely. But they are never very far from the wind parks.
Around the clock, they can react like lightening when there
is a malfunction. The work on the tubes, high above groundlevel, requires physical fitness, certification by a doctor thatthe person can work at high altitudes and annual rescue
training. The team receives thousands of alarm calls every
year. And for the operator, such a special service pays off.
A few months ago, Voith assumed the support for a windpark with 46 megawatts in Austria, in the vicinity of Vienna.
In a brief period of time, Voith Industrial Services was able toincrease the availability of the stations from 85 to 98 percent. The servicing and support of the wind energy stations
through an independent service provider like Voith brings
another advantage. Often a wind park has received turbinesfrom various manufacturers over the years. The employees
from Voith are trained, however, for all types.
‹No dizziness and top-fit: Courageous
assemblers install new wind power stations.
They consist of an up to 100-meter-high tube,
the gondola with the power station technology
and the rotor.

TEXTE

31

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Voith Annual Report 2009/2010

“Especially Good for
Urban Areas”
Resources are limited – but not ideas. Systems expert Markus Oechsle
explains what lies behind the urban mill concept. It helps paper manufacturers
reduce energy consumption, lower their freshwater needs and process­production waste.

What is behind the concept of the urban mill?
The idea of the urban mill is not new in itself. Urban mills are factories that are
built close to consumers to supply the given region with paper such as packaging paper, print and writing paper or tissue.
If the idea of the urban mill is not new, then what is interesting about Voith’s
approach?
New is our idea of “closing the loop,” which means the fiber, energy and water
cycle are almost closed. This offers multiple advantages at the same time:
investment, operating and logistics costs are significantly reduced. Also, lessenergy and water are needed. And furthermore, there is hardly any residualmaterial that must be disposed of.

Markus Oechsle, Voith Paper.

Reduce costs and also produce in a more environmentally friendly way?
That sounds contradictory at first.
But it isn’t. Quite the contrary: Synergies emerge from connecting the loop
cycles and closely coordinating the processes. This, for instance, is how it
works with the fiber cycle: In the urban mill, collected waste paper from theurban area is processed and turned into new paper. If fresh fibers are alsoneeded, these can be purchased on the market. The use of fibers from recycled wastepaper also reduces the consumption of primary energy, since theprocessing of fresh fibers is much more energy-intensive.
In the energy cycle, the system uses the heat that results in the paper production process. Furthermore, the conversion of waste material to steam andelectrical energy significantly reduces costs. Additionally, valuable materials
can be systematically extracted and reused. This lowers disposal costs enormously.
»

People in India like to stock up on exciting literature
in second-hand shops. Before a book is ready forreuse, it passes through many hands.
“Especially Good for Urban Areas”

33The collected paper on the cargo
bike is stacked up more than one
meter in height in India. In thefactory, a conveyor belt transports
the valuable freight directly to theprocessing plant. Thoroughly
cleaned and reprocessed, the fibers
find their way back to the readers.

On the subject of water, we pay attention to closed loop circuits with regard
to consumption: The cooling circuits are closed and the cleaned wastewateris guided back into the paper production process. This lets us reduce ourconsumption of freshwater and the produced wastewater to a minimum.
Important in this connection is that we do not consider the urban mill in isolation, but rather that the industrial surroundings are also considered. This lets
waste products and wastewater produced outside the paper mill be recycled
in the urban mill.
How do you proceed?
Every project is preceded by a detailed situation analysis and the plans areadjusted with the customer to the given location. We make sure that all subprocesses from paper production are ideally coordinated with each other. Additionally, the productivity and efficiency of the paper mill can be increased
with the integration of industries in the surrounding area such as municipal
sewage treatment plants, power plants or garbage sorting plants.
How do you reduce capital expenditures and logistics costs now?
The production capacity adjusted to the conditions on-site and an ideal design for the processes and plant components lowers capital expenditure
costs. Delivery from a single source makes a critical contribution to this.
­Furthermore, the specific costs for small as well as large production plants arealmost equally good. In comparison to conventional paper mills, a higher cash
flow is generated and a quicker return on investment is achieved. The investment in an urban mill is not only worthwhile from an ecological point of view,
but also from an economic one.

34

Voith Annual Report 2009/2010

An Intelligent Concept for Ecology and Economics
The urban mill cycle

Energy cycle

Paper

Fresh fibers
Fiber cycle

City
Wastepaper

Water cycle

Paper millSince an urban mill uses the paper in the urban area close to the mill, this reduces its transport costs, which are cost-intensive. The same naturally applies
to the obtainment of wastepaper. Wastepaper is increasingly gaining moresignificance in paper production. Today, it is already more than 50 percentof the raw material base for paper production. We assume that more than70 percent of global paper production will be based on wastepaper in a few
years. Wastepaper is increasingly important, and since there are tons ofwaste­paper an urban area, this can be collected right in front of the urban
mill’s door, so to say.

“All processes in the urban
mill are ideally coordinatedwith each other andwith the existing regional
circumstances.”

Are there countries or regions that are particularly suited for the urban millconcept?
As already mentioned, an urban mill is especially well suited for urban areas
with a high population density and existing infrastructure. This applies in particular to emerging markets such as India and China. While the required infrastructure is frequently lacking in the rural regions of these countries, it ispresent in the areas around large cities – the ideal environment for an urban
mill.
Why was your urban mill concept not developed earlier?
All the processes in the urban mill must be ideally coordinated with each otherand adjusted to the existing regional circumstances. To fulfill these complex
requirements, a large amount of process knowledge and many years of experience in this area are necessary. We have continued to expand this process
knowledge for decades through myriad projects. Consequently, today we arecapable of facilitating significantly more efficient and ecological paper production.
‹“Especially Good for Urban Areas”

35Computer simulation supports engineers in the development of new products.

Burning for an IdeaIntelligent solutions are being sought more than ever before. For saving the climate,for ensuring energy supplies and for the growing mobility of an increasingly large­number of people and goods. In their research and development divisions, companies
are working on the answers to these questions.
Here, it is mostly engineers who persistently, in small steps,
develop new technologies and turn innovative projects into
products. If a young engineer decides to pursue researchand development in a company, he has the ambition to research for real life, to create a product that will prove itself inpractice and ultimately bring about an improvement. The
projects are complex and challenging; to master them requires endurance and patience. Something that frustrates
a layman is new insight for an engineer. He knows that“there is no bad result. If an outcome is different than hethought at the beginning, we learn something that is important for the entire process,” explains the current specialist,
David Bendl.
The cliché of the solitary inventor has long been a thingof the past. A development engineer must possess socialand communicative skills. He must be capable of present­ing recommendations, convincing partners, irrespective ofwhether it involves the management team at his own company, customers, investors or his colleagues. He must work
together with others in a team on projects and must, as the36

Voith Annual Report 2009/2010

engineer Norman Perner said, “be socially acceptable.”
A basic condition for working in the company’s researchand development department is a solid education, usually auniversity degree in engineering. This is then connected withthorough training. “I spent a few years learning everything
about the production of paper and only took managerial­responsibility afterwards. It was good that way; the order
was correct,” said the paper expert Susanne Berger, who
knows from experience.
The engineers of visions are motivated or driven, as it is often called in the jargon of technology companies, by adventure research – this is both excitement and passion forthem. “I find relevant practical research more important thanworking out very academic subjects and I am lucky to beable to do what excites me,” stresses the young engineer
David Bendl. The developer Felix Rüdiger emphasizes: “Wehave a job with a lot of responsibility. I am proud of what wehave accomplished.” Norman Perner, who has devoted
himself to the research of tidal energy, confirms: “I want toimplement my ideas. You have to be burning for your ideas!”Putting It on Paper
Susanne Berger has been working in
the research division at Voith Paper foreight years. As a process technician,she received her PhD in the drainageof brown coal and then gained her first
professional experience at a plant
manufacturer. At Voith Paper, she began with the research of paper properties. For the layman, there are worlds
between a beautiful, white piece of paper and the brown fuel.
Not for an expert: “The paper fibers
are obtained from wood and brown
coal is also only wood in a different
state,” says Berger, explaining the logical connection between her dissertation and her later area of responsibility.
In one of her first projects, she was insearch of a microscopically small imperfection in magazine paper that only
showed up in the printing. Later she
researched paper that curled when
run through a copy machine.
Susanne Berger’s daily life changed
around three years ago. Today, she­directs a group of 14 employees. Her
team consists of mathematicians,
physicists, bionics researchers, chemists, wood specialists, textile technicians, mechanical engineers, processengineers, as well as paper and electrical engineers. Two of them work in
Sankt Pölten, Austria. “The distance is
not problematic for our collaboration,”says Berger. “We meet frequently online and our Austrian colleagues par-ticipate in our meetings via OfficeCommunicator.”
Her area of responsibility also expanded to include new content. Besides
paper properties, the subject of raw
materials and resources has also
­become a focal point of the researchgroup. “Conserving energy is becoming increasingly important for paper
manufacturers,” says Berger. Voith
had begun a pilot project on the subject of an integrated paper mill theyear before. All the steps in a papermill, from the generation of power inthe company’s own power plant
to the completed paper rolls, were
supposed to be illustrated by using
modern simulation methods on a computer. An absolutely unbelievable performance. “The production of paper ismore complicated from a process
point of view than all other processes
that I know,” she explains.
The simulation shows and calculates
the fiber, water and energy flows in acomplete report. This enables discovering possibilities for conservation andimprovement, and creates the basis
for innovations with which paper canbe produced in a resource-saving way
in the future. Two employees fromBerger’s research group have built thesimulation tool. The entire simulationof a paper mill has been successfully
concluded in the meantime and patents have been filed.
Occasionally, Susanne Berger still
misses not being able to handle thescientific details as intensively as before. But her satisfaction with the newly obtained responsibility and the many
subjects that she confronts significantly outweigh the losses.

Susanne Berger, Head of Department in Research at Voith Paper.
Burning for an Idea

37

A Ship Propulsion System forWind Power

Felix Rüdiger, vehicle engineer:
Development of safety concepts for trains.

Crash Tests on
the Computer
Felix Rüdiger discovered his passion
for development work at university: “I
decided in favor of industry because,
as opposed to university, you do not
do basic research and instead develop
actual products. It is great when I see
trains on the track and know that I
helped develop them myself.” The
young vehicle engineer came to Voith
Engineering Services in Chemnitz rightafter graduating from university andis responsible, as calculation engineer,for creating safety concepts for trains.
At only 28, Felix Rüdiger is already thehead of a specialist area with six engineers, which he was involved in creating. His team’s job consists of conducting so-called crash simulations for
new rail vehicles. The goal is to design
the cars so that the inside area remains undamaged in the event of a
train crash and the travelers survive
with as few ­injuries as possible. The
engineers ­develop concepts for thesafety of millions.

38

Voith Annual Report 2009/2010

David Bendl wants to work on areal product and see a tangible
result at the end. That is why hedecided to work in a company.
He likes the fact that researchand development calls for “a lotof creativity. That is exciting!
When I see a finished component
and know that I established thebasis for it with the hydrodynamic calculation, that is a good feeling and an incentive to pursue
other promising work. This is
more important to me than an
academic degree,” says David,
explaining his passion.
He discovered his specialty, fluid
dynamics, during his mechanicalengineering program at university. For his internship, he sought acompany that is a leader in thisarea and applied to Voith. In thedevelopment division for ship
propulsion in Heidenheim, he
was able to complete his intern-ship and then write his diploma
thesis.
Since 2007, the 29-year-old engineer has worked at Voith Turbo
Schneider Propulsion and forroughly two years has been collaborating with colleagues to develop the first Voith Radial Propeller. This new ship propulsion
system will be built into a 150meter-long special ship that islater supposed to haul wind
power stations out to sea andplace them on the sea floor.
The new propeller possesses ahigher degree of efficiency thancomparable propulsion systems
from competitors. This allows toprecisely hold the position of theship, which is a fundamental precondition for the lowering of wind
power stations. A ship propulsion system contributes to the
expansion of renewable energies.

David Bendl, engineer: Development of the Voith Radial Propeller.

Norman Perner, Technical Director: Tidal current turbines.

Energy through Ebb and Flow
Norman Perner was born with the desire to research. As achild, the now 40-year-old engineer heard about climatechange for the first time. His father, a chemist at the Max
Plank Institute and one of the first climate researchers in theworld, discussed global changes with scientist friends at
home, including, for example, the threatening global warming and the ozone hole. Norman listened to it all and wasquickly infected by environmental protection subjects.
Years later, after graduating with a degree in engineering,
his sister, who had just returned from a long stay in Namibia,
told him about the strong currents off the coast of the African country. Numerous ships became victims of the ocean’s
destructive force there. His sister’s reports stirred the young
engineer: If you succeeded in taming these enormous forces, they could be used as inexhaustible sources of energy
for the benefit of mankind, he considered.
In the following years, he knocked on countless doors at
shipyards, planning companies for wind power parks andwater turbine manufacturers. He succeeded in being invited
over and over again and specialist colleagues were receptive to his idea. Nonetheless, ten years ago, no company
was ready to invest in the development of tidal current
projects. “The time was simply not right,” he states in retrospect. Back then, he also tried to contact representatives inparliament. But the politicians also reacted very reticently
and did not provide any subsidies. Perner did not give up
and developed his first complete tidal current power station

on his computer with his own money. With a friend, he conducted trials with models and filed a patent in 1997. In
search of alternative financing options, he accepted a dissertation grant: “Then I discovered that industry was moving
ahead more quickly than science. That is why I gave up thedissertation project and entered into the development ofwind power generators,” says Perner. It was important for
him to work in an area adjacent to tidal current technology.
At this time, he made contact with experienced engineers
throughout Germany. A personal network emerged, which
ultimately brought him together with experts at Voith.
In Heidenheim, around the turn of the century, he built astrategy team that placed the research of ocean energy on
the agenda. Finally the time was right for Perner’s idea. In
the meantime, the team has become a company withroughly 20 engineers – Voith Ocean Current Technologies.
Currently, a prototype has been developed for a tidal current
power station that will be put into operation in Scotland.
A smaller test station has already been completed andshould enter into the trial phase off the coast of South­Korea. But Perner has still not reached his ultimate goal,“since only after the field trials can we show that our technology works and has proven itself,” he stresses. But he iscertain that they will succeed: “If I were not convinced that it
would work, I would not do it. It is so difficult, it must work,
I cannot and do not want to imagine anything else.”

Burning for an Idea

39

Projects and Products with a Future
Engineers work at innovative technologies and develop
environmentally friendly concepts for the industry.

02
Safety Concepts andCrash Simulation

01
Tidal Current Power Stations
At first glance, the sight reminds the
spectator of a wind turbine: but it is aturbine for a tidal current power station. The station uses the tidal current
energy that results from the shift between ebb and flow. The tidal current
spins a rotor that in turn drives a generator – and without a gear beingchanged between the rotor and generator. Voith has developed two prototypes: one of one megawatt and asmaller one with a nominal output of
110 kilowatts. This one is about to betested off the coast of South Korea,
and the larger one will be placed in operation in Scotland afterwards. Underwater operation in the sea, i.e. in saltwater, presented the developers withspecial challenges. The system should

40

Voith Annual Report 2009/2010

work for many years without any major
maintenance and be environmentallyfriendly. Another problem was keeping
the water completely out of the system. In particular for long operating
periods, this is only possibly with great
difficulty. So the engineers made a virtue of necessity and let the seawaterrun free: They developed saltwater lubricated bearings for the turbine, anabsolute novelty, and a generator
flooded by seawater. Another uniquefeature of the system is the turbine’s
bidirectional rotating rotor blades thatcan be moved from two sides by theflow. This makes it possible to use thecurrent from ebb and flow to the same
degree without having to turn the gondola.

Whether they are tram cars or regional and high-speed trains, newvehicles must go through extensive
test procedures. For cars, one of
the main requirements is that theinterior will suffer as little damage
as possible in the event of a crash.
For these demands, service providers like Voith Engineering Services
develop appropriate safety concepts. The engineers use their calculations to determine which absorption elements, couplings anddeformation tubes have to be integrated into the vehicle’s structure.
Absorption elements for trains workin a way that is comparable to the
crumple zone of a car: They absorb
the energy of a crash and dissipate
it in a controlled fashion. The car
manufacturer and the customer
send the relevant data to the development service provider. He or she
calculates precisely what the ideal
absorption elements are for the
new car model.

03Voith Radial Propeller
The Voith Radial Propeller (VRP) is abrand-new ship propulsion system.
The first VRP, a rudder propeller, isbeing developed for a 150-meter-longspecial ship. The customer is a building contractor that wants to use thisship to haul wind power stations out tosea and place them on the sea floor.
The Voith Radial Propeller can be rotated 360° and is capable of generating thrust in every direction. Anotherunique feature of the new develop-

ment is the nozzle’s special design,
which lets the propeller attain a demonstrably higher degree of effectiveness in comparison to similar products
from competitors – a major advantagethat permits higher static thrust. And
this static thrust, i.e. the power thatkeeps the ship in place, is a fundamental requirement for the exact lowering of the wind power stations to thesea floor.

04
Development Project Integrated Paper MillIn the summer of 2009, the integrated
paper mill project began and was successfully completed in just under ayear. The job was to simulate the entire
process of stock preparation and the
production of paper, and to prepare an
overall report on resource consumption. For the production of paper, youneed above all water, energy and fibers. A modern and sustainably operating paper plant must use these resources conservatively and efficiently.
Paper production is considered a high-ly complex process. Commensurately
great is the challenge of identifying thepossibilities for optimization. By using
a simulation tool, we can see the pro­
cesses of a paper mill from the simple
filter to the complex paper machine
and the interaction of its different parts.
The pilot project was conducted on thebasis of a real mill. It was able to show
where there was potential for improvement and how the use of resources, inparticular the consumption of waterand energy, could be sustainably im-

proved. Parallel to the simulation tool,engineers developed a new softwarethat measures energy consumption
during the paper production process:this is the Voith EnergyProfiler. It creates the basis for the machine operators in paper mills to be able to systematically optimize the use of energy
and thus meet the cost requirementsof their management. The Voith EnergyProfiler was tested at a pilot customer and is now available for installationin paper mills.

Projects and Products with a Future

41

42

Voith Annual Report 2009/2010

For a Great Climate
As the global population dramatically grows, so does the
traffic. Energy-efficient and environmentally friendly pro­pulsion technology helps conserve resources and reduce
the greenhouse effect.

TEXTE

43

R

ush hour in a metropolis. A bus
brakes at a stop, waits. Travelers get on. In the hecticness ofthe day, hardly any travelers noticethat the bus leaves the stop almost silently. With an electric motor, it begins
the trip, and only after a short distancedoes the diesel motor start again. The
majority of the energy required for thestart process was “generated” by thebus itself: It is the braking energy thatis temporarily stored and then used to
set the bus in motion again.

ly, since ultimately in the coming years
it will be these transportation systems
that will ensure the mobility of millions
of people in urban centers around theworld. One thing is completely clear
and not disputed by any transportation expert in the world: We will not be

At Voith, we have spent years working on technologies that make buses
and trains more environmentallyfriendly. Hybrid drives are the key
technologies when it comes to lower
fuel consumption and fewer CO2 emissions. And obviously solid cost argu-“We have achieved reductions of up
to 30 percent in fuel consumption.”
Johannes Gerhard Mosandl, Voith Turbo

People who consider hybrid drive systems today initially think about cars.
Every car manufacturer is sure to receive an enormous amount of media
interest and public attention when it
presents new hybrid technologies. For
buses, subways, high-speed trains
and other public transportation systems, it is completely different. Unfair-

Pictures on the right: Buses play an importantrole in urban transportation. Even more important is that these buses should run as efficiently
as possible and conserve resources.
Picture on the front page: Dense traffic – daily
life in Manhattan.

44

Voith Annual Report 2009/2010

able to maintain the mobility, which we
all enjoy today and which has becomea major part of our lives, without the
expansion of the existing means ofpublic transportation and the development of new, more efficient ones.

ments for transportation services. The
Voith engineers can fall back on over
20 years of experience in the combination of mechanics, electricity andelectronics. The results of these developments are above all two systems­
for use in buses: the parallel hybrid­ IWAhybrid and the serial hybrid ElvoD
Drive. And by the way, this difference
between parallel and serial hybrids­already exists for cars, too: A parallel
hybrid drive has an electric motor thatworks together with the com­bustion
engine on the drive train. For a seriallyarranged hybrid drive, the combustion
engine has no more mechanical connection to the actual drive shaft. Its job
is to power the generator that supplies
the electric motor with energy andcharges the batteries.
Voith is one of the few manufacturersthat has worked on both a parallel anda serial system from the beginning.
The reason for this: “Bus transportation is not the same everywhere. There
are sometimes significant differences,
not just from country to country, butalso even from city to city. While wein Europe have more routes withmany stops and a lower average
speed, the USA is dominated byroutes with fewer stops and higher
speeds,” explains Johannes Gerhard
Mosandl, Director of Technical Operations at Voith Turbo.
Today, in 2010, Voith hybrid technologies are far beyond the testingstage. “Both Voith systems reachedimportant milestones in 2010: The­ElvoDrive performed great in toughdaily service in Sweden. And for the
DIWA­hybrid, we currently have the firstorders from bus manufacturers in theUSA,” says Mosandl. From the USA
back to Europe. Here, the serial hybrid
system was tested – the Voith ElvoDrive. It was developed for routes witha lower average speed and a highnumber of stops, as is typical in large
cities. With ElvoDrive, the required
power is provided completely electri-

cally. Voith developed its own electricmotor with very high torque. A technology that ensures the efficiency ofthe entire system and thus a reduction
in consumption and emissions thanks
to its very high degree of effectiveness.
“And that can be proven in the­numbers,” says Johannes Gerhard
Mosandl: since 2009 the ElvoDrive
has been tested in practical use.
We have achieved a reduction of up to
30 percent in fuel consumption.” Since
the vehicles are equipped with a motor
running on an ethanol base, the CO2
emissions improve by up to 90 percent in combination with ElvoDrive.
The experience and results that Voith
engineers have gained in recent years
while working on hybrid drives canalso be applied to other areas: For instance, in the development of hybrid »

TEXTE

45

solutions for new, cleaner drives forrail vehicles. Here, too, it is clear: The
subject of hybrid drives will become
substantially more important in the

coming years. Voith is prepared in any
case: “For the DIWAPack, we at Voith
Turbo also developed a hybrid variation for trains. In the braking process,

Recycling Excess Energy
How the SteamTrac system works
Vehicle control

ExpanderCapacitor

Evaporator

Exhaust

VTCsmart

Integration in thevehicle’s cooling system

ExhaustFeed pump46

Voith Annual Report 2009/2010

Media tankelectrical energy is guided to the energy storage devices, does not get
wasted, and can be used when starting or driving on a route in order tosupport the diesel motor,” says Heinz
Tengler, director of the product groupfor diesel drive systems.
The idea of recycling surplus energy
for the drive system also lies behind“SteamTrac”: Use energy instead ofsenselessly warming the environment,is the slogan. Conventional combustion engines lose roughly 60 percent of
the energy produced. It leaks out as
waste heat via exhaust and coolant.
SteamTrac guides a portion of it backinto the drive train so that the valuable
energy is not simply lost.

Whether in urban areas or across the country­side, trains are the most environmentally friendly
option for people and goods.

The result: Significantly less fuel consumption and savings of up to ten percent are possible. “In a relatively shorttime, we developed SteamTrac – asystem that increases the efficiency of

The development of new, innovative
motors and vehicle components is important on the path to greater resource
efficiency. Today, Tengler and the Voith
engineers are one step further, how-

“We regard the train as anentire system.”Heinz Tengler, Voith Turbo
every propulsion solution with combustion engines,” stresses Heinz Tengler.
“Thus, SteamTrac plays a role for theentire propulsion system.” No wonderthat there are already new application
areas for it: Presently, the system is­already working in power plants thatrun on biogas or landfill gas. At the beginning of 2011, its use is planned in
the propulsion system of a tugboat.

ever. “We regard the train as an entire
system. In this system DIWA­hybrid or
SteamTrac are important components. But there are many other areas
where we could do something toachieve ideal results.” And for precisely this coordination, EcoConsult wasdeveloped. “EcoConsult is an entire
building block of components to makeit possible to operate diesel and hybrid

trains more efficiently and ecologically,” says Tengler, getting straight to thepoint. “EcoConsult comes in very earlyin the train operator’s added value
process and supports him in the fundamental question: Which vehicle do I
use in which way on a certain route?”
EcoConsult records the operating
data, analyzes it and identifies the potential savings. From this pool alsocomes the driver assistance system
EcoScout, a control and display device that is integrated into the vehicle
and gives the train driver recommendations for a resource-saving way todrive. “The future belongs to the system concept! Innovative components
ideally linked – that is EcoConsult,”
says Tengler. “This puts us one enormous step closer to intelligent, maximum resource-saving means of transportation on train tracks.”‹

For a Great Climate

47

Walter Neumann celebrated his 50-year anniversary in 2010.

Decades for Voith
Spend your entire professional life with one employer? Not so long ago, this model
seemed to have become “unfashionable.” In Germany, too, some companies andtheir advisors bet on quick and frequent changes in staff, as is common in otherregions of the world. Not so at Voith: The family company has been built on longterm employment.

W

ork with one employer for
many years and decades?
In only one company? How
does that fit into the work world of the
21st century? Above all: How does
this way of thinking fit together withthe often raised demands for flexibility
till retirement, unconditional mobility
and life-long learning.
The HR directors at Voith often hearquestions like this. The subject is morecurrent than ever before. How do wewant to work in the future? What is­really important, what motivates em-

48

Voith Annual Report 2009/2010

ployees? What do companies need?
This is discussed on professionalboards, but above all with applicants.
Many people that are interested inworking at Voith have informed themselves and know that the company
has its own opinion on the subjectof “lifetime employment”. The humanresources departments also know thatchange, variation and new responsibilities are important and play a central
role in staff development. But: “Whyshouldn’t that be possible within acompany? What is wrong about theidea of very consciously deciding towork for a company and then developing yourself personally and professionally there over your entire professional
life?” asks Wolf-Dietrich Seibold, thedirector of human resources at Voith
Paper, since he is firmly convinced:“Everyone profits from this: both theemployees and the company!”
Voith knows what such career paths
look like: in management, in the factory, in sales and in the finance division. And also that the conscious decision to work for one employer has
nothing to do with a lack of flexibility orPictures above: A rarity in the 60s – education seminars with a bus trip.
Bottom right: Work creates bonds. Walter Neumann (right)
plays enthusiastically with his colleagues Martin Rehorsch (left)and Hansjörg Baamann in a Voith football team.

convenience. It is entirely the opposite: For Voith, people that spend their
entire professional life working for thecompany represent an important basefor the company’s success. In branches around the globe, there are employees that have worked for 15, 25,
40 or more years at Voith. A valuableasset for the family company: “Voith
lives from the qualifications and knowledge of its experienced employees.
The company is a technology leader inmany markets and has ambitious
goals. Whether it involves generatorsand turbines for hydroelectric power
plants, paper machines, shutdowns ofrefineries, marine propulsion systems,‘old hands’ with many years of experience in the business are needed forthe handling of such very complex
projects.”
One of those is Walter Neumann. He
belongs to those that have worked atVoith for 50 years. In May 1960, the14-year-old came to Voith as a trainee.
And today he still speaks enthusiastically about his training days: “We had
both professional training and generalcourses, even art was in the curriculum.” A one-week seminar for his classand the trainees in Hindeland in Allgäu
was the first trip of his life. After his­final examination, he was hired in thesmall turning shop in 1963 and wasshocked at first: “I thought: I’m not“Everyone didtheir best. And
all gained some­thing from it.”places during my professional life.
That motivates you. I always knew
what I was working for and how it
would con­tinue.” The second half of
his career as a technical estimator
brought Walter Neuman new responsibilities and challenges. “The demands made of me were entirely different. I worked together with young
people, was able to use my experience and pass them on to colleagues. »Walter Neumann, Heidenheim

staying here for 14 days!” In the fac­
tory hall stood over 100 lathes; it was
loud and dark – no comparison withthe modern, light-flooded production
facilities of today.
The first scare turned into a close, lifelong connection. For 25 years, heworked in the small turning shop before switching divisions and gaining
new prospects for his professional­career. “Voith always offered andopened up opportunities in the right
Decades for Voith

49

We had great respect and treatedeach other well. I benefited from their
EDP knowledge; they benefited frommy technical expertise. Everyone didtheir best. And all gained somethingfrom it. I greatly enjoyed the exchange
and remained young as a result.”
Building experience, obtaining knowledge, keeping it in the company andpassing it on to new, younger employees – this is an important componentof the corporate and HR strategy atVoith. This also includes another important aspect: The industries in which
Voith does business require people
who stick around. “The expectations
customers have of Voith are very clear:
They want us to have and provide
them with experienced contacts for along period of time. We want to bindour employees to the company overthe long term, and last year we in­cluded this in our corporate strategy
for the first time,” says Wolf-Dietrich

Jair Padovani, at Voith in Brazil since 1970.

50

Voith Annual Report 2009/2010

Seibold. The strategy is one thing, doing something concrete is another.
Many times over the years, Walter­Neumann saw his employer personallyaccommodate him. After the birth of
his son, he was able to arrange with

­ fforts – and repaid it with good workeand dedication. “For me, one thing
was always clear: It is a give and take.
I was always motivated, never lookedat the clock. When something had tobe done, we pushed it through – even

“Customers want us to have andprovide them with experienced
contacts for a long period of time.”
Wolf-Dietrich Seibold, Voith Paper

his boss that he only work the earlyshift. As a result, his wife had the option of working in the afternoon. Whenhis department was relocated toRavensburg in the 90s, a joint solution
was found that let him continue towork in Heidenheim for family reasons.
He did not forget the company’son the weekend.” Neumann, in re­tirement since May, found it hard to
depart from Voith. He looks back on
his work life in satisfaction: “I was never bored, I was completely engaged
and am proud that I made it throughthe 50 years.”

We try new processes and conduct tests for customers
on the Voith Paper testing machine in São Paulo.

On the other side of the Atlantic,­
the anniversary at Voith Brazil produced similar stories. Jair Padovani
came to Voith in 1970 and has had adiverse career ranging from designe­ngineer to sales manager. Even today, after 40 years, he is regularly andhappily on trips to his customers, thepaper manufacturers. The knowledge
that he has obtained on the market,
technologies and customers overmany years is enormous: “If Jair does
not know something about the paper
market in South America, you don’t
need to know it,” say his colleagues
with great respect.
And the customers? They value his
professional knowledge, his advice
and his personal dedication. For Voith,employees like Jair are valuable bearers of knowledge that make a lot possible for the company. In the case of
Jair Padovani, for a long time his family life was too short. He experienced
the growth of his first two children onlyin passing due to his many trips on­paper matters. He wanted to changethat when his wife gave birth to twins

in 1990. But would that be compatible
with the work requirements and his
employer’s expectations? Yes: In coordination with his superiors, we organized his responsibilities so that he“only” had to go on business trips

both sides. This fits with the culture
and philosophy of Voith: The employees should not experience any stagnation, but rather grow in their responsibilities, continue to develop and have afulfilling professional life.

“I can now reap the benefits for
Voith. I am proud of this.”
Jair Padovani, São Paulo

within Brazil. More time for his family,
particularly for his children, and acommitment to his employer were notmutually exclusive.
Voith challenges itself to bring its
own interests into harmony with thoseof its employees. The collective goal,
which is pursued with a sense of proportion and under consideration ofwhat is possible, is a friendly environment where employees feel good in
the company and remain connected toit for a long time – an advantage forNow, shortly before his 64th birthday,
Padovani is not thinking about stopping: “I am healthy, my knowledge ison the cutting edge. I know that I cando even more for the company. I don’t
want to stop yet,” he says. “I am happy about what I have achieved. People
in the industry know and respect me. I
have acquired this recognition overmany years; and now I can reap the
benefits for Voith. This I am proud of.”‹

Decades for Voith

51

In Good Times and Bad
The US automotive industry suffered seriously during the recent financial
crisis. Its business partners, suppliers and service providers have also been
affected. But new opportunities have also opened up for them. By responding
quickly and adapting to the new conditions, they have not only survived but
have emerged stronger from the turbulence experienced in recent months.
A decisive factor for this was the trust between the service providers and theircustomers.

No other invention has changed
the world and people’s daily life
as quickly and sustainably as
the car. In just a few decades the­automotive industry has lived throughgood and bad times having become akey industry in the global economy.
The oil crisis in the 1970s shook theindustry whilst innovative robots revolutionized production at virtually thesame time. This influential industry had
to face new challenges time and again– most recently about three years ago.
At the end of 2007 the whirling banks
dragged the so-called real economy
into a deep crisis. The automotive industry also saw revenues sink throughthe floor. Corporate bosses had to canmodels, close plants, sell divisions,and finally dismiss employees. From
September 2007 to September 2008

52

Voith Annual Report 2009/2010

the car industry lost 150,000 jobs
in the US alone – a fall of more than
15 percent. But even such drastic
measures were frequently not enough.
In many cases the US government had
to jump in with various life-saving
measures.
Such turbulent times represent toughtests for business relationships, including for Voith Industrial Services
with its customers – large carmakers
in North America. Just like its business
partners, Voith had to undertake radical cuts in the US in recent years andfind new paths: “This crisis went far
beyond anything we had experienced
before,” remembers CEO Harry Nieman. “We had to go places we havenever been before in many respects. It
wasn’t easy.” The American is convinced that the company was only

able to survive the crisis because mutual trust had already been established
to a large extent during previous years,
and Voith was considered to be a reliable partner. Even so, the company
could not avoid financial slumps andpersonnel changes during the financial
crisis.
Even during this difficult phase Voith
did not alter workplace safety, social
benefits, or training measures. “Ourbusiness is based on people. As aservice provider, without them wehave hardly any assets at all on which
we can truly build,” states Nieman as
the reason for this behavior which was
fixed to firm principles. Although all
costs had to be reduced to a minimum, the company maintained business health insurance for all of its employees – which is not a matter of »

To ensure that production runs around the clock, automobile
manufacturers transfer the servicing and maintenance of theirproduction systems to service providers like Voith Industrial Services.
They handle the servicing of the systems and conveyor technology,
undertake the technical cleaning of highly sensitive areas such as
painting lines and the preassembly of entire components such as
wheels or windshield wipers.

In Good Times and Bad

53

Just in time: Voith employees are responsible
for all the logistics of customers in theautomotive industry from the receipt ofgoods to warehouse management andthe timely delivery of the individual parts
to the production lines.

course in the US. “We never wavered
one moment from that commitment.
That’s one of the things that sets us
apart from our competitors,” Nieman
said. Even so he was obliged to reduce employee numbers by around30 percent. But the company immediately made assurances that it would
bring back employees as soon as demand increased. Nieman has fulfilled
this promise. He has already been able
to reemploy many of the employeesthat were dismissed and is planning toreemploy more.
At the very top of the to-do list for
Voith employees has been more flexibility and efficiency. For example, we
approached a customer in Detroit with
the new 4A philosophy. 4A stands for“anyone,” “anything,” “anytime” and“anywhere.” This means that any employee is responsible for anything to
the customer at any time. The sentence “I don’t deal with that” should
not exist. Instead, all of the employees
felt the responsibility to the customer

54

Voith Annual Report 2009/2010

and always undertook everything humanly possible to complete the tasks
at hand. In parallel, a newly developed
software program for facility management helped Voith teams to implement

ative, and have always complied withthe safety regulations. In terms ofsafety we have even achieved the best
results of all time,” praised a customer.
As recognition, the plant recently“Our long-term business relationships are all based on mutual trust
and respect.”
Harry Nieman, Voith Industrial Services

improvements in production planningand order management: “This creates
the requirement for higher customer
productivity,” explains Nieman. The
most recently achieved productivity­increases of six to eight percent are
an impressive result. In spite of the crisis Voith was able to demonstrateprogress at the assembly plant of acarmaker in the state of Ohio. “Youremployees were very flexible, cooper-­ onored Voith ­Industrial Services as its
h“Supplier of the Year.”
Another success story shows thatcrises also bring about opportunities.
A Voith customer wanted to improve
his warehousing. A number of small
locations were merged into three
central warehouses. The schedule
was only possible if Voith employees
worked overtime: “Your employees

worked seven days a week in order tobe ready in good time for our audit.
They worked overtime and undertook
special tasks,” commented the customer on the commitment. “Whenevera customer asked us to do something
we found a way to meet their needs,”
adds Nieman. And this was received
quite positively. Or, as another customer puts it: “This was an unprecedented time for the automotive industry, particularly in North America. Fordneeded to count on all of our suppliers
to move quickly and step up to themany challenges that the economiccrisis presented,” Steve Jones of Fordsays. “We are very proud of our entire
supplier base for their contributions
under extraordinary pressure, theVoith team included.”
Harry Nieman can now look back on adifficult period with relief and pride:“Our long-term business relationships
are all based on mutual trust and respect,” says Nieman. “We maintainvery close contact with our custom-ers,” adds Jeff Fahr, Director Business
Development at Voith Industrial Ser­
vices. “The customers must be able
to trust that we know what we are doing and they can count on us. Our
customers give us this trust.” The other side of the coin is that Voith also
trusts its customers. Even when therisk of non-payment and insolvencies
were increasing, Voith trusted its customers. The partners thanked them for
it. Voith’s invoices were paid.
“Many of our business relationships
go back to the mid-1980s,” explains
Nieman. He is convinced that suchlong-lasting and some very close business relationships – with mutual understanding that can only come fromdomestic companies – made a key
contribution to the automotive industry
surviving the economic crisis. Now thesituation is improving. For example,
production in North America this year
will rise from just under nine million in2009 to a forecast of 13 million vehicles. In addition, the US Department ofCommerce has made it known thatthe number of employees in automotive production rose again last year.
Although this is an initial increase ofjust 4.2 percent, compared with the21.6 percent fall in the previous year, it
is a positive sign.
The great commitment of Voith’s management and employees has paid off.
“Our customers want to reward suppliers who remained flexible in this difficult time and stood up to the storm
with additional orders in future,” states
Nieman with pleasure, and is therefore
convinced that Voith Industrial Ser­
vices will emerge from the crisis
stronger as a result of the varied experience it gained: “We are firmly convinced that we will be more important
for the automotive industry in the­future than ever before.”‹

In Good Times and Bad

55

Management Report

56

Voith Annual Report 2009/2010

Management Reportof Voith AG*

Pages 56 –10558		Report of the Supervisory Board
62		

The Supervisory Board

64 I.

Business and Economic Environment

68 II.

Business Development and Earnings Position of the Group75 III. Business Development and Earnings Position of the Group Divisions
88 IV. Asset and Financial Position
92 V.

Research and Development

94 VI. Non-Financial Performance Indicators
95 VII. Events after the Balance Sheet Date
96 VIII. Report on Risks and Opportunities
102 IX. Forecast Report105		

Corporate Governance Report*Voith GmbH since October 1, 2010.
Management Report57Report of the Supervisory Board
Dear reader,
the Supervisory Board met its duties and responsibilities in fiscal 2009/10 in thecourse of four meetings during which the Board focused primarily on the strategic andoperative challenges to the Voith Group arising from the financial and economic crisis.
Meetings took place on October 5, 2009, December 22, 2009, March 5, 2010 and
May 18, 2010. Although there was great uncertainty in the business world concerning
the duration and depth of the financial and economic crisis at the beginning of the year,
the Supervisory Board grew more confident during the course of the fiscal year that
Voith would master the crisis far more effectively than had been feared on the basis ofinitially disconcerting macroeconomic projections. All the meetings of the Supervisory
Board were characterized by frank and intensive exchanges of views with the Boardof Management.
Discussions were based on detailed reports by members of the Board of Managementon the current situation, corporate planning (including financial and investment planningin the economic crisis), the impact of the economic situation on the Group, the anticipated effects on the four Group Divisions, developments in the company’s earnings
and financial position, and actions to be taken in the context of risk management andcrisis management. The strategic orientation of the Group and its Divisions, both interms of products developed and services offered, as well as collaboration and M&A
issues, were discussed in detail. The ensuing financial and capital expenditure planningfor the current and subsequent fiscal years was approved unanimously. In addition, theSupervisory Board consistently engaged in detailed discussion of necessary adjustments in light of the varying course of business in the Group Divisions.

58

Voith Annual Report 2009/2010

The Chairman of the Supervisory Board was also kept constantly informed aboutsignificant developments and key decisions by the Board of Management. He consulted regularly with the President and Chief Executive Officer on matters of material
importance. For unavoidable reasons, one member of the Supervisory Board attended
less than half of its meetings in the fiscal year under review.
The Personnel Committee met twice in the fiscal year under review, on December 22,
2009 and on March 5, 2010. There was no need to convene the Mediation Committee
formed pursuant to Section 27 Paragraph 3 of the German Codetermination Act(Mitbestimmungsgesetz, MitBestG).
The Balance Sheet Committee met on December 21, 2009 and May 17, 2010. The
first meeting, which was held in the presence of the auditors who examined the annual
financial statements, conducted an in-depth examination of the financial statements ofboth the consolidated Group and Voith AG for fiscal 2008/09, and of the report submitted by the auditors, Ernst & Young GmbH Wirtschaftsprüfungsgesellschaft, Stuttgart.
In light of the continuation of the Fast Close process, the Balance Sheet Committee
and the auditors also discussed issues regarding the improvement of the year-end
closure process. The Balance Sheet Committee was also informed by the Board ofManagement about the existence, function and effectiveness of the risk management
system. Beyond this, the head of the Internal Audit unit discussed the Group audit
report prepared for the fiscal year under review at length with the committee andexplained improvements which had been made during the course of the year. At its
second meeting the Balance Sheet Committee considered cash management in theGroup, ways of ensuring that the accounting process is comprehensive and effective
and the function and effectiveness of Voith’s internal control system. The meeting also
agreed on further improvement measures.
The Annual General Meeting convened on March 5, 2010 and formally approved boththe managerial conduct of the Board of Management and the monitoring activities of
the Supervisory Board in fiscal 2008/09. The meeting also elected Ernst & Young GmbH
Wirtschaftsprüfungsgesellschaft, Stuttgart, to audit the annual financial statements
again in fiscal 2009/10. The Supervisory Board subsequently placed the corresponding
audit order.
The auditor examined and granted its unqualified audit opinion on the accounting
records, the annual financial statements and management report of Voith AG and theconsolidated financial statements and management report for the Voith Group as aReport of the Supervisory Board

59

whole at September 30, 2010. The consolidated financial statements were preparedin accordance with International Financial Reporting Standards (IFRS). Ernst & YoungGmbH paid special attention to “internal control and risk management structuresconcerning the accounting process”, “order-related provisions” and “decentralized
tax invoicing” in accordance with the mandate laid down by the Supervisory Board.
The auditor further granted the following unqualified audit opinion on the report on
relationships with affiliated companies:“Based on our due audit and assessment we confirm (1) that the actual informationin the report is correct, (2) that payment by the company for the legal transactions
referred to in the report was not inappropriately high.”
In September and October 2010, the Board of Management and the Supervisory
Board submitted their reports on corporate governance and the corresponding
statements of compliance for fiscal 2009/10.
At its meeting on December 6, 2010, the Audit Committee examined the annual
financial statements prepared for Voith AG and the consolidated Group as well as
the report on relationships with affiliated companies in light of the audit reports.
Thereupon, the committee recommended that the Supervisory Board approve said
financial statements, which it did at its meeting on December 7, 2010. In this process,the Supervisory Board also explicitly welcomed the management’s systematicintervention in connection with the accounting irregularities at a subsidiary in the USA.
Both meetings were attended by the relevant member of the auditor’s Management
Board and the person who led the audit. They explained the material results of theaudit and were available to provide additional information. The Supervisory Board
also approved the management report of Voith AG and the Group and concurred in
the proposal submitted by the Board of Management regarding the appropriation of
net income. The Supervisory Board raised no objections to the declaration made by
the Board of Management in the report on relationships with affiliated companies.
Significant changes also took place in the membership of the Supervisory Board
during the period under review: After a ten-year membership both the shareholder
representative Angela Voith and the Chairman, Dr. Michael Rogowski, resigned fromthe Supervisory Board at the close of the Annual General Meeting on March 5, 2010.
The proposal submitted by the family firm J. M. Voith GbR to appoint Sonja Gorsch

60

Voith Annual Report 2009/2010

and Ophelia Nick for a full term of office to the Supervisory Board was accepted by
the Annual General Meeting. At its meeting on March 5, 2010, the Supervisory Board
unanimously voted Dr. Manfred Bischoff as Chairman.
Angela Voith’s work, in and out of the Supervisory Board, played an important role insustaining the sense of tradition in the family company Voith and upholding its values.
During a ten-year period in which the Voith Group doubled its sales and increased
the size of its workforce and profits from operations Dr. Michael Rogowski showed
great commitment in confidently and skillfully chairing both the Supervisory Board
and Shareholders’ Committee and significantly influencing the public image of Voith.
As the Chairman of the Supervisory Board and Shareholders’ Committee he enjoyedthe confidence of shareholders in the family. The Supervisory Board is very grateful toAngela Voith and Dr. Michael Rogowski for their successful work.
The Supervisory Board would also like to express its thanks to the employee representatives Florian Haupt and Rudolf Brandhuber, who also opted to leave the Supervisory
Board on June 30, 2010 and September 30, 2010 respectively. Both members have along record of constructive collaborative work on the Supervisory Board. Their places
were taken by Rudolf Bädorf on July 1, 2010 and Gerold Schaubmayr on October 1,
2010.
Finally, the Supervisory Board would like to thank the members of the Voith GmbH
Board of Management and the management of the subsidiaries, the employees of theGroup and the representatives of the workforce for their exemplary commitment andsuccessful endeavors in the fiscal year under review.

Heidenheim, December 7, 2010

Chairman of the Supervisory Board

Dr. Manfred Bischoff

Report of the Supervisory Board

61

The Supervisory Board
Dr. Manfred Bischoff
Chairman(since 2010-03-05),
Chairman of the Supervisory Board Daimler AG,
Stuttgart/Germany

Thomas Brezina1)
Member of the works councilof the common entity of companiesof Voith Paper Heidenheim,
Heidenheim/Germany

Dr. Michael Rogowski
Chairman,President of the Shareholders’ Committee of Voith,
Heidenheim/Germany(until 2010-03-05)

Ulrich Eckelmann1)
Division Manager for Business, Technology,
Environment on the Board of the Metalworkers’ Union,
Frankfurt a. M./Germany

Gerd Schaible1)
Deputy Chairman,
Chairman of the corporate works councilof Voith GmbH2),
Heidenheim/Germany

Rudolf Bädorf1)
Vice President Manufacturing and Logistics
Voith Paper GmbH & Co. KG,
Heidenheim/Germany(since 2010-07-01)

Walter Beraus1)
Secretary of the Metalworkers’ Union,
Regional Organization Baden-Württemberg,
Stuttgart/Germany

Rudolf Brandhuber1)
Chairman of the works council of Voith GmbH2)
and Voith Dienstleistungen GmbH,
Heidenheim/Germany(until 2010-09-30)

62

Voith Annual Report 2009/2010

Sonja Gorsch
Teacher,Erftstadt/Germany(since 2010-03-05)

Prof. Dr. Bernd Gottschalk
Member of the Board of Managementof Mercedes-Benz AG (retired)

Florian Haupt1)
Legal advisor,
Heidenheim/Germany(until 2010-06-30)

Dr. Alan Hippe
Member of the Executive Boardof ThyssenKrupp AG,
Essen/Germany

Bernd Kauba1)
Chairman of the works councilof Voith Industrial Services Mechanical Engineering,
Radebeul/Germany

Dr. phil. Nicola Leibinger-Kammüller
President of the Board of Managementof Trumpf GmbH + Co. KG,
Ditzingen/Germany

Klemens Schweppenhäuser
Member of the Board of Managementof J.M. Voith GbR,
Mannheim/Germany

Reinhard Leigraf1)
Process technology engineer for special papersof Voith Paper GmbH & Co. KG,
Ravensburg/Germany

Andreas Strobel1)
1st Representative of the Metalworkers’ Union,
Heidenheim branch,
Heidenheim/Germany

Ophelia Nick
Veterinarian,Wülfrath/Germany(since 2010-03-05)

Angela Voith
Medical Doctor,
Herdecke/Germany(until 2010-03-05)

Dr. F. Oliver Porsche
President and CEO of
Familie Porsche AG Beteiligungsgesellschaft,
Salzburg/Austria

Dr.-Ing. E. h. Jürgen Weber
Chairman of the Supervisory Boardof Deutsche Lufthansa AG,
Cologne/Germany

Gerold Schaubmayr1)
Chairman of the general works council
Voith Turbo GmbH & Co. KG,
Crailsheim/Germany(since 2010-10-01)

Dr.-Ing. E. h. Heinrich Weiss
Chairman of the Board of Managementof SMS GmbH,
Düsseldorf/Germany

Ute Schurr1)
Chairwoman of the general works council ofcompanies of Voith Turbo Heidenheim,
Crailsheim, Garching and Essen,
Heidenheim/Germany

1)

Selected by the employees.

2)

Until September 30, 2010, Voith AG.

The Supervisory Board

63

I. Business and Economic Environment
I.1. Group Structure andBusiness Activities
Voith is a global provider of leading-edge technology andindustrial services. It offers a broad portfolio of systems,
products and services that serve the five essential markets
of energy, oil & gas, paper, raw materials, and transport& automotive in all regions of the world. Voith operates
in around 50 countries around the globe, maintaining an
extensive network of production, sales and service units on
every continent on the planet.
Voith GmbH, the Group’s holding company which wasincorporated as Voith AG until September 30, 2010, is headquartered in Heidenheim/Brenz (Germany). Voith is 100%
family owned. The Board of Management of the management
holding company shapes and is responsible for the overall
strategy of the entire Group. The Supervisory Board oversees
the Voith GmbH Board of Management.

Operating business is bundled in four Group Divisions, eachof which is run as an independent company: Voith Hydro,
Voith Industrial Services, Voith Paper and Voith Turbo. In eachGroup Division, a head organization oversees the activities of
the independent subsidiaries.
Corporate control is anchored in a value-based management
philosophy that uses the return on capital employed (ROCE)
as the key measure of the company’s earnings power. Thisratio is calculated from the operating result before nonrecurring result and the capital employed. All figures andreports submitted to the Group’s Board of Management are
based on these management ratios.

Organizational Structure of the Voith Group
Voith GmbH *Voith Hydro

Voith Industrial
Services

Voith Paper* Until September 30, 2010, Voith AG.

Geplante Grafiken:- einfache Visualisierung Konzernstruktur [NEU]

64

Voith Annual Report 2009/2010

Voith TurboI.2. Group Strategy
Safeguarding the financial independenceof the family-owned company
As one of Europe’s major family enterprises Voith GmbHbenefits from the stability and long-term view taken by its
shareholders. The stated aim is to preserve Voith’s independence as a family-owned company. This also explains why
the Group’s strategy is geared to preserving business agility
by ensuring that the company maintains sufficient liquidity
and continues to be focused on profitable growth.
Balanced portfolio
A key factor in achieving this objective is a diversified andbalanced portfolio. In addition to engineering and industrial
systems the portfolio has also been systematically and continuously expanded in recent years to include products andservices. In this respect it has proved possible to spreadsales fairly evenly between the Group Divisions. Although
the share of sales contributed by each line of businessvaries from year to year, depending on general industry
performance, all four Group Divisions now account for a
substantial share of Group sales.
Voith addresses a diverse array of industrial core markets
and key industries which are subject to very different cycles.
While the paper market as well as transport & automotive
respond quickly to cyclical fluctuations, energy, oil & gas
as well as raw materials tend to respond rather slower toshifting economic cycles. This allows the Group as a whole
to absorb cyclical economic fluctuations more effectively.
This diversification strategy was put to the test during thelast economic crisis: the Voith Group as a whole was able tosteer a steady course through the recent global crisis without
any losses in sales.
International integration
Another key pillar of Voith’s strategy is the consistent internationalization of its business. Voith has served customers
all around the world for over 100 years. The first overseas
orders in North America and China were acquired in theearly 20th century. The company began establishing produc-tion facilities in other countries at a very early stage in an
endeavor to establish greater proximity to the customer andto shorten transport routes. Voith was one of the first German
companies to establish production facilities in Brazil in theearly 1960s. Voith was also one of the “first movers” on the
Asian market. The Group has been producing in India sincethe 1980s and in China since the 1990s.
Today, around one quarter of consolidated sales are generated in America and Asia, while Germany accounts for 20%
and the rest of Europe almost 30%. The Group’s strong position in Asia was one of the reasons why Voith was also able
to continue increasing its sales during the economic crisisand even managed to improve on last year’s performanceover the period under review. In the medium term Asia andSouth America will continue to grow in importance for Voith’sbusiness. In this respect Voith has resolved to generate
added value and growth in the world’s regions as a local
player. Voith consequently now aims to become as deeply
rooted in the world’s growth regions in the future as it currently is in Germany. This entails being perceived as a local
company which contributes added value locally and which
also fosters ongoing social and economic development.
International growth also benefits German locations where
research and development, quality control and production
are also strengthened.
Solutions to the challenges of tomorrow
As a company with an international outlook and the highest
technological competence, Voith is in a position to makethe most of a broad array of opportunities. Today the Group
works on solutions to global issues and the requirements ofmodern industrial companies. Voith continuously invests inresearch and development—even during difficult economic
times. Over the past three fiscal years Voith has expended
more than a quarter of a billion euros on R&D, geared inparticular to the megatrends of the 21st century such as sustainability, globalization, urbanization, mobility and access toresources and raw materials.

Management Report65I.3. Macroeconomic Situation
Recovery of the global economy

Energy: Demand continues to grow

Following the deepest recession since the end of the Second
World War, the global economy showed a marked recovery
during the course of the Voith fiscal year 2009/10. After theworld’s gross domestic product shrank by almost 1% in
calendar year 2009, the tide changed in the autumn—initiallyin Asia and then in the USA, followed, with a slight delay,
by Japan and Europe. In the course of the first half of 2010
economic recovery really got underway and proved to be
surprisingly dynamic. At the same time Germany became
the main engine of growth in the eurozone.

The energy market encompasses the conversion of various
primary energy sources, such as coal, oil, gas, wind or water
power, into electricity and is served by the Group Divisions
Voith Hydro, Voith Industrial Services and Voith Turbo. As
anticipated, the energy market responded to the economiccrisis with some delay, thereby slowing down the planningand award processes, above all for major power plant construction projects. Some projects due to be awarded in themarket for hydro power have been postponed or even put
on ice indefinitely. While the thermal power station segment
bottomed out in spring 2010 and is now already beginning togrow again, the hydro power market is currently stagnating.
Other renewable energies such as solar and wind again
developed positively during the year under review, although
to some extent with lower growth rates owing to financing­difficulties. In the medium and long term, growth perspectives
on the overall energy market are positive owing to growing
demand around the world for more electricity. Demand forclean and renewable energy is rising all the time, particularlyin the world’s most populous economies.

At the present time the macroeconomic output of individual
countries diverges to varying extents from their long-term
performance trends. The gap is particularly wide in countries
which were directly hit by the real estate and bank crisis,such as the USA and a number of European countries suchas Spain and Ireland. Many emerging countries, on the other
hand, were unscathed by the crisis or have already recovered
and have returned to their pre-crisis performance.
During the second half of 2010 there were increasing signs ofa weaker upward trend. The pace of recovery tailed off in the
USA in particular. The faltering dynamism of the upswing in
the industrialized countries is being interpreted in many cases
as the result of the expiry of temporary government programs
to stimulate the economy. The world’s economy is alsoreeling under the debt crisis in some European countries.
The International Monetary Fund (IMF) forecasts growth in theworld’s gross domestic product for the entire year of 2010of 4.8%. There are two clear lines of development, however:the developed industrialized nations will probably experience average growth of 2.7%, while emerging countries, incontrast, are forecast to experience average growth of 7.1%
for the whole of 2010, primarily in China (10.5%), India (9.7%)
and Brazil (7.5%).

66

Voith Annual Report 2009/2010

Oil & gas: Market bottoms out
The oil and gas market includes both the extraction of crude
oil and natural gas as well as the continued processing
and transport of these fossil fuels. Voith Turbo and Voith
Industrial Services supply the market with diverse products
and specialized services. Demand for oil and gas is closely
tied—if with a certain time lag—to the development of global
gross domestic product. As the oil and gas market is sluggish
in its response to economic cycles, it only recovered fromthe economic crisis very slowly during the period underreview. After falling to its lowest level for many years in 2009,
worldwide demand expanded again moderately in the springof 2010. The crash in the oil price was stopped in early 2009by scalebacks in oil production to a level just below demand.

In the medium and long term, demand for oil and gas willgrow substantially in the growth regions, including China inparticular. Although the need for oil and gas will also increasein Europe and the USA, tougher climate protection legislation
will curb growing demand somewhat.
Paper: Unmistakable upswing
The paper market is served by the Group Divisions Voith
Paper and Voith Industrial Services. After two difficult years
the paper market, which generally responds very quickly
to shifting economic cycles, experienced an unmistakable
upswing during the period under review, resulting in a renewed
burst of major investment in new plant. Fundamental growth
drivers were the Asian market, including China in particular. In
contrast, investment in the mature markets of North America
and Europe was modest. Per capita consumption of all typesof paper in the emerging countries continues to be significantly lower than the average for all industrialized countries.
This means that, in the long run, key stimulus for the paper
market will emanate from these growth regions. At the sametime, demand is growing in all markets for new technologies
that will make the paper production process more efficientwhile consuming fewer resources.
Raw materials: Turnaround completed
The segments of the raw materials market which are relevant
to Voith are the mining sector and the steel industry, both ofwhich are supplied by the Voith Turbo Group Division. Afterthe raw materials boom came to an abrupt end in the previous year, the market picked up again markedly in the period
under review. The recovery of the global economy was also
accompanied by an increase in demand for coal, currently themost important fuel used for electricity generation purposes
and the second most vital raw material after iron ore in thesteel industry. Demand also rose for the raw materials used
in industrial production, such as minerals, copper, nickel andzinc. All in all, investments in the worldwide mining industry
increased again in 2010, while remaining significantly below
pre-recession levels. The future development of the market
for raw materials will primarily be driven by growing demandfor energy, on the one hand, and the strong growth of upand-coming Asian countries on the other. Steel production,
which fell dramatically last year owing to the recession, rosesignificantly again in 2010 and in 2011 will almost certainly
return to the levels of the pre-crisis year of 2007.
Transport & automotive: Market segments growat different rates
The transport and automotive market includes diverse
transport routes and the means of transport used on themfor moving people and goods. This heterogeneous market
is served by two Voith Group Divisions: Voith Turbo supplies products and systems for rail transport, commercial
vehicles and ships. In addition to this segment Voith Industrial
Services also serves the vehicle manufacturing and aviation
sectors. The car and commercial vehicle industry began
to expand again in 2010 after the dramatic collapse in theprevious year. The rail sector has boomed all around theworld in recent years and only suffered a slight setback
in 2010 in the wake of the economic crisis. This segment
benefits everywhere—and particularly so in Asia—from state
infrastructure projects which are intended to facilitate themobility of people. The marine segment suffered right into
Voith’s 2009/10 fiscal year from a drop in freight traffic. Passenger vessels, such as ferries and cruisers, were less starkly
affected by the recession. After the major recession-driven
setbacks suffered by the aviation industry in recent years, theindustry gained upward momentum again in the period underreview, without, however, managing to recoup the losses
reported over the last two years. .

Management Report67II. Business Development andEarnings Position of the Group
II.1. Overall View
Increased sales and profitable operations in spite of
the economic crisis
Voith can look back on a very good fiscal year in which it
successfully navigated one of the worst economic crises
since the Second World War without any losses in sales or
results. Group sales in the period under review rose by 2%,
following a steep decline in orders during the recession of
2008/2009. The order intake also rose by 7%, bringing totalorders on hand at the end of fiscal 2009/10 to a level well
above that of the previous year. The Voith Group was again
profitable in the year under review. The operational result
before non-recurring result was up by 9% while net income
increased by 58%.

68

Voith Annual Report 2009/2010

The excellent results in fiscal 2009/10 are partly due to theGroup’s successful portfolio strategy, which made it possible
to compensate for declines in industries like energy, oil andgas, which respond slowly to shifts in economic cycles, withincreased orders in the fast-responding paper, raw materials,
transportation and automotive markets. In addition, Voith
has benefited from the internationalization of its business,
which it embarked on at an early stage and pursued in asystematic manner. Thus, the Group was able to participate
in the upswing in growth markets like China, India and Brazil.
Some data for the previous year have been adjusted in the
consolidated financial statements 2009/10. Explanations ofthese changes can be found in the “Adjustments to data forprevious year” section in the notes to the consolidated financial statements. These adjustments are taken into accountin the following sections.

II.2. Sales
Increased revenues

Sales GroupIn fiscal 2009/10, the Voith Group’s consolidated sales cameto €5 198 million, an increase of 2% over the previous period(€5 085 million). Business development varied from division
to division. Whereas Voith Hydro and Voith Turbo were able
to increase their sales thanks to large stocks of orders fromthe previous year, Voith Paper and Voith Industrial Services
posted slight drops in revenues (see also Section III of thisreport, Business Development and Earnings Position of theGroup Divisions).

€ in millions

The four Group Divisions accounted for between 19% (Voith
Industrial Services) and 33% (Voith Paper) of consolidated
sales. Thus, each was a strong contributor to the company
as a whole.
Sales in the Group show a fairly even geographical distribution, reflecting Voith’s balanced business presence in theworld’s major economic regions. In fiscal 2009/10, roughlya quarter of total sales came from the Americas, Asia, Germany, and Europe excluding Germany respectively. Voith
prepared at an early stage for the rising demand from countries like China, India and Brazil. It contributed energeticallyto the expansion of these economies in order to participate
in their growth. The share of sales achieved in Asia has risen
again, to 25% (previous year: 24%). The Americas, too, havebecome increasingly important as a sales region (24% ascompared to 23% in the previous year). Germany accounts
for 20% of Group sales (previous year: 22%), and for Europe
excluding Germany the share remains constant at 29%.

4 909*

5 085*

5 198

2007/08

2008/09

2009/10*Data for previous year adjusted.

Sales total €5 198 million
by division
Voith Turbo
26%

Voith Hydro
22%

Voith Paper
33%

Voith Industrial
Services19%by region
Europe excluding
Germany 29%

Germany
20%
Other
2%

Americas
24%

Asia
25%

Management Report69II.3. Orders Received
Orders received surpass the previous year’s level
In fiscal 2009/10, the Voith Group received €5 300 million inorders, exceeding the previous year’s intake (€4 958 million)
by 7%. This brought the total orders on hand at fiscal yearend to €5 436 million, a rise of 8% over the previous year(€5 045 million).
The increase in orders was attributable to Voith Paper andVoith Turbo. Voith Paper, which quickly feels the effects ofshifting economic cycles, had been hurt by the crisis in theprevious year but was able to increase its order intake by one
half in fiscal 2009/10, returning almost to the level of the boom
year 2007/08. Thus, Voith Paper was the Group Division withthe largest share of the consolidated order intake (38%,previous year: 27%). Voith Turbo contributed 26% (previous
year: 26%) to consolidated orders. As a Group ­D ivision
which responds more slowly to cyclical changes, Voith Hydro
did not fully experience the effects of the ­recession until
the period under review, when its new orders fell by about
one fourth from the previous year. This division contributed
18% (previous year: 26%) to consolidated orders. Industrial
Services likewise accounted for 18% (previous year: 21%)and saw a slight decline in new orders.

70

Voith Annual Report 2009/2010

The Group continues to have an even regional distribution,reflecting its balanced business engagement in the world’s
major economic regions. In the fiscal year under review
there was a shift in favor of Asia, which accounted for 30%
of orders received (previous year: 19%). Orders from theAmericas fell to 25% (previous year: 29%). Europe excluding
Germany accounted for 24% of orders (previous year: 29%),
and Germany itself contributed 20% (previous year: 21%) of
the orders received by the Voith Group.

Orders received Group

Orders on hand Group€ in millions€ in millions

6 092
4 958

2007/08

2008/09

5 300

5 104

5 045

2009/10

2007/08

2008/095 436

2009/10

Orders received total €5 300 million
by division
Voith Turbo
26%

Voith Hydro
18%

Voith Paper
38%

Voith Industrial
Services18%

by region
Europe excluding
Germany 24%

Germany
20%
Other
1%

Americas
25%

Asia
30%

Management Report71II.4. Capacity Utilization
Moderate personnel build-up
In fiscal 2009/10 the Voith Group moderately increased its
personnel capacity in selected areas, after having reduced
its capacity by a good 8% in the previous period. The total
number of employees in the Group (not including apprentices) on September 30, 2010 rose by about 400 to 39 754(previous year: 39 329).
All in all, Voith came through the economic crisis with a fairly
constant level of staffing. Although it did not employ as many
persons at the end of fiscal 2009/10 as in the record year
2007/08, its workforce was significantly larger than on September 30, 2007. It must be borne in mind that Voith madespecifically targeted structural adjustments during the last
two fiscal years in anticipation of shifting growth patterns in
the world economy. These measures, which were designed
to reduce overcapacity, were carried out with circumspection
and in line with the Voith corporate culture.
New jobs were created primarily in regions of strong growth.
Thus, in Asia the number of employees rose by 7% to 3 901(previous year: 3 647). Thanks to international growth, staffing requirements in Germany have increased, especiallyin research and development and quality assurance, butalso in production. Germany continues to be where Voith
has the most employees. At the end of fiscal 2009/10,
16 776 persons were employed here by Voith (previous year:
16 790). In the Americas the number of employees rose by
5% to 11 500 (previous year: 11 004). In Europe (excluding
Germany) there was a reduction in personnel capacity. By
the end of the period under review, the number of employees
had fallen by 4% to 7 387 (previous year: 7 691).

72

Voith Annual Report 2009/2010

Looking at the four divisions, the following picture emerges.
Voith Hydro hired new staff (+557) in order to work off thelarge volume of orders accumulated in previous periods. Voith
Industrial Services (+1) and Voith Turbo (minus 6) remainedat the same level. Voith Paper (minus 147) recorded a slightdecline in its workforce owing to restructuring measures that
had been adopted the previous year and took effect during
the period under review.
When vacancies needed to be filled, preference was given
whenever possible to Voith employees affected by adjustment
measures in the same division or other divisions. In this way
the Group was able to retain many well-trained employeeswith strong ties to the company, and the consequences forindividuals were mitigated.
Roughly half of Voith’s employees (48% at September 30,2010) are employed by Industrial Services, which offers
personnel-intensive services. At the close of fiscal 2009/10
it had 19 119 employees. Voith Paper, the second-largest
division in terms of employees, had 9 353 employees at theclose of the period under review, equivalent to 23% of thetotal. Voith Hydro employed 5 238 persons, or 13%. Voith
Turbo, with 5 422 employees, accounted for 14% of theGroup’s total workforce. Regarding the trend in capacity
utilization in the divisions see also Section III “Business
Development and Earnings Position of the Group Divisions”.
Voith continued to invest substantially in its training activities
during the recession. It employed a large number of apprentices and maintained consistently high quality in its training.
At the close of fiscal 2009/10, 1 232 apprentices and students were employed at Voith locations in Germany (previous

year: 1 196). Once again, Voith trained considerably more
apprentices than it needed for its own purposes, thus giving
many young people good prospects for future employment.
In view of the medium-term shortage of suitably qualified
specialists to be expected in Germany owing to demographic
trends, Voith sees this as an investment in its own future aswell as Germany’s future as an industrial location. During
the period under review, Voith’s training and development
programs gained further recognition by fulfilling two German
quality management standards. In October 2009 Voith wascertified according to DIN EN ISO 9001: 2008 and according
to the Regulations on the Recognition and Approval for
Further Education and Training (AZWV), issued by the Federal
Ministry of Labor and Economics. The latter certification
officially recognized Voith as an “organization responsible forpromoting vocational training according to the law governing
employment promotion.” As a consequence, at times of low
employment Voith is now able to provide extended training
to persons from other companies and to its own employeeswith support from the German Federal Employment Agency.
In the period under review, 14 persons from a company in
the Heidenheim region received such training from Voith atits Heidenheim location.

Employees Groupas at September 30

42 955

2007/08

39 32939 754

2008/09

2009/10

Employees total 39 754
by division
Voith Industrial
Services
48%
Voith Paper
23%

Voith Hydro
13%
Other
2%
Turbo
14%

by region
Europe excluding
Germany 19%

Americas29%

Germany
42%

Asia
10%

Management Report73II.5. Results
Highly satisfactory net income

Net income Group

Voith Group earnings developed very positively in fiscal
2009/10. Net income increased substantially to €121 million(previous year: €77 million), equivalent to a plus of 58%.

€ in millions

141*

121

The increase in total output to €5 193 million (previous year:€5 080 million, +2%) was largely the result of the 2% rise insales already described.
Year on year, the cost of materials was down 2% by €51
million to €2 081 million (previous year: €2 132 million). The
material ratio (the relationship between cost of materials andtotal output) fell to 40% (previous year: 42%). This fall is due
in particular to the fact that several orders in plant engineering were going through an implementation phase which wasless material intensive. At the moment the portion of service
business is dominant in plant engineering, hence, it involves
the use of less material. Lower material purchase prices also
exercised a positive impact on the material ratio.
Personnel expenses increased to €1 851 million (previous
year: €1 768 million). This rise was due to both the increase in
the number of company employees to 39 754 (previous year:
39 329) and moderate pay rises. The relationship between
personnel expenses and total output is virtually unchanged.
The operational result before non-recurring result improvedto €353 million (previous year: €324 million, +9%). Return onsales rose to 6.8% (previous year: 6.4%).
The non-recurring result of minus €13 million (previous year:
minus €98 million) reflects measures taken by Voith Industrial
Services, Voith Paper and Voith Turbo to adjust staffing
capacity in both production and administration. The measures taken the previous year as well as during fiscal 2009/10
resulted in further—albeit significantly lower—expenses in
the period under review. These measures should be fully
implemented over the next two years and are expected toresult in further adjustments in specific personnel-relatedareas.

74

Voith Annual Report 2009/2010

77*

2007/08

2008/09

2009/10*Data for previous year adjusted.

Operational result rose to €340 million (previous year: €226
million). The disproportionate growth in operational resultscompared with sales (+50%) and net income (+58%) islargely due to non-recurring results in the previous year.
The higher volume of invested liquidity pushed interest
income up from €28 million in the same period a year ago
to €35 million in the period under review. Interest expenses
rose €22 million to €105 million (previous year: €83 million).
The extra €300 million issue added to the existing bond in
the second half of fiscal 2008/09 led to an increase in interest
expenses.
The other financial result of minus €39 million (previous year:
minus €18 million) includes a one-time charge of minus €39
million (previous year: minus €14 million) due to write-downs
on marketable securities held as financial assets.
The other items in the consolidated statement of incomechanged in line with the pattern of business development.

III. Business Development and Earnings
Position of the Group Divisions
III.1. Voith Hydro
Reaping the rewards of the boom years

Sales Voith Hydro

Full-line supplier for hydro power plants
For more than 100 years, hydro power plants throughout
the world have used machinery from Heidenheim. Today,
Voith Hydro is a leading international supplier of equipment
for hydro power plants, including those which generatehydroelectric power by conventional means and those which
harness ocean energy. Voith Hydro is also a leading supplierof technologies for storing electric power.

€ in millions

Voith Hydro’s portfolio of products and services covers theentire life cycle of large and small hydro plants and includes all
major components: generators, turbines, pumps, automation
systems (measurement and control systems). It also extends
to the after-market business, which includes the supply of
spare parts and maintenance services. In the field of oceanenergies Voith Hydro develops innovative technologies forutilizing tidal currents and waves.
Global hydro power market remains stable
In fiscal 2009/10, the international hydro power market
settled at a medium level after reaching a peak volume inprevious years. Thus, the recent worldwide economic crisis
made itself felt—with a certain delay, as expected. However,after developing very sluggishly in late 2009 and early 2010,
the market began to pick up in the second half of the fiscal
year.
The market for large projects showed little growth in the
period under review. There were no orders at all for large projects in Brazil or India, two traditionally strong sales regions.
In the small hydro segment (power plants with less than
30 megawatts installed capacity) the market showed somerecovery but did not return to the high levels of the past.
For private project developers, implementation of projects
remains very challenging given the difficulty of obtaining
financing.

1 087*

1 158

775*

2007/08

2008/09

2009/10*Data for previous year adjusted.

Orders received Voith Hydro€ in millions
1 373

1 305
972

2007/08

2008/09

2009/10

Employees Voith Hydro
as at September 30
4 681

5 238

3 643

2007/08

2008/09

2009/10

Management Report75High order volume carried over from previous years
In fiscal 2009/10, Voith Hydro increased its sales by 7% to€1 158 million (previous year: €1 087 million). The divisionowes this excellent result to the high level of orders in previous years. The effect on sales revenues was delayed owing
to long order and production lead times.
Most sales in the period under review came from the Americas, with an increasing proportion from South America. As in
the previous fiscal year, about one fourth of total sales camefrom Europe excluding Germany and from Asia respectively.
Still well positioned in a difficult market
Voith Hydro was able to gain a reasonable share of the hydropower projects that were up for tender in the year underreview. It gained new orders worth €972 million (previous year:€1 305 million), but owing to market conditions there was no
major project among them. Orders received declined year on
year by 26%, a result which can be considered satisfactory inview of the prevailing economic conditions. At the close of the
fiscal year on September 30, 2010, orders on hand came to€2 821 million (previous year: €2 770 million, +2%).
Projects in the Americas made up a major part of orders
on hand in the period under review. Among them was apower plant on the Missouri River for the U.S. Army Corps ofEngineers, which Voith Hydro will electrically and mechanicallyrehabilitate and modernize by 2014. In British Columbia,
Canada, the company will overhaul five Francis turbines for
the Gordon M. Shrum hydro power plant, each with a rated
capacity of 310 MW. The first will go online in 2012. Besides
raising the plant’s availability, the repair work will boost thepower of the turbines. It will then be possible to produce anadditional 177 GWh annually, enough electricity for 15,000
households.
Europe excluding Germany likewise made a positive contribution in fiscal 2009/10. In Austria, for example, Voith Hydro
won major orders for overhauling pumped-storage power76

Voith Annual Report 2009/2010

plants, which are important for stabilizing the power grid. The
power utility Vorarlberger Illwerke AG ordered a completely
new generating unit for the Rodundwerk II plant. Voith Hydro
will supply a reversible pump turbine and an air-cooled motor
generator set along with auxiliary systems. In addition, for
Verbund-Austrian Hydro Power AG it will equip the Reißeck II
modernization project with two pump turbines, each delivering
215 megawatts. In addition, the company has an importantorder from Switzerland, rounding off its excellent supply oforders in these two countries.
In Germany, Voith Hydro sees a potential for the constructionof new hydro power plants, especially those involving pumped
storage. In view of the increased use of wind power, which isirregular by nature, pumped-storage power plants are essential for securing a constant supply of energy. During the period
under review, orders were placed for several such projects.
In fiscal 2009/10, market conditions in Asia led to a smallerorder intake than in the previous year. All in all, the market
volume in China did not live up to expectations. Voith Hydro
sees a development potential in the Indian market and inSoutheast Asia, where governments are planning a numberof hydro power plants in order to secure the supply of energy.
Personnel build-up in order to copewith the high order volume
To be able to cope with the large number of orders acquired
during the boom years and to maintain its customary levelof quality, Voith Hydro again added to its personnel capacity
during the period under review. At fiscal year end 2009/10, theequipment manufacturer for hydro power plants employed
5 238 persons, 12% more than in the previous year (4 681).
New jobs were created especially in the USA, China andBrazil. Germany was another focal point of job creation. Here,most of the new posts were related to ocean energy researchand development.

New production facilities in India and Brazil
During the period under review Voith Hydro again madesignificant investments in its production capacity in order tohandle the large volume of orders. Its total investments infiscal 2009/10 came to €90 million, which was 56% above
the previous year’s level (€58 million).
In February 2010, a new factory for small hydro power systems went into operation in Vadodara, India. In Manaus,
Brazil, Voith Hydro invested in totally new facilities, whichhave now begun production. In addition, during the period
under review the company invested in a new production hallin St. Pölten, Austria. Construction has been completed, andproduction will begin at the start of fiscal 2010/11.
Greater emphasis on R&D
In fiscal 2009/10, Voith Hydro continued to invest heavily inresearch and development in spite of a decline in orders due
to economic conditions. It increased its R&D expendituresby 49%, from €53 million in the previous year to €78 million
in the period under review. The Group’s R&D ratio was thus
equal to 6.7% of consolidated sales.
The company made significant efforts in the improvement ofboth generators and turbines. An important consideration
here was the growing share of renewable energy sourcesin the energy mix of the future. Increasing use will be madeof hydro power technology to supplement sources like windenergy and solar energy. Run of river power plants, forexample, serve to cover the base load in electrical power
generation, thus providing the foundation for other forms of
power generation, both conventional and innovative, such ascoal, natural gas, wind or solar energy. And pumped-storage
power plants are the only commercially available ‘battery’ inthe world for energy management. By storing energy, they
provide indispensable support to forms of power generationthat depend on the time of day and weather conditions, likewind power and solar power. In addition, Voith’s variable-

speed motor generators are extremely important for controlling the fluctuations that typically arise when increasing
amounts of wind power and solar power are fed into the grid.
Voith Hydro also made progress in harnessing ocean energy
during the period under review. For example, it significantly
improved its tidal current generator, which can now be
tested at the European Marine Energy Centre (EMEC) in
the waters off the Orkney Islands. In 2011 it will begin two
years of test operations; preparations for installation are
currently underway. When this facility is finished, the turbine
is expected to feed about 1 800 megawatt hours of electricity
into the grid each year. This demonstration facility, built on
a commercial scale, is intended to provide valuable experience in the installation and operation of this special marine
power generation technology. The government of the United
Kingdom is providing £1.7 million in support to the project via
the Marine Renewables Proving Fund of the Carbon Trust.
Total investments by the project partners Voith Hydro and
RWE Innogy, along with Bauer Renewables Ltd., which will
anchor the turbines, is about £11.8 million.
In addition, during the period under review the pilot turbine
for a tidal current park in South Korea was transported
from Germany to its intended location. Operational tests onland and off the Korean coast went according to plan. The
gravitation foundation was successfully set down on theseabed and positioned within the required tolerances. The
power house was completed and inspected by the local
power supply company. As soon as the underwater cablehas been laid, the pilot facility will be placed on the ocean
foundation, connected to the cable and put into operation.
Significantly improved earnings
Thanks to good sales, Voith Hydro was again able to improve
its profit from operations in fiscal 2009/10. The company
achieved a profit from operations of €76 million (previous
year: €63 million), an increase of 21%. The return on sales
improved to 6.6% (previous year: 5.8%).

Management Report77III.2. Voith Industrial Services
Emerging from the crisis stronger than before
Provider of technical services to industry
Voith Industrial Services is a leading supplier of technicalservices to the automotive, energy, chemical, petrochemical,
mechanical engineering and aerospace industries, all ofwhich are of key importance in today’s world. Its portfolio
covers everything from maintenance and technical cleaning
to facility management, assembly and planning services andcomplex high-tech engineering.
In the period under review, Voith Industrial Services wasorganized in five divisions: Facility Services Europe, Facility Services Americas, Industrial Services Asia, Process
Services and Engineering Services. The first two divisions
provided building and facility management to the markets
in their respective countries. The third division provided
technical services to the Asian market. Process Services
provided product-related services in Europe, and Engineering
Services dealt with contract engineering for the aerospaceand rail industries.
Improved business climate
Demand for industrial services is closely linked to trends inindustrial production. If industrial companies are not working
to capacity, fewer services are needed to keep production
running. In the first half of fiscal 2009/10, Voith Industrial Services continued to feel the effects of the economic crisis. In
the second half of the year, the worldwide economic recovery
brought about a noticeable improvement.
In fiscal 2009/10, the situation in the automotive industry
was much better than in the previous year. The chemical andmechanical engineering industries likewise showed a strong

78

Voith Annual Report 2009/2010

recovery in 2010, after having suffered a serious slump in theprevious year. In the oil and natural gas markets, which trad­
itionally respond more slowly to economic trends, demandremained more reserved.
Focus on profitable activities
In fiscal 2009/10, Voith Industrial Services continued topursue two major strategic goals. First, it kept its focus
on profitable businesses and industries, and it adjusted its
service portfolio accordingly. With this purpose in mind, thecompany also implemented a reorganization, which went
into effect on October 1, 2010. Its business activities are
now grouped in four new divisions: the Automotive divisionand the Energy-Petro-Chemicals division offer solutions totheir respective industries. The Industries division provides
comprehensive regional services related to the operation andmanagement of industrial locations in Europe. The Engineering Services division provides contract engineering to theaerospace industry and to manufacturers of rail vehicles.
Besides permitting a better focusing of its activities, thisreorganization brings together the company’s expertise
pertaining to individual industries.
The second strategic goal pursued by Voith Industrial Services during the period under review was to globalize its business, which has been traditionally rooted in Europe, and toincrease its diversification in individual regions. Accordingly, it
launched new business activities in up-and-coming regions.
Examples are the emirate of Qatar, where Voith Industrial
Services supplied services to the process industries on
the Persian Gulf, and India, where it plans to offer contractengineering for offshore projects.

Upturn in the second half of the fiscal year
In keeping with its priorities, Voith Industrial Services deliberately accepted a decline in sales in favor of achieving an
increase in profits. After reaching a low point in the firsthalf of fiscal 2009/10 owing to poor economic conditions,the company was able to increase its sales in the second
half of the fiscal year. Measured over all of fiscal 2009/10,
sales declined by 6% to €962 million (previous year: €1 018
million). As Voith Industrial Services currently has a lower
presence in the growth markets of China and India than otherGroup Divisions, it benefited less from the strong economic
recovery in these regions.
Owing to the short processing times of its service contracts,
Voith Industrial Services does not record the volume oforders on hand. Consequently, its figures for sales andorders received are identical. Most of the company’s orders
continue to come from Europe. In the medium term Voith
Industrial Services wants to achieve a greater regional balance. In particular, it intends to expand its market positionin the USA, Brazil, China and India in order to participate
more in the growth of these markets. In the period underreview, it achieved some initial successes in this direction.
In India, Voith Industrial Services won two orders in August2010 from automotive manufacturers in Pune. Fiat India gave
the company full responsibility for maintaining a paint shop,
and Volkswagen (VW) India placed an order for a project toinstall and modify a number of bodywork and final assemblyplants. In China, for a customer in the aircraft industry, Voith
Industrial Services took charge of maintaining the production equipment for the final assembly phase, and it added
considerably to its stock of orders from VW. In Brazil, Voith
Industrial Services, which already has a strong business inthe automotive sector, won two important customers in theprocess industry: Tetra Pak and Petrobras. For the latter,an oil company, it will provide services like maintenance,machine fitting and machine installation.

Sales Voith Industrial Services€ in millions

983

1 018

962

2007/08

2008/09

2009/10

Employees Voith Industrial Services
as at September 30
22 871

2007/08

19 11819 1192008/09

2009/10

Management Report79Varying developments in the divisions
The trend in the various divisions of Voith Industrial Services
was uneven. Facility Services Europe recovered in the period
under review, with sales stabilizing after a sharp drop in theprevious year. This applied to all of the customer industries
served by the division, including the automotive industry,
which was still very weak in the previous periods. A significant
event was the extension of the service contract with General
Motors, which covers multiple factories and countries. The
contract, which was concluded in 2007 for a term of three
years, was extended in 2010 for another two years.
Facility Services Americas showed a slight increase in sales
and was the only division to do so. Here a decline in sales
owing to the crisis in the US automotive sector was more thanoffset by growth in Brazil and Canada.
The Process Services division experienced a drop in sales on
account of difficult market conditions but was neverthelessable to improve its operating results. A number of multi-year
master agreements with customers from the automotive
sector were extended, for example with the MAN factoryin Niepolomice, Poland. Ever since this plant opened, Voith
Industrial Services has been responsible for maintenance andfacility management services relating to the truck assembly
line. In addition, the division won a multi-year maintenancecontract with BMW in Leipzig. In the refineries sector Voith
Industrial Services was able to strengthen its market position
by winning a number of important contracts, for example
with ExxonMobil in Rotterdam. In the area of shutdowns andturnarounds, this was the most successful business year ever.
In the energy sector the trend was also encouraging. Voith
Industrial Services concluded two maintenance agreementswith operators of wind farms in Germany. For the first time,it also won orders from wind farms outside of Germany.

80

Voith Annual Report 2009/2010

An example is FKI Engineering in the UK, for which Voith
Industrial Services will service wind farms with a total output
of more than 45 megawatts.
In Engineering Services, business generally declined, owing
in particular to reduced demand in the aviation industry. The
division won an important new customer in Chemnitz, where
Voith Industrial Services will handle the design and productionof a control system for VW’s Bentley bodywork activities.
Total number of employees is constant
At the end of the period under review, Voith Industrial Services
employed a total of 19 119 persons (previous year: 19 118).
In this personnel-intensive business, employment trends
varied from one region and division to the next depending on
business developments. Facility Services Europe remained
fairly constant. The Process Services division expanded its
personnel capacity in order to provide support to customers
from the energy sector but reduced its capacity for thechemical industry and refineries. Engineering Services added
new positions.
Investments in internationalization
Investment and development activities focused on internationalization as a strategic goal. In fiscal 2009/10, Voith
Industrial Services made investments totaling €10 million(previous year: €14 million, minus 30%).
Profit from operations increases in spite of adecline in sales
During the period under review, Voith Industrial Services
systematically concentrated on high-profit business in orderto enhance its earnings. As a result, its earnings improved inspite of a small decline in sales: in fiscal 2009/10 it achieved apositive profit from operations amounting to €38 million, thus
exceeding the previous year’s figure (€36 million) by 7%. The
return on sales increased year on year from 3.5% to 4.0%.

III.3. Voith Paper
Taking advantage of the upturn

Sales Voith Paper

Leading-edge technology and services
for the paper industry
Voith Paper has been a partner to the paper industry for many
years. It provides leading-edge technologies and products
for the entire papermaking process from a single source:from pulp (derived from wood or wastepaper) to finishedpaper. It optimizes the papermaking process by means ofcontinuous innovations. Voith Paper focuses on productsthat use resources economically, thus ensuring maximum
efficiency in the consumption of energy, water and fiber.

€ in millions

Worldwide recovery of the paper market
The paper market, which responds quickly to cyclical economic trends, is developing at two speeds. In the Westernregions (Europe and North America) its growth remains verysluggish. In Asia, in contrast, the market is now booming
following a year of modest performance. All in all, the world
market showed a strong recovery in fiscal 2009/10 andpulled out of its slump or the previous year, caused by thegeneral economic downturn. During the period under review,
paper manufacturers again invested in new plants. Powerfulimpetus for growth in the large industrial systems segment
came from Asia, especially China. In the mature markets ofEurope and North America, paper production increased but
there were only a few major investments. With the worldwide
upsurge in paper production, demand also picked up for
consumables, replacement parts and services.
Sales almost constantIn the period under review, sales at Voith Paper stayed almost
constant. The company achieved sales of €1 723 million in
fiscal 2009/10 (previous year: €1 743 million, minus 1%).
Once again, Asia accounted for the largest share. The second most important market was Europe excluding Germany,
followed by the Americas.

1 984

2007/08

1 743

1 723

2008/09

2009/10

Orders received Voith Paper€ in millions
2 083

2 009
1 338

2007/08

2008/09

2009/10

9 500

9 353

2008/09

2009/10

Employees Voith Paperas at September 30
10 548

2007/08

Management Report81Significant increase in orders received
Orders showed a very encouraging trend. In the period underreview, Voith Paper won new orders totaling €2 009 million.
Thus orders received increased by 50% year on year (previous year: €1 338 million), almost reaching the record level offiscal 2007/08. At the end of the fiscal year on September
30, 2010, orders on hand came to €1 333 million (previous
year: €992 million), an increase of €341 million or 34% overthe level one year before.
The main reason for this was the revival of the market forsystems (new systems and major rebuilds). Voith Paperscored well here thanks to its range of water-, energy- andfiber-saving technologies for the papermaking process and toits good customer relationships, which emphasize long-term
partnership. The product and service business (products,
consumables and services) likewise benefited from the upturnin paper production. In addition, there were one-time benefits
owing to pent-up demand from customers who had kept
down their inventories of consumables during the recession
and needed to restock. Continual development and renewalof the product range, especially in paper machine clothing
and roll covers, was very well received by the market. Voith
Paper also benefited from its new organizational structure,
which it adopted in 2009. By reducing the number of divisions it simplified processes, permitting customer orders tobe processed with greater flexibility and efficiency.
In the past fiscal year, Asia was by far the strongest sales
region. Projects from China made an especially strong contribution to the order intake. In this country Voith Paper wasable to win a number of large orders for new machines. These
included systems for manufacturing packaging and for producing graphic wood-free papers and tissue. ­Zhumadianshi
Baiyun Paper, for example, ordered a new plant to produce
copy paper and offset paper.
The tissue segment was especially successful for Voith Paper.
New tissue machines were ordered by Chinese papermakers
like Henan Luohe YinGe and by customers in Brazil and theKingdom of Bahrain.

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Voith Annual Report 2009/2010

Another Chinese manufacturer ordered several systems at
once, including a large deinking machine for processing
wastepaper. The order underscores Voith Paper’s technological leadership in this field and confirms the wisdom of
its strategic focus on environmental solutions. In the Asianmarket, too, recycling is rapidly gaining in importance.
In the mature markets of Europe and North America, most of
the orders were for rebuild projects. Orders of this kind wereplaced in Germany, France, Sweden and the USA.
Slight decline in staffing level
At the end of the period under review, Voith Paper had
9 353 employees (previous year: 9 500), 2% fewer than on
September 30, 2009. Utilization of capacity is satisfactory in
all regions. Thanks to the large number of orders from China,
there is a very high level of capacity utilization in the local
Chinese companies.
High volume of investment
The level of investment continued to be high, although not ashigh as in previous years when Voith Paper invested heavily
to establish itself in Asia. All told, Voith Paper’s investments
came to €52 million in fiscal 2009/10 (previous year: €93 million, minus 43%). The decline is a consequence of targetedcost-cutting measures to improve the division’s liquidity
situation.
The investments were aimed at ensuring continued highquality, efficiency and safety in production. The biggest single
investments were for modernizing the tissue competence
center in Brazil and for procuring a new weaving machinein the USA in order to increase the production capacity forpaper machine clothing.
In July 2010, a new production plant was officially openedin Nansha, China. The new service center is strategicallylocated in Guangdong province. The Nansha plant makes
ultramodern roll covers and provides services related topaper machine clothing, roll covers and other special products for the paper industry.

R&D activities focus on conservation of resources
In fiscal 2009/10, Voith Paper continued to invest heavily inresearch and development. Expenditures for R&D amounted
to €104 million, near the very high level of the previous year(€113 million, minus 7%), and corresponded to an R&D ratioof 6.1%.
As in the past, R&D activities focused on the development of
new technologies to save energy, fiber and water. The aim
is to make the papermaking process more environmentallycompatible and enable resources to be used more efficiently.
As a result, Voith Paper is discovering solutions that givedue account to ecological considerations, but that also yieldsignificant economic benefits in the form of cost savings forcustomers.
Voith Paper brought a wide range of new products onto themarket in the period under review. When developing new
products it was guided by the goal of creating integrated
solutions. Here, it benefited from its broad base of products
and services, which it was able to combine and fine-tune togenerate added value for customers in the form of resource
conservation and cost savings. An example is SolarMax,
an energy-saving solution for high-speed paper machines.
It features a new combination of felt and roll cover in thepress section, which significantly improves dewatering.
SolarMax was tested on the test paper machine at Voith
Paper’s Paper Technology Center and is now in service forcustomers. Another product put on the market by Voith
Paper in the period under review is CycloMech, a deaeration machine which extracts air from white water, thereby
lowering operating costs and reducing the consumption ofvarious chemicals.

Sasaki Award 2010 on the Japanese joint venture between
Voith Paper and the IHI Corporation. The prize was awarded
for the LP Screen, an exceptionally energy-efficient sorterthat needs only half the specific energy of conventional
screens. In February 2010 the Canadian papermaker Cascades presented its supplier Voith Paper with its Sustainable
Development Supplier Award, which it gave for the first time.
Special emphasis on resource conservation in Voith Paper’s
business philosophy clinched the decision.
Positive profit from operations
In the period under review, Voith Paper posted a positive
profit from operations amounting to €128 million (previous
year: €150 million), a decline of 15%. Here it must be kept
in mind that valuation influences had a positive impact on
the previous year’s results. The return on sales was 7.4%
(previous year: 8.6%). The decline in profit from operations
was largely the result of pressure on profit margins, whichdeveloped during the recession.

During the period under review, Voith Paper received twoawards for its efforts to improve the use of resources in
new and existing products. The highly respected Technical
Association of Pulp & Paper Industries (TAPPI) conferred theManagement Report83III.4. Voith Turbo
Constant growth during the crisis
Specialist for power transmission
Thanks to Voith Turbo, people, goods and machines movesafely from place to place each day by the millions. Drive
components and systems made by Voith Turbo are used in awide range of industries, wherever power must be converted
into controlled movement.
The company is organized in four divisions, each of which
focuses on a specific customer sector: Industry, Marine, Railand Road.
Different recovery trends in the customer sectors
Voith Turbo provides leading-edge technologies to four ofVoith’s five core markets. In most segments of importanceto the company, the business climate improved over theprevious year, in which the effects of the economic crisis
were severe.
In fiscal 2009/10, the industrial sector was generally on theroad to recovery, but the economic situation varied fromone line of industry to another. Whereas the steel industry
continued to face difficulties, there were marked upswings inmining and power generation, especially in Asia, and in theoil and gas sector.
The Marine division did not experience any improvement at
the start of the year under review, when the slump of theprevious year still held sway. In the second half of the fiscal
year, however, the market picked up considerably. This
trend was felt in the oil & gas segment and in the market for
special-purpose vessels used in the installation and servicing
of offshore wind farms.
The market for rail vehicles showed a consistent growthtrend. In Asia, where economic growth is creating increased
demand for mobility, work continued on the high-speed rail

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Voith Annual Report 2009/2010

system and on local public transport systems. In Europe, too,
local public transport benefited from government-subsidized
infrastructure projects. Freight transportation, which had
declined during the recession of the previous year, also
picked up again.
The Road division serves the market for trucks, buses andagricultural vehicles. After suffering a severe setback during
the previous year’s recession, the truck business showed astrong recovery at the start of 2010. In some regions, suchas China and South America, there was double-digit growth.
The bus market also resumed moderate growth, following aslight decline. In each of these segments the impetus camefrom outside Western Europe. Western Europe had a steadylevel of business, following a small drop in the previous year.
Increased sales
Thanks to a strong second half-year, Voith Turbo increased
its sales in the period under review by 9% to €1 349 million(previous year: €1 232 million).
This positive development was driven largely by the Rail division, which posted an increase of 25%. The Industry division
increased its record result from the previous year by another
6%. The Road division, which had a strong second half-year,
grew by 4% following a drop in business the previous year.
The Marine division suffered a decline of 13% compared tothe previous year’s high level.
Owing to the concentration of vehicle manufacturers in
Europe, this region again accounted for more than half oftotal sales. The Asian market, already strong, continued to
grow in importance, thanks especially to demand from China.
Asia accounted for almost one fourth of sales. The remaindercame from the Americas and from increasingly important
market regions like Australia and Africa.

Higher order intake
In fiscal 2009/10, Voith Turbo won new orders totaling €1 351
million, corresponding to a gain of 5% over the previous
year (€1 292 million). The order situation improved thanks
to the economic recovery. At the end of the fiscal year on
September 30, 2010, orders on hand amounted to €1 282
million (previous year: €1 283 million).
The Industry division benefited in particular from increasedorders from Asia. For example, Voith Turbo won orders forseveral major projects involving variable-speed Vorecon
systems, some of which will be used in Indian power plants.
Several new orders were also received from the oil and gas
sector in the Middle East and Brazil. ArcelorMittal became
the first South American customer to order universal joint
shafts with a diameter of more than a meter. The North
American market, in contrast, did not show any clear signsof an upturn. Several direct suppliers of wind farms in China,
Germany and Korea ordered prototypes of the WinDrive.
WinDrive is a Voith Turbo solution that permits more efficient
power generation from wind. The Industry division expanded
its service business in all sectors.
In the Marine division the order situation steadily improved,
becoming very favorable by the end of the fiscal year. Total
orders received in fiscal 2009/10 were above the previous
year’s level. There was increased demand from South andCentral America in particular. In the period under review,
Voith Turbo did successful business with tugs and scoredespecially well with special-purpose vessels for installing
offshore wind farms.

Sales Voith Turbo€ in millions
1 349

1 161

1 232

2007/08

2008/09

2009/10

1 292

1 351

2008/09

2009/10

5 307

5 428

5 422

2007/08

2008/09

2009/10

Orders received Voith Turbo€ in millions
1 648

2007/08

Employees Voith Turbo
as at September 30

Management Report85Thanks to a steady growth trend, the Rail division was able
to win a large number of new orders, exceeding the intake
level of the previous year. This growth was driven by the
Far East, especially China. A Chinese manufacturer, forexample, ordered Voith drive systems for diesel railcars
that it intended to export. In Europe the development ofrail transport stagnated owing to a lack of funding. Voith
Turbo was nevertheless able to secure important orders,for example from ZOS Vrutky and the Slovakian national rail
carrier. In the locomotive technology segment there was amarked upturn in project activities in the second half of the
fiscal year. Several orders came from South America, where
Voith Turbo will deliver Scharfenberg couplers for electricrailcars that are to go into service in the suburbs of Riode Janeiro. In addition, Voith Turbo won a major follow-up
order from the Brazilian railcar manufacturer Bom Sinal for
DIWAPack drive systems.
In the Road division, business picked up in the second halfof the period under review. The cumulative order intake forthe year thus slightly exceeded the previous year’s level.
Following a dramatic slump in the previous year, sales ofretarders recovered beginning in the second half of fiscal
2009/10. In a promising development, the Magnetarder was
launched, a new kind of permanent magnet retarder for lightbuses and trucks. Demand also increased for automatictransmissions used in buses. Thanks to its good market
position, Voith Turbo picked up a number of new orders for
projects in South America and Asia, including Panama andSingapore. Its new DIWAhybrid drive posted initial successes
in the US hybrid market. In California, Iowa and Pennsylvania,
three companies are now operating DIWAhybrid systems in a
total of 22 buses. Business in engine components, including
TurboChargers, TurboCompounds and air compressors,
showed a positive trend as well.

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Voith Annual Report 2009/2010

Staffing at the previous year’s level
On September 30, 2010, Voith Turbo had a total of 5 422
employees, nearly as many as in the previous period(September 30, 2009: 5 428). The employment situation
varied within the division. In the first half-year there wereretrenchments in areas affected by the recession, but in thegrowth regions and in some areas of growth in Germany, newemployees were hired.
Major investments in German production locations
In fiscal 2009/10, Voith Turbo invested a total of €72 million(previous year: €78 million, minus 9%). The decisions forthese investments, which were taken during the economiccrisis, now enable the company to benefit from the current
economic upswing.
One outstanding milestone was the construction of a completely new production facility in Mergelstetten, a district of
Heidenheim. The plant will produce mechanical drives forrail vehicles, such as wheelset transmissions for high-speed
trains.
The Rail division’s existing production facilities, also in
Heidenheim, are undergoing extensive modernization, which
will be completed mid-2011.
The factory development project in Crailsheim was completed in July 2010. The Crailsheim plant (Industry division)
manufactures variable-speed drives for the raw materials,
oil and gas industries, couplers for the mining industry, anduniversal joint shafts for the steel industry.
Modernization was also carried out for the Marine division in
Heidenheim during the period under review, bringing abouta marked increase in production efficiency. In Rostock, Voith
Advanced Propeller Technology GmbH und Co. KG wasmerged with ship design, thus establishing a second location
for the division.

Successful new products introduced
In spite of the difficult economic conditions, Voith Turbo
continued to invest heavily in research and development. In
the period under review, R&D expenditures amounted to €78
million (previous year: €81 million, minus 5%). Thus spending
for R&D was equivalent to 5.7% of sales.
R&D activities focused on increasing efficiency, reducing fuelconsumption, and minimizing emissions of CO2 and othergases. All four divisions performed significant research andput new products on the market. An example is SteamDrive,
which is used in all of the divisions. By utilizing exhaust
heat, this drive system lowers fuel consumption in internal
combustion engines by up to 10%.

Development work in the Road division focused on paralleland serial hybrid drives for city buses. DIWAhybrid systems
are already being field-tested in buses in several US cities.
Good return on sales
Voith Turbo posted a profit from operations amounting to€135 million (previous year: €113 million), a healthy increaseof 20%. Thanks to rapid structural adjustments in the areas
affected by the recession, the division’s earnings rose markedly when business picked up again. This, along with a goodsales mix, brought about an increase in the return on sales
to 10.0% (previous year: 9.1%).

In the Industry division, a major area of focus was the development of turbo couplings for use in the mining industry andpower plants. Vorecon m+, a modular concept for Vorecon
variable-speed drives, was launched, for example.
The Marine division also launched new products. The Voith
Radial Propeller, for example, makes it possible to position
offshore platforms like drilling vessels while protecting themagainst forces from currents, winds and waves. The firstorders for the Radial Propeller have been received, marking
Voith’s entry into yet another segment of the offshore market.
In addition, a performance class with a rated input power of
1.5 megawatts was added to the portfolio of Inline Thrusters,
which are compact units consisting of an electric motor andpropeller. This will permit the division to open up new areasof application.
In the Rail division, a front end was developed for high-speed
trains that go 380 km/h and faster. Development of theTurboFlexx transmission family continued. New productspresented at the Innotrans in Berlin in September 2010
included the Galea series of composite rail vehicle heads,
a concept study for a cooling tower and a hybrid version of
the DIWAPack.

Management Report87IV. Asset and Financial Position
IV.1. Balance Sheet Structure
Structure of assets and capital remains solid
The balance sheet of the Voith Group continues to reflect astable asset and capital structure. Total assets increased to€5 902 million (previous year: €5 341 million).
Non-current assets were up to €2 408 million (previous year:€2 260 million) largely due to the increase in property, plantand equipment of €1 059 million to €1 155 million arisingfrom consistently stable capital spending. As in previous
years, capital spending significantly exceeded depreciation.
The main factors leading to an increase in current assets to€3 494 million (previous year: €3 081 million) were changes
in inventories, trade receivables, marketable securities andin cash and cash equivalents. Inventories fell to €784 million(previous year: €833 million). This is attributable to Group
Divisions with product and service business. Thanks to avery positive order position, trade receivables increased
substantially to €1 140 million (previous year: €930 million),
thereby returning to their pre-economic crisis level.
Despite the recovery on the international financial markets
Voith continues to give high priority to financial flexibility.
Cash and cash equivalents rose again by €252 million to€1 175 million (previous year: €923 million) partly as the resultof the start of the liquidation of a multi-asset fund which wasreflected in a reduction in short-term marketable securities
to €41 million (previous year: €107 million).

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Voith Annual Report 2009/2010

Non-current liabilities dropped to €2 015 million (previous
year: €2 075 million) mainly due to the drop in non-current
financial liabilities to €1 180 million (previous year: €1 285
million). As a euro bond issued by Voith in 2001 will be due
for repayment at its current carrying amount of €146 million
within the next 12 months, this bond has been reclassified
from non-current to current financial liabilities.
The increase in current liabilities to €2 779 million (previous
year: €2 316 million) is due not only to the reclassificationof the bond referred to, but also to the increase in otherliabilities to €1 501 million (previous year: €1 329 million). The
customer advances subsumed under this item rose by €137
million to €975 million (previous year: €838 million).
At September 30, 2010, Group equity totaled €1 107 million(previous year: €950 million). The equity ratio rose to 18.8%(previous year: 17.8%).
In addition to net income, exchange rate effects as well as
effects arising from the market valuation of securities had apositive impact and dividend payments a negative impact on
the amount of equity.
More details of equity are shown in the statement of changes
in equity.

IV.2. Liquidity
Positive cash flow trend

Cash flow

In the fiscal year under review Voith generated cash flowfrom operating activities of €390 million (previous year: €304
million). The marked increase in comparison with the previous
period is mainly due to the positive development of operative
earnings.

€ in millions

Owing to a reduction since the previous year in investments
in property, plant and equipment and in intangible assets,
as well as the reclassification of securities as cash and cash
equivalents described above, cash flows from investing
activities improved to minus €159 million (previous year:
minus €286 million).
Factors such as dividend payments and the acquisition of
non-controlling interests resulted in cash flows from financing
activities in the period under review of minus €32 million. In
the previous year, in addition to dividend payments and theacquisition of non-controlling interests, the additions to theexisting €300 million bond and the issue of a note loan inparticular led to a positive cash flow from financing activitiesof €352 million.
Total cash flow amounted to €199 million (previous year:€370 million).
More details of cash flow are provided in the section on the
consolidated statement of cash flows.

2009/10

2008/09*

Cash flow from operating activities

390

304

Cash flow from investing activities

(159)

(286)

Cash flow from financing activities

(32)

352

Total cash flow

199

370

*Data for previous year adjusted.

Balanced net debt
Net debt as the internally defined difference between financial
liabilities and realizable financial assets is an important ratio
for banks, analysts and rating agencies. Net debt on thebalance sheet date of September 30, 2010 amounted to€0.4 million (previous year: net debt €132 million). Basedon valuation at the repayment amount, financial liabilities areincluded at an amount which is €23 million higher (previous
year €25 million) than the carrying amount.
The net debt ratio is not covered by the accounting policies
based on the International Financial Reporting Standards(IFRS) and its definition and calculation may diverge fromthe practice of other companies. In contrast to the carrying
amount, which is based on the effective interest rate method,
the ratio is calculated by measuring financial liabilities at theirhigher nominal repayment amount.

Management Report89IV.3. Investments
Continued heavy investments
Voith also made substantial investments in the fiscal year
under review in strengthening its productivity and in thestrategic orientation of the Group. The total volume of capitalspending by the Voith Group in fiscal 2009/10 amounted to€234 million, just below the level for the previous year (€255
million, minus 8%). The investment ratio of 4.5% (previous
year: 5.0%) of consolidated sales underscores the long-term
and forward-looking nature of the corporate planning of thistechnology group.
The value of investments in the fiscal year under review wasonce again significantly higher—in fact by €71 million—thandepreciation of €163 million (previous year: €151 million).
While the business of Voith Industrial Services requires, by itsvery nature, lower levels of capital spending (investment ratio:1.0%), the three manufacturing Group Divisions reinvested asignificantly higher share of their sales revenue. The highest
investment ratio was reported by Voith Hydro at 7.8%.

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Voith Annual Report 2009/2010

In regional terms, 47% or almost half of total capital spending(previous year: 53%) was made in Germany, specifically in
new state-of-the-art production facilities and the modernization of several existing productions. 32% (previous year: 20%)of total capital spending was invested in America. Importantinvestments were made in Brazil, in particular, where Voith
Hydro built new production facilities and Voith Paper modernized a competence center for tissue paper. 11% (previous
year: 16%) of the Group’s investments were made in Asia,
in China and India in particular. Production facilities werereopened or large new machines commissioned at several
Chinese and Indian locations. 10% (previous year: 11%) of
total capital spending was invested in the Europe excluding
Germany region. Particular mention should be made at thispoint of the new turbine production plant in St. Pölten inAustria.
Detailed information on the investing activities of each of
the Group Divisions can be found in Section III, Business
Development and Earnings Position of the Group Divisions.

IV.4. Financial Investments/
Participating Interests
Investments and depreciation

No acquisitions were undertaken in the period under review.

€ in millions

V.

281

255

234

144

151

163

2007/08

2008/09

2009/10Investments

Depreciation

Investments total €234 million
by division
Voith Paper
23%
Voith Industrial
Services
4%
Voith Hydro
38%

Voith Turbo
31%

Other
4%

by region
Europe excluding
Germany 10%

Americas32%

Germany
47%

Asia
11%

Management Report91V. Research and Development

Focus on resource-efficient technologies
Innovative products and services have been the cornerstoneof future business success over many years. As a technology
group Voith traditionally invests a great deal—and significantly
more than the industry average—in research and development. This was also true of the recession year of 2008/2009.
In fiscal 2009/10 Voith boosted its R&D spending by another
5% up to €266 million (previous year: €254 million).
While the Hydro, Paper and Turbo Group Divisions again
reported high R&D ratios during the fiscal year under review
of up to 6.7%, research and development again played an
important role (naturally at a low level) in Voith Industrial
Services as a service company. Consolidated at the Grouplevel, the lower R&D ratio of the service sector reduced theoverall R&D ratio. Compared with consolidated sales, theGroup’s R&D ratio in fiscal 2009/10 was 5.1% (previous
year: 5.0%).
Most of Voith’s research and development activities takeplace in Germany. Centers in America, Asia and the Europe
excluding Germany region contribute valuable specialized
R&D input in the relevant Group Divisions.

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Voith Annual Report 2009/2010

It is Voith’s ambition to anticipate solutions to future challenges. For this reason the technology group’s R&D strategy
is consistently focused towards global megatrends and inparticular to the requirements of the world’s growth regions.
Environmental friendliness, resource and energy efficiency
as well as clean and renewable energy generation are not
only the key challenges facing the 21st century but also thecentral theme of our research and development strategy atVoith.
Hydro power is the only form of renewable energy that isalready able to produce a constant flow of electricity in thequantities needed by industry and at competitive prices,making it the as yet only really “major” source of renewableenergy. Hydro power contributes 15% to total electricity
production worldwide. If renewable energy sources arelooked at separately, hydro power has a share of around80%. A considerable proportion of Voith’s research efforts
during the period under review have been directed towards
accompanying hydro solutions for a power mix which
includes a growing share of wind and solar power. Owing
to the dependence of wind and solar power on particular
times of the day and weather conditions these sourcesof energy require ­storage capacities which at present canonly be provided in significant volumes by pumped storage
methods. Progress has also been made in the innovative fieldof ocean energy.

Research and development€ in millions
250

254

266

2007/08

2008/09

2009/10Voith developed diverse new solutions for papermakers
during the year under review which offer customers considerable cost benefits as well as taking environmental issues onboard. Voith’s efforts to develop resource-saving products
for the paper industry were rewarded with two international
prizes during the year under review.
Voith is also focusing on resource-efficient solutions for driveand braking systems. A drive system has been developed,
for example, which uses exhaust heat to significantly reduce
the amount of fuel that internal combustion engines use
up in diverse fields of application. Hybrid drive systems forbuses have been improved and successfully tested in local
public transport.
Detailed information on the R&D activities of each of theGroup Divisions can be found in Section III, Business Development and Earnings Position of the Group Divisions.

Management Report93VI. Non-Financial Performance Indicators

Social factors: A key element of business success

Production: Quality management that works

Voith is a family-owned company whose business model
attaches appropriate importance to social factors besides theneed to achieve economic goals and increase the value of thecompany. Satisfied customers are the cornerstone of businesssuccess. As such, they lay the foundation on which Voith canoffer attractive long-term career and development prospects
to its employees. The safety of employees in the context inwhich they work for Voith is of paramount importance to thecompany. Accordingly, extensive measures and initiatives
devote considerable attention to this key issue.

All production processes in the Voith Group satisfy strict
corporate guidelines on quality, risk management, industrial
safety and environmental protection. Integrated management systems monitor compliance with these guidelines andensure that both production and products consistently meetthe same high quality and environmental standards. The
corporate guidelines document a consistent understandingof the entire Group, thereby laying the basis for companyspecific occupational health and safety and environmental
management systems. Internal and external audits in linewith international standards verify the application and effectiveness of these management systems.

Research & development: Focus on technologies thatconserve resources
In many areas relating to environmentally friendly technologies, products and processes, Voith stands out as both thetechnology and opinion leader. This is true, for example,
in the processing of wastepaper for paper production, inthe utilization of ocean energy, in innovative services forthe wind power industry and in the development of hybrid
drive systems for buses. To defend and improve on thisposition, the company sharply focuses all its R&D activities
on technologies that use resources economically and arekind to the environment. In fiscal 2009/10, Voith once again
began work on a whole series of ground-breaking products
and system solutions (for more details, refer to Section V,
Research and Development, in this management report).
Working on these technologies lays the foundation for theGroup’s continued successful business development in the
future. It also helps protect the world around us, as well as
creating high-quality jobs.

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Voith Annual Report 2009/2010

The respective managers, who are supported by environmental protection officers, are responsible for assessing
environmental impact. Their job is to regularly measure andassess how the activities conducted at Voith sites directly
and indirectly affect the environment. Their main focus ison examining emissions in accordance with the relevant
national laws and regulations, assessing the efficiency ofenergy and water consumption, monitoring wastewater andthe wastewater system, and handling waste management.
Efforts are currently being taken to systematically collate andpool all the environmental data that is currently distributed
throughout the Group. Once this has been done, the next
step will be to define specific targets for further improvement
and put together packages of actions to achieve these goals.
The industrial safety campaign, which was launched in fiscal
2008/09 and is being continued, has already had a positive
impact: the accident rate has been reduced by over 50%.
For Voith, industrial safety is not just a matter of preventing accidents. It is proof of the company’s excellence as amanufacturer.

VII. Events after the
Balance Sheet Date
Products: Contributing to environmentally friendly
business practices

No significant events have occurred since the end of fiscal
2009/10. VIII.

Many Voith technologies—such as hydro power plants,
systems for local public transport, drive systems for windturbines and wastewater treatment plants—already play
an important part in making business more environmentally friendly and helping to conserve resources. In close
collaboration with its customers, Voith develops extensive
modernization and servicing models to ensure that installedsystems stay leading-edge throughout their entire life cycle—
in some cases 30 or 40 years or more. In addition, Voith
actively seeks dialog with all relevant stakeholders in thecontext of numerous associations and initiatives. Wherever
possible, the Group gives its practical backing to the further
development of environmental standards and sustainability
criteria. Voith Hydro, for example, does this in its capacity asa member of the International Hydropower Association (IHA).
Recycling: Environmental protection with added value
for customers
In recent years, the concept of recycling has become
increasingly important in the context of long-lasting capital
goods, too—the market in which Voith primarily operates.
Voith has therefore begun to carry out life cycle analyses for
its products and to subject its product range to a comprehensive analysis. It is working to close material life cycles,
both large and small, inside and outside the company. This
begins in the planning phase with the selection of materials
and the design, it extends to waste avoidance and the reuseof recyclable materials in the production process, and it
culminates with proper disposal when products reach theend of their life cycle.

Management Report95

VIII. Report on Risks and Opportunities
VIII.1. Risks
VIII.1.1. Risk and Quality Management
Focus on increasing the value of the company
Entrepreneurial activity includes making decisions under conditions of uncertainty. As a global enterprise, Voith is exposed
to many and varied risks. To guard the Group against risks
that could threaten its survival and/or that of its companies,
it operates a consistent and binding Group-wide system ofrisk and quality management. Existential threats are definedas aggregate risk potential that threatens more than 50% of
equity or more than 10% of sales. All the elements of risk
management have been brought together as part of a risk
management system. This is geared to increase the value of
the Group and its companies by reducing risk potentials andtheir probability of occurrence. At the same time, the system
is also intended to produce a state of equilibrium between
correctly assessed risks and the exploitation of opportunities. Risk and quality management are linked together andintegrated as part of a comprehensive internal controllingsystem.
Distributed nature of the risk management system
The Voith Group operates a distributed risk management
system. Responsibility is assigned in a way that accommodates the varying risk profiles that exist on all levels andin each different function.
The risk management process itself breaks down into four
steps:
Risk identification: Voith constantly monitors macroeconomic
developments, developments in specific industries andinternal business processes that could affect the situation of
the Group. A catalog of risks helps management to identify
individual risks.

96

Voith Annual Report 2009/2010

Risk analysis and assessment: The risks thus identified areassessed in terms of the potential damage they could do
and the probability—expressed as a percentage—that they
will be realized. Wherever possible, the scope of potential
damage is quantified as a cost factor. Worst-case scenarios
are assumed and their impact on the Group’s financial situation is examined.
Risk control: Analysis and assessment of the identified
risks gives Voith’s management the data it needs to decide
whether risks can be avoided, reduced by suitable actions
or distributed by signing appropriate agreements, or whether
they have to be accepted and contained by means of optimized processes and controls.
Risk monitoring and reporting: A multitiered set of controlling and reporting tools helps the Board of Management toanalyze risks and take well-founded decisions.
Risks are divided into two groups—Group risks and risks toperformance. Voith classifies risks to the Group as externalrisks, management risks, financial risks and infrastructurerisks. Risks to performance are regarded by Voith as contractual risks and technical risks.
VIII.1.2. Risks to the Group
External risks
In the autumn of 2010 emerging countries and Westernindustrial nations are again experiencing an upswing, if at
different paces. The planning of the Voith Group for fiscal
2010/11 and 2011/12 is based on the assumption thatthe recession has now passed. Despite a basically positive
economic outlook, Voith nonetheless perceives risks forthe recovery of the global economy, in particular the highlevel of public debt in the Western countries and the heavy
dependence of the global upswing on economic growthin China. Voith has a diversified portfolio in terms of bothcontent and regions and also boasts healthy finances and astable liquidity position and consequently believes it is wellplaced to master the opportunities attendant on an upswing
as well as the challenges of potential phases of recession.
In this context the Voith GmbH Board of Management willcontinue to respond swiftly and decisively to changing market conditions in the future.
Management risks
Voith has developed and operates a reliable reporting systemthat also encompasses its risk and quality management
systems. Group accounting plays a pivotal role in this system
and was migrated to International Financial Reporting Standards (IFRS) in fiscal 2005/06. No risks of material Groupmanagement errors are perceivable at the present time.
Liquidity and financial risks
The Group’s diversified financial structure is designed tosafeguard long-term stability. The additional liquidity derived
from further bonds issued on the capital market in August
2009 continues to function as a liquidity buffer. Additional freeand confirmed credit lines complement a liquidity position
that is sufficient at all times. This enables the Group to pursue
sustainable growth and remain flexible enough to respond tochanges in the market environment.
The investment grade rating given by Moody’s InvestorsService when the first bond was issued in 1999 was downgraded from “Baa1 negative” to “Baa2 stable” in February
2010.

In September of the fiscal year Voith liquidated assets previously held in a multi-asset portfolio. Risks are monitored by an
external advisor. The defined value-at-risk budget has been
complied with at all times. In addition, the Group still holds
what are mostly isolated direct investments. Fluctuations in
the value of these investments as a whole are recognizeddirectly in equity. Market price losses are recognized in profit
and loss only if there is objective evidence that the fair valueof an investment is sustainably or significantly impaired. The“sustainability” criterion is met if the impairment lasts longer
than 12 months. If the fair value of the investment falls morethan 30% below its cost, this is regarded as a significant
impairment. It should be noted that all investment decisions
are based on thorough analysis of fundamental data. In theevent of unusual stock price movements, existing stock
price risks are analyzed immediately and suitable actions
are taken.
To contain risks to cash flows in different currencies, definedforeign currency management procedures are applied consistently throughout the Group. As a basic rule, all Group
companies are required to hedge foreign currency items
when these occur.
Voith uses a variety of derivative financial instruments suchas forward exchange contracts and interest rate swaps
to hedge transactions. These instruments are defined anddocumented at the start of a hedging relationship in line withthe goals of corporate risk management.

Management Report97

To guard against political and economic risks associated withthe deliveries and services provided by the Group Divisions,
the Group buys commensurate insurance from government
export credit insurance agencies, from the private-sector
insurance market and from banks. The Group also maintains
adequate provisions to cover all other operating risks.
No particular liquidity or financial risks are perceivable at thepresent time. For more information, please refer to the notes
to the consolidated financial statements.
Infrastructure risks
In the field of infrastructure risks Voith identifies IT risks,
human resources risks and environmental protection risks
against which the company takes specific countermeasures.
Voith’s own Group IT unit ensures that reliable data processing services are provided from its own data center. The
IT experts at Voith manage the whole IT infrastructure forthe entire Group and also maintain the specific application
systems used by each Group Division. Redundancy is built
into the central systems in two data processing centers.
In fiscal 2009/10 a new wide area network substantially
improved the quality and integrity of connections between
locations and the Group network.
Voith competes with other international players for theservices of its highly qualified specialists and managers.
Training and development programs, international careerdevelopment prospects, performance-linked compensation systems, a family-friendly human resources policy andflexible working hours all help to keep Voith’s staff highly
motivated—a fact evidenced by the Group’s traditionally very
low fluctuation rate.

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Voith Annual Report 2009/2010

The corporate guidelines govern the behavior of employees
to avoid corruption in their business dealings with third
parties. The existing regulation was reviewed in 2009 andamended and extended as required to reflect the Group’s
strong international growth. Voith also supports all efforts
to contain and eliminate corruption worldwide and calls
for integrity in a context of fair competition. The guidelines
and values defined by the Group’s Board of Management
are clear and unambiguous. They are binding for all Voith
employees worldwide and provide clear-cut rules of behavior
toward third parties such as business partners, competitors,
political parties and government authorities. Compliance withthese principles is monitored by the Group’s Compliance
Committee.
All production processes in the Voith Group satisfy strict
corporate guidelines on quality, risk management, industrial
safety and environmental protection. An integrated management system monitors permanent compliance with theseguidelines and ensures that both production and products
consistently meet the same high quality and environmental
standards. Beginning in the current period under review,
environmental aspects and their impact are systematically
identified and evaluated for all environmentally-relevant locations as part of a uniform system of accounts with the aim ofidentifying and thereafter eliminating or minimizing risks bymeans of suitable measures.
No particular risks relating to the Group’s infrastructure areperceivable at the present time.

VIII.1.3. Risks to PerformanceContractual risks
Regular checks ensure that adequate provisions are set
aside to cover the legal risks that exist throughout the Group.
In particular, these include risks relating to warranties, liability,
contractual penalties, guarantees and the possibility of inadequate or incorrect price calculations. Liability and property
insurance in line with standard industry practice is taken out
to cover the possibility of damages and/or liability risks.
Appropriate provisions are made for special risks arisingfrom existing contracts, insofar as said risks can be reliably
quantified.

largely safeguards the supply of basic materials to Group
companies by third parties. Back-up strategies are in place incase suppliers who provide core components for the Group’sbusiness processes should default. In fiscal 2009/10, Voith
once again used every means at its disposal to containthe risks posed by cost increases. It did so by concluding
fixed-price contracts.
VIII.1.4. Overall Risk
To the best of our knowledge at the time this report went topress, there are no risks which could threaten the survival of
the Voith Group.

Technical risks
The technical risks identified by Voith are innovation-relatedrisks and sourcing risks.
Innovation-related risks are a key field of risk for a technology group like Voith. The future profitability of the company
hinges on its ability to develop marketable products andservices and use the most modern production technologies
and service processes. Voith invests large sums of money
to further improve and refine existing technologies, and toresearch and develop new products, systems and services.
With more than 10,000 patents to its name and over 400
new ones filed on average every year, Voith ranks as one of
the most innovative companies in the industries it serves.
Sourcing risks are minimized to the greatest extent possible.
Supplier selection and order management processes areagreed in writing with suppliers. Moreover, a permanentGroup-wide risk management process has been implemented to identify delivery risks and the risk of insolvency
among suppliers at an early stage. A dual sourcing policy

Management Report99

VIII.2. Opportunities
VIII.2.1. Macroeconomic Opportunities
Emerging from the recession stronger than everVoith’s product and service offerings contribute leadingedge technology that will help to solve the challenges facing
humankind in the future. Voith offers the capital goods andservices that are urgently needed to develop the economic
infrastructure in emerging countries. This portfolio includes
paper machines, hydro power plants, components for thedevelopment of local public transport and rail transport
networks, products for use in power plants, steel mills andraw materials mining, and technical services for new factories
and high-performance industries.
Voith has used the economic crisis in order to tailor both its
product and service portfolio as well as its organization tochanged post-crisis conditions. Specific structural changes
have been made in the Voith workforce which reflect thechanging importance of different markets and regions in the
global economy. New employees have been taken on andnew branches, production facilities and service centers set
up in growth regions such as Asia and Brazil in particular.
Research and development activities have been pursued with
undiminished intensity and focused on the global challenges
facing humankind and the needs of growth markets. All thesefactors have helped Voith to emerge from the economic crisis
stronger than ever and put it in a position in which it can
exploit the anticipated upswing for its own positive businessdevelopment. Even under more difficult macroeconomic
conditions, this market constellation still presents Voith with
opportunities for further profitable growth.
VIII.2.2. Strategic Opportunities
Global orientation
At Voith, internationalization is a long-standing tradition. The
company began shipping paper machines to Russia as far
back as 1897, and installed the first hydro power plant in
China in 1910. Today, Voith has in-house production facilities
and sales centers in around 50 countries in all regions of theworld. This global orientation gives the Group the chance to100

Voith Annual Report 2009/2010

participate in and contribute to dynamic business development in the world’s growth regions. Voith is becoming evenmore international in character—by establishing new andexpanding existing locations as well as by putting down evendeeper roots in the regions.
A diversified, profitability-focused portfolio
Under the umbrella of Voith GmbH the four Group Divisions
protect the Group against excessive dependence on business in specific branches of industry. At the same time, theintegration of each of the divisions in the Group as a wholeenables synergies to be used by bringing together innovative
strength and know-how. In this context, Voith endeavors—
both in the Group and in each and every Group Division—to
achieve diversified sales structures according to productgroups, customer industries and regions. Greater attention ispaid to profitability aspects as regards the strategic development of the product portfolio.
Strong innovative power
As a global provider of leading-edge technology and industrial services Voith attaches great importance to research anddevelopment. Despite adverse economic conditions, Voith
has invested over a quarter of a billion euros in R&D each of
the last three fiscal years, producing key innovations which
lay the groundwork for future business successes.
Long-term corporate development
The Voith company has been owned by the Voith family
since its inception in 1867. To this day, the core concernof the Board of Management, the Supervisory Board andthe shareholders alike is to create and expand a successfulcompany and pass it on in better shape than ever to thenext generation. Thanks to an appropriate dividend policy,
Voith has sufficient financial resources to fuel continuous,
attractive growth, the trajectory of which can be plannedover extended periods. An equity ratio of 18.8% and a stablefinancial position are the sound basis on which the Group willcontinue to develop successfully in the future.

VIII.3. Internal Control and
Risk Management System for theGroup Financial Reporting Process
Proper and reliable accounting
As a company which raises funds on the capital markets,
Voith GmbH is required by Section 315 (2), Paragraph 5
HGB to describe the key elements of its internal control andrisk management system with regard to the group financial
reporting process.
The aim of the accounting-related internal control and risk
management system is to guarantee that accounts are prepared correctly and reliably and to ensure that consolidated
and annual financial statements comply with the applicableregulations.
The following structures and processes have been implemented in the Group:
The Board of Management of Voith AG (as of October 1,
2010 the Board of Management of Voith GmbH) bears overall
responsibility for the internal control and risk management
system with regard to the group financial reporting process.
All levels of the company (companies, management companies, Voith GmbH as management holding) are integrated
through a firmly defined management and reporting organization.
Accounting is decentrally organized. Accounting entries
are recorded individually by the companies in the Group.
Assistance is obtained from external experts with regard
to the accounting treatment of complex subfields, such aspensions. The consolidated financial statements are prepared by enriching individual financial statements with further
information to create standardized reporting packages which
are then included in the consolidation system. The boardsof management of the companies issue documented declarations stating that the reporting package is complete,accurate and complies with the applicable regulations.

accounting rules are constantly adapted and notified by Voith
GmbH. The quality of the guidelines is ensured by an ongoingexchange between the responsible specialist fields.
Group-wide reconciliation of balances takes place worldwide
via an intranet-based platform. The deadlines for the different parts of the reporting package are stipulated in the
consolidation system and centrally monitored in the courseof the preparation process. All consolidation activities areundertaken centrally in Voith GmbH.
The control activities designed to ensure that consolidated
accounts are prepared properly and reliably include theanalytical review as well as processing and inspection of
key and complex business transactions by various people.
The quality of financial reporting is also ensured by regularlyreconciling planning scenarios and external accounts at alllevels of the company. Checks on system access based on
an authorization concept as well as programmed plausibility
checks in the IT systems ensure that processes are complete
and precise.
The internal audit department performs regular, independent
reviews of the functionality, correctness, reliability and efficiency of all internal control and risk management systems
in the Voith Group. Suitable measures are taken to remedy
any gaps or weaknesses which may be identified.

Uniform recognition and measurement based on the regulations for the Voith GmbH consolidated financial statements
is guaranteed by Group accounting guidelines. Changed

Management Report101IX. Forecast Report
IX.1. Business Environment
Global economy continues to recoverMarkets on upwards trend

Economists agree that the worldwide recession had come toan end by the autumn of 2010. While many emerging countries have now matched or even exceeded the productionlevels which they had prior to the crisis, overall production inmost Western industrial nations is well below pre-crisis levels.
Economic forecasters predict sustained, if perhaps somewhat
slower, economic recovery throughout 2010 and 2011. The
International Monetary Fund (IMF) predicts global economic
growth in 2011 of 4.2%—down from 4.8% in 2010.

Voith expects almost all the markets it currently serves tocontinue to grow over the next two fiscal years. This applies
in particular to industries which respond very quickly to shifting economic cycles—paper, raw materials, transportation
and automotive engineering. To some extent, it also applies
to industries which respond somewhat more sluggishly—energy, oil and gas. It is only the hydro power segment of
the energy market which has not yet been swept along by
the upswing.

The main engine of growth will continue to be the BRIC countries, which remain an important source of consumption andinvestment. The IMF forecasts 9.6% growth for China, forexample, and 8.4% growth for India. Russia is expected to
grow 4.3% and Brazil 4.1%. The IMF forecasts much lower
rates of growth—2.2%—in the Western industrialized nations.
The eurozone continues to suffer from high rates of unemployment and high levels of public debt in many countries and,according to the IMF, will grow by just 1.5%. Germany issomething of a special case owing to its strong export base,and its gross domestic product is forecast to grow by 3.3%.
With growth of 1.5%, Japan is expected to match the eurozone. Recent forecasts have adjusted the predicted growth of
the world’s largest economy, the USA, downwards. The US
economy is now expected to grow by 2.3% in 2011.

Expanding global production has injected a modicum offresh growth into the market for raw materials. However,investing activities in this industry are unlikely to return to theirpre-crisis level in fiscal 2010/11 and 2011/12.

This positive outlook is marred by several risks—primarily
high rates of unemployment, public debt and fragile banking
systems. While most economists harbor some doubts about
the pace of economic recovery, a potential relapse into recession is not regarded as probable.

The situation in the energy market is much more varied.
There has been a renewed emphasis on the generationof power from thermal energy sources since the spring of2010. The renewable energy sector is divided: while windand solar energy continue to grow, Voith assumes that thehydro power segment—which tends to lag behind cyclicaldevelopments—will not be able to recover its high pre-crisis
volumes in the next two years.

Overall growth on the paper market is characterized bysubstantial regional differences: Europe and America willprobably experience moderate growth, primarily from investments designed to boost productivity, while high rates ofgrowth are also anticipated in Asia and China in particular.
The transport and automotive market has managed theturnaround. All the segments which are relevant for Voith
are expected to develop positively over the next two years.
The market for rail vehicles is growing as strongly as ever,particularly in Asia.

Expanding industrial production is stoking demand for oil andgas. More stringent safety regulations and investments inthe new plant needed to extract oil and gas from less easily
accessible sources will probably result in more intensive
investing activities in the industry.

102

Voith Annual Report 2009/2010

IX.2. Future Development of the Company
Group Divisions growing at different rates
Based on the assumption that the recession is now over,
Voith assumes that all four Group Divisions will be able toincrease or at least maintain their sales at a stable level infiscal 2010/11 and 2011/12. All four Group Divisions willprobably also report improved earnings.
Voith Hydro’s full order books will ensure positive sales
figures in the fiscal years ahead. More new orders are also
expected to come in during both fiscal years, although they
are not expected to match levels during the boom years of
2007/08 and 2008/09. The implementation of planning figures depends critically on the actual realization of announced
major projects. Voith Hydro sees the greatest potential in
Brazil, China and India where plans exist for several, in somecases very large, hydro power projects. In North America,
plans are afoot for modernization projects and new plants,
including pumped-storage power plants in particular, which
will reflect the trend towards increasing use of renewableforms of energy. The medium-term outlook for Voith Hydro isalso positive. Bearing in mind its production, regulatory andstabilizing capacity for networks, hydro power will continue
to play a prominent role in the energy mix of the future. Voith
Hydro is going to work hard to ensure that it secures anappropriate slice of this attractive market.
Voith Industrial Services predicts moderate growth in fiscal 2010/11 based on individual customer industries andregions. The Group Division anticipates a very positive order
position in the process industries as well as in the regions ofAsia, Brazil and the Middle East. The newly founded subsidiaries in India and Qatar will also play a role in exploiting the
growth opportunities in these regions. Robust growth in thesecond planning year is expected to benefit all Group Divisions. Planning is based on the assumption that the relevantmarkets continue to recover, albeit to different extents.

Although it will struggle with rising raw material and energy
prices, the paper industry will probably benefit from a stable
upswing in the years ahead. Given the rapid recovery in
the number of incoming orders, Voith Paper expects sales
to be higher again over the next two years than during theyear under review. As some customer projects which wereoriginally planned for fiscal 2010/11 were brought forwardin the year under review, Voith Paper now forecasts fewer
incoming orders during the first planning year than during
the year under review. More orders are then expected to bereceived during fiscal 2011/12. The regions of China, India
and South America, where paper is increasingly in demand
from a growing middle class, will again be the largest sourceof growth. Fiber supplies, energy and water consumption
will all prove key challenges for papermakers. With its environmentally friendly solutions, Voith Paper regards itself as
excellently positioned in this extremely competitive market
and believes it has good chances in the medium term for its
technology solutions.
Voith Turbo anticipates a rise in sales in fiscal 2010/11 and2011/12. There will probably be a slight increase in the number of incoming orders in fiscal 2010/11 and a substantial
rise in the reporting period 2011/12. The Industry division
expects stable development while the other three divisions,
Rail, Road and Marine, anticipate considerable expansion.
The Asian region, and China in particular, will continue tobe the main engine of growth for the Rail division. However,other countries, too, are planning new high-speed rail links,
such as the USA, Brazil, Turkey and Poland. Voith expects themarket for commercial vehicles served by the Road division
to develop positively, whereby in this context China is theworld’s most important truck market. Despite the underlying
upwards trend in local public transport, there is a danger
that the economic crisis could have a negative impact on
procurement owing to the parlous state of local ­government

Management Report103finances in Western Europe, for example. Voith Turbo’s hybrid
drive systems for buses are the company’s response to theincreasingly emphatic demand for environmentally friendly
inner cities. The Marine division believes that wind power
and offshore application segments offer long-term potential
for growth.
Profitable growth in the Group
Voith’s order books were full at the end of the period underreview, and based on this fact along with the steady flow of
new orders received for fiscal 2010/11 and a sharp increasein new orders anticipated in 2011/12, Voith expects consolidated sales to go up in fiscal 2010/11 and 2011/12. Thanks
to an improved product mix and efficiency gains Voith looks
forward to even better results for the planning period ahead,
both in terms of profits from its operations and its net income.

104

Voith Annual Report 2009/2010

Voith has a future-proof portfolio, sufficient liquidity, an efficient organization and an outstanding workforce. All of whichmeans that Voith is very well equipped to meet the challenges ahead. Forecasts are always subject to considerable
uncertainty. A whole series of macroeconomic and industryspecific factors can impinge on and influence, positively or
negatively, the corporate planning of individual divisions or
the entire Group. Voith will continue to adapt itself quickly andflexibly to changing economic conditions. The aim of Voith
GmbH’s Board of Management is to keep the company on asecure footing for the long term and to actively steer it out of
this challenging first decade of the 21st century.

Corporate Governance Report

On September 13, 2010 and October 4, 2010, the Board ofManagement and the Supervisory Board submitted a statement of compliance pursuant to Section 161 of the German
Stock Corporation Law for fiscal 2009/10, explicitly drawing
attention to a small number of deviations. This statement ofcompliance has been made available to Voith’s shareholders.
The deviations are due to provisions that are either not
required (e.g. Items 3.10 Sentences from 2, 5.3.3, 6.1 through6.8) or do not seem appropriate to an unlisted, family-owned
business such as Voith (e.g. Items 3.8, Paragraph 2, 4.2.2,
4.2.4, 4.2.5, 5.4.6 and 7.1.1).

Corporate Governance

105

106

Voith Annual Report 2009/2010

Financial Statementof Voith AG*

108

Consolidated Statement of Income

109

Consolidated Statement of Comprehensive Income

110

Consolidated Balance Sheet

112

Statement of Changes in Equity

114

Consolidated Cash Flow Statement

115

Notes to the Consolidated Financial Statements

138

Notes to the Consolidated Statement of Income

142

Notes to the Consolidated Balance Sheet

163

Notes to the Consolidated Cash Flow Statement

164

Notes to the Segment Report169

Other Information

188

Responsibility Statement

189

The Voith Group and Its Shareholdings

Financial Statement

Pages 107–195*Voith GmbH since October 1, 2010.
Financial Statement107Consolidated Statement of Income
for the period from October 1, 2009, through to September 30, 2010
€ in thousands

Notes

2009/10

2008/09*

Sales

(1)

5 197 606

5 084 937

Changes in inventories and other capitalized costs(2)(4 591)(5 318)5 193 015

5 079 619

Total output

Other operating income(3)

328 868

356 974

Cost of material(4)(2 080 888)

(2 131 698)

Personnel expenses(5)(1 851 461)

(1 767 960)

(162 927)(151 279)(6)(1 073 586)

(1 062 041)

353 021323 615(13 277)(97 624)

339 744225 991

Share of profits from associates

4 219

1 652

Interest Income

34 53527 797(105 167)(82 721)(39 318)(17 772)

234 013

154 947(112 545)(78 017)

Net income

121 468

76 930Net income attributable to shareholders of parent company

100 053

62 818Net income attributable to holders of non-controlling interests

21 41514 112

Depreciation
Other operating expenses

Operational result before non-recurring result

Non-recurring result(7)

Operational result

Interest expenses
Other financial result(8)

Income before taxes

Income taxes*Data for the previous year adjusted (refer to “Adjustments to data for previous years”).
108

Voith Annual Report 2009/2010(9)

Consolidated Statement ofComprehensive Income
for the period from October 1, 2009, through to September 30, 2010
€ in thousands

2009/10

2008/09*

Net income

121 468

76 930Gains/(losses) on available-for-sale financial assets

24 36840 582

Gains/(losses) on cash flow hedges(5 619)(6 637)

Gains/(losses) on currency translation

55 12515 907

Gains/(losses) on net investments in foreign operations

12 288(17 415)

(979)

7 600

Other comprehensive income

85 18340 037

Total comprehensive income

206 651

116 967

Attributable to shareholders of the parent company

177 949

102 585

Attributable to holders of non-controlling interests

28 70214 382206 651

116 967

Tax on items recognized directly in equity

Of which:*Data for the previous year adjusted (refer to “Adjustments to data for previous years”).
Financial Statement

109Consolidated Balance Sheetas at September 30, 2010
Assets€ in thousands

Notes

2010-09-30

2009-09-30*

2008-10-01*

A. Non-current assets
I.

Intangible assets(10)

702 744702 198

676 165

II.

Property, plant and equipment(11)

1 155 131

1 059 054

977 118

III. Investments in associates(12)

20 81117 20814 643

IV. Investments in securities(16)

173 198

187 911

13 552V.

(12)

32 48429 24835 085

VI. Other receivables and assets(15)

167 189

134 544

125 495

VII. Deferred tax assets(9)

156 256130 062

122 496

2 407 813

2 260 225

1 964 554

Other financial assets

Total non-current assets

B. Current assets
I.

Inventories(13)

784 051

833 106

924 079

II.

Trade receivables(14)

1 139 697

929 567

1 104 428

III. Marketable securities(16)

41 401106 702215 959

81 15359 52752 581(15)

270 860

229 231306 443(17)

1 175 359

923 127539 641

3 492 521

3 081 260

3 143 131

1 447

0

6 700

Total current assets

3 493 968

3 081 260

3 149 831

Total assets

5 901 781

5 341 485

5 114 385

IV. Income tax assets
V.

Other receivables and assets

VI. Cash and cash equivalents

VII. Held-for-sale assets(18)*Data for the previous year adjusted (refer to “Adjustments to data for previous years”).
110

Voith Annual Report 2009/2010

Equity and Liabilities€ in thousands

Notes

2010-09-30

2009-09-30*

2008-10-01*

A. Equity
I.

Issued capital

120 000

120 000

120 000

II.

Revenue reserves

810 467

737 263695 062

III. Other reserves

60 601(17 295)(57 062)

IV. Profit participation rights

6 600

6 600

0

Equity attributable to shareholdersof the parent company

997 668846 568

758 000

V.

76 80076 80076 800

VI. Other interests

Profit participation rights

32 78826 84223 407

Equity attributable to holders
of non-controlling interests

109 588

103 642100 207(19)

1 107 256950 210858 207

Total equity

B. Non-current liabilities
I.

Accrued pension liabilities and similar obligations(20)

408 991404 662404 255

II.

Other provisions(21)

163 979

151 903136 871

4 660

3 393

3 495

III. Income tax liabilities
IV. Financial liabilities(22)

1 180 325

1 284 736

832 371

V.

Other liabilities(23)

122 556

118 074

145 358

VI. Deferred tax liabilities(9)

134 599

112 188

122 630

2 015 110

2 074 956

1 644 980

Total non-current liabilities

C. Current liabilities
I.

Accrued pension liabilities and similar obligations(20)

25 83924 931

11 532II.

Other provisions(21)

336 130

341 986

290 109

94 78377 671101 755

III. Income tax liabilities
IV. Financial liabilities(22)

296 397

117 287

182 887V.

(23)

525 481425 284504 275(23)

1 500 785

1 329 160

1 520 640

Total current liabilities

2 779 415

2 316 319

2 611 198

Total equity and liabilities

5 901 781

5 341 485

5 114 385

Trade accounts payable

VI. Other liabilities*Data for the previous year adjusted (refer to “Adjustments to data for previous years”).
Financial Statement

111

Statement of Changes in Equity
Equity attributable
to shareholders of the parent company€ in thousands
2009-10-01

Issued capital

Revenue
reserves

Available-for-salefinancial assets

Cash flow
hedgesCurrencytranslation

120 000

737 263(442)(1 565)884

24 606(3 969)48 54524 606(3 969)48 54524 164(5 534)49 429Net income

100 053

Other comprehensive income
Total comprehensive income

100 053

Allocation of reservesto profit participation rights(4 405)Acquisition of non-controlling interests(10 439)

Share of income attributable to profit
participation rights
Dividends(9 949)Contributions from holders
of non-controlling interests
Non-controlling interests—put options(1 752)Other adjustments
2010-09-30(304)
120 000

810 467

Equity attributable
to shareholders of the parent company€ in thousands
2008-10-01

Issued capital

Revenue
reserves

Available-for-salefinancial assets

Cash flow
hedgesCurrencytranslation

120 000

698 567(42 683)

3 602(13 280)

Adjustment in accordance with IAS 8
2008-10-01 (adjusted)*(3 505)120 000

Net income

695 06225(42 683)

3 602(13 255)

42 241(5 167)14 13942 241(5 167)14 139(442)(1 565)884

62 818Other comprehensive income
Total comprehensive income

62 818

Allocation of reservesto profit participation rights(4 225)Acquisition of non-controlling interests
Issue of profit participation rights
Share of income attributable to profit
participation rights
Dividends(18 089)

Contributions from holders
of non-controlling interests
Non-controlling interests—put options
Other adjustments
2009-09-30

1 697
120 000

737 263*Data for the previous year adjusted (refer to “Adjustments to data for previous years”).
112

Voith Annual Report 2009/2010

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

Profit participation rights

Total

Profit participation rights

Other interests

Total

Total equity(16 172)6 600

846 568

76 80026 842103 642950 210100 053

21 415

21 415

121 468

8 714

77 896

7 287

7 287

85 1838 714

177 949

28 70228 702206 6514 224

0(1 544)(11 983)(4 224)(4 405)(10 476)(10 476)(20 425)

505

505

505

181

(4 224)4 224(10 439)
(181)

(181)

(1 544)(4 224)(9 949)(7 458)6 600(1 752)(9 299)(9 299)(11 051)(304)(1 942)(1 942)(2 246)32 788109 588

1 107 256

Other interests

Total

Total equity

23 40723 407861 687

76 800(3 480)23 407100 207858 207997 668

76 800Equity attributable to holders
of non-controlling interests
Net investments inforeign operations

Profit participation rights

Total(4 726)76 800838 280(76 800)(80 280)

76 800758 000

76 800(4 726)

Profit participation rights

62 81814 11214 11276 930(11 446)

39 767270

270

40 037(11 446)

102 585

14 38214 382116 967

4 225

0(20 687)(20 687)(4 225)

4 225(20 687)

6 600

6 600

6 600
(4 225)(18 089)

1 697(16 172)6 600

846 568

76 800(4 225)(4 225)(11 700)(11 700)(29 789)

4 415

4 415

4 415

19 98419 98419 984(2 959)(2 959)(1 262)26 842103 642950 210

Financial Statement113Consolidated Cash Flow Statement€ in thousands

2009/10

2008/09*

Income before tax

234 013

154 947

Depreciation

205 551

174 016

Interest result

70 63254 924

Other non-cash items

9 999(3 552)

Result from the disposal of property, plant, equipment and intangible assets(2 077)

1 225

Income from investments(2 343)(1 127)

Changes in provisions and accruals(20 981)45 208Change in net working capital

38 49235 302

Interest payments(74 695)(56 492)

Interest received

33 87225 222

Dividends received

5 252

1 267

Tax payments(107 654)(127 293)

Cash flow from operating activities

390 061

303 647

Investments in property, plant, equipment and intangible assets(233 417)(253 695)

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

18 05917 585Investments in financial assets(8 945)(5 593)(117)(8 009)0(1 508)Subsequent payments on purchasing price of previous acquisitions
Acquisition of subsidiaries
Proceeds from the disposal of financial assets

2 215

956

Changes in investments in securities

63 143(35 517)

Cash flow from investing activities(159 062)(285 781)

Dividend payments(24 830)(34 014)

Contributions from holders of non-controlling interests

505

4 415

(15 292)(58 995)

0

6 600

New bonds, bank loans and overdrafts

49 675692 900

Repayment of bonds, bank loans and overdrafts(8 586)(298 263)

Changes in financial receivables and financial liabilities(33 804)

39 262Acquisition of non-controlling interests
Other changes in equity

Cash flow from financing activities(32 332)

351 905

Total cash flow

198 667

369 771

Exchange rate movements, valuation changes and changes in Group structure

53 565

13 715

Cash and cash equivalents at the beginning of the period

923 127539 641

Cash and cash equivalents at the end of the period

1 175 359

923 127*Data for the previous year adjusted (refer to “Adjustments to data for previous years”).

For more information, refer to the “Notes to the Consolidated Cash Flow Statement”.

114

Voith Annual Report 2009/2010

Notes to the Consolidated Financial Statements
for Fiscal 2009/10
General Information

Consolidated GroupThe legal form of Voith AG changed as of October 1, 2010
to Voith GmbH. Voith GmbH continues to operate as acompany which raises funds on the capital markets fromits headquarters at St. Pöltener Str. 43, Heidenheim/Brenz,
Germany, and is required by Sections 290 and 315a of
the German Commercial Code (HGB) to prepare consolidated financial statements. The company is entered in theCommercial Register (under the number HRB 725621) at
the Registration Court in Ulm, Germany. The consolidated
financial statements are filed with the electronic version of
the Federal German Gazette.

The Voith Group is divided into four Group Divisions: Voith
Hydro, Voith Industrial Services, Voith Paper and Voith Turbo.
Details of the business activities pursued by the Group Divisions are provided in the explanatory notes to the segment
report.

The Board of Management of Voith GmbH released theconsolidated financial statements for presentation to theSupervisory Board on November 22, 2010.
Pursuant to EU Regulation (EC) No. 1606/2002 in conjunction
with Section 315a of the German Commercial Code (HGB),the consolidated financial statements of Voith AG for fiscal
2009/10 were prepared in accordance with International
Financial Reporting Standards (IFRS) and the interpretationsof the International Financial Reporting Interpretations Committee (IFRIC). This Regulation compels all companies thatparticipate in the capital markets (i.e. whose issued debt istraded on a regulated market in an EU member country) andare domiciled in the EU to prepare their consolidated financial
statements solely on the basis of IFRS as endorsed by the
EU. The term IFRS also includes the current valid International
Accounting Standards (IAS). All binding pronouncements
made by the International Accounting Standards Board(IASB) have been taken into account, as have the additional
stipulations required in accordance with Section 315a HGB.

In addition to those companies acting as holding companies,
the 2009/10 consolidated financial statements also include
all the Group’s major manufacturing, service and marketingcompanies both in Germany and abroad as at September
30 in each fiscal year. Consistent accounting and valuation
policies are used to prepare the separate financial statements
for subsidiary companies as applied for the parent company
at each balance sheet date.
Subsidiaries are consolidated at the time when the Voith
Group acquires control over them. Their inclusion in the
consolidated financial statements ends when the parent
company no longer controls these companies. In two cases,
Voith exercises control as defined in IAS 27 owing to a majority of voting rights in the relevant decision-making bodies.
In one case, while Voith has a majority shareholding it does
not control the company as shareholders and employees areequally represented in the decision-making bodies.

The reporting currency for the consolidated financial statements is the euro. Except where explicitly stated otherwise,
all amounts are stated in thousands of euros.
In the balance sheet, assets and liabilities are stated either
as current or non-current items in line with their maturity.
Assets and liabilities that will be realized or will mature within
12 months after the end of the period under review areclassed as current. Inventories and trade accounts receivableand payable are always classed as current items. The Consolidated Statement of Income was prepared in accordancewith the “total cost” method.

Financial Statement

115

The following companies are included in the consolidated
financial statements:
2010-09-30 2009-09-30
Voith AG and its fully consolidated
subsidiaries:
Germany75

82

Abroad148

170

Total fully consolidated companies

223

252

VIEH	Voith Industrial Services Process GmbH & Co. KG,
Stuttgart
VIGG	Voith Industrial Services Grundstücks GmbH & Co. KG,
Stuttgart
VIME 	Voith Industrial Services Mechanical Engineering
GmbH & Co. KG, Stuttgart
VIPH 	Voith Industrial Services Paper GmbH & Co. KG,
Heidenheim
VIPS 	DIW Instandhaltung GmbH & Co. KG, Heidenheim
VISD 	DIW Gastro GmbH & Co. KG, Dingolfing
(previously Spüldienste Niederbayern GmbH & Co. KG, Dingolfing)

Associates accounted for using theequity method:
Germany43

Abroad1212Total of associates accounted forusing the equity method

16

15

The main companies consolidated for the first time in the fiscal year under review are Voith Paper Fabric & Roll Systems
GmbH, Heidenheim, and Voith Middle East FZE, Dubai,
United Arab Emirates. The reduction in the number of fully
consolidated companies is due to the fact that several companies were merged during the reporting period.
An exhaustive German-language list of the companies andother investments included in the consolidated financial
statements has been filed as a section of the consolidated
financial statements with the electronic version of the Federal
German Gazette.
Companies in which Voith GmbH has the opportunity directly
or indirectly to exercise a significant influence on financial andoperating policy decisions (associated companies) are measured using the equity method. The development company
Schloßberg GmbH & Co. KG, Heidenheim, in which Voith
holds a 28.96% stake, was included for the first time in the
period under review.
Pursuant to Section 264b HGB, the following limited partnerships are not required to prepare annual financial statements
subject to the regulations valid for incorporated firms:

116

Voith Annual Report 2009/2010

VISK 	Voith Industrial Services Energy GmbH & Co. KG,
Stuttgart
VISN	Voith Industrial Services Indumont GmbH & Co. KG,
Wesseling
VIST 	DIW Instandhaltung Ltd. & Co. KG, Stuttgart
VIZ	Voith Industrial Services Holding GmbH & Co. KG,
Heidenheim
VPAH 	Voith Paper Automation GmbH & Co. KG,
Heidenheim
VPES	Voith Paper Environmental Solutions GmbH & Co. KG,
Ravensburg
VPFZ 	Voith Paper Fabrics GmbH & Co. KG, Heidenheim
VPH 	Voith Paper GmbH & Co. KG, Heidenheim
VPLB 	Voith Paper Air Systems GmbH & Co. KG, Bayreuth
VPMG 	Voith Paper Krieger GmbH & Co. KG,
Mönchengladbach
VPR 	Voith Paper Fiber & Environmental Solutions
GmbH & Co. KG, Ravensburg
VPRR 	Voith Paper Rolls GmbH & Co. KG, Heidenheim
VPWE 	Voith Paper Rolls GmbH & Co. KG, Weissenborn
VPZ	Voith Paper Holding GmbH & Co. KG, Heidenheim
VHH 	Voith Hydro GmbH & Co. KG, Heidenheim
VHHC	Voith Hydro Ocean Current Technologies
GmbH & Co. KG, Heidenheim
VHZ 	Voith Hydro Holding GmbH & Co. KG, Heidenheim
VTA 	Voith Turbo GmbH & Co. KG, Heidenheim
VTBH	Voith Turbo BHS Getriebe Holding GmbH & Co. KG,
Sonthofen
VTGO	Voith Turbo Aufladungssysteme GmbH & Co. KG,
Gommern
VTHL 	Voith Turbo H+L Hydraulic GmbH & Co. KG,
Rutesheim
VTKH	Voith Turbo Hochelastische KupplungenGmbH & Co. KG, EssenVTLH	Voith Turbo Lokomotivtechnik GmbH & Co. KG,
Heidenheim
VTRH 	Voith Turbo Advanced Propeller Technologies
GmbH & Co. KG, Rostock	(previously AIR Fertigung-Technologie GmbH & Co. KG, Rostock)

VTSH 	Voith Turbo Schneider Propulsion GmbH & Co. KG,
Heidenheim
VTSK 	Voith Turbo Scharfenberg GmbH & Co. KG, Salzgitter
VTWH	Voith Turbo Wind GmbH & Co. KG, Heidenheim
VTZS	Voith Turbo Verdichtersysteme GmbH & Co. KG,
Zschopau
VOGG 	Voith Grundstücksverwaltungs GbR, Heidenheim
VOM 	Voith Materials Holding GmbH & Co. KG, Heidenheim
VOMH 	Voith Materials GmbH & Co. KG, Heidenheim
VZB 	J.M. Voith GmbH & Co. Beteiligungen KG,
Heidenheim
Since they are included in the consolidated financial statements of Voith AG, the following incorporated firms are notrequired to comply with regular preparation, auditing anddisclosure obligations insofar as the conditions defined in
Section 264 (3) HGB (reporting duties) are met.
VIH 	Voith Industrial Services Mechanical EngineeringGmbH, Heidenheim	(previously Voith Dienstleistungen GmbH, Heidenheim)

VOFS	Voith Financial Services GmbH, Heidenheim
VOFZ	Voith Finance GmbH, Heidenheim
VOHA	Voith Assekuranz Vermittlung GmbH, Heidenheim
VOHB 	Voith Dienstleistungsbeteiligungen GmbH,
Heidenheim
VOIS 	Voith IT Solutions GmbH, Heidenheim
Pursuant to Section 264b Paragraph 3 HGB and Section
264 (3) Paragraph 4 HGB, a copy of the consolidated financial statements of Voith AG is filed with the electronic versionof the Federal German Gazette.
In addition to the companies listed above, the following
significant companies are also included in the consolidated
financial statements:
VPFS	Voith Paper Fabric & Roll Systems Inc.,
Wilson (NC)/USA
VPA	Voith Paper Inc., Appleton (WI)/USA
VPIT	Voith IHI Paper Technology Co., Ltd., Tokyo/Japan
VPP	Voith Paper Máquinas e Equipamentos Ltda.,
São Paulo (SP)/Brazil

VPS	Voith Paper GmbH, St. Pölten/Austria
VPSO	Voith Paper S.r.L., Schio (Vicenza)/Italy
VHFK	Voith Fuji Hydro K. K., Kawasaki-shi/Japan
VHP 	Voith Hydro Ltda., São Paulo (SP)/Brazil
VHPO	Voith Hydro GmbH & Co KG, St. Pölten/AustriaVHS	Voith Hydro Shanghai Ltd., Shanghai/China
VHY	Voith Hydro Inc., York (PA)/USA
VTI	Voith Turbo, Inc., York (PA)/USA
VICU	Premier Manufacturing Support Services Inc.,
Cincinnati (OH)/USA
VIKI	Hörmann Industrietechnik GmbH, Kirchseeon
VIW	DIW Instandhaltung GmbH, Vienna/Austria
VIWA	Premier Manufacturing Support Services (UK) Ltd.,
Warwick/United Kingdom
Business combinations in fiscal 2008/09
In fiscal 2008/09, Voith Canada Inc. acquired a 100% stakein PremiAir Technology Inc., Hamilton, Canada, effective
October 1, 2008. In fiscal 2008/09, PremiAir Technology,
Inc. contributed sales totaling €2.8 million and a net loss of€0.5 million to the Voith Group’s consolidated statement ofincome.
Retroactive payments totaling €117 000 were made foracquisitions effected in the previous year.
Business combinations in fiscal 2009/10
There were no business combinations in fiscal 2009/10.
In relation to business combinations in previous years,
expenses of €4 995 thousand (previous year: €5 757 thousand) were recognized in the fiscal year under review for
write-downs on assets revealed in the context of purchaseprice allocation.
Acquisition of further shareholdings in interests with
control already in place in fiscal 2009/10
In fiscal 2009/10, further shareholdings were acquired ininterests with control already in place. The purchase prices
totaled €15 292 thousand and resulted in a change in theGroup’s equity of minus €11 983 thousand.

Financial Statement

117Principles of Consolidation
For the purposes of capital consolidation and in accordancewith the acquisition method prescribed by IFRS 3 (revised)
the consideration paid to the selling entity plus the noncontrolling interests and the fair value of the previously held
equity interests in the acquired company is offset against thebalance of the fair value of the acquired assets and liabilities
at the time the interest is acquired. Any excess of cost overthe carrying amount is capitalized as goodwill. Excessesof the carrying amount over cost are recognized in profit
and loss.
Agreed contingent consideration is recognized at the time ofacquisition at fair value. In compliance with IAS 39, subsequent changes in the fair value of contingent consideration
which represent an asset or liability are recognized in profit orloss or other results. Contingent consideration which is classified as equity is not remeasured and its later compensationis shown in equity.
The effects of subsequent purchases of interests wherecontrol already exists as well as the sale of interests without
loss of control are to be recorded directly in equity as of
fiscal 2009/10.
On the subsequent acquisition of interests that lead to theGroup obtaining control or where the sale of interests leads
to the loss of control, the remaining interest in the investment
is stated at its fair value, with the revaluation effect being
recognized immediately in the Statement of Income.

118

Voith Annual Report 2009/2010

A change in the parent’s ownership interest in a subsidiarythat does not result in a loss of control is accounted for as atransaction between equity holders.
Business combinations involving companies that are under
the common control of one or more parties are presented
using the pooling of interest method. Under this method,
gains or losses on disposal are, for reasons of immateriality,
recognized in equity (in reserves). In the case of acquisitions,excesses of cost over the carrying amount and excessesof the carrying amount over cost are netted in full against
reserves.
The same accounting and valuation policies are used todetermine Voith’s stake in the shareholders’ equity of allcompanies accounted for using the equity method.
Intercompany transactions and results are eliminated.
Unrealized gains in inventories and fixed assets relating tointercompany transactions are eliminated in the consolidated statement of income. Intercompany sales and otherintercompany earnings are netted against the corresponding expenses. Deferred tax is calculated for consolidationtransactions that are recognized in profit and loss.

Foreign Currency Translation
The consolidated financial statements are prepared in euros,
Voith AG’s functional currency. Financial statements prepared by subsidiaries that use a different functional currency
are translated as follows:
Shareholders’ equity for foreign subsidiaries is translated
at historical rates. All other items on the balance sheet arenormally translated at the rates applicable as at the balance
sheet date. Goodwill arising from business combinations
before the transition to IFRS is an exception to this rule andis still translated at historical rates.
In the Consolidated Statement of Income, income andexpenses are translated at the average exchange rates.
Retained earnings and losses are translated using the relevant historical exchange rate.
Differences arising from currency translation are netted
against other reserves.

Foreign currency transactions in local financial statements
are translated at the exchange rate on the effective date of
the transactions concerned. At fiscal year-end, the resultant
monetary items are measured in the light of the exchange rate
at the balance sheet date. Any gains or losses on currencytranslation are recognized in profit and loss as unrealized
gains or losses.
Translation adjustments arising from loans denominatedin foreign currencies (where these are used to hedge net
investments in foreign business operations) are recognizedin equity until the underlying net investment is disposed of.
These translation adjustments give rise to deferred tax items
that are also recognized in equity.
In the period under review, translation of the currencies thatare of significance to the Voith Group was based on thefollowing exchange rates:

Exchange rates between the Euro and the main foreign currencies in the Voith Group:
Exchange rate
at the balance sheet date

Average rate

2010-09-30

2009-09-30

2009/10

2008/09

US Dollar

1.3655

1.46191.3612

1.3618Brazilian Real2.31522.60452.41362.8624

Pound Sterling

0.86660.91400.87200.8738

Swedish Krona

9.190910.2194

9.8353

10.5257

Norwegian Krona

7.99468.48948.12978.8282

Canadian Dollar

1.40061.56891.4293

1.5871

Australian Dollar

1.4102

1.6563

1.5165

1.8426Chinese Renminbi

9.13459.98029.27279.3262114.0629

130.9306

121.4525

130.2030

Japanese Yen

Financial Statement119Accounting and Valuation Policies
The consolidated financial statements are prepared using thehistorical cost method. The only exceptions to this rule arederivative instruments, financial instruments held for sale andassets that must be recognized at fair value in profit and loss.
All these exceptions are recognized at fair value. Acquisitions
and disposals of financial assets are always reported at thesettlement date. Available-for-sale marketable securities arerecognized on the date of regular market buying and sellingtransactions.
In accordance with IAS 27, consistent accounting and valuation policies are used to prepare the separate financial statements for the companies subsumed under the consolidated
financial statements. The main accounting and valuation
policies are listed and explained below.

Operating expenses are recognized as expenditure at thetime when a service is used or when other sales-related
expenses are incurred. Taxes on income are calculated inaccordance with taxation law in the countries in which theGroup operates.
For all categories of financial instruments recognized inaccordance with IAS 39, net gains or losses as defined in
IFRS 7 are resulting from valuation or disposal of financial
instruments. At Voith, such income and expense items mainly
consist of foreign exchange gains and losses, allowances
and income/expenses from the sale of financial instruments.
Neither current interest income and expenses nor dividend
income are included.
Intangible Assets

Income and Expenses
Sales revenue (less various cash and other discounts granted
to customers) is recognized when products or merchandise
have been delivered and/or services rendered and when
the risk of ownership has been transferred to the customer.
In the case of long-term construction contracts, sales arerecognized using the percentage-of-completion method. A
detailed explanation of this method is provided in the notes
on “Long-term construction contracts”.
Interest expenses and interest income are recognized as theyaccrue. (The effective interest rate method, i.e. the imputed
interest rate, is used to discount estimated future cash
inflows over the expected maturity of a financial instrument
to the net carrying amount of the underlying financial asset.)
Dividend income is recognized when receipt of payment
becomes a legal entitlement.

120

Voith Annual Report 2009/2010

Acquired intangible assets are capitalized at cost anddepreciated in a straight line over their anticipated useful
lives. Most of these assets are software programs that are
depreciated over a three-year period.
Internally generated intangible assets are capitalized as
development costs based on their production costs, provided that manufacture of these assets meets the recognition
criteria stated in IAS 38 and will, in particular, probably
result in future economic benefits for the Group. Production
costs include all costs that are directly attributable to thedevelopment process. These assets are depreciated in astraight line from the start of production for a defined period,
usually between three and ten years. If the requirements forcapitalization are not met, expenses are recognized in profit
and loss in the fiscal year in which they were incurred.

Unscheduled write-downs (impairments) are effected inaccordance with IAS 36 if the recoverable amount (the present value of expected future cash flows from the use of theassets concerned) or the higher net realizable value lessselling costs falls below their carrying amount. Should thereasons for impairments effected in previous periods nolonger apply, impairments are reversed.

Voith Hydro:
As things currently stand Voith Hydro does not anticipate thehigh market volumes achieved over the last three years to
be reached again in the foreseeable future. In fiscal 2010/11
sales are expected to remain relatively stable compared withfiscal 2009/10. In the long term, this Group Division expects
to see a slight increase in new orders and sales.

Borrowing costs that could be assigned directly to intangible
assets have been capitalized as part of the acquisition costs
for the first time in fiscal 2009/10.

Voith Industrial Services:
Voith Industrial Services assumes that its relevant markets
will continue to recover in the two fiscal years. Higher rates
of growth are anticipated in all regions in the medium term.
Orders received and sales are planned to be significantly
above their current level in the longer term.

Goodwill is subjected to annual impairment tests. To calculate
its value, goodwill is assigned to four cash-generating units.
In line with the management’s internal reporting practices,
these four cash-generating units are identified on the basis of
the Group’s operating activities. Voith has therefore defined
the Group Divisions Voith Hydro, Voith Industrial Services,
Voith Paper and Voith Turbo as its four cash-generating units.
At the Voith Group, goodwill is tested for impairment on
the basis of its value in use, which itself is based on current management planning data. Planning assumptions
are adapted in line with new knowledge. Key assumptions
underpinning calculations of value in use include assumptions about the trend in orders received and sales, growth
rates, extrapolated cash flow forecasts beyond the planninghorizon, and discount rates. Due account is taken of reasonable assumptions regarding macroeconomic trends andhistorical developments.
The Board of Management of Voith GmbH assumes thatmarkets will continue to recover in fiscal 2010/11. The
assumptions for the four Group Divisions outlined below are
posited on this view:

Voith Paper:
We anticipate a sustained upswing in the paper industry inthe years ahead. New orders and sales will all but match
those achieved during the pre-crisis period. Orders received
and sales are planned to grow slightly.
Voith Turbo:
Voith Turbo’s markets are expected to grow modestly during
the first fiscal year and thereafter to expand more rapidly. In
the longer term, the Group Division anticipates orders andsales to continue rising above current figures.
A small increase in margins due to efficiency gains is planned
for all Group Divisions.
Cash flow forecasts are based on the detailed financial
budget for the coming year, on the financial planning figures
for the coming two years and on well-founded top-downplanning for a two- to six-year period. Cash flows for periods
after the sixth fiscal year are extrapolated at a constantFinancial Statement121

1% growth rate. These growth rates do not exceed the­a verage long-term growth rates of the business areas inwhich the corresponding cash-generating units operate.
The discount rates are derived from a calculation of theweighted average cost of capital, which is itself based on
the financing costs of comparable competitors for each of
the cash-generating units. The discount rates applied reflect
the equity risk specific to each cash-generating unit. After-tax
interest rates of 8.6% (previous year: 6.9%) for Voith Hydro,
7.7% (previous year: 6.6%) for Voith Industrial Services,
8.4% (previous year: 7.2%) for Voith Paper and 7.8% (previous year: 6.8%) for Voith Turbo were used to calculate thepresent value of future net cash inflows. Extrapolation to thepre-tax rate that must be stated pursuant to IAS 36 results ininterest rates of 11.8% (previous year 9.3%) for Voith Hydro,
10.5% (previous year: 8.9%) for Voith Industrial Services,
11.4% (previous year: 9.4%) for Voith Paper and 10.8%(previous year: 9.3%) for Voith Turbo.
Property, Plant and Equipment
Property, plant and equipment is stated at cost less scheduled depreciation and, where necessary, impairment losses.
Production costs for internally generated property, plant andequipment include all directly attributable production costs
and an appropriate share of production overheads. Depreciation is effected in a straight line over the following useful lives:
Useful life
Buildings

40 to 50 years

Plant and machinery

4 to 15 years

Other equipment

4 to 12 years

122

Voith Annual Report 2009/2010

The recognized carrying amount of property, plant andequipment is subjected to an impairment test if unusual
events or market developments indicate that they may
be impaired. To this end, the carrying amount of an asset
or cash-generating unit is compared with its recoverable
amount, which is defined as the higher of fair value less costs
to sell and value in use. Impairment losses are reversed if
the fair value of a previously impaired asset subsequently
increases again.
Repair and maintenance costs are recognized as expenses
at the time when they are incurred. Significant renewals andimprovements are capitalized. Borrowing costs that could
be assigned to property, plant and equipment have been
capitalized as part of the acquisition costs for the first timein fiscal 2009/10.
Leased Assets
Whether an agreement represents or involves a leasedepends on the substance of the agreement and requires adecision to be made on whether fulfillment of the agreement
depends on the use of a particular asset and whether theagreement transfers the right to use the asset.
Leasing transactions that transfer substantially all risks andopportunities incidental to use of the leased property, plantor equipment to the Voith company (the lessee) are classified
as finance leases. In such cases, the lessee capitalizes theleased asset at the start of the lease period and writes it
down over the asset’s useful life. A corresponding liability
is recognized and then settled by the lease payments. Theinterest component is recognized in the interest result. Allother leases in which Voith Group companies act as thelessee are stated as operating leases. The lease paymentsfor operating leases are recognized as expenses in a straightline over the term of the lease.

Financial Assets and Marketable Securities
Shares carried under financial assets as other investments
are normally recognized at fair value. Where no active market
exists for individual companies and their fair value cannot be
determined at reasonable cost, shares are stated at cost. The
carrying amount of such assets is written down if substantial
objective evidence indicates that they are impaired.
Where the equity method is applied, associated companies are stated at the amount of equity held by the Voith
Group plus any goodwill. Changes in associated companies’
equity that are not recognized in profit and loss are likewise
recognized directly in equity in the consolidated financial
statements.
In accordance with IAS 39, loans are classified as noncurrent loans under other financial assets and are stated atamortized cost, adjusted (where necessary) for impairments
recognized in their carrying amount.
In accordance with IAS 39, distinctions between “held-fortrading”, “available-for-sale”, “held-to-maturity” and “financial
assets at fair value through profit and loss” must be madefor marketable securities that are classified as non-current orcurrent assets. Marketable securities held by the Voith Groupare normally available for sale. To a small extent, however,the Group also makes use of financial instruments that areheld for trading and marketable securities that, at initial
measurement, are recognized at fair value through profit

and loss. The latter securities are structured, non-divisible
certificates and convertible bonds that are authorized forstock market trading. Securities are also assigned to thiscategory to eliminate inconsistencies in the valuation for theaccounting of long-term employee benefits.
Where market valuations can be obtained, securities arestated at their market value. Where market valuations cannot
be obtained, they are measured using alternative methods.
Available-for-sale marketable securities are recognized separately in equity, taking due consideration of deferred taxes,
until such time as they are realized. These securities areassets that are not held for trading. Where no market value isavailable and fair value cannot be determined at reasonable
cost, marketable securities are recognized at cost.
The carrying amounts of financial assets and available-forsale securities are regularly tested for objective evidence
that they are impaired. Such evidence can take the form of
substantial financial difficulties on the part of the debtor orchanges in the technological, economic and legal environment. Objective evidence that equity instruments may be
impaired is given if their fair value drops permanently or significantly. The sustainability criterion is met if the impairment
lasts longer than 12 months. If the fair value of the investment
falls more than 30% below its cost, this is regarded as asignificant impairment. If this happens, the amounts hitherto
recognized in equity are recognized in profit and loss.

Financial Statement

123Fair Value
The fair value of financial investments for which an organizedmarket exists is determined by the listed market price atthe balance sheet date. Where no active market exists,
measurement methods are used to determine the fair value.
The methods used by Voith for this purpose aim to reflect
objective criteria as accurately as possible and to simulate
an active market. This is done, for example, by analyzing
discounted cash flows, referring to arm’s-length transactions
between knowledgeable, willing and independent partners,
and drawing on comparisons with the current fair value ofother essentially identical financial instruments.
Inventories
Raw materials and supplies, merchandise, work in progress
and finished goods are all stated under inventories at thelower of cost and net realizable value. Production costs
include both direct costs and an appropriate share of material
and production overheads and production-related depreciation that can be attributed directly to the production process.
The weighted average cost, or cost based on the first-in,
first-out (FIFO) method is capitalized in the balance sheet.
Suitable allowances are made for inventory risks arising fromthe period in stock, lower realizable values, etc. These allowances are reversed if the reasons for the initial impairment of
inventories no longer exist.
Long-Term Construction Contracts
Long-term construction contracts are recognized based on
the percentage-of-completion (PoC) method. The cost-tocost method is used to calculate the ratio of costs alreadyincurred to forecast total costs in order to determine thepercentage of completion. Realized earnings are then stated

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as sales and, after deducting customer advances, as tradeaccounts receivable. If the outcome of a construction contract cannot be forecast with any degree of certainty, it is notpossible to calculate the percentage of completion based on
project revenues and costs. In such cases, sales revenues in
the amount of costs incurred for the construction contract todate are recognized immediately as income, while the costs
incurred by the construction contract in the reporting period
are immediately recognized in full as expenses. Appropriate
provisions are formed to cover anticipated losses on suchcontracts in light of perceivable risks.
Accounts Receivable and Other Assets
Accounts receivable and other assets (with the exceptionof financial derivatives) are stated at face value or at costand are regularly tested for individual impairment. Where
objective indications of possible default exist (if the debtor
is experiencing substantial financial difficulties, if it is highly
probable that insolvency proceedings will be opened against
the debtor, if the debtor defaults on or delays interest or loan
repayments, if changes in the technological, economic orlegal environment put the contractual partner at a significant
disadvantage, if the fair value of a financial instrument falls
significantly or permanently below its cost, or if legal proceedings are opened, for example), then individual allowances are
effected in an impairment account to allow for these factors.
Where write-downs are calculated from historical default
rates on the basis of the portfolio, any decline in the volumeof receivables leads to a corresponding decline in such allowances, and vice versa. Accounts receivable that are classed
as irrecoverable are derecognized. Accounts receivable thatbear little or no interest and that have maturities of more than
one year are stated at their discounted present value.

Financial Derivatives and Hedging Relationships
Voith uses a variety of financial derivatives—such as forward
exchange contracts and interest rate swaps—to hedge
underlying transactions. Essentially, the Group applies two
policies—either the fair value hedge accounting of firm
commitments or cash flow hedge accounting—to hedge
operating business transactions.
At the inception of a hedge relationship, the Group formallydesignates and documents both the hedge relationship towhich the Group wishes to apply hedge accounting and therisk management objectives and strategy for undertaking
the hedge. The documentation includes identification of thehedging instrument, the hedged item or transaction, thenature of the risk being hedged, and how the Group willassess the hedging instrument’s effectiveness in offsetting
the exposure to changes in the hedged item’s fair value orcash flows attributable to the hedged risk. Such hedges
are expected to be highly effective in offsetting the risk ofchanges in fair value or cash flows and are assessed on an
ongoing basis to determine that they have indeed been highly
effective throughout the financial reporting periods for which
they were designated.

hedges, the carrying amount of the hedged item is adjusted
for gains and losses attributable to the risk being hedged, thederivative is remeasured at fair value, and gains and losses
from both are recognized in profit or loss.
For fair value hedges relating to items carried at amortized
cost, the adjustment to carrying amount is amortized throughprofit or loss over the remaining term to maturity.
When an unrecognized firm commitment is designated as ahedged item, the subsequent cumulative change in the fairvalue of the firm commitment attributable to the hedged risk
is recognized as an asset or liability with a corresponding
gain or loss recognized in profit or loss. Changes in the fairvalue of the hedging instrument are also recognized in profit
or loss.

Hedges that meet the strict criteria for hedge accounting are
accounted for as follows:

The Group discontinues fair value hedge accounting
if the hedging instrument expires, is sold, terminated or
exercised, or if the hedge no longer meets the criteria forhedge accounting. Any adjustment to the carrying amountof a hedged financial instrument is made using the effective
interest method to amortize it in the statement of income.
Amortization may begin as soon as an adjustment exists
and shall begin no later than when the hedged item ceases
to be adjusted for changes in its fair value attributable to therisk being hedged.

Fair value hedges
Fair value hedges are hedges of the Group’s exposure tochanges in the fair value of a recognized asset or liability oran unrecognized firm commitment that is attributable to aparticular risk and could affect profit or loss. For fair value

Cash flow hedges
Cash flow hedges are hedges of the Group’s exposure tovariability in cash flows that is attributable to a particular risk
associated with a recognized asset or liability or a highly
probable forecast transaction and could affect profit or loss.

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125

The effective portion of the gain or loss on the hedging instrument is recognized directly in equity, while the ineffective
portion is recognized in profit or loss.
Amounts initially recognized directly in equity are transferredto the statement of income when the hedged transaction
affects profit or loss, such as when hedged financial income
or financial expense is recognized or when a forecast sale orpurchase occurs. Where the hedged item is a non-financial
asset or liability, the amounts recognized in equity are transferred to the initial carrying amount of the non-financial asset
or liability.
If the forecast transaction is no longer expected to occur,amounts previously recognized directly in equity are transferred to profit or loss. If the hedging instrument expires, issold, terminated or exercised without replacement or rollover,or if the designation as a hedge is revoked, amounts previously recognized in equity remain in equity until the forecast
transaction occurs. If the related transaction is not expected
to occur, the amount is recognized in profit or loss.
Where no hedging relationship with an underlying transaction
exists (i.e. where hedge accounting does not apply), financial
derivatives are classified as held-for-trading instruments.
Changes in the fair value of these instruments are recognizedin profit and loss.
Financial derivatives with positive values are stated underother assets, those with negative values are stated underother liabilities.
A treasury tool is used to manage all external hedges.

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The same treasury tool is also used to calculate the fair valueof forward exchange contracts. The original forward rate iscompared with the forward rate calculated at the balance
sheet date. The difference is discounted to the balance sheet
date. The forward rate is calculated based on interest rates
for the two currencies determined by linear approximation on
the basis of current LIBOR rates. The fair value of options,interest rate swaps and interest rate caps is based on information supplied by banks. This information is calculatedon the basis of certain assumptions and using recognizedvaluation models (Black-Scholes and Heath-Jarrow-Morton).
Embedded Derivatives
At the time when the Group becomes party to a contract, theGroup determines whether any embedded derivatives have tobe accounted for separately from the host contract. Revaluation takes place only in the event of significant amendments
to the contractual terms where these amendments lead tosignificant changes in the cash flows that would otherwise
have resulted from the contract. Where embedded derivatives exist, they are recognized at fair value as financial assets
held for trading. Embedded financial derivatives with positive
values are stated under other assets, those with negativevalues are stated under other liabilities.
Cash and Cash Equivalents
Cash and cash equivalents include cash and checks in hand,balances in bank accounts and other cash equivalents.
Under this item, balances in bank accounts include bothdaily deposits and time deposits with fixed maturities of up
to three months.

Non-Current Assets Held for Sale

Profit Participation Rights

Non-current assets are classified as held for sale if theircarrying amount is to be recovered principally through a saletransaction rather than through continuing use. Non-current
assets held for sale are measured at the lower of their carrying amount and their fair value less costs to sell.

Pursuant to IAS 32, the conditions defined for the issue of
profit participation rights in fiscal 2006/07 and fiscal 2008/09
require these rights to be reported as a separate componentof the Group’s equity. Interest is not reported as interest
expenses, but is treated in a similar manner to a dividend
obligation.

Deferred and Current Taxes
In accordance with IAS 12, deferred tax assets and liabilities
are formed for timing differences resulting from valuation differences arising between tax reporting and reporting for IFRS
purposes. Deferred tax items are also formed for tax losses
carried forward insofar as it is reasonable to expect that they
will be realized in the near future. Deferred taxes that relate toitems recognized directly in equity are themselves recognizedin equity. Deferred taxes are calculated based on the tax
rates that, in light of the current legal position, will be or are
expected to be valid in the countries concerned at the time ofrealization. Deferred tax assets that are not likely to be realized within a foreseeable period (normally two years) or thatare not covered by deferred tax liabilities are either impaired
or not recognized at all. Deferred tax assets and deferred tax
liabilities may be netted if the Group has an enforceable legal
claim to offset actual tax refund entitlements against actual
tax liabilities, or if they concern the same tax-paying entity.
Current taxes are calculated and reported in accordance withthe tax laws and regulations valid for each company.

Accrued Pension Liabilities and Similar Obligations
Actuarial measurement of pension provisions is based on
the projected unit credit method prescribed by IAS 19. Thismethod takes into account known pensions and acquired
vested rights at the balance sheet date, as well as factors
such as expected future increases in salaries and pensions.
Defined benefit obligations are measured based on the proportion of future benefits accrued at the balance sheet date.
Measurement makes due provision for assumptions about
the future development of certain parameters that could
affect the actual future benefit amount. The 10% corridor
rule prescribed by IAS 19.92 is applied when recognizing
actuarial gains and losses in the balance sheet and in profit
and loss.
In measuring its defined benefit liability pursuant to IAS 19.54,
a company must recognize a portion of its actuarial gains
and losses as income or expenses if the net cumulative
unrecognized actuarial gains and losses at the end of theprevious reporting period exceeded the greater of:a)	10% of the present value of the defined benefit obligation
at that date (before deducting plan assets); andb) 	10% of the fair value of any plan assets at that date.

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The portion of actuarial gains and losses to be recognized isthe excess determined pursuant to IAS 19.92 divided by the
expected average remaining working lives of the employees
participating in a given plan.
In some countries, Voith is required by law or contract
to make minimum contributions into a plan. When theseamounts are not fully recoverable by the company after
payment and therefore not recognized as an asset under
IAS 19.58 (“asset ceiling”), a liability is recognized.
Other Provisions
In accordance with IAS 37, provisions are formed for allperceivable risks and obligations of uncertain timing in theamount that is likely to be realized. These provisions are
not netted against recourse claims. Provisions are formed
where the Group has present obligations in respect of third
parties resulting from past events that will probably lead to afuture outflow of resources whose amount can be estimatedreliably. Provisions for warranty claims are based on historicalclaim trends and estimated future trends. Specific provisions
are set up for known claims. Provisions for outstanding
expenses, anticipated losses on orders and other orderrelated obligations are measured based on services still tobe rendered, usually in the amount of the production costs
expected to be incurred.
Provisions that will not lead to an outflow of resources inthe subsequent period are stated at their discounted present value at fiscal year-end. The discount rate is derived
from market interest rates. The present value also includes
anticipated cost increases. If an amount set aside as a

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provision is expected to be refunded (through an insurance
claim, for example), the refunded amount is stated separately
as an asset if it is almost certain to be realized. Income fromrefunds is not netted against expenses.
Liabilities
Current liabilities are stated at their repayment amount.
Financial liabilities are measured at their amortized cost.
Amortized cost consists of the acquisition cost less repayments, issue charges and the amortization of any premium or
discount. Where liabilities serve as underlying transactions in
the context of hedging relationships, they are stated according to the fair value of the hedged risk. Gains and losses arerecognized in profit and loss.
Liabilities arising from leasing contracts that are classified
as finance leases in accordance with the criteria laid out in
IAS 17 are recognized at the present value of the minimum
lease payments at the start of the lease. Thereafter, they arestated under financial liabilities at their amortized cost. Lease
payments are split into an interest component and a repayment component. The interest component of each payment
is recognized as an expense in profit and loss.
Government Grants
Government grants are recognized if there is reasonableassurance that they will be received and if the Group complies with the conditions attached to the grants. Grants also
include low interest or interest-free government loans. Costrelated grants are recognized as income over the periods
necessary to match them with the costs for which they areintended to compensate. Cost-related grants are netted
against the costs for which they are granted.
Government grants relating to assets are recognized on thebalance sheet as deferred income, and are recognized asincome in equal annual installments over the estimated useful
lives of the related assets.
If the Group receives non-monetary government grants,
both the assets and the non-monetary grants are recorded
at face value and then recognized as income in equal annual
installments over the estimated useful lives of the assets
concerned.
Classification of Non-Controlling Interestsin Limited Partnerships and Due to Repayment Rights
and Put Options
In accordance with IAS 32, financial instruments that entitle
the holder to repayment of the capital made available to thecompany must be classified as liabilities. In companies that
operate as limited partnerships, shareholders have the right(under German law) to demand repayment of the capital they
have made available to the company. This right cannot be
excluded by the shareholders’ agreement. This provision also
extends to other comparable repayment rights of minority
shareholders with a settlement agreement. Put options create a similar obligation pursuant to IAS 32.
a) Put options
Where the right to terminate non-controlling interests exists
in the form of a put option, the corresponding portion of the
non-controlling interests is not derecognized but is treated as
a component of equity during the fiscal period. Accordingly,
a share of net income for the fiscal year is also allocated to
non-controlling interests. At every closing date, it is assumed

that the put option will be exercised; the corresponding noncontrolling interests are reclassified from equity to financial
liabilities. This financial liability is recognized in the amount of
the probable compensation obligation and measured at fairvalue. The difference between this liability and non-controllinginterests as a share of equity is treated as a transaction
between equity holders and recognized from fiscal 2009/10
as an increase or decrease in equity. Until fiscal 2008/09
transactions were regarded as an ongoing business combination and the difference stated as goodwill. By choosing toapply the transitional rule under IAS 27 these amounts wereretained in fiscal 2009/10.
b) Limited partnerships
The interests held in limited partnerships as well as noncontrolling interests with comparable termination rights aretreated in the same way as the procedure adopted for put
options. The liabilities are measured at amortized costs
taking into account the due share of net income.
If non-controlling interests in the share capital of limited
partnerships are terminated or if corresponding put options
are exercised, the financial liabilities recognized prior totermination/exercise of the put options are reclassified asother (non-interest-bearing) liabilities.
Estimates and Discretionary Assessments
by Management
Some accounting methods require critical estimates thatinvolve complex and subjective assessments and the useof assumptions, some of which are inherently uncertain
and prone to change. These critical accounting estimatescan vary from period to period and significantly impact a­c ompany’s financial situation and/or earnings. The man-Financial Statement129agement explicitly points out that future events will often
deviate from planning assumptions, and that it is normal for
estimates to have to be adapted.

worthiness, current economic trends and an examination ofhistoric default scenarios. For details of carrying amounts,
refer to notes 14 and 15.

Significant estimates and assumptions have to be made in
the following areas of accounting:Impairments of goodwill
Calculating the recoverable amount for a Group Division towhich a certain amount of goodwill is assigned requires management to make estimates. To calculate the value in use,planning for the next six periods is based on management’s
expectations adjusted for economic trends and historicdevelopments. Estimates of growth, the weighted average
cost of capital and tax rates are likewise based on reliable
information that reflects the risks associated with operating
business in each given industry or division. For details ofcarrying amounts, refer to note 10.

Realization of sales revenues on long-term construction
contracts
Much of the business done by Voith Paper and Voith Hydrotakes the form of construction contracts. By contrast, thishappens only in special cases at Voith Industrial Services. The
Group generally accounts for construction contracts using
the percentage-of-completion (PoC) method, according towhich sales are recognized to the extent that contractual
performance is realized. Accurate estimates of the percentage of completion are of vital importance to this method.
Depending on the method used to measure the progress ofthe contract, the most significant estimates concern the total
cost of the contract, the remaining costs up to completion,
the total value of the order, and order-related risks.
The management of Voith’s operating subsidiaries constantly
screens all estimates that are essential to the accountingof construction contracts and adapts them as and whennecessary.
Such examinations are part of management’s normal
accounting activities at operating level.
For details of carrying amounts, refer to note 14.
Trade accounts receivable and other receivables
Allowances for doubtful receivables require extremely good
judgment on the part of management. They also necessitate
an analysis of the individual debtors that covers their credit-

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Development costs
Development costs are capitalized if the recognition criteria
in IAS 38 are met. Initial capitalization is based on management’s estimate of whether there is reasonable evidence oftechnical and economic feasibility. Forecasts of the expected
future economic benefit to be gained from assets are essential to the decision whether or not costs are to be capitalized.
For details of carrying amounts, refer to note 10.
Pension obligations
Estimates of pension obligations depend significantly on
key assumptions about discount factors, expected returns
on plan assets, expected salary increases, mortality rates
and the trend in healthcare costs. The assumptions used
to calculate the discount factor reflect the interest rates thatcan be realized on high-quality fixed-income instrumentswith appropriate maturities. Assumptions regarding expected
returns on investments are determined by a uniform basethat takes account of long-term historic returns and thestructure of the portfolio. For details of carrying amounts,
refer to note 20.

Other provisions
Significant estimates influence the formation of provisions
for anticipated losses on construction contracts, warrantyrelated costs and litigation. Voith forms provisions in all cases
where current estimates of the total cost of an order exceed
expected revenues from the order. Such estimates are subject to change in light of new information regarding projectprogress. Onerous contracts are identified by monitoring
project progress and constantly updating estimates of total
costs, all of which requires good judgment if certain performance standards are to be reached. These estimates also
include warranty-related and litigation costs. Provisions for
restructuring are based on well-founded plans for expected
activities. These plans are reviewed and approved by the
Board of Management. For details of carrying amounts, refer
to note 21.
Taxes
The Voith Group has business operations in many countries and is subject to many different tax laws. Both actualand deferred taxes on income must be calculated for eachindividual taxable entity. To calculate deferred tax assets
on losses carried forward and temporary differences, forexample, assumptions must be made about the possibilityof realizing sufficient taxable income in the future. It is also
necessary to rightly interpret complex tax legislation. For
details of carrying amounts, refer to note 9.
Outside Germany, Voith has substantial refund claims withregard to sales tax (value-added tax) that has already been
paid. These payments can normally be netted against thesales tax that is charged on domestic sales. Since our Brazilian subsidiary has such a strong focus on exports, however,its refund claims cannot be fully offset against the charged
sales tax that it must pass on to the revenue authorities.
Realization of these claims therefore depends on government approval of resale activities. Since the timing of suchapproval is very uncertain, expected future cash flows haveto be discounted based on management’s estimates. In lightof the prevailing uncertainty, a cautious valuation has been
adopted.
Adoption of Amended and New Standards andInterpretations
In fiscal 2009/10, the following revised and recently issued
IFRS and IFRIC were applied for the first time:
Amendments to IAS 1: “Presentation of Financial
Statements”
The changes in IAS 1 result in the inclusion of a “Statementof Total Comprehensive Income” in the financial statements.
This statement contains the net income or loss for the period
taken from the separately reported Consolidated Statementof Income, as well as the components of other comprehensive income.
Within the statement of changes in equity, the individualcomponents of other reserves are required to be shown separately as of now, i.e. the equity attributable to shareholders
in the parent company that relates to other comprehensive
income is disclosed separately.
Amendments to IAS 32: “Financial Instruments:
Presentation” and IAS 1: “Presentation of Financial
Statements”
These amendments concern the distinction between equity
and debt and the way in which both are to be reported. In
future, certain instruments that can be “put” by the holder
will have to be classified as equity rather than debt if theymeet specified conditions. The changes have no effect on
the financial position or results of the Group.
Amendments to IFRS 7: “Financial Instruments:
Disclosures”
The provisions of IFRS 7 regarding how to report the fairvalue of financial instruments have been expanded. This
amendment concerns the introduction of a three-tiered
fair value hierarchy for reporting purposes. Distinctions are
drawn between fair values based on the nature of the input

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131

parameters used for valuation, thereby revealing the extent
to which observable market data is available for calculationof fair values. The updated provisions also aim to improvedisclosures concerning liquidity risks by clearly delimiting theitems to be displayed in tables of maturities.
Amendments to IFRS 3: “Business Combinations”
In IFRS 3 the acquisition method for business combinations
is revised. The significant changes include the definition ofcomponents of the purchase price, the treatment of noncontrolling interests and goodwill, as well as the scope of theassets, liabilities and contingent liabilities to be recognized.
The changes in IFRS 3 have no effect on the financial position
or results of the Group, as the Group did not undertake any
business combinations in fiscal 2009/10.
Amendments to IAS 27: “Consolidated and Separate
Financial Statements”
The effects of subsequent purchases of interests wherecontrol already exists as well as the sale of interests without
loss of control are to be recorded directly in equity as ofnow. IAS 27 requires that by the subsequent purchase ofinterests that lead to the Group obtaining control or where
the sale of interests leads to the loss of control, the remaining
interest in the investment be stated at its fair value, withthe revaluation effect being recognized immediately in thestatement of income.
The changes in IAS 27 have the following effects on thetreatment of put options and non-controlling interests inlimited partnerships:
In line with the treatment in previous years, where the rightto terminate non-controlling interests exists in the form of
a put option, the corresponding portion of non-controllinginterests is not derecognized but is treated as a componentof equity during the fiscal period. Accordingly, a share of net

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income for the fiscal year is also allocated to non-controllinginterests. At every closing date, it is assumed that the put
option will be exercised; the corresponding non-controllinginterests are reclassified from equity to financial liabilities. Thisfinancial liability is recognized in the amount of the probablecompensation obligation and measured at fair value.
The difference between this liability and the book value ofthe related non-controlling interest is treated as a transaction
between equity holders. Up to this point in time, this amount
was recorded as goodwill. The changes in IAS 27 now
require this to be recorded directly in equity, under revenue
reserves. Goodwill which has existed to date will be retained
under the transitional rule.
The interests held in limited partnerships as well as noncontrolling interests with comparable termination rights aretreated in the same way as the procedure adopted for put
options. The liabilities are measured at amortized costs
taking account of the due share of net income. Where differences arise between the valuation of the liability and thenon-controlling interest, this amount will be posted directlyagainst revenue reserves in equity and no longer as goodwill.
Amendments to IAS 7: “Statements of Cash Flows”
In the course of making the changes in IAS 27, IAS 7 was
also changed, requiring cash flows related to the purchaseor sale of interests without the loss of control to be shown
under financing activities. In the past, these cash flows wereshown as investing activities.
With these changes, the cash flows from financing activities
decreased by €15 292 thousand in fiscal 2009/10. In the
consolidated cash flow statement for the comparative period,
the cash flows from financing activities decreased by €58 995
thousand. Cash flows from investing activities increased inboth fiscal years accordingly.

IFRS 8: “Operating Segments”
IFRS 8 replaces IAS 14 “Segment Reporting”. The majordifference from IAS 14 is the classification and presentation of relevant segment information on the basis of the“Full-Management Approach” which results in the segment
reporting being based in the future on the company’s internal reporting structure. In contrast, IAS 14 required the
preparation of relevant information in line with the accounting
policies applied for the preparation of the Group’s financial
statements. The initial application of IFRS 8 does not lead toany changes in the composition of the reportable segments.
The amendments to IFRS 8.23 were applied earlier. Further
information on this topic is provided under the paragraph“Operating Segments”.
IFRIC 9 and IAS 39: “Embedded Derivatives”
The changes made to IFRIC 9 clarify the accounting treatment of embedded derivatives for companies that make useof the amendment to reclassification practices published in
October 2008. Pursuant to the latter amendment, companies
are now permitted, under certain circumstances, to reclassify
certain financial instruments that were formally categorized
as “fair value through profit and loss”. The changes made to
IFRIC 9 and IAS 39 clearly state that all embedded derivatives
that were reclassified from the category “fair value throughprofit and loss” must be revalued and, where necessary,stated separately in the financial statements. Voith is notaffected by these changes.
Amendments to IAS 39: “Eligible Hedged Items”
The changed version of the standard specifies the exposures
which qualify for hedge accounting and also clarifies whenan entity may designate a portion of the cash flows of afinancial instrument as a hedged item. The amendments to
IAS 39 have no effect on the financial position or results of
the Voith Group.

Amendments to IAS 23: “Borrowing Costs”
Borrowing costs that could be assigned directly to qualifying
assets have been capitalized as part of the acquisition costs
for the first time in fiscal 2009/10.
IFRIC 12: “Service Concession Arrangements”
IFRIC 12 deals with arrangements whereby governmentorganizations grant contracts to private enterprises for the
supply of public services. IFRIC 12 governs the ways in which
private-sector companies must account for the rights andduties arising from these arrangements.
IFRIC 13: “Customer Loyalty Programs”
This interpretation concerns itself with the reporting of customer loyalty programs in which customers are awarded
points (credits) that allow them to obtain free or discounted
goods or services.
IFRIC 14: “IAS 19—The Limit on Defined Benefit Asset
Minimum Funding Requirements and Their Interaction”
This interpretation governs the measurement of assets thatarise when plan assets exceed pension obligations. It also
specifies how companies are to account for obligations tomake minimum contributions to pension plans.
IFRIC 16: “Hedges of Net Investment in a Foreign
Operation”
This interpretation applies to companies that hedge theforeign currency risk arising from their net investments inforeign operations. In particular, IFRIC 16 states that thisinterpretation is not to be applied by analogy to other typesof transaction that are carried as hedge relationships.
Annual Improvements Project—May 2008
The amendments encompass specific corrections and clarification of content and terminology.

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The initial application of the changes in IAS 23, the newinterpretations IFRIC 12, 13, 14, 15 and 16, as well as thechanges arising from the annual improvements process in
May 2008, have no major effect on the financial position andresult of the Voith Group.
Adoption of the following new and amended IFRSs and
IFRICs was not yet compulsory in fiscal 2009/10 and/or had
not yet been endorsed by the European Commission for
adoption in the European Union.
Amendments to IAS 24: “Related Party Disclosures”
The amendments to IAS 24 clarify in particular the definitionof a related entity or person. Adoption of these amendments
is compulsory for fiscal years that begin after December 31,
2010. The amendments are unlikely to impact the scope of
disclosure obligations in the Voith Group.
Amendments to IAS 32: “Financial Instruments:
Classification of Rights Issues”
The amendments to IAS 32 are intended to clarify the recognition of rights issues which are denominated in a currency
other than an entity’s functional currency. Adoption of theseamendments is compulsory for fiscal years that begin afterJanuary 31, 2010. The amendments are unlikely to have
any influence. No impact on the Voith Group is currently
expected.
Amendments to IFRS 2: “Share-Based Payment”
The changes made to IFRS 2 concern the reporting of
the conditions governing exercise and cancellations andchanges to cash-settled share-based payments. Since theGroup does not use share-based compensation, theseamendments have no impact on the financial statements of
the Voith Group. Adoption of IFRS 2 is compulsory for fiscal
years beginning after December 31, 2009.

134

Voith Annual Report 2009/2010

Amendments to IFRS 7: “Enhancing Disclosures About
Transfers of Financial Assets”
The amendments improve users’ understanding of transfer
transactions of financial assets (for example, securitizations), including the understanding of possible effects ofany risks that may remain with the entity that transferred theassets. The amendments also require additional disclosures
if substantial transfers are undertaken towards the end of
the reporting period.
IFRS 9: “Financial Instruments”
The International Accounting Standards Board (IASB) has
issued a new International Financial Reporting Standard(IFRS) on the classification and measurement of financial
instruments. The publication represents the conclusion of
the first of three project phases for the replacement of IAS
39 Financial Instruments: Recognition and Measurement
by a new standard. IFRS 9 introduces new regulations forthe classification and measurement of financial assets. The
regulations must be applied from January 1, 2013; earlier
application is permitted.
Amendments to IFRIC 14: “Prepayment of a Minimum
Funding Requirement”
The amendment applies when an entity is subject to minimum
funding requirements and pays the amounts in advance. The
amendment permits such an entity to treat the benefit of suchan early payment as an asset. The amendment shall takeobligatory effect on January 1, 2011. This amendment is not
currently expected to impact the Voith Group.
IFRIC 15: “Agreements for the Construction ofReal Estate”
IFRIC 15 addresses the issue of when revenue and therelated costs arising from the sale of units of real estate
are to be realized in cases where agreements have beenreached between the project developer and the buyer before
completion of the construction phase. Adoption of IFRIC 15
is compulsory for the first time for fiscal years beginning on
or after January 1, 2010.

IFRIC 17: “Distributions of Non-Cash Assets to Owners”
IFRIC 17 governs the reporting of the liabilities that must be
formed for non-cash dividends when distribution of such
dividends is no longer a discretionary decision on the part ofthe company. Adoption of this interpretation is compulsory
for fiscal years beginning on or after October 31, 2009.
IFRIC 18: “Transfers of Assets from Customers”
This interpretation deals with the accounting treatment of
arrangements whereby a company receives from a customer
an item of property, plant and equipment that the company
must then use either to connect the customer to a networkor to provide the customer with ongoing access to a supply
of goods or services. Adoption of IFRIC 18 is compulsory forthe first time for fiscal years beginning on or after October
31, 2009.
IFRIC 19: “Extinguishing Financial Liabilities with
Equity Instruments”
IFRIC 19 clarifies the requirements when a debtor renegotiates the terms of a financial liability with its creditor and thecreditor agrees to accept the entity’s shares or other equity
instruments to settle the financial liability fully or partially.
IFRIC 19 is compulsory at the latest at the beginning of the
fiscal year after June 30, 2010.
Annual Improvements Project—
April 2009 and May 2010
The amendments encompass specific corrections and clarification of content and terminology. The amendments must
be adopted for fiscal years which begin on or after January 1,
2010 (April 2009) and for the first time for fiscal years which
begin on or after January 1, 2011 (May 2010).
The adoption of IFRIC 17,18 and 19 as well as amendments
derived from the annual improvements process will probably have no material impact on the financial and earnings
position.

Adjustments to Data for Previous Years(1)	The profit participation rights included in equity have been
allocated for the first time to shareholders in the parent
company and holdings of non-controlling interests. This
results in an increase in the value of non-controllinginterests shown in equity at September 30, 2010 andfor the same dates in fiscal 2008/09 and 2007/08 by­€76 800 thousand. Total equity in the applicable fiscal
years does not change as a result.
(2)	In the consolidated cash flow statement for the comparative period the amendment to IAS 7 referred to above
resulted in a decrease in cash flows from financing
activities of €58 995 thousand. Cash flows from investing
activities increased accordingly.
(3) 	Owing to a violation in fiscal 2009/10 of the accounting
rule relating to the percentage-of-completion method in
previous years, Voith AG has determined the need forcorrections for one subsidiary.
	With the aim of achieving the greatest possible degreeof transparency and in the interests of providing comprehensive and accurate information Voith AG has decided
to change the comparative data in the framework of theconsolidated financial statements as at September 30,
2010 in accordance with IAS 8. The adjustment amounts
for fiscal years prior to 2008/09 have been recognizedin the opening balance sheet as at October 1, 2008 incompliance with IAS 8.42 b).
	Based on the available knowledge and current assessments, the Board of Management assumes that nofurther substantial changes will be required in addition to
the corrections already made.

At present, the Voith Group does not plan to adopt the newstandards prematurely.

Financial Statement135	In detail the following changes were made in thecomparable periods:
Opening balance sheet as at October 1, 2008:
2008-10-01
Prior to change

Change2008-10-01
Changed

Trade receivables

1 141 742

(37 314)

1 104 428

Income tax assets

51 457

1 124

52 581

Deferred tax assets

120 0512 445

122 496

Revenue reserves

698 567(3 505)695 062€ in thousands

Other reserves (adjustment for currency translations)(57 087)25(57 062)

Trade accounts payable539 299(35 024)504 275

Non-current financial liabilities

834 245(1 874)832 371

1 514 007

6 633

1 520 640

2009-09-30
Prior to change

Change2009-09-30
Changed

Trade receivables

960 488(30 921)929 567

Income tax assets

57 2762 251

59 527

Deferred tax assets

128 533

1 529

130 062

Revenue reserves

741 059(3 796)737 263

Current other liabilities

Fiscal 2008/09€ in thousands

Other reserves (adjustment for currency translations)(17 406)111(17 295)

Trade accounts payable457 485(32 201)425 284

Non-current financial liabilities

1 286 720

(1 984)

1 284 736

Current other liabilities

1 318 431

10 7291 329 160

136

Voith Annual Report 2009/2010

2008/09
Prior to change

Change2008/09
ChangedSales

5 083 370

1 567

5 084 937

Cost of material(2 129 384)

(2 314)(2 131 698)

Income taxes(78 316)299(78 017)

Net income

77 378(448)

76 930Net income attributable to shareholders of the parent company

63 109(291)

62 818Net income attributable to non-controlling interests

14 269(157)

14 112€ in thousands

The corresponding disclosures have been altered accordingly. The changes in the balance sheet and statementof income result in reclassifications of certain items in the
cash flow statement under cash flow from operating activities. Certain ratios in the Segment Report have also beenadjusted. Head

Financial Statement

137Notes to theConsolidated Statement of Income(1) Sales nach Head Konzern ..

(3) Other Operating Income

By division€ in thousands

2009/10

2008/09*

Core Business€ in thousands

2009/10

2008/09

Income from the use of order-specificprovisions

86 30478 048

1 157 431

1 086 126

Income from the reversal of provisions

99 60886 977962 329

1 018 483

Foreign exchange gains

54 314100 469

Voith Paper

1 723 234

1 743 216

Recovered bad debts

10 1939 521

Voith Turbo

1 349 027

1 232 234

5 192 021

5 080 059

Gains on the disposal of non-current
and current assets

9 563

2 644

5 585

4 878

Other income

68 88679 315

5 197 606

5 084 937

328 868

356 974

Voith Hydro
Voith Industrial Services

Other

By region€ in thousands

2009/10

2008/09*

Germany

1 058 129

1 133 960

Europe excluding Germany

1 496 448

1 480 752

Americas1 230 462

1 164 592

Asia

1 296 940

1 216 366

Other

115 627

89 267

5 197 606

5 084 937

Gains on the disposal of non-current and current assets
include no gains (previous year: €0) from the disposal of
assets held for sale.

Voith Group(4) Cost of Material€ in thousands
Expenditure for raw materials,
supplies and purchased goods
Expenditure for purchased services

Services totaling €1 837 million (previous year: €1 794 million)
are included in the sales figures.

(2) Decrease/Increase in Inventories andOther Capitalized Costs
2009/10

2008/09

Change in inventory of finished goods
and work in progress(23 049)(25 187)

Other capitalized costs

18 45819 869(4 591)(5 318)€ in thousands

Social security, employee benefits
and related charges*Data for the previous year adjusted (refer to “Adjustments to data for previous years”).
138

Voith Annual Report 2009/2010

2008/09*

1 632 766

1 688 104448 122443 594

2 080 888

2 131 698

2009/10

2008/09

1 498 432

1 435 971

353 029331 989

1 851 461

1 767 960

(5) Personnel Expenses

Wages and salaries€ in thousands

2009/10

(7) Non-Recurring Result
Number of employees
Annual average

At the balance sheet date2009/10

2008/09 2010-09-30 2009-09-30

Industrial
employees

23 26824 981

23 781

23 850

Salaried
employees

15 93415 311

15 97315 47939 20240 29239 75439 329

1 232

1 196

1 232

1 196

40 43441 48840 98640 525

Apprentices
and trainees

Number of employees by region
Annual average

Non-recurring results primarily include expenses arising frommajor restructuring activities as well as measures addressing
personnel capacity.
The measures taken the previous year as well as during fiscal 2009/10 resulted in further—albeit significantly
lower—expenses in the period under review. These affect
the Voith Industrial Services, Voith Paper and Voith TurboGroup Divisions.
The following expenses have been incurred:€ in thousands

2009/10

2008/09

Personnel expenses(16 199)(91 485)(561)(3 176)

Depreciation
At the balance sheet date

Other expenses(2 010)(3 813)

2009/10

2008/09 2010-09-30 2009-09-30

Income from the reversal of provisions

5 493

702

Germany

16 64317 62816 776

16 790

Other income

0148EuropeexcludingGermany(13 277)(97 624)

7 270

8 070

7 387

7 691

Americas

11 361

10 861

11 500

11 004

Asia

3 738

3 542

3 901

3 647

Other

190

191

190

197

39 20240 29239 75439 3292009/10

2008/09

Income from investments

2 343

1 127

Write-downs on investments in shares(582)(6 067)(1 227)

0(6) Other Operating Expenses(8) Other Financial Result€ in thousands

Depreciation of investments inassociated companies€ in thousands

2009/10

2008/09

Write-downs/write-ups on long-term
loans

0

310

Increase in provisions

222 483

210 101

Write-downs on marketable securities(40 254)(13 804)

Other selling expenses

342 527

313 368

Other administrative expenses

245 156

227 040

Income from marketable securities
and loans

402

662

Foreign exchange losses

72 548

123 892(39 318)(17 772)

Rent for buildings and machinery

67 63463 116

Provisions for bad debts

12 01523 481

Loss on sale of non-current and current
assets

7 207

3 866

104 016

97 177

1 073 586

1 062 041

Other expenses

Write-downs on investments in shares concern availablefor-sale financial instruments that are measured at amortized
cost.

Financial Statement

139(9) Income Taxes€ in thousands

2009/10

2008/09*

Effective taxes(112 814)(87 601)

Deferred taxes

269

9 584

(112 545)(78 017)*Data for the previous year adjusted(refer to “Adjustments to data for previous years”).

Effective taxes include domestic income taxes and comparable foreign income taxes that are calculated in accordancewith the local tax laws valid for each subsidiary company.
For individual Group companies, deferred tax items are recognized for timing differences between carrying amounts fortax purposes reporting and the carrying amounts recognizedin IFRS, as well as for consolidation measures recognized in
profit and loss. Deferred tax assets are also recognized fortax losses carried forward that can be reasonably expected
to be realized in the near future. The average income tax ratefor German companies is 29.84% (previous year: 29.84%).
Deferred taxes are calculated at the tax rates valid in therespective countries.
In the period under review, deferred tax expenses arisingfrom timing differences amounted to minus €21 795 thousand (previous year: minus €18 474 thousand). Deferred tax
income from losses carried forward amounts to €22 064
thousand (previous year: expense: €7 957 thousand). This
includes expenses amounting to €7 509 thousand (previous
year: €21 790 thousand) from reduced deferred tax assets

140

Voith Annual Report 2009/2010

due to the realization of losses carried forward in the current
fiscal year, adjustments arising from tax audits and reduced
future potential for the realization of existing losses carried forward. Income of €29 573 thousand (previous year:€13 833 thousand) was also reported for adjustments torecognized losses carried forward resulting from tax audits,loss allocations where corresponding realization opportunities exist and greater realization potential for existing losses
carried forward.
As at September 30, 2010, tax losses carried forward of€87 347 thousand (previous year: €301 729 thousand) for
German corporate taxes, plus €407 050 thousand (previous year: €283 905 thousand) for German trade tax, plus
€108 965 thousand (previous year: €59 756 thousand) forinterest expenses that were hitherto not tax-deductible under
German law, and €62 621 thousand (previous year: €55 318
thousand) for foreign taxes were not recognized as deferred
tax assets as there was no reasonable expectation that therelated deferred tax assets would be realized in the future.
Owing to the ongoing tax audit of the German companies,
further changes may be made to the losses carried forward.
In Germany, losses carried forward do not expire. Outside
Germany, losses carried forward can normally be realized
within no more than five to ten years. In the period underreview, tax losses carried forward in the amount of €3 148
thousand (previous year: €2 948 thousand) were realized
for which no deferred tax assets were formed in the previous year.

The following table provides a detailed overview of deferred
tax items at the balance sheet date:€ in thousands

2010-09-30

2009-09-30*

2008-10-01*

Deferred tax
assetsDeferred tax
liabilities

Deferred tax
assetsDeferred tax
liabilities

Deferred tax
assetsDeferred tax
liabilities

Intangible assets

9 785

70 127

11 81062 43213 23430 923

Property, plant and equipment

17 40665 0943 378

52 4627 892

83 592

Investments and marketable securities

7 536

1 400

10 595

760

3 552

1 466

Inventories and receivables

51 70884 61633 50951 07353 16887 602Other assets

3 698

29 40914 18223 0389 069

34 700Pension provisions

37 2872 674

38 836

1 439

36 7072 174

Financial liabilities

5 488

8 470

192

17 69715 613

2 688

Other provisions and liabilities

99 12811 34089 91915 42778 48919 857

Write-down on deferred tax assets arising fromtiming differences(13 603)(12 853)

Tax losses carried forward

76 35452 634(17 007)62 151

Netting(138 531)(138 531)(112 140)(112 140)(140 372)(140 372)

Balance sheet figure

156 256

134 599

130 062

112 188

122 496

122 630

Reconciliation of expected and actual tax expenses:
The income of Voith AG and its subsidiaries in Germany
is subject to corporation income tax and trade tax. Profits
earned outside Germany are taxed at the current rates valid
in the countries concerned. Expected tax expenses in the
period under review were calculated based on a tax rate of
29.84% (unchanged from the previous year), which takes
into account the structure of the Voith Group.

€ in thousands

2009/10

2008/09*

Income before taxes

234 013

154 947

Expected tax expenses

69 83046 236655(5 541)

Deviations from expected tax rates
Effects of changes in tax rates(2 396)

1 033

Tax-free income(8 906)(17 649)

Non-deductible expenses

67 84338 389Taxes relating to other reporting periods

12 949(5 498)Change in write-downs on deferred tax
assets(22 238)

24 644

Other tax effects(5 192)(3 597)

Income taxes

112 54578 017

48.1%

50.4%

Effective tax rate (%)

Deferred taxes of €9 982 thousand (previous year €11 049
thousand) relating to timing differences of €665 453 thousand(previous year: €736 569 thousand) arising on investments in
subsidiaries were not recognized in the balance sheet, since
the criteria specified in IAS 12.39 were met. Head

*Data for the previous year adjusted (refer to “Adjustments to data for previous years”).
Financial Statement

141Notes to the Consolidated Balance Sheet(10) Intangible Assets H
Development of intangible assets from October 1, 2008, to September 30, 2009
Franchises,
trademarks,
patents, licenses
and similar rights(including licenses
to such rights)

Cost as at October 1, 2008

155 951

Changes in Group structure

1 027
256

Additions

9 448

Disposals

Goodwill

Development
costs

Payment inadvance tosuppliers

Total

613 000

71 229407

840 587

364

0

0

1 391

(2 784)(21)

0(2 549)0

18 3202 937

30 705(8 119)0(6 799)(53)(14 971)86

21 02900

21 115

6 097

(569)

0

(61)

5 467

Cost as at September 30, 2009164 746631 04082 7293 230

881 745

Accumulated depreciation
as at October 1, 2008

(82 974)(54 179)(27 266)(3)(164 422)

(269)

0

2

(1)

(268)

(16 603)0(11 588)0(28 191)

Disposals

7 270

0

6 630

0

13 900Transfers

(570)

0

0

4

(566)

Accumulated depreciation
as at September 30, 2009(93 146)(54 179)(32 222)0(179 547)

Carrying amounts
as at September 30, 200971 600576 861

50 5073 230

702 198€ in thousands

Currency translation differences

Other adjustments
Transfers

Currency translation differences
Current depreciation

142

Voith Annual Report 2009/2010

Development of intangible assets from October 1, 2009, to September 30, 2010

€ in thousands
Cost as at October 1, 2009

Changes in Group structure

Franchises,
trademarks,
patents, licenses
and similar rights(including licenses
to such rights)
164 746

Goodwill

Development
costs

Payment inadvance tosuppliers

Total

631 04082 7293 230

881 745

0

0

0

0

0

Currency translation differences

2 013

3 607

110

0

5 730

Additions

7 363

0

20 089304

27 756

0

0

31

0

31

(4 334)0(3 262)(18)(7 614)

0

(776)

0

0

(776)

3 430

0

20

(3 075)375

Cost as at September 30, 2010173 218633 871

99 717441

907 247

Accumulated depreciation
as at October 1, 2009(93 146)(54 179)(32 222)0(179 547)

Currency translation differences(1 393)

0

(78)

0

(1 471)

Current depreciation(18 013)0(11 780)0(29 793)

Disposals

2 864

0

3 390

0

6 254

Transfers

54

0

0

0

54

Accumulated depreciation
as at September 30, 2010(109 634)(54 179)(40 690)0(204 503)

Carrying amounts
as at September 30, 2010

63 584579 692

59 027441

702 744

Capitalized interest
Disposals
Other adjustments
Transfers

No impairment losses were required in respect of goodwill
on the basis of impairment tests performed.
Impairment losses of €2 892 thousand (previous year: €3 762
thousand) were recognized on development costs and licences,as sufficient potential for use within the framework given
by calculations of the recoverable amount no longer exists.

Of these impairments, €1 647 thousand (previous year:€3 682 thousand) concerned Voith Paper and €1 245
thousand (previous year: €0) concerned Voith Turbo. In theprevious fiscal year, impairment losses totaling €80 thousand
also affected Voith Industrial Services.
Capitalized interest is based on an interest rate of 4.75%.

Financial Statement143

(11) Property, Plant and Equipment
Development of property, plant and equipment from October 1, 2008, to September 30, 2009
Land, leasehold
rights andbuildings (including
buildings on thirdparty land)Technical
equipment, plantand machinery

Cost as at October 1, 2008

630 615

1 156 160

455 647

111 335

2 353 757

Changes in Group structure

0

0

33

0

33

Currency translation differences(3 964)(9 512)(2 508)(448)(16 432)

Additions40 55865 85445 46571 980223 857

Disposals(12 368)(54 283)(29 772)(5 629)(102 052)

Transfers

18 52247 7865 178(76 953)(5 467)

Other adjustments

6 083(1 098)

646

1 469

7 100

Cost as at September 30, 2009

679 446

1 204 907

474 689

101 754

2 460 796

Accumulated depreciation
as at October 1, 2008(280 413)(782 874)(313 352)

0(1 376 639)

2 320

9 484

2 191

0

13 995€ in thousands

Currency translation differences
Current depreciation

Fixtures, furniture Advance payments
and office equip- and construction in
ment
progressTotal(16 890)(66 349)(43 025)0(126 264)

Disposals

7 117

51 86925 145084 131

Transfers

(160)

418

308

0

566

Write-ups

0

0

0

0

0

Other adjustments

0

2 469

0

0

2 469

Accumulated depreciation
as at September 30, 2009

(288 026)(784 983)(328 733)

0(1 401 742)

Carrying amounts
as at September 30, 2009

391 420419 924

145 956

101 754

1 059 054

144

Voith Annual Report 2009/2010

Development of property, plant and equipment from October 1, 2009, to September 30, 2010
Land, leasehold
rights andbuildings (including
buildings on thirdparty land)Technical
equipment, plantand machinery

Cost as at October 1, 2009

679 446

1 204 907

474 689

101 754

2 460 796

Changes in Group structure

0

0

0

0

0

Currency translation differences

17 08845 450

7 557

6 361

76 456

Additions

20 52662 05343 47779 877

205 933

Disposals(6 046)(40 260)(23 071)(1 870)(71 247)

Transfers

29 56340 0665 345(75 349)(375)

0(1 502)

(153)

315

(1 340)

Cost as at September 30, 2010

740 577

1 310 714

507 844

111 088

2 670 223

Accumulated depreciation
as at October 1, 2009

(288 026)(784 983)(328 733)

0(1 401 742)

Currency translation differences(5 426)(27 783)(4 741)0(37 950)

Current depreciation€ in thousands

Other adjustments

Fixtures, furniture Advance payments
and office equip- and construction in
ment
progressTotal(16 843)(71 998)(44 854)0(133 695)

Disposals

3 710

32 24620 308056 264

Transfers

(56)

(308)

310

0

(54)

Write-ups

0

0

0

0

0

Other adjustments

0

1 223

862

0

2 085

Accumulated depreciation
as at September 30, 2010

(306 641)(851 603)(356 848)

0(1 515 092)

Carrying amounts
as at September 30, 2010

433 936459 111150 996

111 088

1 155 131

Financial Statement

145Impairment losses of €1 259 thousand (previous year: €7 990
thousand) mainly due to reduced fair values of land and buildings as well as machinery and resulting from restructuring oflocations were recognized during the fiscal year under review.
Of the total impairment loss, €562 thousand (previous year:€3 176 thousand) was recognized in the non-recurring resultin profit and loss. Of these impairments, €588 thousand (previous year: €6 923 thousand) concerned Voith Paper, €432
thousand (previous year: €87 thousand) concerned Voith
Turbo and €239 thousand (previous year: €980 thousand)concerned Voith Industrial Services. No impairment losses
affected the Group’s holding companies.
Advance payments and construction in progress relate to thefollowing assets: €34 401 thousand for buildings (previous
year: €34 718 thousand), €69 581 thousand for technicalequipment, plant and machinery (previous year: €65 264
thousand) and €7 106 thousand for non-production equipment (previous year: €1 772 thousand).
Land in the amount of €2 376 thousand (previous year:€2 417 thousand) is held in pledge.

146

Voith Annual Report 2009/2010

Property, plant and equipment includes the following assets:
Finance leases€ in thousands
Land
Technical equipment, plant andmachinery
Fixtures, furniture and office equipment

2010-09-30 2009-09-30
3 683

3 736

800

664

1 239

1 719

5 722

6 119

Buildings, plant, machinery and office and other equipment classified as finance leases are stated under this item.
The corresponding leasing liabilities are shown as financial
liabilities. Depreciation totals €1 018 thousand (previous year:€1 133 thousand).
No contingent rents were recognized in profit and loss.

(12) Investments in Associated Companies/Other Investments
Development of investments in associated companies/other investmentsfrom October 1, 2008, to September 30, 2009
€ in thousands
Cost as at October 1, 2008
Changes in Group structure

Investments
in associates

Other investments

Long-term loans

Total

14 64349 8607 672

72 175

0

0

0

0

105

(13)

(4)

88

Additions

3 391

2 885

3 120

9 396

Disposals(1 420)

(209)

(922)

(2 551)

Transfers

0

0

0

0

489

(5 042)0(4 553)Currency translation differences

Other adjustments
Cost as at September 30, 200917 20847 4819 866

74 555

Accumulated depreciation
as at October 1, 20080

(19 044)(3 403)(22 447)

Currency translation differences

0

0

6

6

Current depreciation

0(6 067)309(5 758)

Disposals

0

79

21

100

Accumulated depreciation
as at September 30, 20090

(25 032)(3 067)(28 099)

Carrying amounts
as at September 30, 200917 20822 4496 799

46 456

Financial Statement

147

Development of investments in associated companies/other investmentsfrom October 1, 2009, to September 30, 2010
Investments
in associates

Other investments

Long-term loans

Total

Cost as at October 1, 200917 20847 4819 866

74 555

Changes in Group structure

0

0

0

0

213

0

334

547

Additions

6 634

5 896

2 055

14 585

Disposals(4 389)(1 211)(754)(6 354)

Transfers

2 532(2 532)00€ in thousands

Currency translation differences

Other adjustments
Cost as at September 30, 2010
Accumulated depreciation
as at October 1, 2009

(109)

(216)

0

(325)

22 08949 41811 501

83 0080(25 032)(3 067)(28 099)

(51)

265

(19)

195

(1 227)(582)

0(1 809)

0

0

0

0

Accumulated depreciation
as at September 30, 2010

(1 278)(25 349)(3 086)(29 713)

Carrying amounts
as at September 30, 2010

20 81124 0698 415

53 295Currency translation differences
Current depreciation
Disposals

The disposal of other investments generated book profits of €141 thousand (previous year: €211 thousand). Since their fairvalue could not be reliably estimated, these investments had previously been recognized at amortized cost.
The table below summarizes the aggregate key data for the
associated companies measured using the equity method.
€ in thousands

2010-09-30 2009-09-30

Equity68 18052 847

Liabilities

141 607129 796

Total equity and liabilities

209 787

182 643Sales

474 601294 345

Net income

10 2876 078

148

Voith Annual Report 2009/2010

(13) Inventories
Inventories consist of the following items:€ in thousands

2010-09-30 2009-09-30

Raw materials and supplies

246 977

251 463

Work in progress

270 259

326 613

Finished goods and merchandise

131 645

116 152

Payment in advance to suppliers

135 170

138 878784 051

833 106

Trade receivables are classified as current assets. As at
September 30, 2010, the volume of receivables that was
not expected to be realized within one year was €20 438
thousand (previous year (adjusted): €11 601 thousand).
€7 165 thousand (previous year: €0) of trade receivables areinterest bearing.
As was the case the previous year, no trade receivables serve
as securities for liabilities.

Impairments on inventories amounted to €19 320 thousand(previous year: €21 388 thousand) and were recognized as
expenses. Write-ups (reversals prescribed by IFRS) totaling€2 502 thousand (previous year: €8 747 thousand) wereeffected. These amounts are included in the cost of materials.

Provisions for bad debts developed as follows:

No inventories were assigned as collateral in the period underreview (carrying amount in the previous year: €0).

(14) Trade Receivables

2010-09-30 2009-09-30* 2008-10-01*

Trade receivables

826 718717 544758 506

Provisions for bad debts(42 660)(45 735)(32 361)

Receivables from
customer-specificcontracts

355 639257 758

378 283

1 139 697

929 567

1 104 428

2010-09-30 2009-09-30

Write-downs at start of fiscal year

(45 735)(32 361)

Additions(11 772)(20 299)

Utilization

6 256

2 321

Reversals

8 755

4 489

Changes in Group structure/translation adjustments

(164)

115

(42 660)(45 735)

Write-downs at end of fiscal year

Trade receivables consist of the following items:€ in thousands€ in thousands

Reversals totaling €8 755 thousand (previous year: €4 489
thousand) consist of the reversal of itemized allowancesin the amount of €7 778 thousand (previous year: €4 489
thousand) and general allowances in the amount of €977
thousand (previous year: €0). Additions of €11 772 thousand(previous year: €20 299 thousand) consist of additions ofitemized allowances in the amount of €11 772 thousand(previous year: €19 057 thousand) and general allowances in
the amount of €0 (previous year: €1 242 thousand).
Credit insurance is used to manage default risk in tradereceivables. In particular, Hermes cover is used to securereceivables from foreign customers.

*Data for the previous year adjusted (refer to “Adjustments to data for previous years”).
Financial Statement

149

Future receivables from customer-specific construction
contracts recognized using the percentage-of-completion
method are determined as follows:€ in thousands

2010-09-30 2009-09-30* 2008-10-01*

Aggregate amount of costs
incurred and profits/losses
incurred on customerspecific projects inprogress

4 044 952

3 793 494

2 270 672

Progress billings to date(2 185 829)

(2 343 462)

(863 969)

Gross amount due from
customers

1 859 123

1 450 032

1 406 703

Advances received(“progress billings”)(1 542 032)

(1 229 531)

(1 045 635)

317 091

220 501

361 068

Thereof receivables fromconstruction contracts

344 343239 710377 519

Thereof liabilities fromconstruction contracts(27 252)(19 209)(16 451)

An amount of €7 712 thousand (previous year: €3 912 thousand) in trade receivables is held as retentions by customers.
Retentions are amounts of progress billings that are not paid
until conditions specified in the contract have been met.
This includes €425 thousand (previous year: €0) for service
contracts.

(15) Other Receivables and Assets€ in thousands

Receivables from customer-specific service contracts total€11 295 thousand (previous year: €18 048 thousand).
­L iabilities from service contracts total €2 087 thousand(previous year: €0).
Advances received amounting to €794 252 thousand(2009-09-30: €696 830 thousand, 2008-10-01: €717 166
thousand)* for which no contract costs have been incurred todate are included in liabilities. None of these advances werereceived for customer-specific service contracts.
Sales relating to customer-specific contracts totalled€2 180 446 thousand (previous year: €2 050 746 thousand).
€91 913 thousand of this amount is from service contracts(previous year: €67 419 thousand). Amounts billed to customers are shown under trade receivables.

Derivatives with hedged operationaltransactions

55 79764 148Derivatives with hedged financialtransactions

40 95030 828Financial receivables

54 86840 434

Other financial assets

4 591

2 002

Deferred income

33 95932 895

Other assets

247 884

193 468

438 049363 775

Financial receivables include fixed-interest receivables with amarket value of €16 567 thousand. The remaining financial
receivables are subject to variable interest rates such that thecarrying amounts are equal to market values.
At the balance sheet date, other assets totaling €38 348
thousand (previous year: €32 420 thousand) served to secure
liabilities and contingent liabilities. Recourse will be made tothis security if the underlying obligations are not fulfilled or if
the contingent liabilities are realized.

*Data for the previous year adjusted (refer to “Adjustments to data for previous years”).
150

Voith Annual Report 2009/2010

2010-09-30 2009-09-30

Write-downs on financial receivables, other financial assets
and other assets developed as follows:(17) Cash and Cash Equivalents
This item mainly consists of time deposits held at banks.

€ in thousands

2010-09-30 2009-09-30(5 186)(6 237)€ in thousands

Additions(243)(1 248)ChecksUtilization

55

148

Write-downs at start of fiscal year

Reversals

1 438

2 112

Changes in Group structure/translation adjustments

(101)

39

(4 037)(5 186)

Write-downs at end of fiscal year

Cash in hand
Cash equivalents
Cash at banks

Reversals totaling €243 thousand (previous year: €1 248
thousand) consist of additions of itemized allowances in theamount of €237 thousand (previous year: €1 248 thousand)and general allowances in the amount of €6 thousand (previous year: €0). Reversals totaling €1 438 thousand (previous
year: €2 112 thousand) consist of reversals of itemized
allowances in the amount of €1 425 thousand (previous year:€1 990 thousand) and general allowances in the amount of€13 thousand (previous year: €122 thousand).

(16) Marketable Securities
Available-for-sale securities totaling €9 930 thousand (previous year: €9 679 thousand) cover future pension obligations.

2010-09-30 2009-09-30
37

20

635

721

7 356

16 894

1 167 331

905 492

1 175 359

923 127

Cash at banks earns interest at floating rates based on dailybank deposit rates.
Short-term deposits are made for varying periods of between
one day and three months depending on the immediate cash
requirements of the Group. These deposits earn interest at
the respective short-term deposit rates.
At the balance sheet date, the fair value of cash and cash
equivalents was €1 175 359 thousand (previous year:€923 127 thousand).
As in the previous year, no cash at banks served as security
for liabilities.

(18) Non-Current Assets and Disposal
Groups Held for Sale
The non-current assets and disposal groups held for sale of€1 447 thousand (previous year: €0) represent exclusively
developed land held by Voith Paper.

Financial Statement151

(19) Equity
Issued Capital and Revenue Reserves
Since September 30, 2006, issued capital in Voith AG of€120 000 thousand has, without change, been held byshareholders in the form of 30 149 100 ordinary shares.
The revenue reserves consist of retained earnings generated
by Voith AG and its consolidated subsidiaries.
Other Reserves
Other reserves include the effects of currency translation offoreign subsidiaries, the effects of the valuation of marketablesecurities and cash flow hedges (pursuant to IAS 39) andgains on the hedging of net investments (pursuant to IAS 21).
The statement of total comprehensive income shows thevaluation effects of individual components of “other reserves”
which are recognized directly in equity.

The items recognized directly in equity consist of:€ in thousands

2009/20102008/2009

Gains/(losses) on available-for-salefinancial assets

24 36840 582

Gains/(losses) in the current period(14 417)28 300Transfers to profit and loss

38 78512 282

Gains/(losses) on cash flow hedges(5 619)(6 637)

Gains/(losses) in the current period

1 357(4 873)

Transfers to profit and loss

(6 976)(1 764)

Gains/(losses) on currency translation

55 12515 907

Gains/(losses) in the current period

55 1253 722

0

12 185

Gains/(losses) on net investments inforeign operations

12 288(17 415)

Gains/(losses) in the current period

12 288(5 423)

Transfers to profit and loss

0

193

Other effects0(12 185)

(979)

7 600

85 18340 037

Other effects

Tax on items recognized directly inequityOther comprehensive income

152

Voith Annual Report 2009/2010

Deferred taxes on the components of the other comprehensive income are as follows:€ in thousands

2010

2009

Pre tax

Deferred tax

Post tax

Pre tax

Deferred tax

Post tax

Gains/(losses) on available-for-salefinancial assets

24 368163

24 53140 582

1 654

42 236

Gains/(losses) on cash flow hedges(5 619)1 584(4 035)(6 637)314(6 323)

Gains/(losses) on currencytranslation

55 125-55 12515 907-15 907

Gains/(losses) on net investments inforeign operations

12 288(2 726)9 562(17 415)5 632(11 783)

Other gains/(losses)

86 162(979)

85 18332 4377 600

40 037

Profit Participation Rights

Non-Controlling Interests

Pursuant to the criteria defined in IAS 32, the Group’s profit
participation rights, with a nominal volume of €83 400 thousand (previous year: €83 400 thousand) constitute Groupequity. The rights in question are lower-ranking bearer profit
participation rights with variable compensation, no bullet
maturity and no right of termination on the part of the creditors. The profit participation rights totaling €6 600 thousand
granted in fiscal 2008/09 were issued by Voith AG. Profit
participation rights amounting to €76 800 thousand were
issued by a subsidiary as early as fiscal 2006/07. Subject
to the approval of the appropriate governing body, profits
totaling €4 406 thousand are scheduled to be distributed
pursuant to profit participation rights.

The major portion of non-controlling interests is attributed
to the co-owners of the companies Rif Roll Cover Srl, Italy,
Voith Fuji Hydro K.K., Japan, Voith IHI Paper Technology Co,
Ltd., Japan, Voith Hydro Shanghai, Ltd., China, Voith Paper
Fabrics India Ltd., India, and VG Power AB, Sweden.
Appropriation of Net Income at Voith AG
The Board of Management proposes to pay a dividendof €0.33 per share (€9 949 thousand in total) out of theunappropriated retained earnings of Voith AG, and to carryforward the remaining €38 821 thousand to the current
fiscal year.
The dividend of €9 949 thousand paid in the period underreview (previous year: €18 089 thousand) is equivalent to a
dividend of €0.33 per share (previous year: €0.6).

Financial Statement

153

Additional Capital Management Disclosures
Voith is a family-owned company. As such, it is obliged
to maintain a robust and sustainable financial profile thatenables the Group to meet its earnings and growth targets.
Voith manages capital with the aim of maximizing the returnon capital. Equity and financial liabilities are those elementsof Group capital that are of relevance to capital management
activities.
€ in thousands

2010-09-30 2009-09-30* 2008-10-01*

Equity1 107 256950 210858 207

Financial liabilities

1 476 722

1 402 023

1 015 258

2 583 9782 352 233

1 873 465

*Data for the previous year adjusted(refer to “Adjustments to data for previous years”).

Year on year, equity rose by 16.5% in the period underreview. Net income, exchange rate effects and the fact that
securities were marked to market made a positive contribution to the development of equity. Dividend payments had anegative impact on the amount of equity. Financial liabilities
increased by 5.3%. For details on the composition of financial
liabilities, refer to note 22.
Voith AG is not listed on a stock exchange and does not haveany share-based compensation plans. No specific capitalrequirements are defined in its Articles of Association.

(20) Accrued Pension Liabilities andSimilar Obligations
Provisions for pensions are recognized for benefits in theform of retirement, invalidity and dependents’ benefits
payable under pension plans. The benefits provided by154

Voith Annual Report 2009/2010

the Group vary depending on the legal, tax and economic
circumstances of the country concerned and usually dependon the length of service and remuneration of the employees.
Group companies provide occupational pensions under bothdefined contribution and defined benefit plans. In the caseof defined contribution plans, the company makes contributions to state or private pension schemes based on legal orcontractual requirements or on a voluntary basis. Once thecontributions have been paid, there are no further obligations
for the company. Current contributions are recognized as
pension expenses in the period concerned. In 2010, theyamounted to €117 550 thousand for the Voith Group as awhole (previous year: €117 619 thousand).
Defined benefit plans make up the major portion of thepension plans. A distinction is drawn between funded andunfunded plans.
The pension provisions for defined benefit plans are determined in accordance with IAS 19 (Employee Benefits) using
the projected unit credit method. Defined benefit obligations
are measured based on the proportion of future benefits
accrued at the balance sheet date. Measurement reflects
assumptions as to the trends in the relevant variables affecting the level of benefits. All defined benefit plans require
actuarial valuations.
Owing to their benefit status, the obligations of the US Group
companies in particular in respect of post-retirement medicalcare are also carried under provisions for pensions. These
post-retirement benefit provisions take into account the
expected long-term rise in the cost of healthcare.
Insofar as foreign Group companies have plan assets, these
consist essentially of stocks, fixed-interest bonds and realestate. Insurance cover forms the plan assets of domestic
companies. The plan assets of the Group companies do notinclude any shares in Voith AG.

The following amounts related to defined benefit plans arerecognized in the Balance Sheet.
€ in thousands

2010-09-30

2009-09-30

2008-09-30

2007-09-30

2006-09-30

Present value of funded obligations

220 334

190 976

180 915

199 407

185 602

Fair value of plan assets(150 552)(118 429)(125 058)(137 260)(137 199)

Shortfall

69 78272 54755 85762 14748 403Present value of unfunded obligations

510 021418 976369 810373 292

404 184

Effect of limits on the capitalizable plan assets

9

0

0

0

0

Adjustment for minimum funding requirements

935

0

0

0

0

Unrecognized actuarial gains and losses(145 903)(61 592)(9 880)(31 152)(51 406)

Unrecognized past service costs

(14)

(338)

0

92

0

Provision in the balance sheet

434 830

429 593415 787404 379401 181

Thereof current

25 83924 931

11 53222 12219 076

The present value of defined benefit obligations comprises
the following items:€ in thousands

2010-09-30 2009-09-30

Defined benefit obligation
at the beginning of the period

609 952

550 725

Current service costs

12 58312 551

Interest expenses (pursuant to IAS 19)

32 62232 150

Actuarial losses(+)/gains(-)

89 11440 295137

5 964

Changes in Group structure

0

(19)

Gains/losses from plan curtailments or
settlements

0241(33 553)(32 386)

Other

5 727

5 719

Currency translation differences

13 773(5 288)

Defined benefit obligation
at the end of the period

730 355

609 952

Past service costs

Benefits paid

Financial Statement

155

The development of plan assets is shown in the table below:

Plan assets consist of the following components:€ in thousandsin %2010-09-30 2009-09-30

Fair value of plan assets
at the beginning of the period

118 429

125 058

Expected return on plan assets

8 801

9 397

Actuarial gains(+)/losses(-)

3 663(11 637)

Contributions

20 183

7 105

Benefits paid

(10 822)(9 608)

Other

2 010

2 377

Currency translation differences

8 288(4 263)150 552

118 429

Fair value of plan assets
at the end of the period

The actual gains on invested plan assets amounted to€12 464 thousand (previous year: loss €2 240 thousand).

2010-09-30 2009-09-30

Stocks

42%

43%

Bonds

41%

41%

Real estate

4%

4%

Other

13%

12%

100%

100%

Actuarial gains and losses are the result of changes in
portfolios and in actual trends (e.g. increases in income
and pensions and changes in interest rates) that differ fromunderlying assumptions.
The following amounts are recognized in profit and loss:€ in thousands

2010-09-30 2009-09-30

The contributions that are expected to be paid into the plansin the next reporting period amount to €5 356 thousand(previous year: €6 304 thousand).

Current service costs

12 58312 551

Interest expenses on pension obligations

32 62232 150

Expected return on plan assets(8 801)(9 397)The expected long-term interest yield on fund assets is calculated based on the portfolio’s actual long-term yields, on
historical returns in the market as a whole, and on forecasts
of probable returns on the classes of securities held in theportfolio. These forecasts are based on yield expectations forcomparable pension funds for the remaining service period(investment horizon) and on experience gathered by the
managers of large portfolios and experts in the investment
industry.

Past service costs

261

5 626

0

241

Realized actuarial gains or losses

2 683

514

Effect of limits on the capitalizable
plan assets

589

0

156

Voith Annual Report 2009/2010

Gains/losses from plan curtailments
or settlements

Current service costs, past service costs, the effects of plancurtailments or settlements and realized actuarial gains andlosses that relate to defined benefit obligations are statedunder personnel expenses. The effect arising from the limiton the capitalizable plan assets is recognized under otheroperating expenses. Expected returns on plan assets andrealized actuarial gains and losses that relate to the plan
assets are also recognized under other operating expenses.
Interest expenses on pension obligations are stated in theinterest result.

The following assumptions underlie Voith Group’s calculationof pension provisions:
Germany and Austria
in %

USA

2010-09-30

2009-09-30

2010-09-30

2009-09-30

Discount rate

4.25%

5.5%

4.5%

5.25%

Expected return on plan assets

4.5%

4.5%

7.5%

8.0%

Salary increases

3.0%

3.0%

2.12%

2.28%

Pensions increases

1.96%

2.0%

0%

0%

8.0%/8.5%
5.0%

8.0%/8.5%
5.0%Annual increase in healthcare costs
Initial medical trend rate (pre-65/post-65)
Ultimate medical trend rate (pre-65/post-65)

If healthcare costs increased by 1%, current service costs
and interest expenses would increase by a total of €60 thousand (previous year: €58 thousand), while the present valueof pension obligations would increase by €913 thousand(previous year: €572 thousand). If costs decreased by 1%,
current service costs and interest expenses would fall bya total of €47 thousand (previous year: €47 thousand) andthe present value of pension obligations by €793 thousand(previous year: €503 thousand).
Experience-based adjustments—i.e. the effects of deviations
between previous actuarial assumptions and what actuallyoccurred—are shown in the table below:in %2010-09-30

2009-09-30

2008-09-30

2007-09-30

2006-09-30– As a percentage of the present value of defined benefit obligations(1.7%)(0.6%)(0.2%)

0%(0.5%)– As a percentage of the fair value of plan assets+2.4%(9.8%)(8.2%)+1.9%(0.5%)

Difference between projected assumptions and actual values:(+ gains/- losses)

Financial Statement

157

(21) Other Provisions
The development of other provisions is shown below:

As at2009-09-30

Changesin Group
structure

Utilization

Additions

Reversals

Transfers

Discounting
effectPersonnel-related
provisions

94 4484(31 217)36 345(4 743)

(600)

66

1 375

95 678Other tax
provisions

7 287

0

(1 321)4 548(1 154)

(11)

0

723

10 072Warranty provisions

195 477(8)(55 186)

107 496(37 511)

1 164

2 831

4 345

218 608

Other order-related
provisions

109 680(52)(44 011)72 511(41 761)

180

72

1 959

98 578Other provisions

86 997(182)(33 665)

37 398(15 670)

(733)

533

2 495

77 173493 889(238)(165 400)

258 298(100 839)

0

3 502

10 897500 109€ in thousands€ in thousands

2010-09-30

Currencytranslation
As atdifferences 2010-09-30

2009-09-30< 1 year> 1 year< 1 year> 1 year

Personnel-related provisions

25 67370 00533 30561 143

Other tax provisions

3 975

6 097

2 948

4 339

Warranty provisions

171 367

47 241147 71947 758Other order-related provisions

88 6399 939

100 234

9 446

Other provisions

46 47630 69757 78029 217336 130

163 979

341 986

151 903

Refund claims totaling €0 (previous year: €5 172 thousand)for order-related provisions were capitalized in the period
under review.

158

Voith Annual Report 2009/2010

(22) Financial Liabilities
Early retirement and anniversary/long service provisions
comprise the major portion of the personnel-related provisions. In the case of provisions for early retirement, theamount and maturity of the future payments to be madeto the beneficiaries are uncertain. Warranty provisions are
accrued for statutory and contractual obligations as well as
for extended warranty. Other order-related provisions include
obligations for services still to be rendered on customer
orders, for service contracts and for commission provisions.
In these cases, the amount and timing of future expenses
hinges on completion of the orders concerned. Other provisions include items such as obligations arising from retrenchments and restructuring measures. The latter activities are
expected to be completed within the next two fiscal years.

Financial liabilities include the following items:€ in thousands

2010-09-30 2009-09-30* 2008-10-01*

Bonds

999 273966 112679 145

Bank loans

337 747

291 649

175 285

Financial liabilities fromleasing contracts

4 133

4 915

5 860

Notes payable

7 522

17 936

12 675Derivatives with hedged
financial transactions

7 136

2 814

217

Other financial liabilities

120 911

118 597

142 076

1 476 722

1 402 023

1 015 258

In the current period, liabilities totaling €0 (previous year:€388 thousand) are secured by mortgages. Financial liabilities totaling €546 thousand (previous year: €869 thousand)are secured by other assets.
The Voith Group’s current and non-current bonds and its
bank loans are denominated in the following currencies:
2010-09-30 2009-09-30
Euros

983 605

981 837

US Dollars

277 630

252 092

Swedish Krona

70 77520 842Other currencies

5 010

2 990

1 337 020

1 257 761

*Data for the previous year adjusted (refer to “Adjustments to data for previous years”).
Financial Statement

159

Interest-bearing loans:
Effective
interest ratein %Maturity

Carrying amount as at Carrying amount as at
2010-09-30
2009-09-30€ in thousands€ in thousands

Current€200 million bond, 2001/2011

EURIBOR +1.65%2)

2011-07-18

145 7310Multi-currency poolInterbank offering
rates w/o margins(currently Stibor)indefinite

36 2529 813

SEK loan

0.75% +0.25%

indefinite

34 075

10 500

INR loan

10.00%

indefinite

1 789

0

NOK loan

7.25%

indefinite

1 251

0

NOK loan

Floating;
currently 2.3%

2009-11-30

0

1 184

Others/checks

4 294

4 479

Total current

223 392

25 976

Non-current€300 million bond, 2007/2017/€300 million top-up, 2009/2017

5.50%1)/6.642%1)

2017-06-21

577 498574 910€200 million bond, 2001/2011

EURIBOR +1.65%2)

2011-07-18

0

146 115

USD 180 million private placement,
first tranche, 2004/2014

USD LIBOR
arrears +0.785%2)

2014-08-17

150 515

134 996

USD 85 million private placement,
second tranche, 2004/2016

USD LIBOR
arrears +0.94%2)

2016-08-17

72 91464 290

USD 60 million private placement,
third tranche, 2004/2019

USD LIBOR
arrears +1.145%2)

2019-08-17

52 61545 801€100 million loan

4.509%

1)

2012-05-11

100 000

100 000€150 million note loan

6.671%

1)/2)

2014-05-06

149 549

149 445

10 million bilateral bank loan

5.950%1)

2014-09-28

10 000

10 000Floating;
currently 0.6% p.a.

2017-01-01

Industrial revenue bond
OthersTotal non-current

1)

Yield/effective interest rate.

2)

Including the effect of related interest rate swaps.

160

Voith Annual Report 2009/2010

0

5 233

537

995

1 113 628

1 231 785

1 337 020

1 257 761

The bonds and the USD private placement all have bullet
maturities.
The market value of the €300 million bond 2007/2017 and€300 million top-up 2009/2017 is €644 082 thousand (previous year: €579 270 thousand). This market value is a stock
market valuation.
The market value of the €100 million loan was €104 219
thousand (previous year: €102 191 thousand) at the ­balance
sheet date. A market interest rate of 2.95% (previous year:
4.42%) was used to discount future cash flows when calculating the loan’s market value.
The market value of the five-year 150 million note loan and
10 million bilateral bank loan is €181 131 thousand (previous
year: €171 598 thousand). A market interest rate of 3.35%(previous year: 5.43%) was used to discount future cash
flows when calculating the loan’s market value.
Since most other loans and financial liabilities have floatinginterest rates, their market values roughly correspond to thecarrying amounts.
Notes on Net Debt
Net debt as the difference between financial liabilities andrealizable financial assets is an important figure for banks,
analysts and rating agencies. This figure is not covered by
the accounting policies based on the International Financial
Reporting Standards (IFRS) and its definition and calculation
may diverge from the practice of other companies.
In contrast to the carrying amount, which is based on theeffective interest rate method, the figure is calculated bymeasuring financial liabilities at their higher nominal repayment amount.

Net debt as defined in the company includes the following
items:€ in thousands
Bank loans

2010-09-30 2009-09-30
337 747

291 649

1 021 775

991 203

Other financial liabilities

137 493

144 261

Stocks2)(214 599)(291 721)(1 175 359)

(923 127)(106 615)(80 064)442

132 201

Bonds1)

Cash and cash equivalents
Other financial claims and loans

Based on valuation at the repayment amount, bonds are included at
an amount which is €23 million higher (previous year €25 million) thanthe carrying amount.

1)

In the previous year, non-current securities not included in theavailable-for-sale category were eliminated.

2)

Lease liabilities relate solely to finance lease obligations.
Most of the underlying lease contracts include a buy option.
Finance lease liabilities are settled during the contractual
period and had the following maturities as at the balance
sheet date:€ in thousands
Total future minimum lease payments(gross)2010-09-30 2009-09-30
5 049

5 991

Due in under one year

1 144

1 611

Due between one and five years

2 080

2 451

Due in over five years

1 825

1 929

4 133

4 915

995

1 402

Due between one and five years

1 760

2 078

Due in over five years

1 378

1 435

916

1 076

Present value of future minimum lease
payments
Due in under one year

Interest component of future minimum
lease payments

Financial Statement

161

(23) Trade Accounts Payable/
Other Liabilities€ in thousands

2010-09-30 2009-09-30* 2008-10-01*

Trade accounts payable

496 142406 075486 705

Liabilities from construction
contracts

29 33919 20917 570Derivatives with hedged
operational transactions

32 797

11 41057 083

Personnel and social
security liabilities

251 233

225 280

218 119

Tax liabilities

114 219

126 398

136 788

Customer advances
received

975 085

838 268

880 508

Deferred income

26 91024 761

23 272Other liabilities

223 097

221 117350 228

2 148 822

1 872 518

2 170 273

€3 604 thousand (previous year: €1 690 thousand) of tradeaccounts payable are not due within a year.
At fiscal year-end, personnel and social security liabilities
included outstanding vacation benefits, overtime, annual
bonus payments, and unpaid wages, salaries and social
security contributions.
Sales tax (VAT) liabilities, whose fair value essentially corresponds to the carrying amount, formed the main item intax liabilities.

Government Grants€ in thousands

2009/10

2008/09

As at October 1

10 893

10 570Granted during the fiscal year

1 805

1 839

Amortized in profit and loss

(1 336)(1 516)As at September 30

11 36210 893

Subsidies totaling €10 270 thousand (previous year: €10 699
thousand) were received in cash for capital spending on
property, plant and equipment. Subsidies totaling €1 092
thousand (previous year: €194 thousand) were granted forother expenses.
Subsidies totaling €4 017 thousand (previous year: €4 747
thousand) were granted. Of this amount, €2 396 thousand(previous year: €2 893 thousand) was for capital spending
on property, plant and equipment and €1 621 thousand(previous year: €1 854 thousand) was for other expenses.
Government assistance totaling €4 718 thousand (previous
year 2007/08: €13 400 thousand) was received in fiscal
2008/09 in the context of the relocation of Voith subsidiaries
in China. Of this amount, €9 049 thousand (previous year
2007/08: €8 500 thousand) was recognized in profit and loss.
No such government grants were received or recognized in
the course of the current fiscal year.
In addition, further subsidies totaling €1 395 thousand (previous year: €1 988 thousand) were netted against cost items.
In Brazil, government-subsidized export credits are granted
to local Voith companies.

*Data for the previous year adjusted (refer to “Adjustments to data for previous years”).
162

Voith Annual Report 2009/2010

Notes to the Consolidated
Cash Flow Statement
In fiscal 2009/10, the change in investments in marketablesecurities was made up of cash inflows totaling €250 506
thousand (previous year: €237 636 thousand) and cash outflows totaling €187 363 thousand (previous year: €273 153
thousand).
Required information relating to the acquisition of consolidated companies is provided in the section on “Businesscombinations in fiscal 2009/10”.
Cash and cash equivalents include checks, cash in hand,cash equivalents and balances in bank accounts.
Hea

Financial Statement

163

Notes to the Segment Report
Information on the Segment Data
According to IFRS 8, which is applied for the first time, segment reporting reflects group-internal reporting structures.
In the past the reportable segments were already definedaccording to group-internal structures. Consequently, there
will be no changes in the definition of reportable segmentswith the implementation of IFRS 8. Business continues to be
managed according to the different products and industries
and for this reason the segments and structures are the sameas they were on September 30, 2009.
Segment data is essentially compiled using the sameaccounting and valuation methods as the consolidated
financial statements. Intercompany sales are effected atmarket prices and intersegment transactions and businessare all undertaken in accordance with the uniform set ofaccounting and valuation policies used for the consolidated
financial statements.
In the Voith Group the key figure to valuate and control theindividual segments is Return on Capital Employed (ROCE).
The calculation of ROCE is defined as Profit from Operations
in relation to Capital Employed.
Based on the calculation of ROCE the key result figure
in controlling is Profit from Operations. Basically, it is anoperational figure derived from external accounting, theoperational result before non-recurring result. In line withthe calculation of Profit from Operations the following resultcomponents are taken into consideration:

164

Voith Annual Report 2009/2010

Operating interest income
Operating interest income from ordinary activities is defined
as interest received by the company on the long-term financing of receivables from customers or as the imputed interest
effect assigned on that portion of customer advances that is
not used to finance inventories and PoC receivables.
Other adjustments
Other adjustments include effects which, based on theiroperating character, are normally shown as other income andother expenses in the Statement of Income. In line with thecalculation of the Profit from Operations these adjustments
are eliminated as exceptions and therefore a better evaluationof the operating business activities by segment is achieved.
The Profit from Operations was also shown on a voluntarybasis in previous periods. Consequently, no adjustment isrequired to this figure due to the first time application of IFRS
8. The segment result according to IAS 14 which had beenshown in previous years is not applicable in the future.
The Capital Employed is defined as operating net assets
and consists of the sum of property, plant and equipment
and intangible assets (excluding goodwill), inventories,
trade receivables, other non-interest-bearing assets andincome tax assets as well as prepaid expenses less tradeaccounts payable, non-interest-bearing liabilities and income
tax liabilities as well as deferred income and advances
received deducted up to the amount of inventories and PoC
receivables.

Information on Activities in the Segments
The Capital Employed on the reference date is an average value derived from the values on the current year-end,
the reference date for the previous half year-end and thereference date for the previous year-end. In contrast to
the provisions of IAS 21 the assets and liabilities of foreignsubsidiaries are translated at the average exchange rate
for the reporting period. Owing to the use of averages theemployed capital cannot be reconciled to the figures in the
consolidated financial statements on a single closing date.

Voith Hydro is a joint venture company that combines thestrength of two leading hydro power component suppliers
to create a leading, full-line supplier for hydro power plants.
Its key products are Francis, Pelton, Kaplan, bulb and pumpturbines. The Group Division also produces generators andgenerator drive units for all kinds of turbines, as well as
excitation and diagnostic systems, frequency converters,
insulation systems, switching systems for all voltages, andtransformers.

Consolidation entries were taken into account in full forthe first time when the employed capital was calculated on
September 30, 2010. Consolidation entries were not taken
fully into account when calculating the employed capital in
the previous year as internal reporting did not provide for acorresponding adjustment owing to the unreasonable cost.

Voith Industrial Services is one of the leading providers oftechnical, consulting and management services in industrial
contexts.

Investments concern intangible assets (excluding goodwill)
and property, plant and equipment. Additions due to new
acquisitions are not included.
Sales are broken down regionally, based on the customer’s
domicile. Non-current assets, consisting of property, plantand equipment and other intangible assets, are assigned tothe asset location.

Voith Paper is a leading provider of complete processlines for the papermaking industry. An established process supplier to the paper industry worldwide, Voith has
amassed a wealth of experience covering everything fromfiber technology through processing to printing technology.
Voith develops solutions that span the entire papermaking
process, from fiber to finished paper—and that for every typeof paper: graphic grades, board, packaging papers, tissue
paper and special-purpose papers. Voith is also one of the
global leading manufacturers of forming fabrics, wet felts anddryer fabrics for the world’s cellulose and paper industry.
Voith Turbo specializes in mechanical, hydrodynamic andelectronic drive and braking systems for road, rail, marine
and industrial applications. Voith Turbo crafts customized
solutions ranging from individual machines to end-to-end
process solutions.
Business and reportable segments as defined in IFRS 8 are
identical.
Head

Financial Statement

165Segment Information by Division
Voith Hydro

Voith Industrial Services

Voith Paper€ in millions

2009/10

2008/09*

2009/10

2008/09

2009/10

2008/09

External sales

1 158

1 087

962

1 018

1 723

1 743

6

1

67

61

43

65

1 164

1 088

1 029

1 079

1 766

1 808

Profit from Operations

76

63

38

36

128

150

Depreciation on property, plant andequipment & intangible assets2)

21

17

18

20

70

67

Investments3)

90

58

10

14

52

93

Segment goodwill

14

14

209

207

219

218

Capital Employed

440

346

193

220

796

801

ROCE

17.3%

18.2%

19.9%

16.4%

16.0%

18.7%

Employees4)

5 238

4 681

19 11919 118

9 353

9 500

Sales with other segments
Total segment sales

1)

Subtotal for Voith Hydro, Voith Industrial Services, Voith Paper and Voith Turbo.

2)

Excluding depreciation included in the non-recurring result, as not included in Profit from Operations.

3)

Excluding additions due to new acquisitions and financial assets.

4)

Statistical number of persons employed at fiscal year-end.

*Data for the previous year adjusted (refer to “Adjustments to data for previous years”).
166

Voith Annual Report 2009/2010

Voith Turbo

Total Core Business1)

Reconciliation

Total

2009/10

2008/09

2009/10

2008/09*

2009/10

2008/09

2009/10

2008/09*

1 349

1 232

5 192

5 080

6

5

5 198

5 085

5

7

121

134

(121)

(134)

0

0

1 354

1 239

5 313

5 214

(115)

(129)

5 198

5 085

135

113

377

362

5

(6)

382

356

46

39

155

143

8

8

163

151

72

78

224

243

10

12

234

255

138

138

580

577

0

0

580

577

703

718

2 132

2 085

96

85

2 228

2 170

19.2%

15.7%

17.7%

17.3%

17.1%

16.4%

5 422

5 428

39 13238 72739 75439 329622

602

The defined components “Operating Interest Income” and“Other Adjustments” are not directly shown in the statementof income and are therefore separately disclosed in thefollowing reconciliation starting with the total of Profit fromOperations to Income before taxes.
Profit from Operations can be reconciled to
the figures in the consolidated financial statements
as follows:€ in millions

2009/10

2008/09*

Profit from Operations

382

356

Operating interest income

(32)

(26)

Other adjustments

3(6)

Non-recurring result

(13)

(98)

Share of profits from associates

42Interest result

(71)

(55)

Other financial result

(39)

(18)

Income before tax

234

155

Head

*Data for the previous year adjusted (refer to “Adjustments to data for previous years”).
Financial Statement

167

Segment Information by Regions
External sales (Customer’s domicile)

Non-current assets€ in millions

2009/10

2008/09*€ in millions

2009/10

2008/09

Germany

1 058

1 134

Germany992

985

Abroad

4 140

3 951

Abroad866

776

of which Europe

1 496

1 481

of which Europe

274

275

of which Americas

1 231

1 165

of which Americas

402

336

of which Asia

1 297

1 216

of which USA

223

216

698

657

of which Asia

187

163

116

89

of which Others

3

2

5 198

5 085

1 858

1 761

of which Chinaof which Others

Total

Total

Head

*Data for the previous year adjusted (refer to “Adjustments to data for previous years”).
168

Voith Annual Report 2009/2010

Other Information
Contingent Liabilities, Contingent Assets
and Other Financial Obligations

Warranties and Guarantees

Appropriate provisions have been formed in the relevantGroup companies to cover contingent liabilities arising fromtaxation, court and arbitration proceedings.

The contingent liabilities listed below are stated at face value.
No provisions were made to cover these contingencies as
the risk of their realization is regarded as low:

Possible tax risks exist outside Germany concerning the tax
recognition of expenses amounting to a maximum of €13
million (previous year: €7 million). Following a successful
action before the court of first instance, the chances of winning proceedings before an appeal court are good. A courtcase is also underway in connection with the recognition ofan amount of €5 million for transfer prices outside Germany
and for €9 million for legal disputes. As things stand, boththe cases in both fields are expected to end successfully.

€ in thousands
Guarantee obligations
Warranties
Assets pledged as security
for third-party obligations

2010-09-30 2009-09-30
36 91032 652

901

804

0

2 347

37 81135 803

Most of the guarantee obligations mature in 2015.

Owing to a failure, due to an end customer, to comply
with specific rules concerning the receipt of tax incentives
outside Germany, the recognition of tax privileges is currently disputed. The maximum risk is currently €39 million,
although the assessment undertaken by the engaged lawyers­suggests that there is a good chance of the tax privileges
being recognized and the maximum risk will not therefore
materialize.
Neither Voith AG nor any of its consolidated companies
are involved in any current or foreseeable taxation, court or
arbitration proceedings that could materially influence theireconomic situation.
Owing to the ongoing tax audit of the German companies,
further changes may be made to tax items.
The Voith Group has contingent tax assets totaling approximately €10 million (previous year: €10 million) outside­Germany.

Financial Statement

169

Other Financial Obligations
In addition to liabilities, provisions and warranties and guarantees, the Voith Group also has other financial obligations,in particular those arising from rental and leasing agreements
for buildings, land, equipment, plant, machinery, and othernon-production-related tools and equipment.
€ in thousands

2010-09-30 2009-09-30

The total of future minimum lease payments for non-cancelable operating rental and leasing agreements is ­shown below:
2010-09-30 2009-09-30
Nominal value of future minimum lease
payments
Due in under one year

47 66539 711

Due between one and five years

62 11061 204Due in over five years

26 24931 402136 024

132 317

Purchasing commitments
for capital expenditure

19 98935 634

Obligations arising from non-cancelable
operating rental and leasing agreements

136 024

132 317

740

2 106

156 753

170 057

Future minimum lease payments include an amount of€5 319 thousand from sale and lease-back transactions.

Assets leased within the framework of operating rental andleasing agreements led to cash outflows totaling €67 634
thousand (previous year: €63 116 thousand) in the period
under review. These payments were recognized as expenses
and mostly related to leased vehicles, machinery andbuildings. The majority of leases run for between one and17 years. Some companies have the option of extending
their rental contracts.

A negligible amount is expected as sublease cash inflows
from assets under operating rental and lease agreements
within the Group.

Other obligations

170

Voith Annual Report 2009/2010

The “Other obligations” item consists essentially of maintenance agreements.

Additional Information on Financial Instruments
Carrying amounts, measurements and fair values for each category of instrument.
IAS 39 balance sheet measurement policy€ in thousands

IAS 39Carrying
measureamountment
as at Amortizedcategory 2010-09-30
cost

Cost

Fair value
in equity

Fair value
in profit
and loss

IAS 17balancesheetmeasurement
Fair value
policy 2010-09-30

Assets:Cash and cash equivalents

LaR

Trade receivables

LaR

784 058

784 058

784 058

Receivables from construction contracts

LaR

355 639355 639355 639

Other financial assets and marketablesecurities

1 175 359 1 175 359

1 175 359

247 083

Financial assets loans and receivables

LaR

30 918Financial assets available-for-saleAfS

206 993

Financial assets held-for-trading

FAHfT

0

0

0

Financial assets at fair value through profit
and loss

FAfvtpl

9 172

9 172

9 172

Derivatives without hedges

30 91824 069182 924

182 9241)

96 747

Financial derivatives2)
Derivatives with hedges

30 918

FAHfT

9 450

n.a.

87 297

797

9 450

9 450

86 50087 297170 376

Other receivables2)
Financial receivables

LaR

54 86854 868Other financial assets

LaR

4 591

4 591

54 868
4 591

Other operating assets

LaR

110 917

110 917

110 917496 142496 142496 142

1 344 542 1 344 542

1 436 927

Liabilities:
Trade accounts payable

FLAC

Bonds/bank loans/notes

FLAC

Financial liabilities from leasing contracts

n.a.

Derivatives without hedges
Derivatives with hedges

4 133

4 133

39 933Financial derivatives2)
FLHfT

9 984

9 984
8 040

21 909

9 984

n.a.

29 949Other financial liabilities

FLAC

120 910120 910120 91029 949Other liabilities2)

FLAC

365 508

365 508

365 508

IAS 39 measurement categories:
Loans and receivables (LaR)

LaR

Available-for-sale (AfS)

AfS

206 993

Financial assets held-for-trading (FAHfT)

FAHfT

9 450

9 450

Financial assets at fair value through profit
and loss

FAfvtpl

9 172

9 172

Financial liabilities measured at amortizedcost (FLAC)

FLAC

Financial liabilities held-for-trading (FLHfT)

FLHfT

2 516 350 2 516 350
24 069182 924

2 327 102 2 327 102
9 984

9 984

1)

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

2) ther receivables and assets/other liabilities totaling €438 049 thousand/€1 623 341 thousand reported in the balance sheet include financial
O
assets/financial liabilities totaling €267 123 thousand/€405 441 thousand.

Financial Statement

171

IAS 39 balance sheet measurement policy
IAS 39Carrying
measureamountment
as at Amortizedcategory 2009-09-30*
cost€ in thousands

Cost

Fair value
in equity

Fair value
in profit
and loss

IAS 17balancesheetmeasurement
Fair value
policy 2009-09-30*

Assets:Cash and cash equivalents

LaR

923 127

923 127

Trade receivables

LaR

671 809671 809671 809

Receivables from construction contracts

LaR

257 758

257 758

257 758

Other financial assets and marketablesecurities

923 127

323 861

Financial assets loans and receivables

LaR

6 799

Financial assets available-for-sale

AfS

300 165

Financial assets held-for-trading

FAHfT

1 564

1 564

1 564

Financial assets at fair value through profit
and loss

FAfvtpl15 33315 33315 33314 30114 30178 45880 675Derivatives with hedges

6 799
22 449277 716277 7161)

94 976

Financial derivatives2)
Derivatives without hedges

6 799

FAHfT
n.a.

14 30180 6752 217

119 764

Other receivables2)
Financial receivables

LaR

40 43440 434

Other financial assets

LaR

2 002

2 002

40 434
2 002

Other operating assets

LaR

77 32877 32877 328406 075

406 075

406 075

1 275 697 1 275 697

1 294 401

Liabilities:
Trade accounts payable

FLAC

Bonds/bank loans/notes

FLAC

Financial liabilities from leasing contracts
Financial derivatives

n.a.

Derivatives without hedges

4 915

4 915

14 224

2)

FLHfT

6 945

n.a.

7 279

Other financial liabilities

FLAC

118 597

118 597

118 597

Other liabilities2)

FLAC

369 465369 465369 465

Derivatives with hedges

2 895

6 945

6 945

4 384

7 279

IAS 39 measurement categories:
Loans and receivables (LaR)

LaR

Available-for-sale (AfS)

AfS

300 165

Financial assets held-for-trading (FAHfT)

FAHfT

15 86515 865

Financial assets at fair value through profit
and loss

FAfvtpl15 33315 333Financial liabilities measured at amortizedcost (FLAC)

FLAC

Financial liabilities held-for-trading (FLHfT)

FLHfT

1 979 257 1 979 257
22 449277 7162 169 834 2 169 834
6 945

6 945

1)

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

2) ther receivables and assets/other liabilities totaling €363 775 thousand/€1 447 234 thousand reported in the balance sheet include financial
O
assets/financial liabilities totaling €214 740 thousand/€383 689 thousand.

*Data for the previous year adjusted (refer to “Adjustments to data for previous years”).
172

Voith Annual Report 2009/2010

IAS 39 balance sheet measurement policy
IAS 39Carrying
measureamountment
as at Amortizedcategory 2008-10-01*
cost*€ in thousands

Cost

Fair value
in equity

Fair value
in profit
and loss

IAS 17balancesheetmeasurement
Fair value
policy 2008-10-01*

Assets:Cash and cash equivalents

LaR

539 641539 641

Trade receivables

LaR

726 145726 145726 145

Receivables from construction contracts

LaR

378 283

378 283

378 283

Other financial assets and marketablesecurities

539 641

264 596

Financial assets loans and receivables

LaR

4 269

Financial assets available-for-sale

AfS

236 015

Financial assets held-for-trading

FAHfT

11 232

11 232

11 232Financial assets at fair value through profit
and loss

FAfvtpl

13 08013 08013 08018 20318 20334 59137 369Derivatives with hedges

4 269
30 816205 199

205 1991)

55 572Financial derivatives2)
Derivatives without hedges

4 269

FAHfT
n.a.

18 20337 3692 778

227 586

Other receivables2)
Financial receivables

LaR

107 367

107 367

Other financial assets

LaR

2 675

2 675

107 367
2 675

Other operating assets

LaR

117 544

117 544

117 544

Liabilities:
Trade accounts payable

FLAC

486 704

486 704

486 704

Bonds/bank loans/notes

FLAC

867 105

867 105

841 108

n.a.

5 860

Financial liabilities from leasing contracts
Financial derivatives

Derivatives without hedges

5 860

57 300

2)

FLHfT

7 064

Derivatives with hedges

n.a.

50 236

Other financial liabilities3)

FLAC

141 417141 417141 417

Other liabilities2)

FLAC

487 160

487 160

487 160

378

7 064

7 064

49 85850 236

IAS 39 measurement categories:
Loans and receivables (LaR)

LaR

Available-for-sale (AfS)AfS

236 015

Financial assets held-for-trading (FAHfT)

FAHfT

29 43529 435

Financial assets at fair value through profit
and loss

FAfvtpl

13 08013 080Financial liabilities measured at amortizedcost (FLAC)

FLAC

Financial liabilities held-for-trading (FLHfT)

FLHfT

1 875 924 1 875 924
30 816205 199

1 982 386 1 982 386
7 064

7 064

1)

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

2) ther receivables and assets/other liabilities totaling €431 938 thousand/€1 665 998 thousand include financial assets/financial liabilities totalingO€283 158 thousand/€544 460 thousand.

3)

The other financial liabilities of €142 076 thousand corrected in the notes include customs totaling €659 thousand.

*Data for the previous year adjusted (refer to “Adjustments to data for previous years”).
Financial Statement

173

IFRS 7.2 measurement categories€ in thousands
2010-09-30

Level 1

Level 2

Level 3

AssetsLevel 1:
Fair values are determined on the basis of publicly listed
market prices.

Other
financialassets andmarketablesecurities

192 096

192 0960

0

Financialderivatives

96 7470

96 747039 933039 9330€ in thousands
2009-09-30

Level 1

Level 2

Level 3Liabilities
Financialderivatives

AssetsOther
financialassets andmarketablesecurities

294 613294 61300

Financialderivatives

94 9760

94 9760

14 2240

14 2240Liabilities
Financialderivatives

174

The three-phase fair value hierarchy distinguishes between
fair values based on the nature of the input parameters usedfor valuation, thereby revealing the extent to which observable market data is available for calculation of fair values.
Three measurement categories are distinguished:

Voith Annual Report 2009/2010

Level 2:
Fair values are determined using measurement methods
in which the input factors are based on directly observable
market data.
Level 3:
Fair values are determined using measurement methods inwhich the input factors are based on indirectly observable
market data.

Risk Management
Net gains and losses for each category of instrument:
2009/10€ in thousands

Other net
Impairments gains/losses

Loans and receivables(LaR)

Principles of Financial Risk Management

Total

1 740

(1 205)535(40 836)(469)(41 305)

Financial assets at fairvalue through profit and
loss

0

978

978

Held-for-trading financial
assets0(4 288)(4 288)Financial liabilities atamortized cost0

(15 065)(15 065)

Available-for-sale financial
assets2008/09€ in thousands

Other net
Impairments gains/losses

Total

Loans and receivables(LaR)(14 627)*(7 787)(22 414)

Available-for-sale financial
assets(19 873)

1 908(17 965)

Financial assets at fairvalue through profit and
loss

0

513

513

Held-for-trading financial
assets0(10 295)(10 295)

Financial liabilities atamortized cost

0

313

313

The Voith Group is a global player. In the course of its ordinary
business, some of its liabilities, assets and transactions are
exposed to risks arising from changes in interest rates andexchange rates. These risks could affect its assets, financial
and earnings position. The aim of financial risk management
is therefore to manage and contain these risks.
The principles of the Group’s financial policy are laid downby the Voith GmbH Board of Management and monitored by
the Supervisory Board. As at October 1, 2009 the previous
Voith AG Corporate Finance division in Heidenheim wasreassigned to Voith Finance GmbH, Heidenheim, a 100%
subsidiary of Voith GmbH, although external refinancing
continues to be contracted via Voith GmbH.
Voith Finance implements the financial policy and regularly
reports to the Chief Financial Officer on the financial positionof the Group and current risk exposures. Certain financialtransactions require special approval by the Corporate Boardof Management.
Derivative financial instruments are used to limit the risks
arising both from operating business and from the resultant
financing requirements. These instruments are used in accordance with clearly defined, uniform, Group-wide guidelines.
Compliance with these guidelines is verified on an ongoingbasis. Hedge transactions and highly liquid investments areplaced only with financial institutions that have first-classcredit ratings.

*Data for previous year adjusted.

Credit Risk
The Voith Group does business only with recognized, creditworthy third parties. We verify the creditworthiness of all
customers who wish to do credit-based business with us.

Financial Statement

175Liquid funds:
For the purposes of risk management liquid funds consist essentially of cash, cash equivalents and marketablesecurities. Default risks associated with term deposits arecontained by selecting banking partners that are verifiably
solvent and by spreading cash and cash equivalents acrossmultiple counterparties. A creditworthiness limit (derived fromcredit default swaps/rating/deposit protection) is establishedfor each bank and compliance continuously verified.
Securities may only be traded by consolidated companies
with the approval of Voith Finance.
In addition, Voith invests in marketable securities in thecontext of its strategic liquidity reserve and has the associated risks monitored by an external advisor on the basis ofa defined value-at-risk budget. Daily changes in the value ofmarketable securities are monitored internally.
Trade receivables:
Credit risk arising from the delivery of goods and services
expresses itself in terms of counterparty risk, manufacturingrisks and political export-related risks. Handling of theserisks is governed by binding rules throughout the Voith
Group. Credit risk is limited to the carrying amount of tradeaccounts receivable, which is €784 058 thousand (previous
year: €671 809 thousand). The maximum default risk forreceivables arising from long-term construction contracts is€355 639 thousand (amounts adjusted for previous years:
2009: €257 758 thousand and 2008: €378 283 thousand).

176

Voith Annual Report 2009/2010

All orders above a defined value are subject to general risk
assessment requirements. Without special permission fromthe relevant governing bodies, Group companies do not
accept orders from customers whose credit rating falls below
a defined threshold and who cannot furnish an adequate
guarantor.
Political export risks must always be hedged for risks at
Euler Hermes country category 3 or higher unless approval
is issued by the decision-making bodies. Further risk assessment is also activated for orders upward of defined values.
Necessary securities are obtained via export credit agencies(ECAs), on the private insurance market or by means of bankcontacts.
If counterparties default in respect of the Group’s otherfinancial assets (cash and cash equivalents, available-for-salefinancial assets and certain financial derivatives), the credit
risk is limited to the carrying amount of the instruments
concerned. For details of financial guarantees, please referto the discussion of contingent liabilities. This kind of asset
loss can occur if individual business partners fail to meettheir contractual obligations. As a rule, no security exists forsuch eventualities.
The Voith Group is exposed to no material concentrationof risks. Corporate policy is to avoid limiting credit risk to asingle financial institution. Instead, the Group invests with avariety of creditworthy financial institutions. Nor is the Group’s
customer structure materially concentrated in any particulargeographic region. The Group tests for the impairment of
doubtful accounts in light of certain customers, historic
trends, branches of industry and various other information.

The following credit risks are factored into financial assets:
2010-09-30

Thereof not impaired but, at the balance sheet date,
overdue for:Gross value

Thereof neither
impaired nor
overdue

Trade receivables

826 718559 886

Other financial assets and marketablesecurities

247 083

247 083

Other receivables

174 413168 562

Gross value

Thereof neither
impaired nor
overdue

Trade receivables

717 544488 322

119 399

Other financial assets and marketablesecurities

323 861323 590

271

Other receivables

124 950

119 425827€ in thousands

2009-09-30€ in thousands

Receivables of €770 thousand (previous year: €0) subject toamended contract terms which were otherwise impaired or
overdue were recognized at the balance sheet date.
The carrying amount of liquid funds, receivables from construction contracts and derivatives is neither impaired nor
overdue.
Liquidity Risk
To ensure that it can always meet its financial obligations,
Voith has adequate cash lines and has negotiated a syndicated credit facility with its banking partners.

less than
90 days

between90 and 180 days

more than
180 days

136 042

20 22032 597

2 244

31

213

Thereof not impaired but, at the balance sheet date,
overdue for:less than
90 days

between90 and 180 days

more than
180 days

19 45018 27657

221

Cash lines are used to cover the short-term financing of working capital. By contrast, the syndicated credit facility serves
as a reserve out of which temporary funding can be provided
for significant investments. The long-term syndicated credit
facility is available for a remaining 2.5 years and had not beendrawn on at the balance sheet date. To safeguard internaland external growth, Voith procures long-term funding on
the capital markets by issuing bonds and note loans and by
private placements.
Cash pools, intercompany loans and the allocation of external bank credit lines to individual operating units protect
Group companies’ liquidity. Voith Finance produces liquidity
status reports for the entire Group once a month. Balancesof central bank and cash pool accounts and guarantees areavailable daily.

Financial Statement

177

The table below lists the undiscounted, contractually agreed
cash outflows arising from financial instruments:
Cash flows < 1 year

Cash flows 1-5 years

Cash flows > 5 years

Balanceas at2010-09-30

Fixed
rate

Floating
rate

Repayment

Fixed
rate

Floating
rate

Repayment

Fixed
rate

Floating
rate

Repayment

Trade accounts payable

496 14200492 539

0

0

3 748

0

0

0

Bonds/bank loans/notes

1 344 542

49 8738 866

230 728

159 997

11 089392 087

56 4383 541

706 581

Financial liabilities fromleasing contracts

4 133

0

0

1 144

0

0

2 080

0

0

1 825

Other financial liabilities

120 910

1 180

366

64 507

127

0

1 719

0

0

54 684

Other liabilities

365 50800

333 87300

28 335

0

0

3 988

Financial derivatives

39 933

Outflows

00

242 979

00

92 80900771

Inflows

00(208 282)00(81 478)

0

0

(795)

9 232 1 157 488

160 124

11 089439 300

56 4383 541

767 054€ in thousands

2 371 168

51 053

Cash flows < 1 year

Cash flows 1-5 years

Cash flows > 5 years

Balanceas at2009-09-30*

Fixed
rate

Floating
rate

Repayment

Fixed
rate

Floating
rate

Repayment

Fixed
rate

Floating
rate

Repayment

Trade accounts payable

406 07500404 385

0

0

1 690

0

0

0

Bonds/bank loans/notes

1 275 697

50 2599 630

43 785177 183

18 079531 62188 6885 285

704 980

Financial liabilities fromleasing contracts

4 915

0

0

1 611

0

0

2 451

0

0

1 929

Financial derivatives(adjusted)

14 2240

0

91 3390044 5030

0

0Other financial liabilities

118 597

1 236

591

72 003

286

0

3 872

0

0

42 722Other liabilities

369 46500313 7000051 312

0

0

4 950

2 188 973

51 495

10 221926 823

177 469

18 079635 449

88 6885 285

754 581€ in thousands*Data for the previous year adjusted (refer to “Adjustments to data for previous years”).

178

Voith Annual Report 2009/2010

Cash flows < 1 year

Cash flows 1-5 years

Cash flows > 5 years

Balanceas at2008-10-01*

Fixed
rate

Floating
rate

Repayment

Fixed
rate

Floating
rate

Repayment

Fixed
rate

Floating
rate

Repayment

Trade accounts payable

486 70400483 294

0

0

3 410

0

0

0

Bonds/bank loans/notes

867 105

23 71320 56981 02081 76856 743

246 658

60 48728 130532 627

Financial liabilities fromleasing contracts

5 860

0

0

2 051

0

0

3 006

0

0

1 789

€ in thousands

Financial derivatives(adjusted)

57 30000173 29900

80 7290

0

0

Other financial liabilities

141 417

1 232

1 318

99 090

320

80

4 562

0

0

37 765

Other liabilities

487 16000417 598

00

67 750

0

0

2 413

2 045 546

24 94521 887 1 256 352

82 08856 823406 11560 48728 130574 594*Data for the previous year adjusted (refer to “Adjustments to data for previous years”).

Other potential payment obligations, which can materialize at
any time, exist in the form of financial guarantees of €37 811
thousand (previous year: €35 803 thousand).
Solvency is ensured and liquidity can be managed using
marketable securities and cash equivalents which can betransformed into cash at any time.
Derivatives include cash outflows on financial derivatives
with negative market values for which a gross cash flow
settlement has been agreed. The cash outflows for thesefinancial derivatives are matched by corresponding cash
inflows which are shown separately in the table above underinflows and outflows (gross). On the other hand, where a net
cash flow settlement is effected, cash outflows are netted
against cash inflows.
Only cash outflows were shown in previous years. If the corresponding cash inflows were taken into account, the cash
flows shown in the maturity analysis would be significantly
lower.

Financial Market Risks
Foreign exchange risks:
Global production and business activities expose the Voith
Group to risks arising from fluctuations in exchange rates.
Foreign exchange risks exist in particular wherever receivables, liabilities, cash and cash equivalents and orders (firmcommitments/planned transactions) are or will be denominated in a currency other than the presentation currency of
the Group company concerned.
For the Voith Group, this happens above all with the US­Dollar. Changes in the exchange rate affect both earnings andGroup equity. If the US Dollar rises by 5%, this reduces our
pretax profits by €7 259 thousand (previous year: €14 380
thousand) and equity (including the effect from pretax profits)by €1 389 thousand (previous year: €8 908 thousand). If
in contrast the US Dollar falls by 5%, this increases our
pretax profits by €6 554 thousand (previous year: €12 996
thousand) and equity (including the effect from pretax profits)by €1 241 thousand (previous year: €7 914 thousand).

Financial Statement

179

Most currency hedging is undertaken by Voith Finance.
Transaction risks arising from the international deliveryof goods and services are mainly contained by forward
exchange contracts, currency swaps and combinations ofinterest rate and currency swaps. Essentially, all foreign currency transactions at the Voith Group must be hedged. Major
items and orders on the balance sheet (upward of a valueof €1 million) are hedged individually within the framework ofhedge accounting.
In the context of project business, both the hedge relationship and the objectives of and strategies for risk management
must be documented in respect of the underlying (hedged)transactions before external hedge transactions are agreed.
Hedges must be highly effective if they are to satisfy Voith’srisk management strategy. Where hedge relationships
are verifiably effective, the transactions achieve a hedge
accounting status. As a result, fluctuations in the exchange
rate do not affect profit and loss, nor do they influence project
costing.
In the Voith Group, financial derivatives are traded externallyby Voith Finance on behalf of consolidated companies.
Consolidated companies in countries subject to foreignexchange restrictions hedge their currency risks locally.
The enterprise-wide treasury management tool is used forcentral scheduling, monitoring and documentation of all
foreign currency hedges entered into by Voith Finance orconsolidated companies.

180

Voith Annual Report 2009/2010

Interest rate risks:
The Voith Group’s exposure to interest rate risks arising fromexternal refinancing is centrally analyzed and managed byVoith Finance. Medium- to long-term assets and liabilities
with fixed interest rates are the main source of interest raterisks at the Group, as changes in market rates of interest cancause the value of a financial instrument to fluctuate. Risks to
the market value of fixed-interest receivables and payables
are hedged on a case-by-case basis. Risks to market value
are hedged by interest rate swaps and combined interest rate/currency swaps, usually in the context of hedge
accounting.
The relevant asset positions are essentially balances in bankaccounts that are invested in the money market and/or
are used to fund the existing cash pool. The consolidated
companies that participate in the cash pool operate a daily
zero-balancing policy and therefore have no exposure toexternal interest rate risks.
The Group raises funds by drawing on financial instrumentswith both fixed and floating rates of interest which are hedged
against interest rate risks.
On the cost side, interest rate risks arise from bonds placedon the capital market, a private placement in the USA, aeuro note loan and a variety of bank loans. The US private
placement was swapped from a fixed to a floating rate andthe resulting cash flow risk hedged by interest rate caps
accordingly. Part of the 2001/2011 bond has been swappedfrom fixed to floating rates. Ongoing analysis of effective
interest payments and the trend in mid-swap rates withsimilar maturities form the basis for the option of realigning
fixed- and floating-rate obligations. By contrast, the newly
issued euro note loan has been swapped from a floating toa fixed rate.

The carrying amounts of those key financial instruments thatare exposed to interest rate risks are grouped by ­contractually
defined maturity in the following table:
Under
1 year

1–2 years

2–3 years

3–4 years

4–5 yearsOver
5 years

Total

1 175 359

0

0

0

0

0

1 175 359

Bonds

145 73100

150 5150

125 529421 775

Bank loans

77 443

34

34

34

34

269

77 848

0

0

0

0

0

577 498

577 498218

100 09313

159 56213

0259 899

Under
1 year

1–2 years

2–3 years

3–4 years

4–5 yearsOver
5 years

Total

923 127

0

0

0

0

0

923 1270

146 11500

134 996

110 091

391 202

25 976

211

93

150

110

5 664

32 204

Bonds

0

0

0

0

0

574 910574 910

Bank loans00

100 0000

159 4450259 445

2010-09-30€ in thousands
Floating interest rates
Cash and cash equivalents

Fixed interest rates
Bonds
Bank loans

2009-09-30€ in thousands
Floating interest rates
Cash and cash equivalents
Bonds
Bank loans
Fixed interest rates

If the market rate of interest had been 100 bps higher (lower)
at September 30, 2010, earnings would have been €6.8 million (previous year: €5 million) higher (lower). Equity would
have changed accordingly.

Financial Statement

181

Risks relating to marketable securities andstock prices:
Towards the end of the fiscal year Voith began liquidating assets previously held in a multi-asset portfolio. At thebalance sheet date there was still a portfolio of remaining
unsold securities. The total value of the portfolio at thebalance sheet date was still €11 million (previous year: €100
million). Risk monitoring takes place via an external advisor
using a defined value-at-risk budget. The value at risk (VaR)
indicates the maximum loss at a defined probability level overa defined holding period. A rolling 260-day window supplies
the information about future returns and volatility levels thatis needed to calculate the value at risk.
The confidence level is set at 95%. The holding period is
set at 10 days and, in a second method, 260 days. The
parameter settings indicate a probability of 95% that losses
to the portfolio after 10 days (260 days) will not exceed thedefined value at risk. The 95% VaR for 10 days was 0.38%(previous year: 0.28%) of the market values at the balance
sheet date.
In addition, the Group holds mostly individual stocks witha total value of €158 million (previous year: €179 million).
Accordingly, stock price risks are reflected on the balance
sheet and not in the consolidated statement of income, provided the criteria for impairment are not met. A 10% change
in the underlying stock prices would cause equity to change
by 10% of the carrying amount of the stocks concerned.
Stocks and other securities worth €23 million (previous year:€14 million) were also held which may be subject to a price
risk.

182

Voith Annual Report 2009/2010

It should be noted that all investment decisions are basedon thorough analysis of fundamental data. In the event of
unusual stock price movements, existing stock price risks
are analyzed immediately and suitable actions taken.
Commodity price risks:
Voith is indirectly exposed to risks arising from changes incommodity prices, as these also affect the semi-manufacturesthat we usually need. Corporate Purchasing regularly reviews
the nature, volume and scheduling of the Group’s material
requirements. On request by Corporate Purchasing, and in
consultation and agreement with consolidated companies,
suitable forward commodity contracts can be arranged byVoith Finance to contain any latent commodity price risks.
No forward commodity contracts were arranged during the
fiscal year. In addition, increases in the price of materials canbe passed on to customers to some extent.

Hedge Relationships:
The following items hedge foreign exchange and interest
rate risks:
2010-09-30€ in thousands

Nominal values*< 1 year> 1 year

Positive market values

Negative market values< 1 year< 1 year> 1 year> 1 year

Forward exchange contracts (fair value hedges)

588 767

219 11435 73812 12716 426

5 484

Forward exchange contracts (cash flow hedges)

20 327

0

797

0

1 030

0

Interest rate swaps (fair value hedges)

100 000

238 008261

38 3740

0Interest rate swaps (cash flow hedges)0

148 000

0

0

0

7 009

Other derivatives

154 708

265 635

4 448

5 002

8 710

1 274

Total

863 802

870 757

41 24455 50326 166

13 767

2009-09-30€ in thousands

Nominal values*< 1 year> 1 year

Positive market values

Negative market values< 1 year< 1 year> 1 year> 1 year

Forward exchange contracts (fair value hedges)

515 497

255 114

39 14815 331

3 494

890

Forward exchange contracts (cash flow hedges)

7 825

4 207

1 694

523

155

120

Interest rate swaps (fair value hedges)0

321 661

0

23 9790

0Interest rate swaps (cash flow hedges)0

148 000

0

0

0

2 620

Other derivatives

192 770286 079

5 856

8 445

4 963

1 982

Total

716 092

1 015 061

46 69848 278

8 612

5 612

*Nominal value refers to the volume of the hedged transactions in the local currency, translated at the exchange rate on the balance sheet date.

The reported interest rate swaps were concluded to hedge
the fair value of the €200 million bond running from 2001
through 2011, to hedge the fair value of the private placements (fair value hedge) and to hedge the risk of changes
in the rate of interest for the note loan (cash flow hedge). As
a result, the fixed interest rates agreed for the bonds wereconverted to floating rates and the floating rate agreed forthe note loan was converted to a fixed rate. The main terms
and conditions agreed for the bonds and interest rate swaps
are identical.

Financial Statement

183

Fair value hedges
The Group uses fair value hedges primarily to hedge interest
rate and foreign exchange risks.
In fiscal 2009/10, a loss of €5 449 thousand (previous year: again of €77 822 thousand) was recorded for financial derivatives classified as fair value hedges. Since the hedges wereclassified as highly effective, measurement of the hedgedtransactions at the balance sheet date produced contrary
results in the same amount.
The ineffective portions of hedges did not affect earnings infiscal 2010 or 2009.
Changes in the value of financial derivatives that do not meetthe requirements defined for hedge accounting by IAS 39
are recognized in profit and loss at the balance sheet date.
Cash flow hedges
On September 30, 2010, the Group held forward exchange
contracts to hedge expected future sales and purchases.
These contracts relate to firm commitments. Since 2009,
the Group has also been using interest rate swaps to hedge
interest rate risks through 2014. Since the hedge relationships are documented, these forward exchange contracts
are classified as hedges in the context of cash flow hedging.
The main terms and conditions of the forward exchange
contracts were negotiated in line with the terms and conditions agreed for the underlying transactions.
Hedge relationships designed to hedge cash flows fromexpected future sales were classified as highly effective.
Accordingly, an unrealized loss of €1 357 thousand (previous
year: €4 873 thousand) was recognized in Group equity inrevenue reserves on September 30, 2010.
Due to the realization of transactions in the course of theperiod under review, the relevant accumulated losses in theamount of €6 976 thousand (previous year: gains of €1 764
thousand) were reclassified from other reserves to profit
and loss.

184

Voith Annual Report 2009/2010

Research and Development Costs
In fiscal 2009/10, research and development costs totaled€265 861 thousand (previous year: €253 860 thousand).
Of this amount, €20 121 thousand (previous year: €18 320
thousand) was capitalized as development expenditure in thebalance sheet. The remaining expenses consist of €172 628
thousand (previous year: €171 229 thousand), which includes
both scheduled depreciation on these capitalized development expenses and activities for non-customer-specificnew developments and improvements, as well as €73 112
thousand (previous year: €64 311 thousand) for development
activities capitalized in the context of customer-specificorders.
Related Party Disclosures
In the course of its ordinary business activities, Voith AG
maintains relationships both with the subsidiaries listed
in these consolidated financial statements and with otherrelated enterprises and individuals (holders of minority interests, family members who are shareholders, and membersof the Supervisory Board and the Board of Management).
In fiscal 2007/08, one subsidiary of Voith AG was sold tofamily members who are shareholders in the context of atransaction under common control. This company, JMVGmbH & Co. KG, Heidenheim, is now the parent companyof the Voith Group.
All business transactions with related enterprises and individuals are conducted at arm’s length on regular market
terms and conditions.
Members of the Board of Management or members of theSupervisory Board of Voith AG and family members who holdshares in the Group also serve on the supervisory boards ofother companies with which Voith maintains relationships inthe course of its ordinary business activities. Any transactions
involving these companies are conducted at arm’s length
on the same terms and conditions as business with any
unrelated third parties.

A total of €76 thousand (previous year: €153 thousand)was paid at customary market rates to members of theSupervisory Board and former members of the Board ofManagement for consulting and other services.
The majority of intercompany deliveries and services torelated enterprises and individuals are shown in the tablebelow:€ in thousands

2009/10

2008/09*

2007/08*

Liabilities to family members who are shareholders

37 12337 76934 637

Services purchased from associated companies

7 508

1 511

1 386

Services provided for associated companies

20 122

4 741

5 818

Receivables from associated companies

5 057

2 758

726

Liabilities to associated companies

707

3 939

1 342

Services purchased from other investments

665

705

3 886

Services provided for other investments

24 38013 35414 869Receivables from other investments, incl. advance payments

11 140

10 31415 293

Write-downs on receivables from other investments(448)(1 181)(1 623)Liabilities to other investments

25 03020 80428 966

Services purchased from the parent company

8 842

7 824

7 738

Services rendered to the parent company

467

599

325

Receivables from the parent company

214

514

538

Liabilities to the parent company

1 904

1 193

1 181

Liabilities to holders of non-controlling interests

61 59063 482101 751

Receivables from holders of non-controlling interests

31 496

7 697

36 908Services purchased from holders of non-controlling interests

68 60169 43951 678Services provided for holders of non-controlling interests

60 92745 95144 449Liabilities to family members who are shareholders include
current floating-rate clearing accounts and pension obligations.

Research and development services in the amount of €1 692
thousand (previous year: €1 688 thousand) were provided
and charged to the Group by one related party.

For more information on the profit participation rights granted
in fiscal 2006/07 (€76 800 thousand) and in fiscal 2008/09(€6 600 thousand) to family members who are shareholders,please refer to note 19.

Guarantees in the amount of €12 146 thousand and €1 684
thousand were assumed on behalf of an associated ­company
and other investments.

*Data for the previous year adjusted (refer to “Adjustments to data for previous years”).
Financial Statement

185

Remuneration of Governing Bodies

Auditor’s Fees and Services

Total compensation for members of the Board of Management of Voith AG, including pension expenses, came to€11 458 thousand in the period under review (previous
year: €11 596 thousand). This amount includes long-termcompensation components totaling €3 603 thousand (previous year: €3 373 thousand). These long-term compensation
components include service costs totaling €1 548 thousand(previous year: €1 409 thousand).

The following fees (including compensation for expenses)
were paid to the independent auditor for services renderedin fiscal 2009/10:

The members of the Supervisory Board received compensation in the amount of €507 thousand (previous year: €406
thousand).
The present value of all defined benefit obligations in respectof current members of the Board of Management was€20 430 thousand (previous year: €14 497 thousand) at
the balance sheet date. The present value of all defined
benefit obligations in respect of former members of theBoard of Management was €18 676 thousand (previous year:€17 432 thousand). Plan assets totaling €12 567 thousand(previous year: €10 246 thousand) have been formed for
current and former members of the Board of Management.
These amounts are stated in section 20 of the notes to theconsolidated financial statements.
€1 275 thousand (previous year: €1 601 thousand) was spenton pension and other payments to former members of theBoard of Management.

186

Voith Annual Report 2009/2010€ in thousands

2009/10

2008/09

Annual audit

1 797

2 182

Other auditing and valuation services

18

143

Tax advice

145

84

Other services

57

142

2 017

2 551

Events after the Balance Sheet Date
Apart from the transactions outlined in this report, no further
developments of material importance have occurred since
the close of fiscal 2009/10.

Heidenheim/Brenz, November 22, 2010

Voith GmbH
The Board of Management

Dr. Hubert Lienhard
Dr. Hermann Jung
Dr. Hans-Peter Sollinger
Peter Edelmann
Martin Hennerici
Bertram Staudenmaier
Dr. Roland Münch

Ernst & Young GmbH, Wirtschaftsprüfungsgesellschaft,
Stuttgart, gave an unqualified audit opinion on the consolidated financial statements of Voith AG for the fiscal year
to September 30, 2010 and the German version was filedwith the electronic version of the Federal German Gazette(available at www.bundesanzeiger.de).

Financial Statement

187

Responsibility Statement
To the best of our knowledge, and in accordance with theapplicable reporting principles, the consolidated financial
statements give a true and fair view of the assets, liabilities,
financial position and profit or loss of the Group, and theGroup management report includes a fair review of thedevelopment and performance of the business and theposition of the Group, together with a description of the principal opportunities and risks associated with the expecteddevelopment of the Group.

Heidenheim/Brenz, November 22, 2010

Voith GmbH
The Board of Management

Dr. Hubert Lienhard
Dr. Hermann Jung
Dr. Hans-Peter Sollinger
Peter Edelmann
Martin Hennerici
Bertram Staudenmaier
Dr. Roland Münch

188

Voith Annual Report 2009/2010

The Voith Group and Its Shareholdings
as at 2010-09-30

Significant Associated Companies and Shareholdings
Capitalin local currency
Voith GmbH (formerly Voith AG), Heidenheim/Germany

Group sharein %120 000 000

EUR

Voith IT Solutions GmbH & Co KG, St. Pölten/Austria

35 000EUR

100.0Voith Composites GmbH & Co. KG, Garching/Germany

200 000

EUR

100.0

44 601 000

EUR

100.0

Voith Assekuranz Vermittlung GmbH, Heidenheim/Germany

51 129EUR

100.0Voith Finance GmbH, Heidenheim/Germany

25 000EUR

100.0Voith Financial Services GmbH, Heidenheim/Germany

25 000EUR

100.0Voith IT Solutions GmbH, Heidenheim/Germany

50 000EUR

100.0Voith Theta GmbH, Heidenheim/Germany

50 100

EUR

100.0

1

USD

100.0

23 519 500

EUR

65.0

363 364

EUR

100.0

Voith Hydro GmbH & Co KG, St. Pölten/Austria

3 633 642

EUR

100.0

Voith Hydro da Amazonia Ltda., Manaus/Brazil

10 000BRL

100.0Voith Hydro Ltda., São Paulo (SP)/Brazil

42 962 560

BRL

100.0

Voith Hydro Services Ltda., São Paulo (SP)/Brazil

1 000 000

BRL

100.0

Voith Hydro Inc., Brossard (QC)/Canada

16 114 850

CAD

100.0

Voith Hydro S.A., Santiago de Chile (Las Condes)/Chile

25 000 000

CLP

100.0

Voith Hydro Shanghai Ltd., Shanghai/China

J.M. Voith GmbH & Co. Beteiligungen KG, Heidenheim/Germany

Voith IT Solutions Inc., Wilson (NC)/United States

Voith Hydro Holding GmbH & Co. KG, Heidenheim/Germany*
Kössler Gesellschaft m.b.H., St. Georgen (Stfd.)/Austria

43 333 667

USD

80.0

VH Auslandsbeteiligungen GmbH, Heidenheim/Germany

26 000EUR

100.0

VHG Auslandsbeteiligungen GmbH, Heidenheim/Germany

25 565EUR

100.0

15 441 100

EUR

100.0

100 000

EUR

80.0

200 000 000

INR

100.0

120 000

EUR

100.0

200 000 000

JPY

50.0

3 000

MXN

100.0

3 000 000

NOK

100.0

Voith Hydro Sarpsborg AS, Sarpsborg/Norway

530 000

NOK

100.0

Voith Hydro Lima S.A.C., San Isidro - Lima/Peru

1 000

PEN

99.0

680

RON

100.0

Voith Hydro GmbH & Co. KG, Heidenheim/Germany
Voith Hydro Ocean Current Technologies GmbH & Co. KG, Heidenheim/Germany
Voith Hydro Private Limited, Noida/India
Voith Hydro S.P.A., Cinisello Balsamo (MI)/Italy
Voith Fuji Hydro K. K., Kawasaki-shi, Kanagawa/Japan
Voith Hydro Mexico, S. de R.L. de C.V., Huixquilucan, Edo de Mexico/Mexico
Voith Hydro AS, Oslo/Norway

Voith Hydro S.R.L., Bucharest/Romania*The proportionate holding for the Hydro companies relates to Voith Hydro Holding GmbH & Co. KG, Heidenheim.
The Voith Group and Its Shareholdings

189

Capitalin local currency
Voith Hydro S.L., Ibarra (Guipúzcoa)/Spain

Group sharein %345 575

EUR

100.0

VG Power AB, Västerás/Sweden

1 200 000

SEK

51.0

Voith Hydro Limited Sirketi, Sögütözü Ankara/Turkey

1 000 000

TRY

100.0

1

USD

100.0

43 344 100

USD

100.0

Voith Industrial Services Holding GmbH & Co. KG, Heidenheim/Germany

500 000

EUR

100.0

Hörmann Industrietechnik GmbH, Steyr/Austria

35 000EUR

100.0

DIW Instandhaltung GmbH, Vienna/Austria

1 500 000

EUR

100.0

Voith Industrial Services Ermo Benelux N.V., Kapellen (Antwerp)/Belgium

1 137 500

EUR

100.0

Voith Industrial Services do Paraná Ltda., Pinhais - PR/Brazil

4 500 000

BRL

100.0

Voith Serviços Industriais do Brasil Ltda., São Paulo (SP)/Brazil

12 245 142

BRL

100.0

100

CAD

100.0

500 000

USD

100.0

Hörmann CZ spol. s.r.o., Kosmonosy/Czech Republic

1 500 000

CZK

100.0

DIW Service s.r.o, Prague/Czech Republic

2 000 000

CZK

100.0

Skandinavisk Industriservice A/S, Ringsted/Denmark

5 501 000

DKK

100.0

Voith Engineering Services Sarl, Colomiers/France

75 000EUR

99.5

Voith Engineering Services GmbH, Bremen/Germany

250 000

EUR

100.0

Voith Engineering Services Holding GmbH, Bremen/Germany

250 000

EUR

100.0

Voith Engineering Services GmbH, Chemnitz/Germany

950 000

EUR

100.0

100

EUR

100.0

Voith Engineering Services GmbH, Hamburg/Germany

25 000EUR

100.0

DIW Instandhaltung GmbH & Co. KG, Heidenheim/Germany

41 312EUR

100.0

1 000 000

EUR

100.0

48 000EUR

100.0

12 071 500

EUR

100.0

200 000

EUR

100.0

1 600 100

EUR

100.0

400 000

EUR

100.0

15 525 000

EUR

100.0

50 000EUR

100.0Peak Hydro Services, Inc., Chattanooga (TN)/United States
Voith Hydro Inc., York (PA)/United States

Premier Manufacturing Support Services of Canada Ltd., Markham (ON)/Canada
Voith Industrial Services (Shanghai) Co., Ltd., Shanghai/China

DIW Gastro GmbH & Co. KG, Dingolfing/Germany

Voith Industrial Services Mechanical Engineering GmbH, Heidenheim/Germany
Voith Industrial Services Paper GmbH & Co. KG, Heidenheim/Germany
Hörmann Industrietechnik GmbH, Kirchseeon/Germany
Voith Engineering Services GmbH, Ludwigshafen/Germany
Voith Industrial Services Ermo GmbH, Mainhausen/Zellhausen/Germany
Voith Industrial Services Ermo GmbH, Merseburg/Germany
DIW Instandhaltung Ltd. & Co. KG, Stuttgart/Germany
DIW Service GmbH, Stuttgart/Germany

190

Voith Annual Report 2009/2010

Capitalin local currency
Voith Industrial Services Beteiligungen GmbH, Stuttgart/Germany

Group sharein %25 600EUR

100.0

20 500 000

EUR

100.0

Voith Industrial Services Energy GmbH & Co. KG, Stuttgart/Germany

251 000

EUR

100.0

Voith Industrial Services Grundstücks GmbH & Co. KG, Stuttgart/Germany

25 000EUR

100.0Voith Industrial Services Mechanical Engineering GmbH & Co. KG, Stuttgart/Germany

657 631

EUR

100.0

1 530 000

EUR

100.0

Voith Industrial Services Wind GmbH, Stuttgart/Germany

25 000EUR

100.0Voith Industrial Services Indumont GmbH & Co. KG, Wesseling/Germany

1 000

EUR

100.0

Hörmann Györ Kft, Györ/Hungary

9 220 000

HUF

100.0

DIW Service Kft., Veszprém/Hungary

20 000 000

HUF

100.0

Voith Industrial Services India Private Limited, Pune/India

59 600 000

INR

100.0

Premier Manufacturing Support Services de Mexico S. de R.L. de C.V., Saltillo Coahuila/Mexico

23 419 381

MXN

100.0

Voith Railservices B.V., Twello/Netherlands

20 000EUR

100.0

Premier Manufacturing Support Services Poland Sp. z. o.o., Gliwice/Poland

500 000

PLN

100.0

Hörmann Serwis Polska Sp. z. o.o., Poznan/Poland

2 250 000

PLN

100.0

Voith Industrial Services O.O.O, St. Petersburg/Russian Federation

1 700 000

RUB

100.0

DIW Service s.r.o, Bratislava/Slovakia

66 388EUR

100.0

Hörmann Slovakia spol. s.r.o., Bratislava/Slovakia

6 639

EUR

100.0

DIW Service d.o.o., Maribor/Slovenia

125 188

EUR

100.0

Premier Manufacturing Support Services Spain S.L., Coslada (Madrid)/Spain

Voith Industrial Services Beteiligungsverwaltungs GmbH, Stuttgart/Germany

Voith Industrial Services Process GmbH & Co. KG, Stuttgart/Germany

803 006

EUR

100.0

Voith Engineering Services SL, Madrid/Spain

3 006

EUR

100.0

Newtec Kemiteknik AB, Trollhättan/Sweden

1 000 000

SEK

100.0

100 000

SEK

100.0

1

GBP

100.0

50 000GBP

100.0

11 000 000

GBP

100.0

10

USD

100.0

30 703 500

EUR

100.0

12 000

ARS

100.0

100

AUD

100.0

374 265

EUR

99.8

Premier Manufacturing Support Services AB, Trollhättan/Sweden
Voith Engineering Services Limited, Bristol/United Kingdom
Premier Manufacturing Support Services (UK) Ltd., Warwick/United Kingdom
Premier Manufacturing Support Services Holding (UK) Ltd., Warwick/United Kingdom
Premier Manufacturing Support Services Inc., Cincinnati (OH)/United States

Voith Paper Holding GmbH & Co. KG, Heidenheim/Germany
Voith Paper Argentina S.A., Carapachay - Buenos Aires/Argentina
Voith Paper Australia and New Zealand Pty. Ltd., North Ryde (NSW)/Australia
Voith Paper Fabrics GmbH, Frankenmarkt/Austria

The Voith Group and Its Shareholdings

191

Capitalin local currency
GAW technologies GmbH, Graz/AustriaGroup sharein %1 000 000

EUR

35.0

726 728

EUR

100.0

Voith Paper Automation GmbH & Co KG, St. Pölten/Austria

1 000 000

EUR

100.0

Voith Paper GmbH, St. Pölten/Austria

13 994 750

EUR

100.0

Voith Paper Rolls GmbH & Co KG, Wimpassing/Austria

3 270 278

EUR

100.0

Voith Mont Montagens e Serviços Ltda., Barueri (SP)/Brazil

3 389 223

BRL

100.0

50 000BRL

55.3

Voith Paper Máquinas e Equipamentos Ltda., São Paulo (SP)/Brazil

37 269 872

BRL

100.0

Voith Paper Fabric & Roll Systems Canada Inc., Hamilton (ON)/Canada

14 775 275

CAD

100.0

Voith Paper Rolls GmbH & Co KG, Laakirchen-Oberweis/Austria

Meri Sistemas e Tecnologia Ltda., São Paulo (SP)/Brazil

PremiAir Technology Inc., Saint-Laurent-Québec/Canada

540 000

CAD

100.0

Servicios y Suministros Voith Chile Ltda., Concepción, Coronel/Chile

12 500 000

CLP

100.0

Voith Paper Rolls Guangzhou Co., Ltd., Guangzhou City/China

5 500 000

USD

100.0

Voith Paper (China) Co., Ltd., Kunshan, Jiangsu/China

6 250 000

USD

100.0

Voith Paper Fabrics (China) Co., Ltd., Kunshan, Jiangsu/China

15 000 000

USD

100.0

Voith Paper Rolls (China) Co., Ltd., Kunshan, Jiangsu/China

16 050 000

USD

100.0

Voith Paper International Trading Co., Ltd., Shanghai/China

300 000

USD

100.0

Pikoteknik Oy, Parhalahti/Finland

34 000EUR

100.0Voith Paper Oy, Vantaa/Finland

200 000

EUR

100.0

4 050 000

EUR

100.0

40 000

EUR

100.0

100

EUR

100.0

Voith Paper Automation GmbH & Co. KG, Heidenheim/Germany

25 000EUR

100.0Voith Paper Fabric & Roll Systems GmbH, Heidenheim/Germany

26 000EUR

100.0Voith Paper Fabrics GmbH & Co. KG, Heidenheim/Germany

500 000

EUR

100.0

36 004 000

EUR

100.0

Voith Paper Rolls GmbH & Co. KG, Heidenheim/Germany

580 000

EUR

100.0

VPT Auslandsbeteiligungen GmbH, Heidenheim/Germany

29 000EUR

100.0Voith Paper Fabrics Düren GmbH, Krefeld/Germany

270 000

EUR

100.0

Voith Paper Fabrics SAS, Montbron/France
Voith Paper SAS, Orsay/France
Voith Paper Air Systems GmbH & Co. KG, Bayreuth/Germany

Voith Paper GmbH & Co. KG, Heidenheim/Germany

Voith Paper Krieger GmbH & Co. KG, Mönchengladbach/Germany

1 587 561

EUR

85.0

MERI Environmental Solutions GmbH, Munich/Germany

51 129EUR

65.0

LSC Process- und Laborsysteme GmbH, Neuwied/Germany

26 076EUR

100.0

Voith Paper Environmental Solutions GmbH & Co. KG, Ravensburg/Germany

500 000

EUR

100.0

192

Voith Annual Report 2009/2010

Capitalin local currency
Voith Paper Fiber & Environmental Solutions GmbH & Co. KG, Ravensburg/Germany

Group sharein %30 303 134

EUR

100.0

26 000EUR

100.0

5 338 800

EUR

100.0

26 000EUR

100.0Voith Paper Fabrics India Ltd., Faridabad (Haryana)/India

43 925 590

INR

74.0

Voith Paper Technology (India) Ltd., Kolkata/India

29 999 900

INR

100.0

PT. Voith Paper, Jakarta/Indonesia

1 182 875

USD

100.0

PT. Voith Paper Rolls Indonesia, Karawang - West Java/Indonesia

3 570 000

USD

76.0

102 960

EUR

51.0

Voith Paper Hybrid Fiber GmbH, Ravensburg/Germany
Voith Paper Karton- und Verpackungspapiere Forschungs GmbH, Ravensburg/Germany
Voith Paper Rolls GmbH & Co. KG, Weissenborn/Germany

Rif Roll Cover SRL, Basaldella (Udine)/Italy
Voith Paper S.r.L., Schio (Vicenza)/Italy

258 000

EUR

100.0

Voith IHI Paper Technology Co., Ltd., Tokyo/Japan490 000 000

JPY

49.0

Voith Paper Co., Ltd., Tokyo/Japan

28 000 000

JPY

100.0

Voith Paper Fabrics Asia Pacific Sdn. Bhd., Ipoh, Perak Darul Ridzuan/Malaysia

10 000 000

MYR

100.0

Voith Paper Fabrics Ipoh Sdn. Bhd., Ipoh, Perak Darul Ridzuan/Malaysia

56 000 000

MYR

100.0

Meri Sistemas Ambientales S.A. de C.V., Monterrey/Mexico

250 000

MXN

45.5

Voith Paper Fabrics B.V., Haaksbergen/Netherlands

113 445

EUR

100.0

Voith Paper B.V., Vaassen/Netherlands

18 200EUR

100.0

4 401 000

NOK

100.0

100 000

NOK

100.0

Voith Paper AS, Lier/Norway
Voith Paper Fabrics AS, Tranby/Norway
Voith Paper Technology Russia GmbH, St. Petersburg/Russian Federation

10 000RUB

100.0Voith Paper Fabrics, S.A., Guissona (Lérida)/Spain

1 202 024

EUR

100.0

Voith Paper S.A., Ibarra (Guipúzcoa)/Spain

1 887 715

EUR

100.0

3 100

EUR

100.0

Voith Paper Fabrics Gusum AB, Gusum/Sweden

2 000 000

SEK

100.0

Voith Paper Fabrics Högsjö AB, Högsjö/Sweden

28 425 000

SEK

100.0

Voith Paper Fabrics Holding AB, Högsjö/Sweden

100 000

SEK

100.0

Voith Paper AB, Karlstad/Sweden

100 000

SEK

100.0

Voith Paper Rolls AB, Lessebo/Sweden

500 000

SEK

100.0

Voith Paper Services S.L., La Puebla de Alfinden, Saragossa/Spain

Voith Paper Walztechnik AG, Zurich/Switzerland

150 000

CHF

100.0

Voith Paper Fabrics Blackburn Ltd., Blackburn (Lancashire)/United Kingdom

14 400 000

GBP

100.0

Voith Paper Fabrics Holding Ltd., Blackburn (Lancashire)/United Kingdom

11 000 000

GBP

100.0

160 000

GBP

100.0

Voith Paper Fabrics Stubbins, Ltd., Bury (Lancashire)/United Kingdom

The Voith Group and Its Shareholdings

193

Capitalin local currency
Voith Paper Ltd., Manchester/United Kingdom

Group sharein %1 000 000

GBP

100.0

2 000

USD

65.0

2 006 975

USD

100.0

100

USD

100.0

Massachusetts PFE, Inc., Orange (MA)/United States

100 000

USD

100.0

PFS I, Inc., Salisbury (NC)/United States

100 000

USD

100.0

Syn Strand Inc., Summerville (SC)/United States

641 649

USD

100.0

200

USD

100.0

178 412 527

USD

100.0

300

USD

100.0

25 602 000

EUR

100.0

650 000

AUD

100.0

3 300 000

EUR

100.0

Voith Turbo Vertriebs GmbH, St. Pölten/Austria

40 000EUR

100.0Voith Turbo S.A./N.V., Brussels/Belgium

300 000

EUR

100.0

Voith Turbo Ltda., São Paulo (SP)/Brazil

5 250 568

BRL

100.0

1 021

CAD

100.0

650 000

HKD

100.0

Voith Meri Environmental Solutions, Inc., Appleton (WI)/United States
Voith Paper Inc., Appleton (WI)/United States
PFR, Inc., Newark (DE)/United States

Voith Paper Fabrics Waycross, LLC, Waycross (GA)/United States
VAM Finance LLC, Wilmington (DE)/United States
Voith Paper Fabric & Roll Systems Inc., Wilson (NC)/United States

Voith Turbo GmbH & Co. KG, Heidenheim/Germany
Voith Turbo Pty. Ltd., Wetherill Park (NSW)/Australia
Voith Turbo GmbH, St. Pölten/Austria

Voith Turbo Inc., Mississauga (ON)/Canada
Voith Turbo Limited, Hong Kong/China
Voith Schaku KTK Coupler Technology Co., Ltd., Shanghai/China

2 000 000

EUR

50.0

Voith Turbo Power Transmission (Shanghai) Company Ltd., Shanghai/China

6 916 000

CNY

100.0

700 000

DKK

100.0

2 072 000

EUR

100.0

200 000

EUR

100.0

2 500 000

EUR

100.0

Voith Turbo Antriebstechnik Beteiligungen GmbH, Heidenheim/Germany

25 565EUR

100.0Voith Turbo Auslandsbeteiligungen GmbH, Heidenheim/Germany

51 129EUR

100.0Voith Turbo Lokomotivtechnik GmbH & Co. KG, Heidenheim/Germany

2 501 000

EUR

100.0

Voith Turbo Schneider Propulsion GmbH & Co. KG, Heidenheim/Germany

2 582 050

EUR

100.0

100 000

EUR

51.0

Voith Turbo Vertriebsgesellschaft mbH, Heidenheim/Germany

5 114 000

EUR

100.0

Voith Turbo Wind GmbH & Co. KG, Heidenheim/Germany

1 000 000

EUR

100.0

50 000EUR

85.0Voith Turbo A/S, Gadstrup/Denmark
Voith Turbo SAS, Noisy-le-Grand Cedex/France
Voith Turbo Hochelastische Kupplungen GmbH & Co. KG, Essen/Germany
Voith Turbo Aufladungssysteme GmbH & Co. KG, Gommern/Germany

Voith Turbo SMI Technologies GmbH & Co. KG, Heidenheim/Germany

Voith Turbo Advanced Propeller Technologies GmbH & Co. KG, Rostock/Germany

194

Voith Annual Report 2009/2010

Capitalin local currency

Group sharein %Voith Turbo H+L Hydraulic GmbH & Co. KG, Rutesheim/Germany

6 100 000

EUR

100.0

Voith Turbo Scharfenberg GmbH & Co. KG, Salzgitter/Germany

5 113 000

EUR

100.0

Voith Turbo BHS Getriebe GmbH, Sonthofen/Germany

3 038 000

EUR

100.0

Voith Turbo BHS Getriebe Holding GmbH & Co. KG, Sonthofen/Germany

283 000

EUR

100.0

Voith Turbo Verdichtersysteme GmbH & Co. KG, Zschopau/Germany

125 000

EUR

100.0

285 250 000

HUF

100.0

Voith Turbo Private Limited, Hyderabad (A.P.)/India

7 349 986

INR

100.0

Voith Turbo Drive Systems s.r.l., Montichiari (BS)/Italy

100 000

EUR

100.0

1 200 000

EUR

100.0

Voith Turbo Kft., Biatorbágy/Hungary

Voith Turbo s.r.l., Reggio Emilia/Italy
Voith Turbo Co., Ltd., Kawasaki-shi, Kanagawa/Japan

38 000 000

JPY

100.0

Voith Turbo Co., Ltd., Seoul/Korea

337 500 000

KRW

80.0

2 474 095

MXN

100.0

Ox-traction (Locomotives) N.V., Roosendaal/Netherlands

45 000EUR

46.0

Ox-traction N.V., Roosendaal/Netherlands

200 000

EUR

46.0

Voith Turbo B.V., Twello/Netherlands

18 000EUR

100.0Voith Turbo Holding B.V., Twello/Netherlands

703 813

EUR

100.0

Voith Turbo sp. z o.o., Wola Krzysztoporska/Poland

250 000

PLN

100.0

Voith Turbo Kazan GmbH, Kazan/Russian Federation

14 400 000

RUB

91.0

Voith Turbo Pte. Ltd., Singapore/Singapore

507 330

SGD

100.0

Imfuyo Air Products (Proprietary) Limited, Bedfordview/South Africa

Voith Turbo S.A. de C.V., Mexico (D.F.)/Mexico

10 000ZAR

23.6

Imfuyo Projects (Pty) Ltd., Benoni/South Africa

100

ZAR

47.0

Imfuyo Locomotives (Proprietary) Limited, Parktown/South Africa

100

ZAR

47.0

Voith Property Company (Pty) Ltd., Witfield (Boksburg)/South Africa

100

ZAR

100.0

127 572

ZAR

100.0

Voith Turbo S.A., Coslada (Madrid)/Spain

1 500 000

EUR

100.0

Voith Turbo Safeset AB, Hudiksvall/Sweden

2 000 000

SEK

100.0

Voith Turbo AB, Spanga-Stockholm/Sweden

3 475 000

SEK

100.0

Voith Turbo Co. Limited, Kaohsiung/Taiwan

5 500 000

TWD

100.0

Voith Middle East FZE, Dubai/United Arab Emirates

Voith Turbo (Pty) Ltd, Witfield (Boksburg)/South Africa

1 000 000

AED

100.0

H + L Hydraulic Ltd., Croydon (Surrey)/United Kingdom

260 000

GBP

100.0

Voith Turbo Limited, Croydon (Surrey)/United Kingdom

5 000 000

GBP

100.0

12 000GBP

100.0

2 150 000

USD

100.0

Voith Turbo Rail Systems Ltd., Croydon (Surrey)/United Kingdom
Voith Turbo Inc., York (PA)/United States

The Voith Group and Its Shareholdings

195

Your Contact to Voith

Holding Company
Phone: +49 7321 37-0
Fax: +49 7321 37-7000
E-mail: info@voith.com

Voith Hydro
Phone: +49 7321 37-6848
Fax: +49 7321 37-7828
E-mail: info.voithhydro@voith.com

Public Relations
Phone: +49 7321 37-2219
Fax: +49 7321 37-7107
E-mail: info@voith.com

Voith Industrial Services
Phone: +49 711 7841-170
Fax: +49 711 7841-160
E-mail: info.industrialservices@voith.com

Investor Relations
Phone: +49 7321 37-2332
Fax: +49 7321 37-7010
E-mail: info@voith.com

Voith Paper
Phone: +49 7321 37-2888
Fax: +49 7321 37-7008
E-mail: info.voithpaper@voith.com
Voith Turbo
Phone: +49 7321 37-2832
Fax: +49 7321 37-7110
E-mail: info.voithturbo@voith.com

196

Voith Annual Report 2009/2010

Imprint

Publisher
Voith GmbH
P.O. Box 20 00
89510 Heidenheim/Germany
Phone: +49 7321 37-0
Fax: +49 7321 37-7000
E-mail: info@voith.com
www.voith.com
Editorial
Voith GmbH
Corporate Communications
Heidenheim/Germany
This annual report is also available inGerman. Both versions, as well aspress releases and other information,
can also be downloaded from theInternet at www.voith.com.

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FSC
The Galaxi Keramik paper used for the annual
report is produced in compliance with theinternational FSC standard. The pulp is partly
manufactured from certified, i.e. responsibly
managed, forests. Careful forestry practicealso ensures, among other things, that biological diversity and ecological processes are
not disturbed when wood products are removed from the forest.

CO2 compensation
Voith records all CO2 emissions produced in
the course of printing and processing theannual report. By making a proportionately
equal investment in a Gold Standard climate
project the corresponding CO2 emissions will
be saved in the future and the carbon footprint
left by the Voith annual report compensatedfor in this way.

Ident-No. 106731

The paper for this annual report was produced
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Printed in Germany | © Voith GmbH | 2010-12