2014 ANNUAL REPORT FREUDENBERg gROUP · 2017-06-12 · HigHLigHTS External reporting Internal...

2014 ANNUAL REPORTFREUDENBERg gROUP

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Freudenberg is a globally active technology company that develops innovative, sophisticated and tailor-made solutions in partnership with its customers. The Group’s products are part of everyday life all over the world – usually invisible, but always indispensable, they have a valuable role to play in more than 30 markets and thousands of applications.

The quest for excellence, creativity, diversity, financial solidity and a long-term orientation form the cornerstones of the Freudenberg Group. Our company’s success is founded on innovation. The internal Freudenberg Innovation Award was presented for the first time in 2014 and further highlights the great importance of innovation, honoring projects that are already proving their worth in the market.

This Annual Report presents the four finalists and the awardee of the Freudenberg Innovation Award.

HigHLigHTS

External reporting Internal reporting

FREUDENBERG GROUPAt-equity

2012*At-equity

2013At-equity

2014Pro-rata

2012Pro-rata

2013Pro-rata

2014

Sales [€ million]

germany 1,210 1,059 1,087 1,494 1,885 1,975

EU (excluding germany) 1,562 1,553 1,657 1,621 1,570 1,681

Other European countries 311 327 334 315 327 336

North America 1,291 1,267 1,383 1,342 1,274 1,390

South/Central America 343 306 296 351 306 296

Asia 824 1,002 1,089 1,057 1,129 1,224

Africa/Australia 140 132 136 142 132 137

Total sales 5,681 5,646 5,982 6,322 6,623 7,039

Consolidated profit 438 399 478 433 402 478

Cash flow from operating activities 445 516 618 532 614 712

Cash flow from investing activities -186 -520 -339 -348 -571 -407

Depreciation and amortization 238 238 256 274 280 305

Balance sheet total 5,677 5,873 6,667 6,060 6,284 7,113

Equity 2,668 2,775 3,211 2,818 2,775 3,224

Personnel expenses 1,719 1,728 1,812 1,820 1,916 2,027

Workforce (as at Dec. 31) 30,786 33,245 34,030 37,453 39,897 40,456

Workforce (annual average) 32,769 33,293 34,094 37,683 39,979 40,614

* Figures adjusted due to the application of iFRS 11 prior to the mandatory application date.

Whilst joint ventures must be consolidated using the equity method for external reporting, for internal reporting purposes their consolidation is based on the pro-rata method as a tool for managing group operations.

WORLDWiDE LOCATiONS

The Freudenberg Group and its 40,000 employees are active in some 60 countries.

CONTENTS

COmpaNy BOardS SupErviSOry BOard BOard Of maNagEmENTExECuTivE COuNCilmaNagEmENT Of ThE BuSiNESS grOupSrEpOrT Of ThE SupErviSOry BOardfOrEwOrd Of ThE BOard Of maNagEmENT

grOup maNagEmENT rEpOrT Of ThE frEudENBErg grOup fuNdamENTal iNfOrmaTiON aBOuT ThE grOup

BuSiNESS mOdEl Of ThE grOup rESEarCh aNd dEvElOpmENT

rEpOrT ON ECONOmiC CONdiTiONS maCrOECONOmiC ENvirONmENT BuSiNESS dEvElOpmENT aNd pOSiTiON Of ThE grOup EarNiNgS pOSiTiON Of ThE grOup fiNaNCial pOSiTiON Of ThE grOup aSSETS, EquiTy aNd liaBiliTiES Of ThE grOup humaN rESOurCES COrpOraTE rESpONSiBiliTy rEviEw Of OpEraTiONS By BuSiNESS arEa

rEpOrT ON pOST-BalaNCE ShEET daTE EvENTS rEpOrT ON riSkS aNd OppOrTuNiTiES rEpOrT ON ExpECTEd dEvElOpmENTS

fiNaNCial rEpOrT - CONSOlidaTEd fiNaNCial STaTEmENTSfrEudENBErg SECONSOlidaTEd STaTEmENT Of fiNaNCial pOSiTiONCONSOlidaTEd STaTEmENT Of prOfiT Or lOSSCONSOlidaTEd STaTEmENT Of prOfiT Or lOSS aNd OThEr COmprEhENSivE iNCOmECONSOlidaTEd STaTEmENT Of CaSh flOwSCONSOlidaTEd STaTEmENT Of ChaNgES iN EquiTyNOTES TO ThE CONSOlidaTEd fiNaNCial STaTEmENTS SharEhOldiNgS Of ThE frEudENBErg grOup

audiT OpiNiON

234568

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2225252730323642

828392

969798

99100101151

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as at december 31, 2014

SupErviSOry BOard

Martin Wentzler, Großhesselohe Chairman Attorney

Prof. Dr. Dieter Kurz, Lindau Deputy Chairman Chairman of the Shareholder Council of the Carl Zeiss Foundation

Martin Freudenberg, Heidelberg Managing Director of Jumag Dampferzeuger GmbH

Dr. Maria Freudenberg-Beetz, Weinheim Biologist

Dr. Mathias Kammüller, Ditzingen Managing Director of TRUMPF GmbH + Co. KG

Robert J. Koehler, Wiesbaden Chairman of the Supervisory Board of Benteler International AG

Maeva Kuhlich, Chichilianne, France Project Manager in Supply Chain Management at Becton Dickinson

Dr. Richard Pott, Leverkusen Former member of the Board of Management of Bayer AG

Walter Schildhauer, Stuttgart Managing Partner of speedwave GmbH

Dr. Christoph Schücking, Frankfurt am Main Attorney and Notary Public

Mathias Thielen, Zurich, Switzerland Managing Director of Credit Suisse AG

PD Dr. Emanuel V. Towfigh, Bonn Attorney

COmpaNy BOardS

from left: Schücking, Schildhauer, kammüller, freudenberg-Beetz, Towfigh, koehler, pott, wentzler, freudenberg, kuhlich, kurz and Thielen

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BOard Of maNagEmENT

Dr. Mohsen Sohi, Frankfurt am Main Chief Executive Officer

Dr. Tilman Krauch, Heidelberg Member of the Board

Dr. Ralf Krieger, St. Leon-Rot Member of the Board, CFO

Christoph Mosmann, Mannheim Member of the Board (until December 31, 2014)

from left: krauch, Sohi and krieger

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ExECuTivE COuNCil


mEmBErS BuSiNESS grOupS

Claus Möhlenkamp (CEO) Freudenberg Sealing Technologies

Bruce R. Olson (CEO) Freudenberg Nonwovens

Dr. Klaus Peter Meier (CEO) Freudenberg Home and Cleaning Solutions

Hanno D. Wentzler (CEO) Freudenberg Chemical Specialities

and the Board of Management

Membership of the four CEOs in the Executive Council lends greater weight to the perspectives of the Business Groups with regard to overarching issues.

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maNagEmENT BuSiNESS grOupS

Claus Möhlenkamp (CEO and Member of the Executive Council), Freudenberg Sealing Technologies Dr. Arman Barimani (CTO), Ludger Neuwinger-Heimes (CFO), Dieter Schäfer (COO)

Richard Schmidt (CEO and President), Craig Barnhart (CFO) Freudenberg Oil & Gas Technologies

Dr. Stefan Sacré (CEO), Jochen Strasser (CFO), EagleBurgmann Michael Stomberg (COO)

Dr. Jörg Schneewind (CEO and President), Michael A. Hawkins (CFO), Helix Medical Dr. Max Gisbert Kley (President Europe and Global Business Development), Mitch Moeller (CEO of MedVenture)

Hans-Jürgen Goslar (CEO), Norbert Schebesta (CFO), TrelleborgVibracoustic Lennart Johansson (CTO), Jim Law (CTO)

Bruce R. Olson (CEO and Member of the Executive Council), Freudenberg Nonwovens Dr. Frank Heislitz (CTO), Dr. René Wollert (CFO)

Richard Shaw (CEO), Dr. Riccardo Forni (CFO) Freudenberg Politex Nonwovens

Dr. Andreas Kreuter (CEO), Thomas Herr (CFO), Freudenberg Filtration Technologies Dr. Jörg Sievert (COO)

Dr. Klaus Peter Meier (CEO and Member of the Executive Council), Freudenberg Home and Cleaning Solutions Arndt Miersch (CTO, until December 31, 2014), Frank Reuther (CFO)

Hanno D. Wentzler (CEO and Member of the Executive Council), Freudenberg Chemical Specialities Dr. Jörg Matthias Großmann (CFO)

Horst Reichardt (CEO), Dr. Sebastian Weiss (CFO) Freudenberg IT

Dr. Manfred Egner (CEO), Christoph Neumann (CFO), enmech Christophe Luciani (CSO)

maNagEmENT Of ThE BuSiNESS grOupS


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martin wentzler (Chairman)

Dr. Wolfram Freudenberg stepped down from his post as Chairman of the Supervisory Board at the middle of the year having reached retirement age. He was a member of the Board of Partners for almost 40 years. He became Chairman in 2005, and has since driven forward the strategic development of the company – above all through the establishment of the holding company Freudenberg Societas Europaea (hereinafter: Freudenberg SE). He also supported the systematic development of the company’s portfolio. The company and the Supervisory Board express their great respect for the achievements of Dr. Wolfram Freudenberg and their gratitude for his dedicated and successful service to the company. The changeover and meticulously prepared transition have safeguarded continuity and responsible cooperation bet-ween the Supervisory Board and the Board of Manage-ment.Ms. Maeva Kuhlich joined the Supervisory Board in July 2014.

Five meetings of the Supervisory Board were held in the year under review. Each meeting addressed a detailed

analysis of markets, sales and earnings development, liqui-dity status and the risk situation of the Freudenberg Group. The agenda also included strategy issues and major special projects.

At each of these meetings, the Supervisory Board also consulted on ongoing key projects in the Group, reviewing factors of relevance to the Group‘s success and adjusting them to changed conditions. Of particular significance for the Supervisory Board were the organizational realignment of the Freudenberg Group, more efficient administrative processes, the new positioning of the Freudenberg global brand, the global talent management process, and the two development programs for top management.

In addition, the Supervisory Board also consulted on several acquisitions such as the takeover of the compa-nies which operate the Hänsel brand interlinings business from Hänsel Textil GmbH, Iserlohn, Germany, and the acquisition of Tobul Accumulator Incorporated, Bamberg, USA, and their integration in the Freudenberg Group. The Supervisory Board furthermore consulted on develop-ments in the participations in joint ventures and associated companies such as NOK Corporation and Japan Vilene Company Ltd., both registered in Tokyo, Japan, and TrelleborgVibracoustic GmbH, Darmstadt, Germany. Other issues included the execution of the strategy process 2015 - 2017 and the revision of the rules of procedure for the Board of Management and the Supervisory Board.

The Audit Committee met five times in the year under review. Matters dealt with by the Audit Committee included the findings of the internal audit process. Priority areas were the Group risk management system, the key provisions of the German Corporate Governance Code, and the new compliance architecture.

rEpOrT Of ThE SupErviSOry BOard

in 2014, the Board of management and the Supervisory Board held regular and detailed discussions on the progress of the group and major individual business transactions on the basis of oral and written reports. Business policy was agreed in consultation between the two bodies and updated where necessary in joint deliberations. in addition, the Chairman of the Supervisory Board discussed current business developments with the members of the Board of management on a regular basis and in a spirit of partnership.

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Key issues addressed by the Audit Committee in the 2014 financial year also included the preparation of Supervi-sory Board resolutions concerning the annual financial statements and the dependent company report as well as the consolidated financial statements of the Freudenberg Group. Furthermore, the Audit Committee supervised the required independence of the auditor and prepared the Supervisory Board recommendation to the General Meet-ing on the engagement of the auditor and commissioning of the audit for the 2014 financial year.

The Audit Committee also consulted on further issues such as provisions – in particular provisions for pensions –, at-equity measurement of participations, and legal risks. The committee in addition reviewed and discussed the report of the Ombuds Office, the strictly confidential point of con-tact for employees wishing to report breaches of laws and regulations or infringements of Freudenberg values.

The Personnel Committee met five times in 2014. Dr. Richard Pott became a new member of the committee effective December 2014. Consultations of the Personnel Committee focused on changes in the Board of Manage-ment: Dr. Tilman Krauch is a new member of the Board of Management. He joined the Freudenberg Group on October 1, 2014. The competent bodies complied with the request of Mr. Christoph Mosmann to be released from his responsibilities as a member of the Board of Management. Mr. Christoph Mosmann stepped down from the Board of Management effective December 31, 2014. Both the Supervisory Board and the Board of Management would like to thank Mr. Christoph Mosmann for almost 20 years of service to the Freudenberg Group. In particular, as a long-standing and highly-respected senior executive, he helped shape the development and influence the direction of the sealing technology business in particular for many years.

The Personnel Committee also consulted on leadership development, improving diversity among senior executives, the talent management process, succession planning in key bodies of the Freudenberg Group, and remuneration systems.

The consolidated financial statements and the management report for 2014 as well as the dependent company report for Freudenberg SE were audited by Ernst & Young GmbH Wirtschaftsprüfungsgesellschaft, Mannheim, Germany, and were approved without reservation. Following intensive consultation with the auditors on all relevant findings, the Supervisory Board approved the consolidated financial statements and the management report and the annual financial statements of Freudenberg SE and, fol-lowing examination, concurred with the auditor‘s findings.

The Supervisory Board examined the report on relations with affiliated companies (dependent company report) and approved the report together with the auditor‘s con-clusions. Following final review, the Supervisory Board has no reservations in respect of the closing statement by the Board of Management on the dependent company report.

The Supervisory Board expresses its thanks to all employees, the Business Group managing bodies and the Board of Management. Their enormous personal commitment, their ideas and their outstanding professionalism have made an important contribution to the success of the Group.

Weinheim, March 26, 2015 For the Supervisory Board

Martin WentzlerChairman

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fOrEwOrd Of ThE BOard Of maNagEmENT

2014 was a very good year for the freudenberg group. Thanks to the enormous commitment and excellent perfor-mance of our more than 40,000 employees worldwide, we not only achieved profitable and sustainable growth, but also progressed well with the strategic evolution of our company. we made further increases in productivity, contin-ued to strengthen our innovation capabilities, improved the transparency and efficiency of our organization, and further expanded both our global presence and our broadly-diversified product portfolio.

dr. mohsen Sohi (CEO)

Under the IFRS financial reporting rules, joint ventures must be consolidated using the equity method.

according to this method, sales in 2014 amounted to €5,982.3 million (previous year: €5,646.1 million), €336.2 million or 6.0 percent higher than the previous year. adjusted for exchange rate effects and the effects of acquisitions, this represents an organic growth of 6.1 percent.

profit before income taxes amounted to €625.1 million (previous year: €493.3 million). This improvement is above all attributable to the success of our innovative products on the market, a high degree of customer orientation and the expansion of business in attractive growth markets as well as improved production proces-ses. free cash flow amounted to €279.1 million (previ-ous year: €-3.8 million).

with an equity ratio of 48.2 percent (previous year: 47.3 percent), freudenberg further strengthened its very good, comfortable equity base. liquid funds at year-end amounted to €917.7 million (previous year: €672.9 million).

As a values-oriented company, occupational health, safety and environmental protection, and social respon-sibility are firmly anchored in our corporate culture. The safety of our employees at the workplace has top priority, and we also improved our performance in this field in 2014. Our LDI rate (accidents per 1,000 employees) fell from 3.4 in 2013 to 2.7. In terms of the standard for manufacturing companies we have therefore achieved first-class occupational safety.

There were leadership changes at Freudenberg during the year under review: Dr. Wolfram Freudenberg handed over the reins as Chairman of the Supervisory Board to Martin Wentzler, thus safeguarding continuity and responsible cooperation. Together, we will make the right decisions for the future.

We would like to thank Dr. Wolfram Freudenberg for almost forty years of commitment as a Member of the Board of Partners, nine of which were spent as its Chair-man. During this time, his entrepreneurial vision played a key role in shaping the strategic orientation of the Group, forging close ties between the company and the family, and thus securing a stable foundation for the future.

Dr. Tilman Krauch joined the Board of Management team in October 2014. He brings with him some two decades of extensive experience working for an internationally successful company.

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in its internal reporting, freudenberg applies the pro-rata consolidation method for joint ventures as a tool for managing operating activities. for the fifth year in succession we reported record figures in 2014 on the basis of the pro-rata consolidation. Sales ran at €7,039.1 million (previous year: €6,622.5 million), a year-on-year increase of 6.3 percent. Consolidated profit totaled €478.3 million and is chiefly attributable to the market success of our innovative products and to higher efficiency. all Business areas improved year-on-year.

Christoph Mosmann left the company at his own request at the end of the year. We would like to thank him for almost 20 years of service to the Freudenberg Group. As a long-standing senior executive, he helped shape the development and the direction of the sealing technology business for many years.

The Board of Management is supported by a new body called the Executive Council. The four members of the Executive Council who come from the Business Groups – Dr. Klaus Peter Meier (Freudenberg Home and Cleaning Solutions), Claus Möhlenkamp (Freudenberg Sealing Technologies), Bruce R. Olson (Freudenberg Nonwo-vens), and Hanno D. Wentzler (Freudenberg Chemical Specialities) – lend greater weight to the perspectives of the Business Groups with regard to overarching issues.

2014 was a successful year in very many respects over and above our financial performance. We initiated an ambitious program of strategic projects and realigned our organizatio-nal structure to suit the future demands of the market.

The Business Groups implemented the approved FOKUS 2.0 organizational changes and several projects stemming from these changes:

Freudenberg Schwab Vibration Control and Dichtomatik as well as the NOK-Freudenberg Group China joint venture began operating under the roof of Freudenberg Sealing Technologies at the beginning of the year under review. Their combined strengths can cover market segments more efficiently and they can bundle administrative tasks.

Freudenberg Performance Materials began operating in January 2015. Combining Freudenberg Nonwovens and

Freudenberg Politex Nonwovens brings many advantages. The extended material expertise, the global positioning and leveraging economies of scale are just a few of the benefits of this new united path.

We repositioned the Freudenberg Real Estate Manage-ment Division as a new Corporate Function called Freudenberg Real Estate responsible for managing the Freudenberg Group‘s real estate worldwide.

The most important foundation of our corporate success is innovation. Consequently, the former Freudenberg New Technologies Business Group has been reposit-ioned as a Corporate Function, and is thus established as an overarching innovation driver. In addition to this organizational realignment, we invested more than ever before – €270.3 million – in innovation during the year under review. Our research and development expenditure rose by almost €100 million or 58 percent between 2009 and 2014 and we have further strengthened Freudenberg‘s innovation capabilities. The aim of all activities is to increase the share of sales accounted for by new products still further.

The excellent achievements of the Innovation Award which made its debut in the year under review are pre-sented on the photo pages.

The goal of Freudenberg Business Services KG, Weinheim, Germany, a new company which began operating in the year under review, is to achieve econo-mies of scale. The first projects indicate that the bundled procurement of non-production-related goods brings significant benefits for the relevant Business Groups and the Group as a whole.

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this acquisition, Freudenberg can offer global customers additional future-oriented filtration solutions for pollution-free air.

Furthermore, Freudenberg Nonwovens acquired Polymer Health Technology, Ebbw Vale, UK, a leading specialist of polyurethane foams for advanced wound care in January 2015, thus further expanding our activities in the medical technology sector.

Apart from the organizational changes and the portfo-lio expansion we also worked on other key projects in 2014.

Excellent talent management helps us meet our ambitious targets with the right people. We successfully launched our two flagship programs for leadership development. The Strategic Leadership Program and Business Leader-ship Program not only encourage personal leadership competence, but also create a common understanding of how to implement central processes such as strategic and operational planning, strategic human resources, and talent management.

We realigned our risk management as well as optimiz-ing our compliance architecture to improve our corpo-rate governance and help us to minimize risks.

During the year under review, we continued our work on redesigning the Freudenberg global brand and defined a new brand architecture. We will present this repos- itioning at DIALOG 2015, our global senior manage-ment meeting to be held in Detroit, USA, in July 2015. Preparations for this and other strategic topics also began in the year under review.

These activities will be successively expanding over the coming years to leverage greater benefits from the size of our Group.

With this multi-year project to improve administrative pro-cesses we will make Freudenberg even more efficient and deliver on our promise to achieve leaner administration and greater innovation.

We made further additions to our portfolio. In January 2014, Freudenberg Home and Cleaning Solu-tions acquired the Marigold household gloves business from Comasec SAS, Gennevilliers, France, a company of the Dutch Ansell Group. The acquisition brought us the global trademark rights for the Marigold brand as well as consumer business in the UK, Ireland, Italy, the Netherlands, Hong Kong and Japan.

Freudenberg Sealing Technologies acquired Tobul Accumulator Incorporated, Bamberg, USA, in July 2014. With the acquisition, we are strengthening established accumulator business in various markets such as energy/oil & gas, mining and fluid technology in North and South America.

In August, Freudenberg Nonwovens acquired the compa-nies which operate the Hänsel brand interlinings business from Hänsel Textil GmbH, Iserlohn, Germany. This trans-action brings us the know-how and innovative technology we need to expand our offering in the knit products segment in future.

Freudenberg Filtration Technologies acquired the indus-trial activated carbon corrosion protection business of the American company MeadWestvaco Corporation. With

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expect year-on-year sales growth of between 2 and 4 percent for the Freudenberg Group in the 2015 financial year accompanied by an operating result at the prior-year level. All Business Groups are likely to contribute to this performance. On the basis of this forecast, we expect a slight decline in the return on sales.

Overall, we are confident we will be able to improve the excellence of our Group still further in the current financial year.

Thanks:

Freudenberg is headed for a good future thanks to the motivation of our employees and their willingness to embrace change. We would like to thank everyone who helped us on our way last year for their commitment and ideas. We would also like to extend our appreciation to all customers and business partners for their trust and good cooperation. In 2015, we will again strive to make a valuable contribution each and every day to their suc-cess. This is our ultimate objective.

Weinheim, March 26, 2015 For the Board of Management

Dr. Mohsen SohiChief Executive Officer

We will continue working hard on all of these key projects in the current financial year and will also launch new initiatives with regard to sustainability, non-financial key performance indicators and social commitment.

All in all, we can be proud of our progress in the year under review – leveraging greater Group potential, becoming more efficient, and driving excellence in all what we do.

Outlook:

Overall, we are cautiously optimistic about the global macroeconomic environment for the 2015 financial year.

We are aware that economic conditions can change very rapidly. The difficult economic situation in South America, Russia and southern Europe is unlikely to change significantly in the coming years – and could even deteriorate. We expect the oil and gas industry will come up against strong opposition.

The impact on Freudenberg of the present exchange rate effects caused by the weak euro will be mixed. While a stronger dollar will, for example, have a positive impact on our sales development, we anticipate neutral to negative effects on operating result. That is because raw materials denominated in dollars have become more expensive.

A further effect will be that our international acquisition projects will become more expensive as a result of the weaker euro.

From today‘s perspective and despite all challenges, we

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fuNdamENTal iNfOrmaTiON aBOuT ThE grOup

BuSiNESS mOdEl Of ThE grOup

Organizational structure of the Group

Freudenberg is a globally active group of companies; the 12 Business Groups (previous year: 16 Business Groups, please refer to page 14 “Organizational changes“ for further information) have a presence in over 30 market segments and thousands of applications. Across the globe, the Freudenberg Group’s products and services make a valuable contribution to the success of its custom-ers – rarely visible, but always indispensable. Without

Freudenberg, for example, indoor air would not be as clean, cars would not drive, suits would not sit properly on shoulders and wounds would not heal as quickly.

Freudenberg offers its customers in the passenger car and commercial vehicle industry, mechanical and plant engineering, textile and apparel, construction, mining and heavy industry, energy, chemical, and the oil and gas sectors tailor-made, innovative technological products and services. The customer base also includes companies in the medical technology, civil aviation, rail vehicles and semiconductor sectors.

grOup maNagEmENT rEpOrT Of ThE frEudENBErg grOup

in the 2014 financial year the freudenberg group reported sales of €5,982.3 million (previous year: €5,646.1 million). Consolidated profit ran at €477.8 million (previous year: €398.8 million). at december 31, 2014, the freudenberg group workforce totaled 34,030 employees (previous year: 33,245).

Parent company (strategic management)

freudenberg & Co. kommanditgesellschaft

Parent company (business operations)

freudenberg SE

Seals and Vibration Control Technology Business Area

Nonwovens and Filtration Business Area

Household Products Business Area

Sales [€ million] 4,028 Sales [€ million] 1,279 Sales [€ million] 760

Workforce 27,067 Workforce 5,994 Workforce 2,880

Business Group Business Group Business Group

freudenberg Sealing Technologies

freudenberg Nonwovens

freudenberg home and Cleaning Solutions

freudenberg Oil & gas Technologies freudenberg politex Nonwovens

EagleBurgmann

helix medical freudenberg filtration Technologies

Trelleborgvibracoustic 1

Specialties and Others Business Area

Sales [€ million] 1,135

Workforce 4,515

Business Group

freudenberg Chemical Specialities

freudenberg iT

enmech 1

Divisions

freudenberg Business Services

freudenberg Service

1 fully consolidated at equity

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Freudenberg develops and manufactures seals, vibra-tion control technology components, filters, nonwovens, surface treatment products, release agents and spe-cialty lubricants, medical technology and mechatronic products.

Freudenberg also develops software solutions and IT services primarily for small- and medium-sized enterprises.

Consumers enjoy the benefits of Freudenberg‘s state-of-the-art household products marketed under the vileda®, O-Cedar®, Wettex®, Gala®, Marigold® and SWASH® brands.

Creativity, quality, diversity and innovative strength

are the company‘s cornerstones. Reliability and res-ponsible conduct rank among the basic values of the company with a history spanning more than 165 years. Freudenberg is committed to partnerships with customers, and believes in a long-term orientation, financial solidity and the excellence of its employees.

Freudenberg sees itself as an enterprise of entrepreneurs. Operational business is in the hands of independent companies whose management conducts business under their own responsibility. These individual companies in turn belong to Business Groups.

Freudenberg has two parent companies: Freudenberg & Co. Kommanditgesellschaft (hereinafter:

Business Model of the Group

Business Areas 1Pro-rata

2013Pro-rata

2014

Total sales [€ million] 6,623 7,039

Seals and vibration Control Technology 2 3,804 4,028

Nonwovens and filtration 2 1,228 1,279

household products 2 710 760

Specialties and Others 2 1,054 1,135

Workforce (as at Dec. 31) 39,897 40,456

Seals and vibration Control Technology 26,917 27,067

Nonwovens and filtration 5,707 5,994

household products 2,914 2,880

Specialties and Others 4,359 4,515

1 The figures for the Business areas are presented in line with internal reporting procedures under which the joint ventures are consolidated on a pro-rata basis. 2 including intra-company sales

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This has led to more transparency and faster decision-making. The Business Groups remain fully responsible for their business operations and for meeting targets.

The Board of Management is supported by a new body called the Executive Council. Membership of the four CEOs in the Executive Council lends greater weight to the perspectives of the Business Groups with regard to overarching issues.

Under its organizational realignment, Freudenberg integrated the former NOK-Freudenberg Group China, Freudenberg Schwab Vibration Control and Dichtomatik Business Groups under the roof of Freudenberg Sealing Technologies effective January 1, 2014.

In addition, Freudenberg repositioned the Freudenberg Real Estate Management Division as the Freudenberg Real Estate Corporate Function effective April 1, 2014.

Furthermore, preparations were made to combine Freudenberg Nonwovens and Freudenberg Politex Nonwovens to form Freudenberg Performance Materi-als. The new Business Group officially began operating on January 1, 2015.

Another new company is Freudenberg Business Services KG, Weinheim, Germany – a customer-oriented internal service provider offering the 12 Freudenberg Business Groups efficient, high-quality and competitively-priced business services worldwide.

Freudenberg & Co. KG), Weinheim, Germany, is the stra-tegic parent company, Freudenberg Societas Europaea (hereinafter: Freudenberg SE), Weinheim, Germany, is the parent company with responsibility for managing busi-ness operations. The corporate bodies of Freudenberg & Co. KG are the Management Board, the Board of Partners and the General Meeting. The corporate bodies of Freudenberg SE are the Board of Management, the Supervisory Board and the Shareholder‘s Meeting. The Management Board of Freudenberg & Co. KG and the Board of Management of Freudenberg SE have the same members. This also applies to the Board of Partners of Freudenberg & Co. KG and the Supervisory Board of Freudenberg SE.

Freudenberg is a family company. It is owned by some 320 heirs to the founding father Carl Johann Freudenberg.

For further information on the Business Groups, please refer to the chapter “Review of Operations by Business Area“ (page 42 ff).

Organizational changes

During the year under review, the Freudenberg Group continued to work very intensively at aligning the orga-nizational structure to the future demands of the market. Under the “Strategic Guide” governance concept, the Board of Management will have a stronger focus on developing the strategy, approving investments, and setting strategic guidelines.

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Freudenberg repositioned the former Freudenberg New Technologies Business Group as a Corporate Function, thus strengthening creative innovation throughout the company. The internal Freudenberg Innovation Award presented for the first time in 2014 highlights the great importance of innovation for the Group.

There were some leadership changes during the year under review: Martin Wentzler took over from Dr. Wolfram Freudenberg as Chairman of the Supervisory Board. Dr. Freudenberg stepped down from the Supervisory Board in June 2014 having reached the retirement age of 73.

Dr. Tilman Krauch became a member of the Board of Management. He joined the Freudenberg Group on October 1, 2014. The competent bodies complied with the request of Mr. Christoph Mosmann to be released from his responsibilities as a member of the Board of Management. Mr. Christoph Mosmann stepped down from the Board of Management effective December 31, 2014.

During the year under review, Freudenberg invested strongly in existing locations and opened new sites. Freudenberg Oil & Gas Technologies, for example, built a new site in Port Talbot, UK, and TrelleborgVibracoustic doubled capacity at its plant in Yantai, China. Construction work on the new Freudenberg Chemical Specialities plant in Valinhos, Brazil, commenced.

For further information on sites of Freudenberg companies, please refer to the chapter “Review of Operations by Business Area“ (page 42 ff).

Business processes

As a result of the organizational realignment in the year under review, Freudenberg has become more transparent, the decision-making processes are faster and better, and cooperation among the Business Groups is stronger.

In 2014, the company continued to work very intensively at improving the efficiency of administrative processes. Freudenberg also streamlined and standardized the Group risk management process during the year under review, thus achieving a significant increase in efficiency. Furthermore, the Group-wide compliance architecture was improved.

The Group also redesigned the Freudenberg global brand and defined a new brand architecture during the year under review. The global brand will be presented at DIALOG 2015 – an internal management event for some 300 senior executives – to be held in Detroit, USA, in July 2015.

In addition, numerous Business Groups worked on respond- ing to customer needs even more effectively and meeting the shorter delivery times expected by the market. EagleBurgmann, for example, improved the process chain from the receipt of a customer order to delivery. Freudenberg Sealing Technologies invested in improving the supply chain in Pinerolo, Italy, and Freudenberg Politex Nonwovens optimized the supply chain, reduced raw material consumption, simplified processes, improved energy efficiency and further raised product quality in the year under review.


16

the Freudenberg Sealing Technologies Business Group effective January 1, 2014.

enmech is a further joint venture of Freudenberg and NOK Corporation. The company’s business activities range from the development and production of mechatronic solutions based on large flexible printed circuits, ready-for-use SMD assembly flat wiring harnesses which can integrate switches, sensors, LED and other functional components, and connector technology.

The most important non-controlling interests held by Freudenberg concern the Japanese companies NOK Corporation and Japan Vilene Company Ltd. (JVC), both registered in Tokyo, Japan.

The NOK Group manufactures and supplies sealing pro-ducts, flexible printed circuits, roll products for office equip-ment and further products such as specialty lubricants.

JVC manufactures nonwovens for the clothing, automotive, electrical and consumer goods industries as well as for applications in the medical sector and filtration.

The proven partnership between Freudenberg and these two Japanese companies has already lasted more than 50 years. Numerous activities in the USA, Asia (China and India) and in Europe have been jointly established during the decades-long partnership.

Further details can be found in note (4) Investments in joint ventures and note (5) Investments in associated

Consolidated group

At year-end 2014, the number of companies in the Freudenberg Group totaled 497 located in 57 countries. 472 of these companies were included in the consolida-tion. 392 companies, including 129 production and 172 sales companies, were fully consolidated.

Investments in joint ventures and associated companies

The joint ventures with Trelleborg AB, Trelleborg, Sweden, and NOK Corporation, Tokyo, Japan, are of major importance for Freudenberg.

The purpose of the TrelleborgVibracoustic joint venture with Trelleborg AB is to strengthen activities in the auto-motive business. Trelleborg AB and Freudenberg SE, Weinheim, Germany, each hold a stake of 50 percent.

Freudenberg and NOK Corporation jointly hold shares in several companies, seven of which, including Freudenberg-NOK General Partnership, Plymouth, USA, are fully consolidated. The Asian companies grouped together in NOK-Freudenberg Group China are consoli-dated according to the equity method.

NOK-Freudenberg Group China is a 50:50 joint venture between the Japanese NOK Corporation and Freudenberg SE with the objective of serving the high-growth Chinese market with locally-produced and import-ed sealing products. The joint venture was integrated in

17

companies in the Notes to the Consolidated Financial Statements.

Acquisitions and disinvestments and discontinued operations

In January 2014, Freudenberg Home and Cleaning Solu-tions acquired the Marigold household gloves business from Comasec SAS, Gennevilliers, France. Comasec SAS is a company of the Dutch Ansell Group, a world leader in protective glove solutions for industrial applications. The acquisition included the global trademark rights for the Marigold brand as well as consumer business in the UK, Ireland, Italy, the Netherlands, Hong Kong and Japan.

Freudenberg Sealing Technologies acquired Tobul Accumulator Incorporated, Bamberg, USA, in July 2014. The family company Tobul is a world-class developer and manufacturer of hydraulic accumulators. With the acquisition, Freudenberg is strengthening established accumulator business in various markets such as energy/oil & gas, mining and fluid technology in North and South America.

In August 2014, the Freudenberg Nonwovens Business Group acquired the companies which operate the Hänsel brand interlinings business from Hänsel Textil GmbH, Iserlohn, Germany. Hänsel is a high-quality and innovative interlinings specialist for the international fashion industry.

Freudenberg Filtration Technologies acquired the indus-trial activated carbon corrosion protection business of the American company MeadWestvaco Corporation, Richmond, Virginia, USA, in November 2014. With this acquisition, Freudenberg can offer global customers a further future-oriented filtration solution for clean and pollution-free air.


18

networks. The function pools research and development services to support the Business Groups and develops new business via the New Business Development and Venture Capital units. The issue of technology platforms has been revived with a view to developing overarching competences.

The New Business Development unit continued to expand its expertise in lightweight construction during the year under review. New Business Development also conduc-ted structured market segment analyses in cooperation with the Business Groups with the aim of generating new fields of business. Particularly close attention was paid to analyzing the energy and oil & gas market segments with the help of external experts.

With regard to the scaffolene® (bioresorbable nonwovens) project, Freudenberg and a selected partner success-fully concluded process validation for the manufacture

rESEarCh aNd dEvElOpmENT

In 2014, the Freudenberg Group expensed €270.3 million (previous year: €246.3 million) for research and development based on the pro-rata consolidation of the joint ventures. €213.7 million (previous year: €193.0 million) was expensed based on the equity consolidation method for joint ventures. In both cases, more than half of the sum is accounted for by the Freudenberg Sealing Technologies, EagleBurgmann and Freudenberg Chemical Specialities Business Groups.

During the year under review, an average of 2,582 employees (previous year: 2,484) were employed in research and development throughout the Freudenberg Group based on the pro-rata consolidation of the joint ventures, with the regional focus in Germany, where 1,542 employees (previous year: 1,564) were employed.

Based on the equity consolidation method for joint ventures this figure was 2,025 employees (previous year: 1,936). Here, too, the regional focus was in Germany, where 1,153 employees (previous year: 1,161) were employed.

The goal of all research and development activities of the Freudenberg Group is to boost the share of new pro-duct sales. To that end, strategic support is provided for the focused, customer-oriented activities of the Business Groups:

The Corporate Innovation function, in which the Freudenberg New Technologies Business Group was also integrated in 2014, is responsible for innovation strategy, innovation marketing, public funding and collaborations/

19

of the new product in the field of biosurgery. The Group qualified as the sole supplier. CE marking for this pro-duct is expected in early 2015 – this is a milestone for a subsequent successful market launch. In addition to this, Freudenberg also continued work on developing scaffolene® as a platform technology. This will significantly expand the product portfolio of bioresorbable polymers and the application range, in particular with regard to drug delivery and regenerative medicine. Moreover, work on further customized scaffolene® pre-developments began in the year under review.

The Freudenberg Fuel Cell Component Technologies unit won several further series orders from high-caliber cus-tomers in 2014. Given the advanced stage of product development and business expansion, the gas diffusion layers and filters & humidifiers product groups were transferred to the Freudenberg Performance Materials respectively Freudenberg Filtration Technologies Business Group effective January 1, 2015. These two Business Groups will move forward with industrial production, thus strengthening Freudenberg‘s position as a competent component supplier with a unique product portfolio of fuel cell components.

Awards

In the 2014 financial year the Group again honored the achievements of employees and external scientists in the field of innovation: The Freudenberg Innovation Award is a new distinction. Within the Freudenberg Group, it is the highest award for innovations that are already successful in the mar-ketplace. The five finalists in 2014 were as follows (see photo pages for further details):

– Proven energy savings with high-tech lubrication (Awardee: Freudenberg Chemical Specialities): The power consumption of industrial plants is often enormous. “Energy Efficiency Solutions” from Klüber Lubrication (Freudenberg Chemical Specialities) help to increase their efficiency and cost-effectiveness. In an innovative measurement and evaluation process, the energy-saving potential of the system is first identi-fied. After optimization, the realized savings are then measured. This can often be a tough challenge. High-precision, easy-running specialty lubricants provide the basis for optimization. These advanced lubricants are used in place of conventional oils and reduce friction between individual components. The result: a proven reduction in energy consumption at increasing power levels.

– Energy storage from the clean room (Freudenberg Sealing Technologies): One small but vital component in modern dual-clutch, direct-shift gearboxes is the hydro-mechanical piston accumulator. It enables silky-smooth gearshifts, even if the oil pump is not running. To ensure that this func-tion continues throughout the car’s lifetime, the piston accumulator’s high-precision components are assem-bled by robots in a clean room. Even a single speck of dust can cause the gas reservoir to leak and render the piston accumulator inoperable.

– Diamond coating against corrosion (EagleBurgmann): To ensure that power plants produce electricity and heat at optimal levels, the amount of steam delivered to the turbines needs to be very precise. Feedwater pumps play a central role in achieving this. Their ceramic

Research and Development

20

outcome is an important basis for the development of vaccines or the treatment of diseases such as cancer.

The Freudenberg Group also sponsored the Heinz König Young Scholar Award 2014 of the Center for European Economic Research (ZEW) in Mannheim. The award was presented to Olga Malkova of the University of Michigan, USA, for her work on the effects of parental leave benefits on the birthrate. Her research represents a key contribution to the discussion concern-ing the effectiveness of family policy measures.

Freudenberg Sealing Technologies received the TOP Innovation Award of the F.A.Z. Institute for 2014. This award confirms once again that the continual improve-ment process and innovation culture at Freudenberg have found recognition.

Freudenberg held the 5th Global Innovation Forum in May 2014. This time, the subject was process technologies for the future. The internal event was attended by over 400 participants from all over the Freudenberg Group. Some 250 researchers and developers gathered in Weinheim for the main event. Around 160 further participants in Brazil, USA, China, India and Japan were linked via video conferencing.

The Freudenberg Group inaugurated a new research and development center in Qingpu, China, in July 2014. The Group is thus expanding its site for specialty lubricants and release agents. Klüber Lubrication and Chem-Trend, both companies belonging to the Freudenberg Chemical Specialities Business Group, can now respond even better to growing demand and the specific needs of Chinese customers.

seals are placed under extreme chemical stress by the feedwater. However, by coating the ceramic rings with EagleBurgmann‘s new and extremely thin layer of microcrystalline and electrically conductive diamond, their durability can be vastly increased, and they can last eight times longer than before.

– Ultra-thin nonwovens let the ions flow (Freudenberg Nonwovens): No mobile phone, laptop or electric car can function without electricity from batteries. They need to be pow-erful, durable and – above all – safe. A wafer-thin yet extremely durable nonwoven separator with a functional ceramic impregnation produced by Freudenberg Nonwovens keeps positive and negative poles perman-ently separated from each other. This minimizes the risk of short circuits or even battery fires while allowing the ions and thus the electricity to flow freely.

– Dusting robot (Freudenberg Home and Cleaning Solutions): Powered by a rechargeable battery, the ViRobi dusting robot from Freudenberg Home and Cleaning Solutions automatically runs around rooms of its own accord, wiping them clean with its electrostatic dusting cloth. Clever axle geometry and suspension remove the need for high-tech navigation and enable ViRobi to negotiate obstacles or corners.

The 2014 Karl Freudenberg Prize was awarded to Dr. Michael Floßdorf of the German Cancer Research Center at Helmholtz-Gesellschaft Heidelberg for his work on “Stochastic T cell fate decisions“ from the field of bioscience. He combined mathematical models and statistical analyses resulting from experimental data. The

21

Research and Development

Freudenberg has participated in research and develop-ment projects supported by the German government and the EU for many years. These funded research and development collaborations between industrial companies and scientific institutions can address issues and problems that can only be jointly solved. In the 2014 financial year, a total of seven German companies in the Freudenberg Group received funding for a total of 16 collaborative projects (12 German, 4 EU) running until the end of 2014 or beyond.

22

maCrOECONOmiC ENvirONmENT

In 2014 it was above all the industrialized nations which recorded higher economic growth than the previous year. Momentum in developing countries was less dynamic in a year-on-year comparison; consequently, global econo-mic growth, and thus growth in the relevant markets for Freudenberg, remained at approximately the same level as the previous year. The Freudenberg Group benefited from these positive developments and continued to grow sales in the 2014 financial year by marketing innovative products, achieving a high degree of customer orientation and flexibility as well as proceeding with structured expan-sion in attractive markets and strategic areas of business. The oil price, which fell sharply in the later months of the year, could only partly offset generally unfavorable exchange rate developments in 2014.

Regional developments in the Freudenberg Group‘s busi-ness were mixed. Moderate growth in Europe is primarily attributable to improved economic conditions, particularly in Germany, Spain and Italy, while the conflict in Ukraine had a negative impact on business in Russia. Business in North America developed well, while in particular the problems in Argentina and weak economic conditions in Brazil impacted on emerging markets in South America. Freudenberg continued to enjoy strong growth on Asian markets.

Global economic situation

The global economy expanded in 2014 despite sev-eral political crises, for example in Ukraine and Syria, and continuing economic risks, particularly in southern Europe. The key drivers of this positive development were the continued strong US economy (2.4 percent) and sturdy, albeit weaker, growth in China (7.4 percent).

The eurozone recovered noticeably in the year under review (0.9 percent), even though some problems in the region – particularly in southern Europe – still remained unsolved. German gross domestic product (GDP) rose by 1.6 percent in 2014, with exports and employment reaching record levels. Spain (1.4 percent), Portugal (0.9 percent) and Greece (1.0 percent) returned to growth thanks to strict reform measures. As industry in the UK continued its upswing (2.8 percent), the strong economic recovery across all sectors continued there.

The revival of the Japanese economy which was driven by monetary policy was short-lived. Nevertheless, growth averaged out at an annual 0.2 percent.

Brazil (0.1 percent) and Russia (0.5 percent) put up a disappointing performance in 2014. Major structural reforms that would stimulate continued above-average growth and allow these economies to catch up with the industrialized nations, failed to materialize. More-over, Russia lost important trade and financial links with

rEpOrT ON ECONOmiC CONdiTiONS

23

western industrialized nations as a result of the conflict with Ukraine. In contrast, India developed well (5.6 percent). The change in government there triggered new momentum and brought a realistic chance of systematic growth in the coming years. (Figures sourced from: Consensus Economics, European Commission, Inter-national Monetary Fund)

Developments in the Freudenberg Group‘s key sales markets in 2014 were as follows: the automotive industry in China and the USA enjoyed strong growth, albeit at a slightly lower level than the previous year. Passenger car production in China grew by 8 percent, demand increased by 11 per-cent. In the USA, automobile production grew by 5 percent, and demand by just under 3 percent. For the first time in several years, the automotive industry in Europe returned to a growth trajectory. The number of new registrations in

Macroeconomic Environment

GDP growthRegion 2013 2014

USA 2.2% 2.4%

Mexico 1.4% 2.1%

Brazil 2.5% 0.1%

Argentina 2.9% -1.6%

Japan 1.6% 0.2%

Russia 1.3% 0.5%

China 7.7% 7.4%

Taiwan 2.2% 3.5%

India 4.7% 5.6%

wOrld rEgiONS

GDP growthRegion 2013 2014

Eurozone -0.4% 0.9%

Germany 0.1% 1.6%

France 0.4% 0.4%

Italy -1.9% -0.4%

Spain -1.2% 1.4%

Portugal -1.4% 0.9%

Ireland 0.2% 4.8%

Greece -3.9% 1.0%

United Kingdom 1.7% 2.8%

Figures sourced from: Consensus Economics, European Commission, International Monetary Fund

EurOpE

Europe increased by 1 percent, while production rose by as much as 3 percent on the back of exports to Asia and Ame-rica. (Figures sourced from: Information Handling Services)

The mechanical and plant engineering sector benefited from the catch-up effect in many regions in 2014 and recorded global growth of 5 percent. While growth in Germany and the eurozone was below average at just under 1 per-

cent in each case, other countries recorded robust growth. There was a 10 percent upswing in Japan, 9 percent in China, 7 percent in the UK and 6 percent in the USA. (Figures sourced from: Verband Deutscher Maschinen- und Anlagenbau – German Engineering Association)

In the textile and apparel industry, the world market leader China grew production in 2014 by 7 percent, on a par with the previous year. Its competitors in the USA and

24

Europe returned to growth in the year under review, albeit a moderate 1 percent in both cases. (Figures sourced from: National Bureau of Statistics of China, Federal Reserve Board, Eurostat) The construction industry in the eurozone put the recession behind it in 2014, reporting growth in excess of 2 percent. While production in Spain climbed 17 percent, production declined by 7 percent in Italy, and by almost 10 percent in Portugal. The positive trend in the US construction industry continued. At almost 7 percent, growth was even slightly higher than the previous year. The construction industry in China grew by 9 percent. (Figures sourced from: Eurostat, US Census, National Bureau of Statistics of China)

Medical technology manufacturers in Germany grew pro-duction by almost 5 percent in 2014. The USA, the world market leader, grew further from an already high level, adding another 2.5 percent to production. Cost efficiency was once again one of the most important innovation

drivers. (Figures sourced from: Eurostat, Federal Reserve Board)

Solid macroeconomic developments and the associated high level of employment led to rising demand from final users in many regions.

Overall, raw material prices declined slightly on a global basis. There was a significant drop in the price of crude oil towards the end of the year as a result of oversupply, and the annual average price for crude oil was just under US$100 per barrel, almost 9 percent down on the previ-ous year. (Figures sourced from: Handelsblatt)

Following a strong first half of the year, the euro/US dollar exchange rate fell sharply in the second six months. The annual average exchange rate was identical with the previous year at US$1.33/€. (Figures sourced from: Euro-pean Central Bank)

dEvElOpmENT Of rEal gdp iN BriC COuNTriES aNd gErmaNy SiNCE 2008index 2008 = 100

170

160

150

140

130

120

110

100

90

Source: National statistical offices

2008 2009 2010 2011 2012 20142013

China

India

BrazilRussia

Germany

dEvElOpmENT Of rEal gdp iN SElECTEd SOuTh EaST aSiaN COuNTriES aNd gErmaNy SiNCE 2008index 2008 = 100

150

140

130

120

110

100

90

Source: National statistical offices

2008 2009 2010 2011 2012 20142013

IndonesiaVietnamPhilippines

Malaysia

Thailand

Germany

25

BuSiNESS dEvElOpmENT aNd pOSiTiON Of ThE grOup

The Freudenberg industrial group continued its good busi-ness development in 2014. Growth in emerging econo-mies remained dynamic and growth in established markets was also slightly above expectations. While negative exchange rate effects impacted business development in the first half of the year in particular, relatively stable raw material procurement prices approximately offset these effects.

The Freudenberg Group again reported increased sales and consolidated operating result. Not only all Business Areas, but also the well-integrated acquisitions at Freudenberg Sealing Technologies, Freudenberg Home and Cleaning Solutions and Freudenberg Chemical Specialities contributed to this increase. The Group outper-formed the market in terms of growth and this was attributa-ble to the marketing of innovative products, a high degree of customer orientation and flexibility, as well as structured expansion in attractive markets and strategic fields of busi-ness. Furthermore, the Freudenberg Group maintained its high earning power through the systematic implementation of measures to increase productivity and efficiency.

Earnings position of the Group

The Board of Management uses sales and operating result as financial key performance indicators for the management of the Freudenberg Group; these figures are taken from internal reporting and are based on the pro-rata consolidation of the joint ventures. This provides greater transparency when comparing business performance since it also includes the activities of the 50:50 joint ventures. As the value-oriented performance indicator, operating result describes the profit before income taxes excluding special effects. The return on sales is determined from the two performance indicators of sales and operating result and will in future represent another key indicator of oper-ating performance. A return on sales of 9.1 percent was reported for the 2014 financial year. These indicators are regularly made available to the Board of Management to assist in the timely identification of trends and changes. The financial key performance indicators are targeted towards sustainable earnings-oriented growth and a continuous increase in enterprise value.

Applying the pro-rata consolidation for joint ventures, the Freudenberg Group generated sales of €7,039.1 million (previous year: €6,622.5 million) in 2014, thus setting a new record. Overall, sales increased by 6.3 percent or €416.6 million year-on-year. Adjusted for the effects of acquisitions and disinvestments to the amount of €131.0 million and exchange rate effects, sales were 5.6 percent or €368.0 million higher than the previous year. Sales increased in all Business Areas.

Under the IFRS financial reporting rules, joint ventures must be consolidated using the equity method. According to this method, sales during the year under review amounted to €5,982.3 million (previous year: €5,646.1 million). On this

Business Development and Position of the Group

fOrECaST/aCTual COmpariSON frEudENBErg grOup*

actual 2013

[€ million]

forecast for 2014

actual 2014

[percent]

actual 2014

[€ million]

Sales 6,622.5 moderate growth

+6.3 7,039.1

Operating result

512.9 moderate growth

+25.4 643.3

ldi-q** 3.3 slight reduction

-18.2 2.7

* For internal reporting, the Freudenberg Group key performance indicators are determined based on the pro-rata consolidation of the joint ventures.** For further details please refer to the chapter on “Corporate Responsibility“.

frEudENBErg grOup

2013 2014

Sales [€ million] 5,646.1 5,982.3

Profit before income taxes [€ million] 493.3 625.1

Consolidated profit [€ million] 398.8 477.8

Workforce 33,245 34,030

At-equity

26

basis, sales were €336.2 million or 6.0 percent higher than the previous year.

Applying the pro-rata consolidation for joint ventures, operating result for the year under review amounted to €643.3 million, €130.4 million higher than the previous year. This was attributable to higher sales, productivity improvements, cost saving programs and favorable sectoral developments.

Based on the equity consolidation method for joint ventures, profit before income taxes in 2014 amounted to €625.1 million, a year-on-year improvement of €131.8 million. This increase is primarily attributable to higher contribution margins and active cost management.

Contribution margins rose. This is attributable on the one hand to higher sales and the slight decrease in raw material procurement prices, and on the other to improved capacity utilization and measures to increase productivity in almost all Business Groups. Selling costs rose approximately in proportion to sales. Administration expenses declined as a result of process and system optimization.

Research and development expenses increased by 10.5 per-cent from €191.5 million in 2013 to €211.6 million in 2014.

Consolidated profit was €477.8 million (previous year: €398.8 million).

Sectors and regions

The 2014 financial year was characterized by a rise in demand on almost all markets, and developments were positive throughout the year.

Under the IFRS financial reporting rules, joint ventures are consolidated using the equity method. Excluding sales by the 50:50 joint ventures such as NOK-Freudenberg Group China, TrelleborgVibracoustic and enmech, which make a significant contribution to automotive OEM busi-ness, the share of automotive business in Freudenberg sales was 25 percent (previous year: 24 percent).

The second most important customer grouping for the Freudenberg Group was the mechanical and plant engineering sector accounting for a share of 15 percent (previous year: 16 percent). Business with final users and spare parts business accounted for some 13 percent, respectively 8 percent of total sales (no change compared with the previous year). Other major customer groupings for the Freudenberg Group are the textile and apparel industry (7 percent), energy and water (6 percent), construction (6 percent), the chemical industry (4 percent), and the medical and pharmaceutical industry (4 percent).

With few exceptions, the regional distribution of sales remained largely unchanged in 2014. The Freudenberg Group generated 28 percent of total sales in the Euro-pean Union excluding Germany (no change compared

SalES By SECTOrS[%]

SalES dEvElOpmENT[€ milliON]

6,000

7,000

5,000

4,000

3,000

2,000

1,000

02009

7,039.1

4,200.8

2010

5,481.4

2011

6,006.5

2011 SE

5,991.9

2012 2013

6,321.7 6,622.5

Joint ventures are consolidated on a pro-rata basis in line with internal reporting procedures. Figures based on Freudenberg & Co. KG. until 2011.

Pro-rata

2014

Energy and water 6

Chemical 4

Medical and pharmaceutical 4

Textile and apparel 7

Construction 6

Mechanical and plant engineering 15

Other industry sectors 12

Final users 13

Spare parts business 8

Automotive OEMs 25

At-equity

27


with the previous year). Germany accounted for 18 percent (previous year: 19 percent) of total sales, while the Other European countries accounted for 6 percent (no change compared with the previous year). Business in North America accounted for 23 percent of total sales (previous year: 22 percent). 5 percent of total sales (previous year: no change compared with the previous year) were generated in South and Central America. The share attributable to the Asia region was 18 percent (no change compared with the previous year). The Freudenberg Group generated the remaining 2 percent of total sales in Africa/Australia (no change compared with the previous year).

Financial position of the Group

Financing management of the Freudenberg Group

Freudenberg SE is responsible for all the financing activities of the Freudenberg Group, thus ensuring the Freudenberg Group has sufficient liquid funds at all times. Freudenberg Group companies obtain the financing they require via cash pools or loans provided by the internal financing companies – for legal, fiscal and other reasons financing in some countries also takes the form of bank loans guaranteed by Freudenberg SE.

Freudenberg does not expose itself to financial risks through speculation with derivative financial instruments but uses such instruments only for hedging, and therefore reducing, risks in connection with underlying transactions. Future transactions are only hedged if there is a high pro-bability of occurrence. In order to ensure the identification and management of all financing risks, the Freudenberg Group pursues a holistic approach to financial risk management. The existing financial risks are identified and limited in an institutionalized control loop.

Although financing conditions have loosened significantly compared with previous years, currency risks remain high as a result of distortions on currency markets. In addition, volatility on the credit and capital markets remains high. This also impacts the financing conditions for industrial companies. The Freudenberg Group is in a good posi-tion to tackle these challenges thanks to its conservative finance policy. Liquidity measures include high reserves of liquid funds and committed credit lines with core banks.

SalES By rEgiONS [%]

Africa/Australia 2

Asia 18

South/Central America 5

North America 23

Germany 18

EU (excluding Germany) 28

Other European countries 6

At-equity

28

In 2014, the largest single financing measure was the conclusion of a new €250 million syndicated loan. This loan has a term of five years and was undrawn at the end of the year. This gives additional financing security. The aim is to maintain a balanced due date profile, achieve investor diversification and optimize external borrowing conditions, thus ensuring that external borrowing by the Freudenberg Group is for the most part independent of short-term fluctuations on credit markets. As at December 31, 2014, Freudenberg had undrawn committed credit lines amounting to some €400 million. The interest payable on the certificates of indebtedness (“Schuld-scheindarlehen”) included in the liabilities to banks is based on variable and fixed components.

Off-balance sheet contingent liabilities and other financial obligations of the Freudenberg Group are negligible.

In its rating published in May 2014, the rating agency Moody’s rated the creditworthiness of Freudenberg SE as Baa1 and confirmed the outlook as “stable“. This gives the Freudenberg Group very good creditworthiness at investment grade level.

Capital structure

The equity ratio rose from 47.3 to 48.2 percent. This was chiefly attributable to the positive result and exchange rate developments. Adjustments in the discount rate of provisions for pensions had an offsetting effect.

The rise in non-current liabilities to €1,559.3 million (previous year: €1,412.3 million) was mainly attributable to the increase in provisions for pensions and similar obli-gations in part due to the decrease in the discount rate.

The €210.8 million rise in current liabilities to €1,896.2 million is attributable in particular to the €81.3 million increase in short-term provisions, above all as a result of the increase in short-term provisions for person-nel obligations, as well as the €55.3 million rise in trade payables as at December 31, 2014. After eliminating exchange rate effects and the effects of acquisitions, current liabilities increased by 4.1 percent.

Dec. 31, 2013 Dec. 31, 2014 Change

[€ million] [€ million] [percent] [€ million]

Equity 2,774.9 3,211.0 15.7 436.1

Non-current liabilities 1,412.3 1,559.3 10.4 147.0

Current liabilities 1,685.4 1,896.2 12.5 210.8

EQUITY AND LIABILITIES 5,872.6 6,666.5 13.5 793.9

29

Liquidity

Cash flow from operating activities in the 2014 finan-cial year amounted to €617.8 million, corresponding to a year-on-year increase of €101.9 million. The rise is primarily due to the increase (€131.8 million) in profit before income taxes. The €129.6 million increase in working capital to €1,189.0 million (previous year: €1,059.4 million) had an offsetting effect.

Cash flow from investing activities amounted to €-338.7 million and was therefore appreciably lower than cash flow of €-519.7 million reported for the previous year; this was attributable to significantly lower acquisition sums under corporate transactions. Major investing activities focused on tangible assets.

Cash flow from financing activities in the 2014 financial year was €-47.3 million (previous year: €54.5 million). The main driver was payments to share-holders and non-controlling interests.

The Freudenberg Group can meet all of its payment obligations at any time.


2013 2014

Cash flow from operating activities 515.9 617.8

Cash flow from investing activities - 519.7 - 338.7

Cash flow from financing activities 54.5 -47.3

Cash and cash equivalents at beginning of year 652.2 672.9

Changes in cash and cash equivalents with effect on payments 50.7 231.8

Changes in cash and cash equivalents from exchange rate differences - 21.9 13.0

Changes in cash and cash equivalents from changes in consolidated group - 8.1 0.0

Cash and cash equivalents at end of year 672.9 917.7

Securities and cash at bank and in hand 672.9 917.7

Summary Of CaSh flOwS[€ milliON]

30

Assets, Equity and Liabilities of the Group

BalaNCE ShEET STruCTurE [€ milliON]

2013 2014 2013 2014

Assets Equity and Liabilities

3,483.3

3,847.9

2,389.32,818.6

1,412.31,559.3

1,896.21,685.4

2,774.9

3,211.0

5,872.6

6,666.5

5,872.6

6,666.5

Non-current assets

Current assets

Equity

Non-current liabilities

Current liabilities

31

At €6,666.5 million (previous year: €5,872.6 million), the total assets of the Freudenberg Group increased by €793.9 million.

The rise in the balance sheet total is attributable among other things to the increase in non-current assets, particularly as a result of the acquisition-driven increase in intangible assets and the positive change in participations consolidated by the equity method.

The significant €429.3 million increase in current assets to €2,818.6 million is chiefly attributable to the increase in securities and cash at bank and in hand – as a result of the appreciable rise in free cash flow – and the rise in receivables as a result of positive business development.

Equity and liabilities items are explained in the chapter “Capital structure“ of the Group Management Report.

Investments

Investments in intangible assets, tangible assets and investment properties rose during the year under review to a total of €271.6 million (previous year: €229.3 million) and were therefore higher than depreciation of €254.7 million. In terms of Freudenberg Group sales, this corresponds to an increase in the investment rate from 4.1 percent in the previous year to 4.5 percent in 2014.

The Freudenberg Group invested worldwide and invest-ment in almost all regions was higher than the previous year. Major projects in 2014 included a production location for Freudenberg Chemical Specialities in Valin-hos, Brazil, and a new research and development center for Freudenberg Chemical Specialities in Qingpu, China.

The center was opened as part of a multi-year investment plan for China.

€79.1 million (previous year: €74.1 million) were invested in Germany, among other things in a large administrative building at Weinheim industrial park, or in production halls and plant infrastructure at the Oberwihl location. Furthermore, an on-site day care center for children was opened at Weinheim industrial park in November, thus making an important contribution to the work/life balance for parents.

Investments planned for 2015 are likely to be financed from cash flow from operating activities and have no major effect on net assets.

Summary statement

Developments in the assets, liabilities, financial position and earnings position of the Freudenberg Group were stable. On this basis, the Freudenberg Group was able to meet its growth forecast and business targets.

The events reported in the chapter “Report on Post-Balance Sheet Date Events“ do not change this assessment.


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In our internal reporting – where the joint ventures are consolidated on a pro-rata basis – the headcount as at December 31, 2014 was 40,456 employees (previous year: 39,897). Based on the equity consolidation method for joint ventures, the Freudenberg Group employed 34,030 employees (previous year: 33,245). Personnel expenses increased to €1,811.8 million (previous year: €1,727.9 million).

Overall, headcount development was positive on the back of continued dynamic growth. The headcount rose in Germany to 9,647 (previous year: 9,538), in Europe (excluding Germany) to 8,592 (previous year: 8,375), in Asia to 6,441 (previous year: 6,231), and in North Amer-ica to 7,484 (previous year: 7,200).

Vocational training at Freudenberg

In 2014, 142 young people (previous year: 170) began their vocational training at Freudenberg‘s German com-panies. The decline in the number of vocational trainees is chiefly due to changes at Freudenberg Sealing Technolo-gies. In previous years the Business Group trained in excess of its requirements at the Weinheim location and realigned the number of vocational trainees accordingly.

In total, 511 people were training at Freudenberg in Germany as at December 31, 2014. The spectrum ranges from a two-year commercial or technical apprenticeship to dual studies at a university of cooperative education. Freudenberg has acquired a reputation for the high standard of its vocational training, as is confirmed by the fact that companies located in the vicinity of Freudenberg operations send their young people to Freudenberg for training.

Freudenberg drafted a concept for a modern, new vocation-al training center in Weinheim. The center will be based on the latest educational practice and will be fitted with state-of-the-art technical equipment in order to safeguard excellent vocational training for the future.

Freudenberg invests in vocational training at several loca-tions as is illustrated, for example, by EagleBurgmann Germany GmbH & Co. KG. Industrial mechanics, technical product designers and industrial clerks receive skilled training in Wolfratshausen.

humaN rESOurCES

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Talent Management

Competition to recruit the best minds is one of the biggest challenges facing any company. Freudenberg‘s response to this challenge is excellent talent management:

Group-wide development programs for top management

Group-wide development programs for the top two management levels below the Board of Management were launched at Freudenberg during the year under review. Both the Strategic Leadership Program and the Business Leadership Program are key elements of the global talent management process and bring together employees from the various Business Groups. The objec-tive is to create a network for top management throughout Freudenberg in order to meet the demands of increasing internationalization and to respond to market change. What is needed are international teams who share know-ledge with one another, thus developing new ideas and solutions. Both programs are being implemented in cooperation with the internationally acknowledged INSEAD Business School, Fontainebleau, France.

Freudenberg Leadership Development Program

The Freudenberg Group offers leadership training for management talent in all regions. During the year under review, Group-wide development programs featuring standardized content were introduced for management talent as part of the Freudenberg Leadership Development Program (FLDP). The target group is young managers who have either just embarked on their first management tasks or are about to do so.

FLDP alumni organizations are to be established in the regions to maintain the momentum of the network. Such organizations have already been set up in China and Europe, where several network meetings or FLDP alumni days were held with extremely positive feedback. In addition, regional talent dialogues aimed at supporting management talent across all Business Groups were set up in all regions in 2014. These meetings serve to discuss Group-wide development perspectives for identified regi-onal management talent. Freudenberg also expanded the functional talent dialogue which is designed to develop specialist talent.

Freudenberg Academy is the name given to a concept addressing the development of a corporate university for the Freudenberg Group to support collaboration among the academies run by individual Business Group. Two key elements of this concept are the Learning Manage-ment System, which is to be rolled out in 2015, and the Freudenberg Training & Development Forum, which took place for the first time in 2014.

Human Resources

wOrkfOrCE By rEgiON (aS aT dEC. 31, 2014)

Africa/Australia 411

Asia 6,441

Germany 9,647

North America 7,484

South/Central America 1,455

Europe (excluding Germany) 8,592

At-equity

North America 8,343

South/Central America 1,773

Europe (excluding Germany) 10,597

Africa/Australia 432

Asia 8,775

Germany 10,536

Pro-rata

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Regional activities

Europe

Two FLDP events were held in 2013, one in English and one in German; from 2014 onwards, English became the language of both events, which bring together participants of different nationalities and from different functions and Business Groups. Under the scheme comprising five mod-ules, participants have the opportunity to network and gain experience with intercultural project work. In Germany, Freudenberg opened an on-site day care center at its headquarters in Weinheim. The Group is thus making an important contribution to the work-life balance for parents.

North America

The second Leadership Program for young potentials began in 2014. 19 young managers from different cultural back-grounds came together to learn how to prepare for future management tasks. The program focused in particular on encouraging diversity.

In addition, Freudenberg launched a further round of the mentoring program to develop young potentials introduced a few years ago. 20 mentors, executives from various functions, guide their protégés for a period of one year, supporting their personal development and broadening their network. The young potentials also learn more about the diversity of the Freudenberg Group in North America which strengthens their bond with the company.

South America

The Freudenberg Leadership Development Program for middle management launched in 2010 was again implemented in the year under review with 24 employees taking part. To date, a total of 102 managers have suc-cessfully completed this training.

Managers from all Business Groups in Brazil, Argentina and Chile attended an innovation workshop in February 2014. Moderated by a well-known Brazilian manage-ment school, the managers drafted strategies to raise innovation capabilities and implement these capabilities in the region.

China and Asia

The Freudenberg China Talent Summit, a two-year program for middle management talent in China, was first introduced in 2006. Participants now also include management talent from Thailand, South Korea and Vietnam, and the scheme, which has now been renamed Freudenberg Leadership Development Program Asia, continues to comprise intensive training modules and challenging project work, and is supported by international managers from Freudenberg.

During the year under review, 23 employees from seven Business Groups were trained as Cross Culture Ambas-sadors under a pilot project. The participants from China, Taiwan, Japan and Germany learnt about the different value systems and communication behaviors of different cultures and formulated openings for achieving more effective cooperation.

frEudENBErg grOup wOrkfOrCE By rEgiON

Africa/Australia

416 411

Asia

6,2316,441

South/Central America

North AmericaEurope (exclu-ding Germany)

Germany

9,538

2013 2014

11,000

9,000

7,000

5,000

3,000

1,000

0

At-equity9,647

8,3758,592

7,2007,484

1,485 1,455

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The first Lean Management Workshop also took place in 2014. The workshop consisted of six two-day modules which introduced employees from various Freudenberg Business Groups to lean management methods. A total of 18 participants received a “Lean Green Belt“ certificate.

India

Talent management in India consists of a combination of management development, retaining talent by offering individual training schemes at various levels, and recruiting new talent from leading business schools in India. 38 talents have so far participated in two Leadership Development Programs in India. This scheme was revised during the year under review and adapted to cover the standard content for Freudenberg Leadership Develop-ment Programs. It will take place again in 2015 under the aegis of an external training company. The participants were selected during the regional talent dialogue which took place in early January 2015.

The Freudenberg India Entrepreneurial Leadership Development Program remains the key measure for recruiting talent from the best business schools in India for Freudenberg. The objective is to enroll outstanding gradu-ates from all disciplines in order to increase the number of potentials for future management tasks.

Human Resources

2013 2014

428 432

8,9898,775

10,382 Pro-rata10,53610,186

10,597

8,0428,343

1,870 1,773

11,000

9,000

7,000

5,000

3,000

1,000

0

frEudENBErg grOup wOrkfOrCE By rEgiON

Africa/Australia

AsiaSouth/Central America

North AmericaEurope (exclu-ding Germany)

Germany

36

ENVIRONMENTAL PROTECTION, OCCUPATIONAL HEALTH AND SAFETY

Management systems

The introduction of management systems relating to occupa-tional health and safety (OHSAS 18001) and environmental protection (ISO 14001 or EMAS) continued in the 2014 financial year. 86 percent of Freudenberg Group production facilities now operate an occupational health and safety management system pursuant to OHSAS 18001 and 87 percent of Freudenberg Group production sites operate an environmental management system pursuant to ISO 14001 or EMAS.

Investments

In the year under review, direct investments in occupational health and safety amounted to €12.0 million (previous year: €10.6 million). Direct investments in environmental protection amounted to €1.8 million (previous year: €2.8 million).

The share of direct investments in environmental protection, occupational health and safety in total investments in tangible assets, intangible assets and investment properties amounted to 5.1 percent (previous year: 6.9 percent).

Preventive health care

The Group further expanded preventive health care management in the year under review. Various programs implemented Freudenberg‘s health care principles throughout the company. Internal surveys on health care infra-structure served to identify improvement potential and define corresponding measures. Health care performance indicators, such as the sickness rate, have been recorded

since 2011. The transparency brought by this process has already led to a series of improvement projects such as the two outlined below:

Demographic change and the associated age-related diseases are causing a rise in the sickness absence rate at several sites. In response to this situation the Freudenberg Group has, for example, developed a health program featuring health checks, sport during work breaks, and changes in the canteen menus.

In France, Freudenberg Filtration Technologies introduced a project about managing stress at the workplace. Inter-active training sessions and workshops help employees to develop anti-stress mechanisms.

Occupational safety Occupational safety measures focus on changing the behavior of all employees. One example of these efforts is the numerous projects implemented under the “We all take care“ environmental protection and occupational health and safety initiative. Trainers and apprentices at the Freudenberg Service Training Workshop have, for instance, jointly developed a concept that enables apprentices to systematically inspect their working environment for hazards. Each of the apprentices becomes a safety observer for a one-week period. They are tasked with checking the work of the other apprentices in their group for potential risks and ensuring their safety during the week they are on safety duty.

The LDI rate (LDI is the acronym for Lost Day Incident) used by Freudenberg in its internal reporting is based on the pro-rata consolidation of the joint ventures. On this basis, the LDI rate in 2014 was 2.7, representing a further

COrpOraTE rESpONSiBiliTy

The priority goals of the freudenberg group are the avoidance of all accidents, preventive health care, and reducing the impact of business activities on the environment.

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improvement on the previous year (3.3). This indicator is regularly made available to the Board of Management and therefore serves as a non-financial key performance indicator for the Freudenberg Group. The LDI rate measures all accidents at work involving at least one day‘s absence per 1,000 employees. Based on the equity consolidation method for joint ventures, the LDI rate was 2.7 (previous year: 3.4). In terms of the standard for manufacturing companies, the Group therefore achieves first-class occupational safety.

From 2015, the non-financial key performance indicators used for internal reporting are being redefined. The indi-cator that will be used from the beginning of 2015 will be LDI-FR (“Lost Day Incident – Frequency Rate“). Unlike the LDI rate formerly used for reporting purposes, the LDI-FR measures accidents at work involving at least one day‘s absence per million working hours. In the year under review, the LDI-FR was 1.4 (previous year: 1.8) based on the pro-rata consolidation method for joint ventures, and 1.5 (previous year: 1.9) based on the equity consolidation method for joint ventures.

The total number of accidents resulting in at least one day‘s absence from work during the year under review was 95 (previous year: 111). At six, the number of serious accidents was on a par with the previous year.

Environmental protection

Numerous products manufactured by the Freudenberg Group help customers achieve efficient and sustainable resource management. Internally, Freudenberg fosters this approach, both during the manufacture of products and with regard to the design of new buildings and the moder-nization of existing ones.

The Business Groups address the ecological and social impact of their products. New product development at Freudenberg Home and Cleaning Solutions, for example, involves a stage gate process that factors in sustainability aspects. New products must perform better than their predecessors.

The strict emission limits for automotive engines call for new technical solutions - from fuel injection to exhaust after-treatment. The new BlueSeal seal ring from Freudenberg Sealing Technologies is designed for use in high-pressure pumps. This patented technology weighs 25 percent less than a conventional seal and requires only half as much installation space.

In the field of vibration control technology, Freudenberg Schwab Vibration Control has developed HALL 2.0, a new hydraulic axle guide bearing. With the help of path sen-sors, cameras and GPS data, it keeps trains on track. The result is a safer ride, less wheel and rail wear, less noise and lower energy consumption.

Energy management

Many site projects and Business Group initiatives oriented to the Freudenberg HSE (Health, Safety and Environment) guideline focus on sustainable energy use with a view to reducing the environmental impact of business activities. Energy managers have begun their work at many Business Groups and initiated numerous improvements to existing plants such as heating systems, compressors, ventilation and steam generation units.

A growing number of Freudenberg sites is introducing energy management systems, some certified to DIN EN ISO 50001, in order to achieve a sustainable reduction in

Corporate Responsibility

The freudenberg group signed the united Nations global Compact in January 2014. This is a voluntary corporate responsibility initiative to align operations to values and sustainability. The group published its first Communication on progress report in august 2014. The report describes how the company brings the ten global Compact principles on human rights, labor, environmental protection and anti-corruption to life.

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energy consumption. Freudenberg Sealing Technologies, for example, has begun conducting energy audits at its German sites. Some facilities received certification during the year under review. Furthermore, in cooperation with other Business Groups, other potential was identified and joint projects to increase energy efficiency were initiated.

Key data

In 2014, Freudenberg consumed 1.6 million megawatt hours of energy (previous year: 1.6 million megawatt hours). The break-down by sources of energy is as follows:

Outsourced energy supplies (power, steam and dis-trict heat generated outside Freudenberg; 0.99 million megawatt hours)

Natural gas (0.57 million megawatt hours) Fuel oil (0.03 million megawatt hours)

This energy consumption of 1.6 million megawatt hours translates into costs totaling approximately €125 million. Energy costs accounted for 2.1 percent of total sales (pre-vious year: 2.2 percent).

There was one event with a significant environmental impact in 2014 (previous year: one event): A fire broke out in the heat treatment furnace section of the Freudenberg Sealing Technologies facility in Kufstein, Austria. The pro-duction building was evacuated immediately. The fire was soon brought under control. No one was injured. Employ-ees were able to return to work after two hours.

Social responsibility

Social responsibility is in Freudenberg‘s DNA. The “Responsi-bility“ Guiding Principle, part of the Group‘s corporate values, states: “Our company and its family shareholders together are committed to protecting the environment and being res-ponsible corporate citizens in all countries and communities where we do business.“ This commitment goes back to the company‘s founder Carl Johann Freudenberg and is brought to life today by the Group‘s employees all over the world.

In 2014, many of the Group‘s companies, sites and employees worldwide again engaged in local projects and initiatives - focusing above all on environmental protection and the education of children and young people. The spectrum ranges from small actions in the direct neighbor-hood to complex projects. Regardless of the scale, all of these activities have one thing in common: they are tailored to suit local needs and usually involve the engagement of local Freudenberg employees. In addition, numerous internal assistance and support programs are available to the Group‘s own employees. Furthermore, Freudenberg largely implements the rules of the German Corporate Governance Code on a voluntary basis.

39

in Haijin - both financially and personally - as their education progresses.

TANNER, Freudenberg‘s youth exchange program, cele-brated its 15th anniversary in 2014. Freudenberg offers its employees‘ children worldwide the opportunity to encoun-ter different cultures, to broaden their horizons and to learn for life. Over the past 15 years almost 1,000 young peo-ple have traveled the globe with TANNER. In the process, the young participants, their parents and their host families have gained a stronger sense of belonging to the global Freudenberg community.

Since 1984, Freudenberg Stiftung has been promoting long-term structural change and contributing to more inclusion, education and democracy with its programs. As a nonprofit limited company, the foundation is a sharehold-er of Freudenberg & Co. KG - albeit with no voting rights. All projects focus primarily on children and young people and their social, language, educational and vocational integration.

Enactus, the world‘s largest student organization, focuses on social and ecological projects. The Freudenberg Group has been a committed Enactus partner for over ten years. In 2014, the team from the University of Mannheim became the Enactus National Champion in Germany. The winning team from the “city of squares“ is mentored by Cornelius Bossers from Freudenberg Home and Cleaning Solutions.

Apart from these initiatives, the Freudenberg Group will be launching a new program to strengthen social commitment in 2015. Initially, the initiative with funding of €10 million will run for five years. The objective is to support and main-tain projects that serve to promote education and environ-mental protection.

In 2014, Freudenberg organized the first Service Day in North America. On September 26, employees in more than 50 locations in Canada, the USA and Mexico donated food, organized blood drives, visited local senior centers and supported schools or educational programs – thus practicing social responsibility in their neighborhoods in many different ways.

Another success story is the “Learn to Transform“ edu-cational program in Brazil, where the Diadema site of Freudenberg Sealing Technologies organizes free, six-month pre-vocational training courses for young people from low-income families.

The following two examples illustrate the long-term nature of the local projects: Freudenberg gives young people the opportunity to complete dual study courses to qualify as welders, plumbers, engine mechanics and machine fitters at a nonprofit training center in Nagapattinam in the Indian state of Tamil Nadu south of Chennai opened in 2009. The Nagapattinam region, with a population chiefly comprising low-income agricultural workers and fishermen, was very hard hit by the tsunami in 2004.

An elementary school was rebuilt with Freudenberg’s help and opened in 2009 in Haijin, a village in Sichuan province, China, almost completely destroyed by an earthquake in May 2008. The building provides some 300 students with the right setting for a successful start to their education. Freudenberg employees visit the school each year and organize various activities such as the summer school project, extra tuition and a Christmas party. In the meantime the first children have graduated from the elementary school. “Freudenberg Help“, the association established specially for the elementary school project, is therefore continuing its assistance and supporting students

Corporate Responsibility

40

Energy storage from the clean room

Find out more here

41

Freudenberg Innovation Award 2014 finalistModern dual-clutch, direct-shift gearboxes represent the state of the art in transmissions. One small but vital component is the hydro-mechanical piston accumulator manufactured by Freudenberg Sealing Technologies.

It enables silky-smooth gearshifts, even if the oil pump is not running. To ensure that this function continues through-out the car’s lifetime, the piston accumulator’s high-precision components are assembled by robots in a clean room.

Even a single speck of dust could cause the gas reservoir to leak and render the piston accumulator inoperable.

42

of Freudenberg Sealing Technologies with effect from January 1, 2014.

The Business Group grew sales in the year under review to €2,103.3 million (previous year: €1,958.6 million). The increase is attributable to organic growth and acquisitions.

The operating result also improved year-on-year. This positive trend is chiefly due to higher sales volumes and appreciable increases in productivity as well as acquisitions.

Freudenberg Sealing Technologies had a headcount of 14,906 as at December 31, 2014 (previous year: 15,366 employees).

Business development

2014 was a very successful financial year for

frEudENBErg SEaliNg TEChNOlOgiES

Annual figures Prior-year figures have been adjusted to take account of the integration of the former independent Business Groups NOK-Freudenberg Group China, Freudenberg Schwab Vibration Control and Dichtomatik under the roof

rEviEw Of OpEraTiONS By BuSiNESS arEa The freudenberg group‘s four Business areas – Seals and vibration Control Technology, Nonwovens and filtration, household products, and Specialties and Others – focus on long-term, sustainable and profitable growth. in partner-ship with its customers, freudenberg harnesses its high technical expertise and enormous innovative strength to con-stantly improve its products, thus making an important contribution to helping customers solve the challenges they face.

SEalS aNd viBraTiON CONTrOl TEChNOlOgy BuSiNESS arEa

in the 2014 financial year, the Seals and vibration Control Technology Business area comprised the following five Business groups:

freudenberg Sealing Technologies helix medical freudenberg Oil & gas Technologies Trelleborgvibracoustic EagleBurgmann

in 2014, roughly three quarters of sales in this Business area were generated by the automotive industry and the mechanical and plant engineering industry. Sales in this Business area rose to €4,028.3 million (previous year: €3,803.7 million). The headcount at year-end rose to 27,067 (previous year: 26,917).

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The sales data for joint ventures used by freudenberg in its internal reporting are based on the pro-rata consolida-tion method. The sales and workforce data in the chapter entitled “review of Operations by Business area“ are presented on a pro-rata basis.in the consolidated financial statements, however, the 50:50 joint ventures are consolidated by the equity method. Sales and workforce data as well as assets and liabilities items are therefore not taken into consideration. This prima-rily concerns the freudenberg Sealing Technologies, Trelleborgvibracoustic and enmech Business groups.

Freudenberg Sealing Technologies. Developments in almost all regions and market segments were positive. All units reported growth. The largest increase in sales by the Business Group came from China. Europe and North America also made a substantial contribution to sales growth.

As far as regional activities in the year under review were concerned, Freudenberg Sealing Technologies continued to focus on China and India, where there are still significant growth opportunities for the future. In China, demand in the automotive sector was particu-larly strong, but there was a noticeable upswing among industrial customers in the country as well. In contrast, the market in Brazil, where the macroeconomic situation led to a downturn in sales above all in the automotive sector, proved challenging.

Key events

The integration of seals and vibration control techno-logy business operations under the roof of Freudenberg Sealing Technologies – part of the Freudenberg Group‘s organizational realignment – was completed in 2014.

Business in America, Europe and India was already combined in Freudenberg Sealing Technologies back in 2011. Business in China was added in the year under review with the integration of the NOK-Freudenberg Group China joint venture which is co-led by Freudenberg Sealing Technologies and NOK Corporation. The two companies are jointly intensifying the market presence and systematically expanding the product portfolio. In the past, activities in China focused on the automotive business. Going forward, the Business Group is to devote greater

attention to serving the industrial sector, extending the product offering to cover industrial applications.

The former independent Business Groups Freudenberg Schwab Vibration Control and Dichtomatik were also inte-grated in 2014. This brings numerous advantages for cus-tomers. Freudenberg Schwab Vibration Control can make use of the efficient administration processes at Freudenberg Sealing Technologies, and is thus in a position to concen-trate fully on the market and leverage its potential even more effectively, for example with reference to rail techno-logy or the manufacturers of construction and agricultural machinery and tractors.

Dichtomatik has also been successfully integrated in Freudenberg Sealing Technologies. Dichtomatik is Freudenberg‘s sales organization in the market for tech-nical seals. The company is a global organization and excels in logistics, service and purchasing. This integration creates synergies in purchasing and logistics, thereby freeing up resources for investing in growth.

Activities undertaken by Freudenberg Sealing Technolo-gies to further strengthen its global presence and expand its product portfolio included among other things the acquisition of Tobul Accumulator Incorporated. Tobul is a world-class developer and manufacturer of hydraulic accumulators. The family-owned company has sites in Bamberg, South Carolina, USA, and Houston, Texas, USA, and employs some 120 people. Tobul Accumulator Incor-porated manufactures products such as piston and bladder accumulators for industrial applications and therefore ideally complements the existing portfolio. The focal points lie in the market segments energy/oil & gas, mining as well as fluid power in North and South America.

Review of Operations by Business Area

44

to its unique design, the Curve Gasket achieves a perfect seal, uses less material and its improved performance allows automobile manufacturers and automotive sup-pliers to design smaller, lighter engine components, thus reducing the total vehicle weight. The seal is one of the products in the Low Emission Sealing Solutions (LESS) line which is becoming increasingly relevant for trucks and buses.

The stringent emissions limits for engines in the automotive field call for new technical solutions – covering everything from fuel injection to exhaust after-treatment. The new BlueSeal seal ring is designed for use in high-pressure pumps. This patented technology weighs 25 percent less than a conventional seal and requires only half as much installation space. Due to its additional metal carrier, the BlueSeal seal ring is mechanically resistant to high pres-sures and resists aggressive substances due to the PTFE material. It also significantly reduces friction.

In the field of vibration control technology, a new hydrau-lic axle guide bearing – HALL 2.0 – was developed and showcased at Innotrans in Berlin in September. HALL 2.0 keeps trains on track with the help of path sensors, cam-eras and GPS data, resulting in a safer ride, less wheel and rail wear, less noise, and lower energy consumption.

The demands placed on the components of a wind turbine are enormous. Among other things they must be able to withstand extreme weather conditions, lubricants, and ozone. The newly developed Radiamatic R 55 radial shaft seal has been designed with an integrated deflector lip that protects wind turbine systems against harsh environment elements and eliminates the need to use a second seal – a common practice in existing wind systems. Apart from eliminating the expense associated with a second seal,

Freudenberg Sealing Technologies also made invest-ments at sites in the year under review. €4.3 million were spent on expanding production capacity at the facility in Kecskemét, Hungary. The production area has been increased by 30 percent. This project brought improve-ments in many respects, such as material flow and safety standards.

A new distribution center combining the two existing warehousing facilities in Pinerolo and Verona was built in Pinerolo, Italy. Freudenberg Sealing Technologies is investing €1.8 million in the site infrastructure to improve the supply chain.

A further €5.8 million was invested in production halls and plant infrastructure at the German site in Oberwihl. Total investment at the site amounts to €9.8 million, and the measures to expand the production area under this project are scheduled for completion within three years. The Oberwihl facility, which has been in existence for more than 60 years, mainly produces O-rings for indus-trial and automotive customers.

Innovation is a key element of corporate philosophy at Freudenberg Sealing Technologies and is pursued consistently and systematically. Product, material and process competence are decisive factors in a structured innovation process. Freudenberg Sealing Technologies‘ achievements in this field were recognized in October 2014, when the Business Group was presented with the TOP Innovation Award of the F.A.Z. Institute for the first time.

In the quest to use less material while not comprising on performance, Freudenberg Sealing Technologies has developed a new solution for press-in-place seals: thanks

Freudenberg Sealing Technologies 2013 2014

Sales [€ million] 1,958.6 2,103.3

Workforce 15,366 14,906

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another advantage of this system is that it can be installed in tight spaces. Material competence is a key success factor for Freudenberg Sealing Technologies. Thanks to an innovative combination of two different polyurethanes, the advanta-ges of the new rod seal HDR-2C include special extrusion stability in the high-pressure range and great flexibility down to a temperature of –50°C. Applications include hydraulic cylinders in construction machinery.

Profile:Freudenberg Sealing Technologies is a supplier, develop-ment and service partner for customers in different market segments, such as the automotive industry, civil aviation, mechanical engineering, shipbuilding, food and phar-maceuticals, and agricultural and construction machinery.

Based on the Simmerring® which was developed by Freudenberg in 1929, Freudenberg Sealing Technolo-gies has built up a broad and continuously expanding range of seals and vibration control technology pro-ducts – from customized solutions to complete sealing packages. Together with its partner NOK Corporation, Japan, Freudenberg Sealing Technologies forms a global network with the aim of offering products of the same high quality. NOK-Freudenberg Group China is a 50:50 joint venture between the Japanese NOK Corporation and Freudenberg. In addition, Schwab Vibration Control, Dich-tomatik and Corteco also come under the Freudenberg Sealing Technologies umbrella. Schwab Vibration Control is a leading supplier of technology for vibration control components and systems for rail vehicles, wind energy solutions, agricultural and construction machinery and

other industries. Dichtomatik is Freudenberg’s sales orga-nization in the market for technical seals. Corteco is the Freudenberg Group specialist for the independent automo-tive aftermarket specializing in spare parts for seals and vibration control as well as service parts such as cabin air filters.

Products and servicesSimmerrings, diaphragms, high-precision molded parts, bellows, dust boots, hydraulic accumulators, O-rings, seals for hydraulic and pneumatic applications, frame gaskets, silicone seals, shock absorber seals, valve stem seals and various special seals; sealing packages for engines, gearboxes, brakes, axles and steering systems; rubber, plastic and PTFE components for suspensions; special seals for electrical and fuel systems; sealing solutions for special applications; vibration control components and systems for rail vehicles, energy generation, agricultural and construc-tion machinery and other industries

Production locationsAustria, Brazil, Canada, China, Czech Republic, Estonia, France, Germany, Hungary, India, Italy, Mexico, Spain, Turkey, UK, USA

Freudenberg Sealing Technologies GmbH & Co. KG69465 Weinheim | GermanyPhone: +49 6201 80-6666Fax: +49 6201 88-6666E-mail: [email protected]


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return to the level of the first half of 2014 in the foresee-able future. The Business Group continued to focus on specific market segments in the year under review as it set its sights on becoming the leading supplier of advanced sealing solutions and differentiated sealing products for the oil and gas industry.

Key events

During the year under review, Freudenberg Oil & Gas Technologies successfully concluded the integration of the Vector Technology Group acquired in 2013. To that end, the Business Group invested in new and existing Vector plants. In 2014, Freudenberg Oil & Gas Techno-logies built a new facility in Port Talbot, UK, which will manufacture the Vector product line which includes patent-ed metal-to-metal seal technology and high-integrity connector products for offshore and subsea applications. There has been a strong increase in demand for Vector products in recent years beyond the capacity of the three existing plants on the Baglan Industrial Estate in Port Talbot. Therefore, Freudenberg invested in a new facility where the three original Welsh plants could be combined into one. This move benefits the Business Group with greater operational efficiencies, a significant investment in new CNC machining capabilities, and additional testing and R&D capabilities for the global Vector product line. The project is backed by funds of just under €4 million from the Welsh Government.

Overall, Freudenberg will be investing some €14 million in the new facility. During the year under review, Freudenberg Oil & Gas Technologies also invested in the site at Houston, Texas, USA, where existing molding machines were replaced by new ones. This new equipment not only increases productivity but

frEudENBErg Oil & gaS TEChNOlOgiES

Annual figures

Freudenberg Oil & Gas Technologies generated sales of €153.2 million in 2014 (previous year: €140.4 million). At year end 2014, the Business Group had a headcount of 753 (previous year: 690 employees).


Market conditions for Freudenberg Oil & Gas Technolo-gies at the beginning of the year were characterized by high production activity and stable oil prices worldwide.

The second half of 2014 saw increasing excess supply on global oil markets which led to a noticeable drop in the oil price. Following their meeting in November 2014, the OPEC countries (OPEC is the acronym for the Orga-nization of the Petroleum Exporting Countries) stated their resolve not to throttle back production in order to boost prices as they had done in the past. As long as OPEC continues with this strategy, or as long as demand for oil does not increase significantly, the oil price is unlikely to

Freudenberg Oil & Gas Technologies 2013 2014

Sales [€ million] 140.4 153.2

Workforce 690 753

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gas producing companies, original equipment manufac-turers (OEMs) and engineering and service companies that provide technologies, equipment and services for pro-ducing oil and gas from land-based and offshore platforms throughout the world. Freudenberg Oil & Gas Technologies has its own materials development and product testing lab where new materials and solutions are developed and tested.

Products and servicesElastomer O-rings and specialty seals, ram and annular blowout preventer seal elements and seal kits, engineered thermoplastic seals, seal stacks and assemblies, standard and proprietary metal seal gaskets, spiral wound gaskets, and sheet gaskets, Vector SPO® Compact Flanges, Vector Techlok® Clamp Connectors and ROV-operated Vector Optima® Subsea Connectors

LocationsAustralia, Brazil, Canada, Malaysia, Norway, Singapore, United Arab Emirates, UK, USA

Freudenberg Oil & Gas Technologies10035 Brookriver Drive, Suite 400Houston, Texas 77040 | USAPhone: +1 281 233-1400Fax: +1 281 894-5232E-mail: [email protected] www.fogt.com

also has a positive impact on occupational health and safety and environmental protection.

In November 2014, the Freudenberg Oil & Gas Technologies manufacturing location for petroleum elastomers in Houston received the API 16A license for the manufacture of annular packing units for drilling operations and blowout preventers (BOPs). Only a few sealing technology providers have received this license. The license places Freudenberg Oil & Gas Techno-logies on an equal footing with major OEMs of annular packing units. The products manufactured under the API 16A license use internally developed proprietary elastomers and are marketed and sold under the brand name of WellProtek™.

In 2014, the Business Group again continued its work on key projects with major customers. Material and pro-duct tests were performed at the special laboratory of Freudenberg Oil & Gas Technologies in Houston. These lab tests set the Business Group apart from its competi-tors and reinforce its good market reputation.

Profile:Freudenberg Oil & Gas Technologies provides innovative sealing solutions and differentiated sealing products to the global oil and gas industry. The Business Group focuses on solutions for applications in the upstream segment, i.e. exploration and production, such as the markets for drilling/BOP (pressure control) products, wellhead equipment, fracturing services, offshore oil and gas platforms, flow lines and subsea installations. With some 750 employees, Freudenberg Oil & Gas Techno-logies serves a wide range of customers including oil and


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as planned. There were also the first tentative signs of recovery in the mechanical seals market in China. Market conditions in Japan, on the other hand, remained subdued as investment projects to optimize the power station infrastructure came to an end.

Against this macroeconomic backdrop EagleBurgmann recorded an increase in orders in Europe, Middle East, America – primarily South America – and South East Asia. Order levels in Russia fell as the crisis there escal- ated further and some states imposed extensive sanctions.

Furthermore, the Business Group systematically continued with its established cost and liquidity management in the year under review.

Key events

The expansion joints unit won a major order in 2014 for delivery in 2015. Following the relocation of production at EagleBurgmann KE, Inc., Hebron, Kentucky, USA, a subsidiary of EBI Atlantic AIS, Vejen, Denmark, to the new location in Lakeside, California, USA, this order resulted in high capacity utilization.

In addition, EagleBurgmann also won the tender for the “Nghi Son” international refinery project in Vietnam. This project will significantly increase the Business Group‘s market penetration in Vietnam.

EagleBurgmann is seeking to respond to customer needs even more effectively and to meet the shorter delivery times expected by the market. To achieve that, processes were optimized further with a view to improving the pro-cess chain from receipt of the customer‘s order through to

EaglEBurgmaNN

Annual figures EagleBurgmann sales in the 2014 financial year ran at €765.8 million (previous year: €760.1 million). Negative exchange rate effects, particularly with reference to the Japanese yen, had a significant impact on EagleBurgmann‘s sales.

A focus on final-user business and selective investments in the international project business lifted the operating result.

The headcount at December 31, 2014 was 5,908 (previous year: 5,881 employees).


Developments in the Business Group‘s markets became increasingly positive as the 2014 financial year pro-gressed. In India in particular, market conditions recov-ered after the parliamentary elections as infrastructure investment in the energy and refinery sector resumed

EagleBurgmann 2013 2014


Workforce 5,881 5,908

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delivery. Another key issue was the centralization of order activities and order acceptance. ERP (enterprise resource planning) has now been rolled out at the main production sites in Germany and Japan.

Profile:EagleBurgmann figures among the internationally leading companies for industrial sealing technology. The Business Group manufactures and markets a broad range of high-quality products – from individual designs right through to large-batch productions, irrespective of whether these are highly complex dynamic seal systems such as mechanical seals and supply units or special gaskets for a diversity of applications and sectors of industry. A workforce of around 6,000 employees in about 70 subsidiaries develops and produces EagleBurgmann seal solutions which customers around the world can rely on. A close-knit global sales and service network testifies to an international presence and customer proximity. The products are installed wherever safety and reliability are major design considerations when sealing demanding mediums under the most challenging technical conditions, for example in the oil and gas, refinery, chemical, pharmaceutical, energy, food processing, paper, water, shipbuilding, aerospace and mining industries.

Products and services Mechanical seals, gas lubricated seals, carbon floating ring seals, magnetic couplings, seal supply systems, stuffing box packings, flat gaskets, expansion joints, TotalSealCare® Ser-vices; environmentally compatible solutions, standardization of sealing systems and application testing; after-sales service with assembly, commissioning, repair and damage analysis, sealing technology seminars and practical training

Production locations Austria, Brazil, China, Denmark, Germany, India, Italy, Japan, Mexico, Turkey, USA

EagleBurgmann Germany GmbH & Co. KG Äußere Sauerlacher Straße 6–1082515 Wolfratshausen | GermanyPhone: +49 8171 23-0Fax: +49 8171 23-1214E-mail: [email protected]


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Key events

The Business Group developed proprietary technologies in strategic areas, i.e. technologies where the Business Group owns the intellectual property rights. Examples include improved sealing systems for drug dosage devices, innovative catheter solutions used during surgery, and new voice restoration products.

In addition, process technologies such as those used in the manufacture of braided reinforced tubing for high-pressure applications or extrusion methods with improved error tolerance were refined further.

Major investments included the extension to the building at the facility of VistaMed Ltd., Carrick-on-Shannon, Ireland, in which Helix Medical holds a 50 percent share. The construction project includes a new cleanroom for thermoplastic extrusion and a technical laboratory for product design and development.

Helix Medical received FDA approval (US Food and Drug Administration) for two medical device production facilities in the USA and Costa Rica.

In 2014, Helix Medical again focused on the integration of MedVenture Technology Corporation, Jeffersonville, Indiana, USA, acquired in 2012. The Business Group concentrated in particular on standardizing processes and methods and was thus able to launch a global ERP system at the first production facility.

The Business Group set benchmarks in HSE, winning the internal Freudenberg Safety Excellence Award.

hElix mEdiCal

Annual figures

Helix Medical grew sales in 2014 to €116.4 million (previous year: €104.8 million). Growth is primarily attributable to projects with major OEMs and higher order levels in strategic areas such as special components, minimally invasive solutions and innovative ear, nose and throat devices.

At year-end, the Business Group had a headcount of 990 (previous year: 849 employees).


The Business Group serves the majority of the largest and most important global manufacturers of medical devices and instruments. In the USA, Helix Medical‘s largest sales market, approximately eight million Americans signed up for health insurance under the “Patient Protection and Affordable Care Act“. Companies such as Helix Medical, which market technology-based solutions efficiently, will benefit from this development.

Helix Medical 2013 2014


Workforce 849 990

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Profile: Helix Medical is a leading global manufacturer of compo-nents for medical devices used in the biotech, healthcare and pharmaceutical industries, as well as in vitro diag-nostics. The Business Group runs more than ten medical manufacturing operations located within the USA, Europe, South America and Asia. Helix Medical provides custom manufacturing services for medical devices, components, and subassemblies – from a single component program to turnkey contract manufacturing. In addition to its custom manufacturing operations, Helix Medical also manufactu-res and markets the HelixMark® brand of platinum-cured silicone tubing and fluid handling components for the pharmaceutical and biotech industries. The medical device division called InHealth Technologies develops and manu-factures Blom-Singer™ voice restoration products that are distributed worldwide.

Products and services Thermoplastic molding, silicone molding (HCR, LSR), silicone and thermoplastic extrusions, complex diagnostic and therapeutic catheters, assembly, packaging, steriliza-tion, and engineering services

Locations China, Costa Rica, Germany, Ireland, USA

Helix Medical, LLC 1110 Mark Avenue Carpinteria, California 93013 | USAPhone: +1 805 684-3304Fax: +1 805 684-1934E-mail: [email protected] www.helixmedical.com


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diamond coating against corrosion

Find out more here

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Freudenberg Innovation Award 2014 finalistPower plants are highly sensitive. The amount of steam delivered to these systems must bevery precise to ensure that they produce electricity and heat at optimal levels.

Feedwater pumps play a central role in achieving this. Their ceramic seals are placed under extreme chemical stress by the feedwater. However, by coating the ceramic rings with an innovative and extremely thin layer of microcrystalline and electrically conductive diamonds, a technology developed by EagleBurgmann, their durability can be vastly increased.

A working life of 16,000 operating hours or even more is achievable – at least eight times longer than before.

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Despite continued high competitive pressure, TrelleborgVibracoustic successfully defended its position as the market leader in the field of automotive vibration control technology. The Business Group‘s organic sales growth clearly outperformed the market segment for anti-vibration solutions. Growth was highest in the Asia/Pacific region, followed by Europe and North America. Brazil was the only country where continued weak demand and declining production at the largest customers resulted in a sharp year-on-year decline. TrelleborgVibracoustic therefore rolled out a restructuring program at its Brazilian plants in order to achieve a swift turn-around in Brazilian business.

Order development was generally positive. Apart from new orders for global platforms, the company was parti-cularly successful in winning orders for innovative vibration control solutions in emerging markets.

Jaguar Landrover will be using air springs from TrelleborgVibracoustic in one of its SUVs for the first time, introducing this technology in the new Evoque XL. Start of production is scheduled for 2016. The customer was impressed by the cross-axial bellows design, the first time this design has been used in the automotive sector. The robust technology ensures particularly high driving comfort. Series production of the Porsche Macan, which features the first air spring for the compact SUV segment – a TrelleborgVibracoustic development – also got off to a very successful start. After a development time of just

TrEllEBOrgviBraCOuSTiC

Annual figures

TrelleborgVibracoustic recorded substantial sales growth in the 2014 financial year, with sales totaling €1,779.3 million (previous year: €1,679.5 million), and achieved a noticeably higher operating result compared with the previous year. Based on the 50 percent share-holding, pro-rata sales attributable to Freudenberg amount to €889.6 million (previous year: €839.7 million).

The pro-rata headcount for Freudenberg increased to 4,510 (previous year: 4,131 employees). The increase is above all due to the appreciable increase in business in the Asia/Pacific region and the integration of joint ventures in India and Turkey which was completed in 2014.

TrelleborgVibracoustic [pro-rata] 2013 2014



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excellent resistance to corrosion, but also weigh 30 per-cent less as well as being significantly less expensive than the steel versions. A hydraulic rear axle support bearing with a glass-fiber reinforced laser welded housing, which also weighs 30 percent less than the comparable metal design, was developed for BMW with series production getting underway in 2015. These arguments have also convinced GM, the world’s third-largest auto manufac-turer, who will be using TrelleborgVibracoustic’s plastic-design engine mounts from 2015.

The new corporate strategy signed off at the beginning of 2014 lays the foundation for sustained profitable growth. Under this strategy, TrelleborgVibracoustic will not only develop innovative solutions for products, processes and materials as well as comprehensive measures to raise efficiency and cut costs, but also design a portfolio management with the aim of extending the competitive edge, for example through targeted expansion in Asia.

TrelleborgVibracoustic doubled production capacity at the Yantai plant in order to meet the needs of customers on the fast-growing Chinese market even more effectively. The Yantai extension was inaugurated in November 2014. Construction of additional production capacity for microcellular polyurethane components is in full swing at the Wuxi facility, which also houses the R&D Center for the Asia/Pacific region. Work on building a production facility in Thailand also commenced. Engine mounts, chas-sis components and dampers for the Thai market will be manufactured at the Rayong site in close proximity to Ford, Suzuki and other OEMs from the second quarter of 2015.

two-and-a-half years, the result is best-in-class handling with excellent comfort, regardless of loading conditions.

Furthermore, the Engine Mounts Business Area established itself with Jaguar Landrover as sole supplier for all engine mount systems for the Evoque, Freelander, Range Rover and Range Rover Sport models for a ten-year period.

Key events

TrelleborgVibracoustic began series production of numerous innovations or engaged in promising custo-mer trials involving innovative technologies during the period under review. There have already been several expressions of interest in a new chassis mount made of two different elastomer compounds. This “DualRubber” mount insulates road noise excellently, and controls low-frequency axle vibrations more effectively. A special production process, in which the elastomers are injected simultaneously using two different rubber compounds, is used to manufacture the mount. With its new DualRubber mount, TrelleborgVibracoustic is offering an attractively priced alternative to conventional chassis bushings and more expensive hydraulic mounts. It is also highly suitable for electric cars and hybrids, in which there is no combus-tion engine to drown out other noises, meaning higher acoustic demands on the chassis.

Another innovation theme is the use of plastics to cut costs and reduce weight. TrelleborgVibracoustic already manufactures plastic-design engine mounts for Renault-Nissan and the PSA Group (Peugeot) which not only have


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Profile:Trelleborg Vibracoustic is a worldwide market and tech-nology leader for antivibration components and modules for the global automotive industry. The company’s portfolio of products for passenger cars and commercial vehicles is unique on the automotive market. These pioneering pro-ducts reduce unwanted vibration and noise and improve ride comfort.

Products and services Engine mounts, transmission mounts, components for chas-sis, air springs, torsional vibration dampers, isolators and dampers, MCU (microcellular urethane) jounce bumpers

LocationsBrazil, China, Czech Republic, France, Germany, Hungary, India, Japan, Mexico, Poland, Romania, Russia, South Africa, South Korea, Spain, Sweden, Thailand, Turkey, USA

TrelleborgVibracoustic GmbH64293 Darmstadt | GermanyPhone: +49 6151 3964-0Fax: +49 6151 3964-444E-mail: [email protected]

Location changes

TrelleborgVibracoustic continued to improve processes and structures and further optimize the global network of development and manufacturing locations in the 2014 financial year in response to permanent competi-tive pressure and growing demands from customers for competitive prices and quality. Various measures were initiated to improve competitiveness at facilities in Europe in particular, the region with the highest sales where TrelleborgVibracoustic operates a very broad production network. The phased introduction of the “focussed facto-ries“ concept is designed to reduce production complexity and increase efficiency further. Under this concept, sites focus on their core competences; the production program at each location is designed to focus on two business areas.

In future, the plants at Martorell, Spain, and Nantes-Carquefou, France, will concentrate on manufacturing components for the engine mounts and chassis mounts business areas. The German facility in Breuberg is to focus on engine mounts and microcellular polyurethane compo-nents, while Neuenburg will concentrate on torsional vib-ration dampers and various isolators and dampers. In line with the focused factory concept, production programs for other business areas previously served by these facilities will be relocated to other sites in the European production network. The relocation of the production of components for heavy trucks from Forsheda, Sweden, was completed in the period under review. Going forward, this site will focus on manufacturing isolators and dampers.

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and the positive effects of restructuring in the Interlinings Division in Germany.

The Business Group‘s headcount at December 31, 2014 was 3,249 (previous year: 3,193 employees).


Developments in the Spunlaid Division included among other things a three-year extension to a contract with a global key account; this played a central role in securing future business in this segment. In the USA, Freudenberg Spunweb Company, Durham, USA, reported a record year. Sales growth there was in particular attributable to the automotive and carpet tiles business.

Business with Evolon® grew worldwide. In the USA, Evolon® successfuly gained a foothold with car manufac-turer Ford and features prominently in sound absorption in the Ford Transit.

In the medical technology business, Freudenberg

frEudENBErg NONwOvENS

Annual figures

In 2014, Freudenberg Nonwovens generated sales of €682.7 million (previous year: €660.0 million). Organic sales growth helped offset exchange rate losses. Profitabi-lity rose on the back of higher sales, an improved margin

NONwOvENS aNd filTraTiON BuSiNESS arEa

in the 2014 financial year, the Nonwovens and filtration Business area comprised the following Business groups:

freudenberg Nonwovens freudenberg politex Nonwovens freudenberg filtration Technologies

in total, the Business area generated sales of €1,279.1 million (previous year: €1,227.9 million) in 2014. at year-end 2014, the headcount was 5,994, compared with a headcount of 5,707 at the close of the previous financial year. The major markets for the Business area are textile and apparel, automotive, energy, health, horticulture, agriculture, and construction.

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showed great interest in the R&D project for Lutraflor® automotive carpets.

Advanced wound care is a future-oriented pillar for Freudenberg Nonwovens. In recent years, new customers have been won and in-house production capacity estab-lished and expanded. The goal now is to further extend the product portfolio by adding new technologies.

The Business Group acquired Polymer Health Technology Limited, Ebbw Vale, UK, a leading specialist of polyure-thane foams for advanced wound care in January 2015. Foam solutions are a key technology in advanced wound care. The hydrophilic foam systems from Polymer Health Technology Limited absorb wound exudate, creating an ideal environment for wound healing.

The Business Group acquired the companies which operate the interlinings business of the Hänsel brand from Hänsel Textil GmbH in August 2014. Hänsel is a high-quality and innovative interlinings specialist for the interna-tional fashion industry. With the acquisition, Freudenberg is extending its position as a global leader in the field of interlinings. At the same time, the transaction gives Freudenberg deeper access to the knit product segment as well as bringing further growth opportunities. The introduction of the innovative “A” adhesive techno-logy during the year under review offers Freudenberg‘s customers high-performance and reliable interlinings. Innovations for the apparel industry included nonwovens with high transverse stretch and no warp fringe. Printed interlinings – interlinings with a customized print – offer Freudenberg’s customers new openings for individualiza-tion or branding.

Nonwovens reported a substantial increase in sales of advanced wound care products in 2014.

The Interlinings Division recorded moderate growth in Europe, benefiting from market recovery in southern Europe, in particular Italy and Spain. In particular the crisis in Ukraine curbed growth in the second half of the year.

Sales of woven, knit and nonwoven interlinings in the indus-trial apparel segment rose. The menswear initiative resulted in increased sales of woven and knit products.

A series of product innovations contributed to growth in the year under review. The main growth drivers were elastic interlinings and innovative paddings as a substitute for down as well as optimized product positioning in key mar-kets. Vlieseline final user products once again developed very well.

Key events

Freudenberg Nonwovens increased investment in the Spun-laid Division during the year under review, thus enabling the division to safeguard the development of new products that satisfy growing market demands. Such developments included a bicomponent spunlaid which supports the Freudenberg Filtration Technologies Business Group with its strategy to expand business in automotive intake air filters.

Furthermore, the facility in Jacareí, Brazil, which manufac-tures nonwovens for the hygiene industry was expanded. With regard to spunlaid business in Europe, Freudenberg Nonwovens concentrated on growth in core applications and harnessing new business opportunities in fields such as automotive headliner systems. Furthermore, the market

Freudenberg Nonwovens 2013 2014



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The Interlinings Division will return to operating as a global division from 2015, bringing together all regions. Global management allows Freudenberg Nonwovens to serve its customers in the global apparel industry more effectively and efficiently.

Location changes

In New York City, USA, the Interlinings sales office relo-cated to the historic Garment District in August 2014. That is where all US customers who are active worldwide are located.

As part of the organizational realignment of the Freudenberg Group, Freudenberg Nonwovens and Freudenberg Politex Nonwovens, formerly two indepen-dent Business Groups, were brought together to form a new Business Group called Freudenberg Performance Materials. As a leading global supplier, Freudenberg Performance Materials offers its customers in markets such as apparel, automotive interiors, building materials, energy, filtration, hygiene and medical innovative, for-ward-looking solutions.

Profile:Freudenberg Nonwovens develops, produces and markets nonwoven products for a wide range of appli-cations. These products are used as interlinings for the garment industry and for technical applications such as battery separators, for acoustic purposes to provide sound absorption, as fireblockers in furniture and as cable insulation. In the medical and hygiene sector, nonwovens

from Freudenberg offer the highest comfort and safety. Freudenberg was one of the first companies to introduce nonwovens on the market and continues to set the global standard with a constant stream of new ideas such as Lutraflor®, SoundTex® and Vildona®. Freudenberg Nonwovens operates a global sales network and manu-factures at 20 locations worldwide. The company has enjoyed very close cooperation with Japan Vilene Company Ltd., Tokyo, Japan, the Japanese market leader in nonwovens, for many decades.

Products and services Interlinings, industrial nonwovens, spunlaid

Production locationsArgentina, Brazil, China, France, Germany, India, Italy, South Africa, South Korea, Spain, Taiwan, UK, USA

Freudenberg Vliesstoffe SE & Co. KG 69465 Weinheim | GermanyPhone: +49 6201 80-5009Fax: +49 6201 88-5009E-mail: [email protected] www.freudenberg-pm.com

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ultra-thin nonwovens let the ions flow

Find out more here

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Freudenberg Innovation Award 2014 finalistElectricity from rechargeable batteries is essential to modern life. Without it, hardly anything functions. Whether in cell phones, laptops, electric cars or e-bikes, rechargeable batteries are a crucial component.

They need to be powerful, durable and – above all – safe. Freudenberg’s wafer-thin yet extremely durable nonwoven separator with a functional ceramic impregnation keeps the positive and negative poles permanently separated from each other.

This minimizes the risk of short circuits or even battery fires while allowing the ions and thus the electricity to flow freely.

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frEudENBErg pOliTEx NONwOvENS

Annual figures

In 2014, Freudenberg Politex Nonwovens generated sales of €223.3 million (previous year: €220.0 million).

The headcount at December 31, 2014 was 561 employees (previous year: 572).


Regional developments in the construction sector in 2014 were mixed. Western Europe developed relatively well during the first half of the year, but this was followed by a downturn which gathered pace as the second half of the year progressed. In North America, on the other hand, growth continued throughout the year. Russia had to con-tend with a weak domestic economy attributable in part to the crisis in Ukraine. Other markets such as Turkey or the Middle East showed continued growth brought about by the need to expand and modernize infrastructure. Freudenberg Politex Nonwovens reported positive busi-ness development during the year under review thanks to the successful marketing of the newly-developed special

products, and improved productivity and efficiency as a result of the restructuring measures at the Italian sites.

The Business Group was able to defend its world leading position in the market for polyester-based roofing mate-rials thanks to its broad range of quality products, the know-how in both spunbonded and staple fiber technolo-gies, and close customer relations all over the world.

Key events

Freudenberg Politex Nonwovens offers customers solu-tions with added value by combining complementary products and services. During the year under review, the Business Group continued to work hard on expanding the product range by adding innovative special products for roofing materials and the construction industry.

A production line in Pisticci, Italy, was modified to manu-facture fiberglass reinforced spunbonded nonwovens for flat roof applications.

Another production line in Pisticci was upgraded to manufacture nonwoven roofing reinforcements for pitched slate roofs; this is an attractive market segment where the Business Group is looking for growth going forward.

Furthermore, Freudenberg Politex Nonwovens also opti-mized the supply chain, reduced raw material consump-tion, simplified processes, improved energy efficiency and further raised product quality in the year under review.

The Business Group became even more sustainable and efficient in terms of resource management. The “Zero Landfill“ project continued at all sites. The objective is to recycle waste and reduce landfill. Landfill at the Colmar, France, facility fell by 20 percent year-on-year.

Freudenberg Politex Nonwovens 2013 2014


Workforce 572 561

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As part of the organizational realignment of the Freudenberg Group, Freudenberg Nonwovens and Freudenberg Politex Nonwovens, formerly two indepen-dent Business Groups, were brought together to form a new Business Group called Freudenberg Performance Materials. As a leading global supplier, Freudenberg Performance Materials offers its customers in markets such as apparel, automotive interiors, building materials, energy, filtration, hygiene and medical innovative, for-ward-looking solutions.

Profile: Freudenberg Politex Nonwovens, headquartered in Novedrate, Italy, is the world leader in the production and marketing of polyester nonwovens, mainly used as rein-forcements for bituminous roofing membranes. A broad range of products is furthermore sold to the construction industry for different applications. Technical polymers used as bitumen modifiers round off the product program.

A large share of these products are manufactured with recycled polyester obtained in-house from post-consumer PET bottles. Freudenberg Politex Nonwovens is the largest recycler of PET bottles in Europe and converts over seven million bottles daily into polyester fibers at production plants all over the world. This integrated production cycle not only recycles waste, but also significantly reduces CO2

emissions.

Products and services Roofing: Staple and spunbonded polyester nonwovens (standard or glass filament reinforced) used as backing for bituminous roofing membranes

Construction materials: Products for waterproofing,

thermal insulation, sound absorption, heat reflection, drainage, reinforcements and other applications

Polymers: Plastomer compounds made of recycled mate-rials used as modifiers in bitumen impregnation, polyester fibers and flakes

Locations China, France, Italy, Poland, Russia, USA

Freudenberg Politex S.r.l. Strada Provinciale Novedratese 17/a22060 Novedrate (CO) | ItalyPhone: +39 031 793-111Fax: +39 031 793-202E-mail: [email protected]

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frEudENBErg filTraTiON TEChNOlOgiES

Annual figures

Freudenberg Filtration Technologies reported sustained growth in its market positon during the year under review and generated sales of €373.1 million (previous year: €347.9 million).

The Business Group made good progress in profitabi-lity on the back of the higher sales volume, increased

Freudenberg Filtration Technologies 2013 2014



productivity at plants, systematic cost, inventory and receivables management as well as a continuous im-provement program.

At year-end, Freudenberg Filtration Technologies employed 2,184 employees (previous year: 1,942).


In 2014, very good sales growth in Europe and China contrasted with developments in South America, Australia and South Africa which were characterized by challeng-ing economic factors and unfavorable exchange rates.

In industrial filtration, Freudenberg Filtration Techno-logies further expanded business with Viledon® filter elements and service contracts in technically demanding segments.

Furthermore, the Business Group won and concluded key major orders for system solutions; these projects included complete air filtration systems for offshore oil platforms in Brazil, filtration systems for a hospital in Spain, and several project orders for efficient, resource-saving waste water treatment in the UK food and beverage industry.

Demand for micronAir® cabin air filters, both as original equipment in new vehicles and on the aftermarket, in-creased in all regions, with appreciable growth in China, North America and Europe.

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The Business Group successfully defended its world- leading market position despite a very challenging com-petitive environment.

Key events

Freudenberg Filtration Technologies acquired the industri-al activated carbon corrosion protection business of the American company MeadWestvaco Corporation head-quartered in Richmond, Virginia, USA, in November 2014.

The air purification product portfolio of this leader in high-quality activated carbon technologies acquired by Freudenberg Filtration Technologies comprises activated carbon pellets, Honeycomb® modules, which include the innovative Versacomb™ technology, and system solutions.

The new products complement Freudenberg Filtration Technologies’ existing globally available range of quality gas phase filtration solutions. With its Viledon® ChemCon-trol system solution for gas phase filtration, the Business Group offers protection from harmful corrosion.

Pulp and paper producers, refinery operators and custo-mers in the chemical and pharmaceutical industries benefit from a complete clean air solution, tailored to each specific application. Freudenberg takes care of all aspects of filter system design and construction, including matched filter stages for particulate and noxious gas filtration. In

addition, the company offers a comprehensive range of technical support services.

Worldwide, the need for high-performance, energy-efficient filtration solutions for clean air and clean water is growing. Freudenberg Filtration Technologies is planning to increase sales in these growth markets on a larger scale than in the past by extending its market position in attractive core segments, thereby lifting profitability further.

During the year under review, the Business Group laid the organizational foundations for realigning its organizational structure effective January 1, 2015. The former organiza-tional structure with its pronounced regional focus was transformed into a divisional structure geared to customers and markets.

To that end, Freudenberg Filtration Technologies set up two global divisions – “Automotive Filters“ and “Industrial Filtration“. The present “Water Solutions” global segment remains in operation and is to undergo expansion.

Production facilities were separated from the divisions and put under a single global management with a view to improving the coordination of development activities and the deployment of manufacturing technologies and plant concepts as well as achieving greater synergies in process and productivity optimization.

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Profile:As a global technology leader in air and liquid filtration, Freudenberg Filtration Technologies develops and produ-ces high-performance, energy-efficient filtration solutions which improve the efficiency of industrial processes, conserve resources, protect people and the environment and thus enhance the quality of life. With its Viledon® and micronAir® global brands, Freudenberg Filtration Tech-nologies offers customers innovative filter elements and systems for the energy, health, and transport (automotive, rail, marine, aviation) sectors, general ventilation and cleanroom technology, and for highly-specialized appli-cations. Viledon® stands for reliable process air optimiza-tion and high-quality liquid filtration solutions. micronAir® cabin air filters provide health protection and ride com-fort, micronAir® engine intake air filters improve engine performance.

Products to improve indoor air quality in buildings, and a comprehensive range of system solutions (e.g. develop-ment and construction of air intake systems) and services (e.g. Viledon® filterCair air quality management) round off the product portfolio.

Location changes

In response to increasing demand for micronAir® cabin air filters, the Business Group commissioned a new logistics center at the Kaiserslautern site. The newly-created close proximity of production and logistics is one contributory factor in meeting customers’ growing demands regarding product availability and delivery flexibility.

Westpfalz-Werkstätten, an institution for the occupational and social integration of people with disabilities, took charge of the manual assembly and packaging tasks from mid-2014. A building was therefore modified and made accessible for disabled people; it is equipped with light, friendly workstations for up to 40 people.

As a result of the acquisition of the Indian company Freudenberg Filtration Technologies India Private Limited, Pune, India, in 2012, the Business Group operated two facilities in India, which were brought together at a new site in Sanaswadi, Pune District, at the middle of the year.

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Products and services Filtration elements, system solutions and services for intake and exhaust air in industrial processes and end user applications, water and membrane filtration systems, cabin air filters and engine intake air filters; filter measurement technology; training and consulting

Production locations Argentina, Australia, Brazil, China, Germany, India, Italy, Japan, Mexico, Slovakia, South Africa, South Korea, Thailand, USA

Freudenberg Filtration Technologies SE & Co. KG 69465 Weinheim | Germany Phone: +49 6201 80-6264Fax: +49 6201 88-6299E-mail: [email protected]


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The criss-cross path to cleanliness

Find out more here

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Freudenberg Innovation Award 2014 finalistMore and more people have less and less time – even for keeping their homes clean. So the ViRobi dusting robot from Freudenberg Home and Cleaning Solutions is definitely good news.

Powered by a rechargeable battery, it navigates autonomously round the floors, wiping them clean with its electrostatic dusting cloth. Clever axle geometry and suspension remove the need for high-tech navigation and enable ViRobi to negotiate obstacles or corners.

The result: effort-free cleanliness, right into the farthest corner.

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reported solid growth. The conflict in Russia and the politi-cal crises in some areas of the Middle East did, however, impact market growth in the relevant countries.

The Business Group responded to the challenging market situation with acquisitions, product innovations and growth initiatives, thereby improving the market position and achieving local currency sales growth in almost all regions. Adjusted for exchange rate, acquisition and consolidation effects, the Business Group outperformed the market in terms of growth.

Key events

During the year under review, Freudenberg Home and Cleaning Solutions focused on expanding business substantially in the growth regions of Asia/Pacific, India, Middle East, and North America, on launching product innovations with the associated advertising activities and significantly improving the distribution basis with strategic retail partners. vileda® was launched in Thailand, Malay-sia and Indonesia, the innovative “No Dust” broom made its market debut in India, the pan-Arabian advertising cam-paign was successfully continued in the Middle East, and the new vileda® Home product and sales model kicked off in Germany. The Business Group also expanded its e-commerce activities by over 50 percent in all regions. Freudenberg Home and Cleaning Solutions acquired the Marigold® household gloves business from Comasec SAS,

frEudENBErg hOmE aNd ClEaNiNg SOluTiONS

Annual figures

During the year under review, the Business Group generated sales of €760.2 million (previous year: €710.4 million). Currency effects had a negative impact on sales.

The headcount at December 31, 2014 was 2,880 employees (previous year: 2,914).


There was a slight improvement in the market environment for Freudenberg Home and Cleaning Solutions in 2014.

While the markets in southern and eastern Europe declined due to the effects of the debt and financial crisis, the North America, Asia/Pacific, Middle East and India regions

hOuSEhOld prOduCTS BuSiNESS arEa

The household products Business area comprises the freudenberg home and Cleaning Solutions Business group whose vileda®, O-Cedar®, wettex®, gala®, marigold® and SwaSh® brands are active in the mechanical cleaning and laundry care segment for final users and professional cleaning companies.

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The Business Group‘s success factors are detailed know-ledge of the market, innovations, new and effective pro-ducts, and a pronounced customer orientation. These are complemented by international market and customer research, innovation centers and production facilities in all regions of the world and a dedicated sales network in over 35 countries.

Products and services Floor cleaning systems, household cloths, cleaning articles, household gloves, mats, laundry care products such as ironing boards and clothes driers, cleaning systems for professional applications

Locations Australia, Belgium, Canada, Chile, China, Croatia, Czech Republic, Denmark, Finland, France, Germany, Greece, Hong Kong, Hungary, India, Indonesia, Italy, Jordan, Malaysia, Mexico, Netherlands, New Zealand, Norway, Poland, Portugal, Russia, Serbia, Slovenia, Spain, Sweden, Taiwan, Thailand, Turkey, UK, USA

Freudenberg Home and Cleaning Solutions GmbH Im Technologiepark 1969469 Weinheim | GermanyPhone: +49 6201 80-871000Fax: +49 6201 88-874000E-mail: [email protected]

Gennevilliers, France, in January 2014 and successfully integrated the business in the UK, Ireland, Italy, Nether-land, Hong Kong and Japan. Comasec SAS is a company belonging to the Dutch Ansell Group, a world leader in protective glove solutions for industrial applications.

The business of Freudenberg Home and Cleaning Solutions in Croatia and Taiwan was transferred to a distributor.

Freudenberg Home and Cleaning Solutions developed several new, award-winning products and upgraded existing product lines in the year under review. These included the Easy Wring & Clean cleaning system, the new cleaning robot lines, the Magical cloth and spray system for cleaning glass with its “stays cleaner longer” concept, the innovative polyvinyl alcohol (PVA) microfiber generation of cloths, and the new cable and cordless steam cleaners. The Glitzi product line was voted the top brand of 2014 by the food trade press and “Lebensmittel Praxis”, a specia-list journal for the food industry, voted the vileda® RELAX cleaning robot its product of the year 2015.

Location changes

The plants in Vaughan, Canada, and Suzhou, China, were closed in 2014.

Profile: Freudenberg Home and Cleaning Solutions is one of the leading international manufacturers of brand cleaning artic-les and systems and laundry care products. The company is the market leader in almost all countries.

Products are marketed under the brand names of vileda®, O-Cedar®, Wettex®, Gala®, Marigold® and SWASH®.

Freudenberg Home and Cleaning Solutions 2013 2014



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The headcount rose from 3,107 in the previous year to 3,216.


Freudenberg Chemical Specialities continued on its long-standing growth trajectory in 2014. The Business Group reported appreciable sales growth in almost all market segments and regions. Freudenberg Chemical Specialities strengthened its market position during the year under review in part through acquisitions - and the associated expansion of the portfolio - and in part as a result of the global presence in all key markets.

The automotive suppliers, traffic engineering, wood, marine, food, surface technology, die casting, polyur-ethane and renewable energy market segments were once again key pillars for the Business Group. Its strategic

frEudENBErg ChEmiCal SpECialiTiES

Annual figures

The Business Group generated sales of €881.4 million (previous year: €797.6 million) in 2014. Negative currency effects prevented an even stronger rise in euro-based sales.

SpECialTiES aNd OThErS BuSiNESS arEa

The Specialties and Others Business area mainly comprises the following Business groups: freudenberg Chemical Specialities enmech freudenberg iT

during the year under review, the companies in this Business area generated sales of €1,135.1 million (previous year: €1,053.6 million). at year-end 2014, the headcount was 4,515 compared with 4,359 at year-end 2013. well over half of the sales generated by this Business area are attributable to the freudenberg Chemical Specialities Business group, which supplies the automotive and mechanical and plant engineering industries as well as many other sectors. freudenberg iT is an iT service provider primarily serving small and medium-sized enterprises in various branches of industry and the trade sector. The enmech Business group manufactures products mainly for the automotive industry, including mechatronic solutions based on large flexible printed circuits.

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Freudenberg Chemical Specialities successfully concluded the integration projects to strengthen the market position – both regional and segmental – as well as the complete realignment of the brand positioning.

Under the long-term buy and build strategy, Freudenberg Chemical Specialities purchased minority shares in the SurTec companies in Portugal and Japan – this had a positive impact on sales developments in 2014.

As a result of the acquisition of selected strategic business activities in 2013 – in the field of specialty release systems for the composite industry at Chem-Trend and with regard to PFPE specialty lubricants at Klüber Lubrication – both segments recorded double-digit growth in the year under review.

During the year under review, long-term investment policy continued to focus on China, India and Brazil – despite the differences in the scale of economic momentum - with a view to strengthening the regional organizations and expanding the technical infrastructure. Plant expansions in India and China initiated in 2012 were (partly) com-missioned. Construction work on the new plant at the joint Chem-Trend and SurTec location in Valinhos, Brazil, commenced.

Growing regulatory requirements, especially with refe-rence to environmental compatibility and the associated substitution of raw materials, are placing increasing demands on the Business Group‘s research, development and materials safety capabilities in particular. Freudenberg Chemical Specialities is well positioned in this respect, as illustrated by the following two examples:

innovation management keeps Freudenberg Chemical Specialities highly attractive for customers who prefer part-ners for projects with a medium- or long-term perspective over and above current project and service requirements. The forward-looking internationalization strategy oriented to market opportunities which has been practiced for many years led to balanced business development in the regions. Germany remained one of the most impor-tant core markets in the year under review. Western and eastern Europe were also reliable sales generators with further growth potential.

Freudenberg Chemical Specialities companies in southern Europe outpaced macroeconomic growth, but could not realize their full potential due to poor local conditions. The Business Group expanded its market position in North America, in part thanks to targeted project work in select-ed focus segments.

Growth for Freudenberg Chemical Specialities in South America was curbed by the difficult macroeconomic conditions in Brazil and Argentina. Asia, and above all China, remained the most Important growth region for the Business Group thanks to the economic momentum in the region and the good market position of Freudenberg Chemical Specialities.

Key events

The acquisition of the shares of the Capol Group, a world leading supplier of surface treatment products for the confectionery industry, in 2013 marked the success-ful entry into the food additives industry – a sector with significant growth potential. During the year under review,

Freudenberg Chemical Specialities 2013 2014



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Klüber Lubrication won the internal Freudenberg Innovation Award for its “Energy Efficiency Solutions“ service concept, and SurTec was a winner in the Group‘s “We all take care“ HSE initiative with its project to sub-stitute non-toxic chromium (III) for substances containing toxic chromium (VI) in surface coating technology.

Profile:The Business Group comprises the largely autonomous divisions of Klüber Lubrication, Chem-Trend, SurTec, OKS, and Capol.

Klüber Lubrication is one of the world’s leading manufac-turers of specialty lubricants. Its customized tribological solutions are almost exclusively sold direct to customers in virtually all industries and markets.

Chem-Trend is a world market leader for release agents used to manufacture composite, rubber, plastic, metal and polyurethane molded parts.

SurTec is a leading supplier of chemical specialties for surface treatment and electroplating.

OKS specializes in performance lubricants and in repair and maintenance products.

Capol is one of the world’s leading manufacturers of coatings for the confectionery industry and supplies glazes, release agents and sealing agents as well as other specialty products.

Products and services Oils, greases, waxes, pastes, bonded coatings, dry lubri-cants, solid lubricants, anticorrosion products, chemotech-nical products for MRO, hydraulic fluids, cleaning agents, release agents for die casting, composites, rubber and polymer processing, surface treatment products, industrial parts cleaning and electroplating, glazes, release agents and sealing agents for the confectionery industry

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Locations Argentina, Australia, Austria, Belgium, Brazil, Chile, China, Croatia, Czech Republic, Denmark, Egypt, Finland, France, Germany, India, Italy, Japan, Malaysia, Mexico, Netherlands, Norway, Poland, Portugal, Romania, Russia, Serbia, Singapore, Slovakia, Slovenia, South Africa, South Korea, Spain, Sweden, Switzerland, Thailand, Turkey, United Arab Emirates, UK, USA, Vietnam

Freudenberg Chemical Specialities SE & Co. KGGeisenhausenerstraße 781379 Munich | GermanyPhone: +49 89 7876-0Fax: +49 89 7876-1600E-mail: [email protected]


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Find out more here

Energy savings through high-tech lubrication

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Freudenberg Innovation Award 2014 awardeeThe power consumption of industrial plants is often enormous. “Energy Efficiency Solutions” from the Freudenberg company Klüber Lubrication help increase the efficiency and costeffectiveness of such plants.

In an innovative measurement and evaluation process, the energy-saving potential of the system is first identified. After optimization, the realized savings are then measured. This can often be a tough challenge. High-precision, easyrunning specialty lubricants provide the basis for optimization. These advanced lubricants are used in place of conventional oils and reduce friction between individual components.

The result: a proven reduction in energy consumption at increasing power levels.

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Freudenberg IT’s three-year transformation program which comprised many individual projects and significantly improved the Business Group‘s competitiveness and future viability came to an end on December 31, 2014.

Overall, Freudenberg IT became more global during the year under review and strengthened its position as an IT service provider through new strategic partnerships with Cisco und NetApp. The new strategic partnership with Cisco enables Freudenberg IT as a “CISCO Intercloud Partner“ to provide global services even when Business Group capacities are exhausted or, in exceptional cases, not custom-tailored.

At the same time, the long-standing partnership with SAP was further expanded and intensified. In parallel, Freudenberg IT has extended its range of products and ser-vices from the Microsoft portfolio with a view to reducing dependence on SAP. Numerous new certifications were issued to Freudenberg IT under these strategic partner-ships, thus further strengthening competitiveness.

Key events

In recent years, Freudenberg IT has positioned itself as a pioneer of Industry 4.0. Now, Freudenberg IT is deli-vering the “FIT Shop Floor Suite” – the portfolio for this megatrend. During the year under review, the Business Group won customers such as L’orange, Danfoss and Kion. With its innovative global cloud architecture, FIT is in a position to offer customers all over the world uniform, top security standards. In addition, customers can sign up for “FIT Global Application Management Services” for hosted applications; these services are provided round the clock on the basis of binding service level agreements. This makes Freudenberg IT a full service IT provider and

frEudENBErg iT

Annual figures

Freudenberg IT generated sales of €136.2 million (previous year: €133.6 million) in the year under review. The Business Group successfully converted the above-average sales volume of the previous year into long-term operating business on the back of numerous contract extensions and customer acquisitions.

The Business Group had a headcount of 734 (previous year: 694 employees) as at December 31, 2014.


The market for SAP products, a core area of business for Freudenberg IT, once again outperformed the over-all IT market. Global sales drivers included topics such as SAP hosting in the cloud, in-memory computing with SAP HANA, and template rollouts. In North America, Freudenberg IT again reported strong growth and earnings.

Freudenberg IT 2013 2014


Workforce 694 734

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from the Rhine-Main region. In addition, the Business Group moved into a new data processing center in China.

Profile:Freudenberg IT is a global, full-service IT provider with 30 years of excellence as a reliable partner for small- and medium-sized industrial enterprises (SMEs). The portfolio of services covers all facets of the modern SAP landscape, from a variety of outsourcing offerings through system optimization and system operating services to process and SAP consulting. In particular for SMEs in the manu-facturing and automotive industries Freudenberg IT is an MES specialist (MES is the acronym for Manufacturing Execution System), optimizing the integration between production control and the ERP system, and is a pioneer for Industry 4.0. The Business Group also offers cloud computing solutions which Freudenberg IT customers can use to outsource IT without any investment risk. That means users are free to focus completely on their core business without having to address IT issues.

Products and servicesOutsourcing, cloud computing, consulting for SAP and MES

LocationsChina, Germany, Mexico, USA

Freudenberg IT SE & Co. KG69465 Weinheim | GermanyPhone: +49 6201 80-8000Fax: +49 6201 88-8000E-mail: [email protected]

one-stop shop for customers. A further major event in the year under review was the strategic restructuring of the Chinese national organization, which has again returned to profitability: Freudenberg IT Asia will in future focus on global customers who need an IT service provider in China. The significant improvement in customer satisfaction is particularly worthy of note. For the second year in a row, there was a marked improvement in the TRI*M-Index (Measuring, Managing und Monitoring). With an interna-tional index of 76 points, Freudenberg IT’s performance is higher than the industry‘s international benchmark of 68 points, and the index of 70 points for Germany is also higher than the industry‘s national benchmark. Over 25 contract extensions with existing customers such as BSN, Karl Mayer, B+S Card Service and Berner confirm this trend. 2014 also saw the acquisition of numerous new customers such as the Wirtgen Group, the Good Mills Group, Bilcare, Pentair and Stahlgruber.

The legal entity Freudenberg IT, S.A. de C.V. established in 2013 in Mexico City, Mexico, was expanded. The company with its workforce of 100 offers various IT and application management services. Freudenberg IT’s global footprint has thus become even larger, bringing competitive advantages for the Business Group as a midsized company.

Location changes

Freudenberg IT further expanded its existing locations in Germany and America during the year under review. Furthermore, a new site in Eschborn, Germany, takes Freudenberg IT closer to customers and gives the Busi-ness Group better access to highly-qualified employees

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hand, enmech recorded its biggest order ever in 2014. Series production of the products commissioned under this order begins in 2015 to 2017.

In the year under review the focus lay on achieving a significant improvement in productivity and on the Business Group’s restructuring process, which was successfully com-pleted in the third quarter. All of the Business Group’s final finishing activities are now located at the facility in Pécel, Hungary. As a result, the supply chain has been greatly simplified.

Key events

The brand name enmech was successfully launched on the international market through a presence at trade fairs – in particular at Electronica, the world’s leading trade show for electronic components, systems and applications – through publications, and through other communication measures.

In the fast-growing market for LED lighting, enmech won orders for new, innovative light source modules for LED head-lights based on the company’s hybrid flex technology. Key characteristics of these new modules are optimal thermal management and high-precision LED positioning.

Business development in the battery segment continued to be extremely positive. The Business Group won a further OEM series order as well as development projects with all major OEMs for the next generation of lithium-ion batteries applications. There was very strong demand for flexible foil antennas. These antennas can be fitted very successfully into any space in a vehicle. In this context, integrated amplifier tech-nology is gaining ground.

ENmECh

The Freudenberg NOK Mechatronics Business Group was officially renamed enmech effective January 1, 2014. The company sees itself as an enabler, in other words it pre-pares the way for customers with FPC-based mechatronic products.

Annual figures

Due to product phaseouts, enmech sales of €42.0 million did not quite reach the €46.4 million sales level of the previ-ous year – on the basis of the 50 percent pro-rata consoli-dation, sales of €21.0 million are reported for Freudenberg (previous year: €23.2 million).

The headcount at year-end attributable to Freudenberg was 187 (previous year: 174 employees).


enmech sales in the year under review decreased slightly as a result of the planned portfolio changeover from wiring harnesses for doors to mechatronic products. On the other

enmech [pro-rata] 2013 2014


Workforce 174 187

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Profile:enmech is a 50:50 joint venture between Freudenberg and NOK Corporation, Tokyo, Japan. Business activities range from the development and production of mecha-tronic solutions based on large flexible printed circuits, ready-for-use SMD assembly flat wiring harnesses which can integrate switches, sensors, LEDs and other functional components, and connector technology. Experience in research, development and production drawn from the joint venture partners makes the company a competent and reliable development partner and supplier, particu-larly for the automotive industry, module suppliers and harness makers.

Products and services Mechatronic solutions based on large flexible printed circuits including connector technology with the option to integrate various functions; heating and antenna foils; component assembly

Locations Germany, Hungary

enmech GmbH & Co. KG69465 Weinheim | GermanyPhone: +49 6201 80-0Fax: +49 6201 88-2069E-mail: [email protected]

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As part of the organizational realignment of the Freudenberg Group, Freudenberg Nonwovens and Freudenberg Politex Nonwovens, formerly two indepen-dent Business Groups, were brought together effective January 1, 2015 to form a new Business Group called Freudenberg Performance Materials.

Furthermore, Freudenberg Performance Materials acquired Polymer Health Technology Limited, a leading specialist of polyurethane foams for advanced wound care with effect from January 2015. With this acquisition, Freudenberg Performance Materials is further expanding its portfolio in the medical technology sector.

rEpOrT ON pOST-BalaNCE ShEET daTE EvENTS

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The Freudenberg Group‘s organizational structure was developed further in 2014, and the risk management system was adjusted accordingly. The Freudenberg risk management process was revised and improved and implemented in its new form throughout the Group. The revised risk management process explicitly deals with main risks identified at several levels and involving the participation of several specialist functions, committees and corporate bodies.

The risk management system - including its suitability and effectiveness - is reviewed by Internal Auditing. In addi-tion, the system is also reviewed regularly by the external auditor.

Risks

The following chapter deals with risks classified as significant or higher for the Freudenberg Group ranked by their importance. These risks can have very differing impacts. They may occur individually and independent of one another or simultaneously. In all cases they have the potential to impact directly or indirectly on the net assets, financial position or results of operations of the Freudenberg Group.

Demand-side risks

Freudenberg delivers challenging and innovative solutions to customers in over 30 markets, some 60 countries and thousands of applications. The broad diversification of the Group reduces dependence on individual customers, customer groupings, regions and countries. Nevertheless

Risk management system

The Freudenberg Group‘s risk management system is a decentralized system oriented to the Group‘s organiza-tional structure. The system covers all companies fully consolidated in Freudenberg SE, and includes all Group measures addressing the main risks. One such measure is the Freudenberg risk management process. This process in particular ensures the structured identification, assessment, control and monitoring of main risks that might jeopardize the continued existence of the company. The process also includes appropriate risk communication and the conti-nuous improvement of the risk management system.

The objective of the risk management system is the prompt identification of risks that might jeopardize the continued existence of the company and the initiation of appropriate countermeasures. It is not the objective of the risk manage-ment system to avoid all potential risks, but rather to create the leeway for taking a deliberate decision to enter into a risk backed by a comprehensive knowledge of essential information. Entrepreneurial action therefore also involves identifying and harnessing opportunities and thus safe-guarding and enhancing the company‘s competitiveness.

The risk management strategy is derived from the general strategy of the Group.

The risk management strategy primarily addresses risks, while opportunities are addressed in the context of the annual planning process and monitored throughout the year. Long-term opportunities for profitable growth are primarily identified as part of the strategy process.

rEpOrT ON riSkS aNd OppOrTuNiTiES

freudenberg is exposed to numerous risks and opportunities inseparably associated with entrepreneurial action. a risk management system is in place throughout the freudenberg group to help the company deal with risks.

Report on Post-Balance Sheet Date EventsReport on Risks and Opportunities

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risks can affect Freudenberg in very different ways, such as payments to third parties, fines or penalties. In extreme cases, legal risks could have a very significant impact on Freudenberg.

Freudenberg has many measures in place to respond to these legal risks such as comprehensive quality assurance mechanisms, clearly-defined product specifications, inst-ructions, documentation or preventive contractual solutions containing provisions to limit liability, and flanks these meas-ures with customary insurance cover. Compliance with laws, internal guidelines and Freudenberg‘s own code of values (Guiding Principles and Business Principles) has high priority and is the subject of regular training. Further-more, the Business Groups take the initiative in sensitizing their employees‘ perception of the relevant legal risks.

In addition, the Corporate Functions and the Freudenberg Regional Corporate Centers ensure that laws and regula-tions as well as internal rules are observed and complied with. To that end, training events are held at regular inter-vals. Modern communication tools such as web-based training and e-learning tools are used to reach as many employees as possible.

In order to ensure even more effective compliance with legal requirements, an improved framework for a com-pliance management system was drawn up in 2014, marking a further step in efforts to create an even more efficient compliance management system tailored to the structures and needs of the Freudenberg Group. As a result of expansion and growth within the Group

Freudenberg is dependent on the general economic situation, particularly with regard to general demand for its products and services, and dependent on some major customers. Even though the scale of this dependence decreased compared with the previous year as a result of the current economic situation and Group acquisi-tions, a slump in demand such as that experienced in 2008/2009, for example, could lead to a substantial decline in sales and earnings and thus still exert a not insignificant impact on Freudenberg.

The Freudenberg Group has implemented several mea-sures to limit the negative effects of demand-side risks. The company has, for example, high capacity flexibility and practices active working capital management. Freudenberg regularly monitors several success indicators and can thus respond promptly to negative developments. In terms of a long-term response to demand-side risks, Freudenberg makes targeted investments in research and development, in individual regions and customer relations as well as selected strategic growth areas.

Legal risks

As a globally active manufacturer of functionally-relevant technical components, specialty chemicals and final user products as well as a service provider for industry, Freudenberg is exposed to various legal risks, including in particular product liability and warranty risks or risks relating to competition and antitrust law, anti-corruption regulations, export controls, intellectual property rights (patent law), tax law and environmental protection. These

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– particularly in China – the significance of legal risks for Freudenberg rose compared with the previous year.

Information security risks

The Freudenberg Group relies extensively on information that is chiefly stored electronically and communicated by electronic means. In some cases, this information is crucial, both with reference to internal business proces-ses and with regard to communication with customers and suppliers. Failure to access such information could, for example, lead to the interruption of operations at Freudenberg or at a third party. As a provider of IT servi-ces, Freudenberg offers its customers the usual guarantees regarding availability and performance. Freudenberg uses a wide range of measures to deal with the associ-ated information security risks, for example by operating information security management systems oriented to the ISO/IEC 27001:2005(E) international standard. In addi-tion, various measures such as redundant data centers in different geographical locations are implemented to deal with technical risks.

The aim of the guideline on information security issued by the Board of Management is to preserve the con-fidentiality, availability and integrity of information; the guideline sets out procedures to achieve this. The Business Groups, Corporate Functions and Freudenberg Regional Corporate Centers conduct comprehensive risk monitoring and implement the appropriate measures. An assessment of information security in the Group is conducted on a regular basis. Numerous internal

communication measures encourage heightened aware-ness on the part of employees with regard to the correct handling of information and information processing systems.

In spite of the measures already implemented, informa-tion security risks could have a strongly negative impact on the Freudenberg Group. Both on balance and in a year-on-year comparison, there were no major changes in these risks.

Contractual risks

Freudenberg enters into contracts with third parties on a daily basis and makes continuous adjustments to its portfo-lio, latterly through a pronounced focus on the acquisition of companies and business units. During the course of these activities, commitments are undertaken or obliga-tions assumed that cannot always be accurately quantified in advance, must be complied with over a longer period of time, may change as time goes by or may with hind-sight turn out to be disadvantageous. All of these cases could above all negatively impact the earnings situation of the Group. Freudenberg has several measures in place to deal with these risks including comprehensive checks prior to entering any such contractual arrangements, dedicated project management or contractual solutions. Freudenberg also implements systematic contract management and contract monitoring in selected areas.

There were no major changes to these risks compared with the previous year. They could nevertheless and in

Report on Risks and Opportunities

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Freudenberg Group as a whole and controlled by a central unit.

Interest rate risks arise from possible changes in the market rate and can lead to changes in the market value of fixed interest investments. To reduce interest rate risks, Freudenberg makes funds available to subsidiaries in the form of loans or cash pools. Vice versa, Freudenberg companies channel surplus liquidity to the central finance department.

Binding internal guidelines for companies in the Freudenberg Group clearly specify that derivative finan-cial instruments may not be used for speculative purposes, but only for hedging risks in connection with underlying transactions and associated financing operations.

In its rating published in May 2014, the rating agency Moody’s rated the creditworthiness of Freudenberg SE as Baa1 and confirmed the outlook as “stable“. This gives the Freudenberg Group very good creditworthiness at investment grade level.

Despite all measures, financial risks could still have a negative impact on the Group. In certain circumstances their effect on Freudenberg could be significant. Overall, there were no changes in financial risks compared with the previous year, primarily as a result of the good earn-ings position of the Group.

extreme cases - particularly in connection with takeovers - have a significant negative impact on Freudenberg.

Financial risks

As an internationally active company with major share-holdings in other countries Freudenberg is exposed to financial risks which may negatively impact the net assets, financial position or results of operations of the Group. Freudenberg employs various measures to manage these risks. For example, the Group has several specialist func-tions and expert groups specifically tasked with the iden-tification, analysis and control of Freudenberg‘s financial risk profile. In addition, selected corporate bodies discuss and define existing and future processes concerning the methodology and control of financial risk management.

Various measures to safeguard liquidity are in place which allow Freudenberg to react swiftly to unexpect-ed liquidity-related risks. Such risks are hedged, for example, by solid banking and Partners‘ financing and high liquid reserves. Freudenberg has an above-average equity ratio, a stable level of Partners‘ reserves through the Partners of Freudenberg & Co. KG, and compre-hensive credit lines.

In addition, Freudenberg is exposed to currency and interest rate risks which are always meaningfully hedged. Monitoring of these risks is implemented by internal guidelines and processes. Because the currency risks of the various companies have a partially offsetting effect, the effective foreign exchange risk is determined for the

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Risks from technological progress and innovation

As a highly diversified technology company, Freudenberg is active in numerous product and market segments, some of which vary considerably. Moreover, Freudenberg con-ducts its entrepreneurial activities on the basis of different business models. Consequently, Freudenberg operates in a constantly changing environment and is exposed to technological progress and a wide range of innovations. In specific terms, this means that Freudenberg comes up against new products, technologies or organizational structures.

Freudenberg uses various measures, such as in-house research and development and innovation, to manage the consequences of these risks. The most important pillar and key driver of innovation at Freudenberg is to be found in the Business Groups, whose research and development activities are closely geared to their customers. In addition, the Freudenberg Group acquires external companies or business units to add to the Group‘s technology and pro-duct portfolio and to enhance innovation capabilities.

With the new Corporate Innovation function, Freudenberg has created an organizational unit that bundles the Group‘s technical knowledge - in particular through cross-sectional technologies, through Corporate Research & Development which investigates and develops new areas of business, and through Corporate New Business and Venture Capital. In total, Freudenberg invests a notable share of sales in research and development. Risks from technological progress and innovation could in theory

have a significant impact on Freudenberg in spite of the measures implemented. There were, however, no major changes to these risks compared with the previous year.

HSE risks (health, safety, environment)

Various raw materials and processes used by Freudenberg in production have differing effects on the environment and workplace safety. These effects could, for example, lead to personal injury or have a negative environmental impact at a site. Freudenberg manages these risks in many ways with the aim of continually reduc-ing their impact. With regard to hazardous substances or substances which have become the subject of debate as a result of legislative initiatives such as REACh (European Regulation on Registration, Evaluation, Authorization and Restriction of Chemicals), Freudenberg proactively enga-ges in searching for alternatives or substitute substances before a statutory provision comes into effect while at the same time forestalling the effects on production of a possi-ble ban on a given substance. In addition, many product developments are subject to a stage gate process which among other things ensures that new products have a better environmental performance than their predecessors.

Freudenberg‘s worldwide “We all take care“ initiative calls on every employee to engage personally in improving environmental protection and occupational health and safety. The initiative is constantly evolving and is supported by the Group‘s top management and senior executives in the Business Groups. The Freudenberg Group is devel-oping a growing number of occupational health measures


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campaigns at leading Chinese universities and personnel retention and development programs designed specifically for the Chinese labor market.

Personnel risks in China are classified as significant. These risks are less significant for Freudenberg in other regions. Compared with the previous year, personnel risks rose as a result of the Group‘s expansion in China. There were no major changes in the other regions.

Overall picture of the risk situation

The analysis of present risks concludes there are no risks which pose a threat to the continued existence of the Freudenberg Group. There were no major changes in the overall risk situation of the Group compared with the previ-ous year.

Opportunities

Administrative excellence

In 2013, Freudenberg launched an initiative to increase administrative excellence which comprised several projects to raise efficiency in the field of administration. The first poten-tial savings and efficiency enhancements under this initiative were achieved in 2014, with some of them exceeding expectations. The initiative will be continued in the coming years and it is possible that the cost savings and efficiency improvements realized under the projects will be higher than anticipated. Freudenberg would then be in a position to become even more competitive than in previous years.

for its older employees; these measures cater for national and regional factors.

Internal and external audit processes monitor the implemen-tation of HSE or fire protection programs by the Business Groups. One objective of these programs is to raise aware-ness for fire protection and to prevent personal injury, oper-ational interruptions and the associated potential delivery disruptions. The findings of the audits are systematically eva-luated and measures implemented throughout the relevant Business Groups. In spite of all the preventive measures, HSE risks can nevertheless have a significant impact, particularly at the larger locations such as Weinheim.

The most significant potential threat comes from incidents involving a fire and the associated operational interruptions. There were no major changes in HSE risks compared with the previous year.

Personnel risks

A further risk for Freudenberg is growing competition for talent, particularly in China, where the labor market is highly competitive. This risk can lead, for example, to a rise in personnel expenses or recruitment costs. Freudenberg responds to this risk with global and local measures such as the Group-wide talent management process which ensures that Freudenberg employees throughout the Group receive further expert training and acquire the skills nee-ded by the company on the basis of unified programs and standards. Furthermore, several additional measures are in place in China; these include in particular regular recruiting

89

Freudenberg global brand

In 2014, the groundwork was laid for presenting the redesigned Freudenberg global brand in 2015. One of the key elements will be the clear positioning of the Freudenberg brand. The entire Freudenberg Group, and the smaller units in particular, stand to benefit signifi-cantly, for example with regard to recruiting employees and winning customers.

Talent management

Freudenberg rolled out a new talent management process in 2013. The process establishes a uniform procedure for talent management throughout the entire Freudenberg Group. The process includes standar-dized assessment systems based on standardized skills profiles and definitions of potential. This enhances the comparability of assessments and facilitates personnel development. The process improves the basis on which Freudenberg can take personnel decisions in the future, and therefore brings the prospect of long-term cost savings in many areas, particularly with regard to recruit-ment and personnel development, on a notably larger scale than present expectations.

Economic globalization

Due to its global presence, Freudenberg has for many years been able to offer products and services world-wide at uniform standards. As a result, Freudenberg can keep pace with the international strategies of its

customers, for example in production or research and development. In the past, Freudenberg has almost exclu-sively leveraged this expertise for customers from Europe or North America as they gain a foothold in emerging markets, most notably in Brazil, Russia, India or China. Recently, however, Freudenberg encountered the reverse situation and successfully supported a customer from an emerging economy enter the market in western Europe. If this trend were to intensify in the future, Freudenberg could benefit from globalization to a significantly larger extent than anticipated.

Investment in strategic growth areas and regions

Freudenberg offers solutions for thousands of customers in over 30 sectors of industry and is active in some 60 countries. The Group will invest in four strategic growth areas – chemical surface treatment, medical technology, oil & gas, and industrial filtration – wherever attractive opportunities arise and in line with the megatrends relevant to Freudenberg. Investment will take the form of acquisitions and additional research and development tasks. Furthermore, Freudenberg intends to step up its activities in individual regions in line with market oppor-tunities. The Group therefore has the chance for stronger than anticipated growth as the pace of growth accelera-tes and the scale of diversification widens, and to trigger greater innovation in established areas.


90

the relevant accounting laws and standards is available to all Freudenberg employees involved in this process via the Freudenberg intranet. There are binding instructions for internal coordination and the preparation of financial statements.

Freudenberg uses a standard software tool for the Group financial reporting process. This tool is used throughout the company worldwide and clearly defines user rights observ-ing the principle of the separation of functions. The system covers both reporting by Freudenberg companies and the consolidated financial statements. Additional controls are implemented in the consolidation process.

This process is also supported by a software tool for the automatic reconciling of balances throughout the Group. The individual companies have a local internal control system which is the responsibility of the respective Business Group and which must comply with uniform minimum requi-rements applicable throughout the Group. If Shared Service Centers are responsible for the financial processes, then the internal control system of the Shared Service Centers also applies.

Corporate Controlling & Accounting provides support for local contact partners throughout the entire reporting process. The corporate function organizes seminars for employees involved in this process in the event of important changes in financial reporting procedures and IT applica-tions, thereby guaranteeing a consistently high standard of reporting. Some sections of the HSE reporting process are integrated in the central reporting system.

Internal control and risk management system (referred to the financial reporting process)

The internal control and risk management system for the financial reporting process at Freudenberg is tasked with ensuring the functionality, compliance and effectiveness of financial reporting in the Group. The internal control system includes measures intended to ensure the complete, accu-rate and timely transmission and presentation of information of relevance to the preparation of the consolidated financial statements and the consolidated management report of the Freudenberg Group.

The Board of Management of the Freudenberg Group bears overall responsibility for the internal control system. To this end, Freudenberg has initiated the following main measures: the Corporate Controlling & Accounting function is responsible for drawing up the consolidated financial statements and the consolidated management report of the Freudenberg Group. It defines minimum requirements regarding reporting content submitted by the companies and controls and monitors the time frame and process requirements. Corporate Controlling & Accounting is also responsible for the central administration of the sharehold-ing structures and updates the list of companies included in the Freudenberg Group consolidation as appropriate. The standards for IFRS reporting as regularly updated form the basis for compiling the IFRS reporting packages of the parent company and of all domestic and foreign subsidia-ries included in the consolidation. The necessary informa-tion concerning the coordinated and punctual compilation of the consolidated financial statements in compliance with

91

There is a clear demarcation of tasks between Corporate Controlling & Accounting and the companies. The separa-tion of functions and the dual control principle are syste-matically applied. Actuarial reports and evaluations are compiled by specialist service providers or appropriately qualified employees. It is standard procedure for the Group auditor and the auditors of the consolidated companies to review the functionality and compliance of the Group‘s reporting processes. The minimum controls defined by Freudenberg are also reviewed as part of the audit process.

The Audit Committee monitors the effectiveness of the inter-nal control and risk management system. In addition, the functionality and compliance of processes of relevance to financial reporting are reviewed regularly under an internal auditing process. The complete package of processes, systems and controls adequately ensures that the Group‘s reporting process is in accordance with IFRS and other regulations and laws of relevance to financial reporting and is reliable.


92

Overall, our assessment of the prospects for economic conditions* in the 2015 financial year is cautiously optimistic. Global economic growth in 2015 should benefit from the present decline in oil prices. Growth in eurozone countries is expected to be slightly stronger on the back of the depreciation of the euro. All in all, how-ever, these effects are not likely to have a major impact on the moderate development of the global economy.

More specifically, we expect economic development in Germany to remain robust in 2015. The German eco-nomy will again produce an above-average performance compared with other EU countries, with gross domestic product (GDP) increasing by 1.5 percent. With reference to the eurozone, Freudenberg‘s largest sales region, we expect to see a rise in GDP of around 1.2 percent. We anticipate a strong economic trend in the USA, and estimate that U.S. economic growth for the full year will run at 3.0 percent.

In contrast, our forecasts for the emerging economies are very mixed. We expect China, an important market for Freudenberg, to continue to drive the global economy. GDP in China is forecast to grow by 7.0 percent in 2015. In India, the change of government last year triggered new momentum. We expect GDP in this region to increase by 6.3 percent.

Key structural reforms in Brazil are in all probability again unlikely to materialize in 2015. Consequently, GDP there is only expected to grow by 0.3 percent. In light of the conflict with Ukraine, GDP in Russia is anticipated to fall by 3.5 percent.

These forecast economic conditions could change very swiftly. According to our current assessment, the economic situation in South America, Russia and southern Europe is unlikely to change significantly in the coming years – and could even deteriorate. Furthermore, we expect to see negative developments in the oil and gas industry as a result of the lower oil price and we anticipate the neutral effect of exchange rates on the Group to continue.

The Freudenberg Group plans to outperform the market in 2015 and to draw above-average benefit from economic developments in the individual regions. To that end, the individual Business Groups will execute their operational planning and respond appropriately to new challenges.

Freudenberg Sealing Technologies plans to expand business further, above all in Asia, focusing on the automo-tive and industrial sector and on expanding the relevant product portfolio. Freudenberg Oil & Gas Technologies expects to see investments by the oil and gas industry dec-line as a consequence of the drop in the price of oil. The lower oil price will negatively impact the Business Group‘s sales. In light of this, Freudenberg Oil & Gas Technolo-gies has already introduced several cost-saving measures which also include optimizing production and improving internal processes. EagleBurgmann expects a downturn in business in Russia and subdued demand for mechanical seals in Japan. The Business Group will therefore system-atically continue with its established cost and liquidity management. In 2015, the Helix Medical Business Group will continue to drive forward the integration of the businesses acquired in recent years. In addition, Helix Medical will be intensifying investment in proprietary know-how for various medical applications. The organizational

rEpOrT ON ExpECTEd dEvElOpmENTS

* Sources: In this chapter, all figures referring to economic developments are based on data from Consensus Economics, the European Commission, the International Monetary Fund and the market research and consultancy company Schlegel und Partner.

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realignment of the Freudenberg Nonwovens and Freudenberg Politex Nonwovens Business Groups and their merger to form the new Freudenberg Performance Materials Business Group should enable the new unit to serve customers more effectively and efficiently. Freudenberg Performance Materials will invest in new applications, technologies and IT systems.

The Freudenberg Filtration Technologies Business Group will continue to focus on automotive filters and indus-trial filtration. It will also seize attractive openings to expand its market position in further filtration applications. Freudenberg Home and Cleaning Solutions is likely to benefit from the economic growth in the North America, Asia/Pacific and India regions forecast for 2015. At the same time, the Business Group will not be immune to negative developments in Russia and some parts of the Middle East. Freudenberg Chemical Specialities expects positive overall business development in 2015. In line with economic conditions, developments in the individual regions will be very mixed.

Across the board, we will be offering our customers new innovative solutions in 2015. We will drive our key projects forward and will also launch new initiatives with regard to sustainability, non-financial key performance indicators and social commitment. We will invest in the four strategic growth areas – chemical surface treatment, medical technology, the oil and gas industry, and indus-trial filtration – wherever attractive opportunities arise, and we will intensify our activities in selected regions in line with market openings. The Freudenberg Group will again deliver on its commitment to responsible conduct in 2015 by implementing numerous HSE measures. We expect

to achieve a slight reduction in the number of accidents at work, measured by the “Lost Day Incident - Frequency Rate“ (LDI-FR) (accidents resulting in at least one day‘s absence from work per million working hours) referred to the full year.

We will continue to act prudently, keep a careful watch on economic developments, and respond swiftly and sys-tematically to market changes. We will also systematically pursue our business policy with high operating efficiency and flexibility, and with solid financial management.

The analysis of present risks concludes there are no risks which pose a threat to the continued existence of the Freudenberg Group. There were no major changes in the overall risk situation of the Group compared with the previous year.

From today‘s perspective and despite all challenges, we expect year-on-year sales growth of between 2 and 4 percent for the Freudenberg Group in the 2015 financial year accompanied by an operating result at the prior-year level. All Business Groups are likely to contribute to this performance. On the basis of this forecast, we expect a slight decline in the return on sales.

Overall, we are confident we will be able to improve the excellence of our Group still further in the current financial year.

Weinheim, March 26, 2015

The Board of Management

Report on Expected Developments

95

fiNaNCial rEpOrT – CONSOlidaTEd fiNaNCial STaTEmENTSfrEudENBErg SE

96 Consolidated Statement of Financial Position 97 Consolidated Statement of Profit or Loss 98 Consolidated Statement of Profit or Loss and Other Comprehensive Income 99 Consolidated Statement of Cash Flows100 Consolidated Statement of Changes in Equity101 Notes to the Consolidated Financial Statements

96

CONSOlidaTEd STaTEmENT Of fiNaNCial pOSiTiON

[€ million] Note Dec. 31, 2013 Dec. 31, 2014

ASSETS intangible assets (1) 786.7 860.6

Tangible assets (2) 1,387.8 1,466.5

investment properties (3) 19.3 20.6

investments in joint ventures (4) 348.3 413.1

investments in associated companies (5) 691.6 820.0

Other financial assets 106.2 118.1

financial assets 1,146.1 1,351.2

Other non-current assets (7) 53.0 28.6

deferred taxes (20) 82.9 120.4

Non-current assets 3,475.8 3,847.9inventories (6) 697.7 798.5

Trade receivables 846.3 929.5

Other current assets 134.2 142.4

Current receivables (7) 980.5 1,071.9

Current tax assets 38.2 30.5

Securities and cash at bank and in hand (8) 672.9 917.7

Current assets 2,389.3 2,818.6Non-current assets held for sale and disposal groups (9) 7.5 0.0 5,872.6 6,666.5EQUITY AND LIABILITIES Subscribed capital 450.0 450.0

Capital reserves 50.2 50.2

retained earnings 1,951.8 2,344.4

Equity without non-controlling interests 2,452.0 2,844.6Non-controlling interests 322.9 366.4

Equity (10) 2,774.9 3,211.0provisions for pensions and similar obligations (11) 465.9 620.0

Other long-term provisions (12) 89.1 69.7

long-term provisions 555.0 689.7

financial debt 672.9 677.5

Other non-current liabilities 63.4 78.3

liabilities (13) 736.3 755.8

deferred taxes (20) 121.0 113.8

Non-current liabilities 1,412.3 1,559.3Other current provisions (12) 355.7 437.0

Current tax liabilities 42.8 64.4

financial debt 519.1 558.9

Trade payables 468.8 524.1

Other current liabilities 299.0 311.8

liabilities (13) 1,286.9 1,394.8

Current liabilities 1,685.4 1,896.2Liabilities in connection with non-current assets held for sale and disposal groups (9) 0.0 0.0

5,872.6 6,666.5

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Financial Report – Consolidated Statement of Financial Position Consolidated Statement of Profit or Loss

CONSOlidaTEd STaTEmENT Of prOfiT Or lOSS

[€ million] Note 2013 2014

Sales (14) 5,646.1 5,982.3

Cost of sales (15) -3,512.0 -3,672.1

Gross profit 2,134.1 2,310.2Selling expenses -996.0 -1,068.7

administrative expenses -530.5 -511.4

research and development expenses (16) -191.5 -211.6

Other income (17) 64.3 85.1

Other expenses (18) -58.2 -95.3

income from investments in joint ventures (4) 35.1 55.1

Profit from operations 457.3 563.4income from investments in associated companies (5) 66.1 92.8

Other investment result 5.8 -3.1

Other interest and similar income 10.5 12.3

interest and similar expenses (19) -46.4 -40.3

Financial result 36.0 61.7Profit before income taxes 493.3 625.1income taxes (20) -94.5 -147.3

Consolidated profit 398.8 477.8

profit attributable to freudenberg 352.4 427.4

profit attributable to non-controlling interests (21) 46.4 50.4

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Consolidated profit 398.8 477.8

Other comprehensive income:remeasurement of defined benefit plans (11) 12.7 -150.5

income tax relating to items thatwill not be reclassified to profit or loss (10) -4.2 40.0

Items that will not be reclassified to profit or loss 8.5 -110.5

Exchange rate differences (10) -291.2 136.4

Changes in value of securities (10) 23.0 12.5

Changes in value of derivative financial instruments (10) 6.2 0.1

Share in other comprehensive income of joint ventures (4) -0.9 -0.1

Share in other comprehensive income of associated companies (5) 81.3 50.3

miscellaneous comprehensive income -21.7 -2.9

income tax relating to items that will be reclassified subsequently to profit or loss when specific conditions are met (10) -1.0 -7.6

Items that will be reclassified subsequently to profit or loss when specific conditions are met

-204.3 188.7

Other comprehensive income for the year -195.8 78.2 Total comprehensive income for the year 203.0 556.0 Of which attributable to freudenberg 151.3 483.1

Of which attributable to non-controlling interests 51.7 72.9

CONSOlidaTEd STaTEmENT Of prOfiT Or lOSS aNd OThEr COmprEhENSivE iNCOmE

99

Financial Report – Consolidated Statement of Profit or Loss and Other Comprehensive Income

Consolidated Statement of Cash Flows


profit before income taxes 493.3 625.1

Current income taxes -112.4 -173.4

depreciation, amortization and impairment losses on intangible assets, tangible assets, investment properties and financial assets less write-ups

237.6 256.2

profit or loss on disposal of intangible assets, tangible assets, investment properties and financial assets

-6.9 -6.7

Other expenditure and income not affecting payments -82.1 -111.7

Changes in inventories, trade receivables and other assets -100.8 -72.8

Changes in trade payables and other liabilities 29.4 53.6

Changes in provisions 57.8 47.5

Cash flow from operating activities (22) 515.9 617.8

Cash inflow from disposals of intangible assets, tangible assets and investment properties

23.1 34.8

Cash outflow from acquisitions of intangible assets, tangible assets and investment properties

-229.3 -271.6

Cash inflow from disposals in financial assets 21.5 1.2

Cash outflow from acquisitions in financial assets -9.6 -4.9

payments in connection with the disinvestment/investment of consolidated companies less cash acquired or disposed of

-325.4 -98.2

Cash flow from investing activities -519.7 -338.7

payments to shareholders/non-controlling interests -95.9 -119.9

Cash inflow from the take-up/cash outflow from the repayment of financial debts

147.1 69.2

Cash inflow from disposals of loans and securities held as non-current assets

4.8 4.2

Cash outflow from acquisitions of loans and securities held as non-current assets

-1.5 -0.8

Cash flow from financing activities 54.5 -47.3 Changes in cash and cash equivalents with effect on payments 50.7 231.8Changes in cash and cash equivalents from changes in consolidated group -8.1 0.0

Changes in cash and cash equivalent from exchange rate differences -21.9 13.0

Cash and cash equivalents at beginning of year 652.2 672.9Cash and cash equivalents at end of year 672.9 917.7 Securities and cash at bank and in hand 672.9 917.7

CONSOlidaTEd STaTEmENT Of CaSh flOwS

100

CONSOlidaTEd STaTEmENT Of ChaNgES iN EquiTy

[€ million] Subs

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Ca

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erve

s

Ret

ain

ed e

arn

ings

Equi

ty w

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No

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inte

rest

s

Equi

ty

Status Jan. 1, 2013 450.0 50.2 1,873.8 2,374.0 294.0 2,668.0Consolidated profit 352.4 352.4 46.4 398.8

appropriation of profit -73.3 -73.3 -22.8 -96.1

Other comprehensive income -201.1 -201.1 5.3 -195.8

Status Dec. 31, 2013 450.0 50.2 1,951.8 2,452.0 322.9 2,774.9

Consolidated profit 427.4 427.4 50.4 477.8

appropriation of profit -90.5 -90.5 -29.4 -119.9

Other comprehensive income 55.7 55.7 22.5 78.2

Status Dec. 31, 2014 450.0 50.2 2,344.4 2,844.6 366.4 3,211.0

See also the explanatory remarks on equity in note (10) to the Consolidated financial Statements.

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NOTES TO ThE CONSOlidaTEd fiNaNCial STaTEmENTS

General

The Freudenberg Group is an international industrial group mainly active as a supplier to the automotive, mechanical engineering, oil and gas, textile and apparel industries throughout the world. The Group’s portfolio also includes medical technology and consumer goods.

The consolidated financial statements of Freudenberg Societas Europaea (hereafter Freudenberg SE), Weinheim, Germany, for 2014 have been drawn up in accordance with the International Financial Reporting Standards (IFRS) as they are to be applied in the European Union (EU) as of the date of the statement of financial position (December 31, 2014). Comparative figures for the previous financial year were based on the same principles.

Freudenberg SE has availed itself of the right as laid down in Sec. 315a (3) HGB (Handelsgesetzbuch, “German Commercial Code”) to set up its consolidated financial statements in accordance with IFRS.

The Group currency is the euro. All amounts are indicated in million euros unless otherwise stated.

In the 2014 financial year, the application of the following amended standards was binding for the first time:

– IAS 32: Amendment to IAS 32 – Financial Instruments: Presentation – Offsetting Financial Assets and Financial Liabilities

– IAS 36: Amendment to IAS 36 – Recoverable Amount Disclosures for Non-Financial Assets

– IAS 39: Amendment to IAS 39 – Novation of Derivatives and Continuation of Hedge Accounting

The first-time application of these amended standards had no effect or no material effect on the consolidated financial statements.

Financial Report – Consolidated Statement of Changes in EquityNotes to the Consolidated Financial Statements

102

Freudenberg applied the following new standards and amendments to existing standards, the application of which was mandatory for the first time as at December 31, 2014, on a voluntary basis for the consolidated financial statements as at December 31, 2013:

– IFRS 10: Consolidated Financial Statements

– IFRS 11: Joint Arrangements

– IFRS 12: Disclosure of Interests in Other Entities

– Amendment to IFRS 10, IFRS 11, IFRS 12: Consolidated Financial Statements, Joint Arrangements and Disclosure of Interests in Other Entities: Transition Guidance

– Amendment to IFRS 10, IFRS 12, IAS 27: Investment Entities

– IAS 27: Separate Financial Statements

– IAS 28: Investments in Associates and Joint Ventures

103

Financial Report – Notes to the Consolidated Financial Statements

The IASB and the IFRS Interpretations Committee have published additional standards, interpretations and amendments the application of which was not yet binding for the 2014 financial year. The application of these standards, interpreta-tions and amendments is subject to endorsement by the EU which, in some cases, is still pending.

Standard/Interpretations

Application binding from*

Endorsed by EU

Probable impact

ifrS 9 Financial Instruments January 1, 2018 No Changes in the classification and measurement of financial assets and liabilities, impairments, hedge accounting and extended disclosures in notes; it is expected that the impact of the changes will be slight

ifrS 10, ifrS 12 and iaS 28

amendment to ifrS 10, ifrS 12 and iaS 28 – Investment Entities: Applying the Consolidation Exception

January 1, 2016 No None

ifrS 11 amendment to ifrS 11 – Accounting for Acquisitions of Interests in Joint Operations


ifrS 14 Regulatory Deferral Accounts January 1, 2016 No None ifrS 15 Revenue from Contracts with Customers January 1, 2017 No Effects on sales, mainly as a result of

customer-specific project orders and extended disclosures in notes

iaS 1 amendment to iaS 1 – Disclosure Initiative January 1, 2016 No No significant impactiaS 16 and iaS 38

amendment to iaS 16 and iaS 38 – Clarification of Acceptable Methods of Depreciation and Amortisation


iaS 16 and iaS 41

amendment to iaS 16 and iaS 41 – Bearer Plants


iaS 19 amendment to iaS 19 – Defined Benefit Plans: Employee Contributions

July 1, 2014 No No significant impact

iaS 27 amendment to iaS 27 – Equity Method in Separate Financial Statements


iaS 28 and ifrS 10

amendment to iaS 28 and ifrS 10 – Sale or Contribution of Assets between an Investor and its Associate or Joint Venture


ifriC 21 Levies January 1, 2014 yes** None variousstandards

Annual Improvements to IFRSs 2010 – 2012 Cycle

July 1, 2014 No None

variousstandards

Annual Improvements to IFRSs2011 – 2013 Cycle

July 1, 2014 yes None

variousstandards

Annual Improvements to IFRSs 2012 – 2014 Cycle

January 1, 2016 No No significant impact

* from this date or for reporting periods beginning after this date.** The first date of binding application defined by the Eu endorsement is different from the first date of application stated in the standard.

104

Consolidated group

Apart from Freudenberg SE, 67 (previous year: 68) German and 324 (previous year: 323) foreign affiliated companies, with respect to which Freudenberg SE has the power to direct the relevant activities of the company, the right to variable returns from the company and the ability to affect such variable returns, are fully consolidated.

Freudenberg holds a 25-percent stake in EagleBurgmann Japan Co., Ltd., Tokyo, Japan, the partner in the joint venture in the field of mechanical seals operated within the EagleBurgmann Business Group. Eagle Industry Co., Ltd., Tokyo, Japan, also holds a 25-percent stake in EagleBurgmann Germany GmbH & Co. KG, Wolfratshausen, Germany. According to the Joint Venture Agreement, Freudenberg exercises control over affiliated companies of the EagleBurgmann Group in which Freudenberg holds less than half of the voting rights of the other company; such affiliated companies are therefore fully consolidated.

Ten (previous year: nine) German and 57 (previous year: 53) foreign joint ventures are included in the consolidated financial statements. These legally independent companies are managed jointly with the partner company in each case. Both parties hold rights to the net assets of the companies. The joint ventures are consolidated by the equity method.

In addition, 12 (previous year: 14) foreign associated companies are included in the consolidated financial statements. Freudenberg does not control these companies but only exercises a significant influence. These companies are consolidated by the equity method.

All affiliated companies, joint ventures and associated companies are listed under “Shareholdings of the Freudenberg Group“.

In the year under review, 15 companies were included in the consolidated financial statements as fully consolidated affiliated companies for the first time. 15 companies which had previously been fully consolidated were no longer included as fully consolidated affiliated companies due to sale, liquidation or merger. The timing of the initial consolidation was determined on the basis of the date when Freudenberg SE started to exercise financial control.

Tobul Accumulator Incorporated with headquarters in Bamberg, USA, was acquired with effect from July 31, 2014. The objective of this acquisition was to strengthen the seals and vibration control strategic business area in the field of the development and production of hydraulic accumulators.

In addition, various companies of the Hänsel Group which operate the interlinings business of the Hänsel brand were acquired from Hänsel Textil GmbH, Iserlohn, Germany, with effect from August 1, 2014. This acquisition further expanded interlinings business.

Apart from the participations mentioned above, the following operations were acquired on the basis of asset deals:

105


Effective January 15, 2014, the Marigold household gloves business was acquired from Comasec SAS, Gennevilliers, France, a company of the Dutch Ansell Group. The acquisition included the global trademark rights for the Marigold brand as well as consumer business in the UK, Ireland, Italy, the Netherlands, Hong Kong and Japan.

Effective November 1, 2014, Freudenberg acquired the industrial activated carbon corrosion protection business of North American company MeadWestvaco Corporation, headquartered in Richmond, Virginia, USA. This means that Freudenberg can offer global customers an even broader portfolio of future-oriented filtration solutions for pollution-free air.

In 2014, the balance of the amount expended on acquisition activities and the amount received as a result of disinvestment activities was €-98.2 million (previous year: €-325.4 million).

The changes in the consolidated group had the following effects on the net assets, financial position and results of operations:

[€ million ] Dec. 31, 2013 Dec. 31, 2014

Non-current assets 307.3 93.9

Current assets 97.7 31.3

Non-current liabilities 54.7 18.9

Current liabilities 327.4 106.7

Sales 106.8 66.1

Consolidation methods

The acquisition costs of the shareholdings concerned are set off against the pro-rata share in the fair value of the equity of the companies concerned as of the date of acquisition according to the purchase method. Assets and liabilities are also included in the consolidated statement of financial position at their fair values as of the acquisition date. Any remaining differences are shown as goodwill.

Inter-company profits and losses, sales, expenses and income and all receivables and payables between consolidated companies are eliminated. Deferred taxes are set up on consolidation transactions affecting net income.

Joint ventures and associated companies are consolidated by the equity method on the basis of financial statements drawn up in accordance with IFRS.

The differences arising from the acquisition of shareholdings in joint ventures and associated companies form part of the book value of the shareholding in the company concerned. Amortization is not recognized on goodwill in subsequent periods. An impairment test is carried out on the book value of the shareholding in the joint venture or associated com-pany as a whole.

106

Accounting and measurement principles

The consolidated financial statements are based on the annual accounts of Freudenberg SE and the consolidated companies. All the annual accounts concerned were drawn up as at December 31, 2014.

In accordance with IFRS 10, the accounts of the individual companies to be included in the consolidated financial state-ments have been drawn up applying uniform accounting and measurement methods.

Acquired intangible assets are capitalized at acquisition cost and amortized on a systematic basis.

Amortization is based on the following useful lives:

Software 3 to 8 years

patents and licenses depending on contract term

An impairment test is carried out on goodwill at least once per year and an impairment loss is shown if the value of such assets is found to have been impaired.

For the impairment test, the value in use of the cash-generating unit to which the goodwill is allocated is determined in accordance with IAS 36 on the basis of a five-year plan, applying the discounted cash flow method. In line with internal management reporting, the cash-generating units are determined on the basis of the Business Groups. The discount rates used are based on the WACC (”weighted average cost of capital“) determined separately for each cash-generating unit. An impairment loss is recognized if the carrying amount of the cash-generating unit is in excess of discounted future cash flows.

Impairments of capitalized goodwill are shown under other expenses in the consolidated statement of profit or loss.

Provided that such assets meet the requirements of IAS 38, internally generated intangible assets are carried as assets at production cost and are amortized on a systematic basis over their useful lives, if their useful lives are finite.

If the useful life of intangible assets is not considered to be finite, no amortization is effected. An impairment test is carried out on such assets annually. An intangible asset may be regarded as having an indefinite useful life when, based on an analysis of all of the relevant factors, there is no foreseeable limit to the period over which the asset is expected to gene-rate net cash flows for the Group.

Tangible assets are capitalized at acquisition or production cost. In the case of assets produced by Group companies, production cost also includes directly attributable cost as well as pro-rata overheads and depreciation.

107


Borrowing costs are capitalized as part of acquisition or production cost in the case of qualifying assets.

Expenditure for repairs and maintenance is generally shown as expenses. Such expenditure is only capitalized if future economic benefits in connection with such expenditure are probable and the acquisition or production cost can be reliably measured.

Movable non-current assets and industrial buildings are depreciated over their useful lives. This approach normally corresponds to straight-line depreciation.

Systematic depreciation is determined on the basis of the following useful lives:

Buildings max. 50 years

machinery and equipment 5 to 20 years

Other fixtures, fittings and office equipment 3 to 20 years

In addition, an impairment loss is recognized if the fair value less costs to sell or value in use of an asset falls below the book value. If the impairment of an asset reflected by a write-down in the past is reduced or eliminated, the impairment loss is reversed. The updated acquisition or production cost represents the upper limit of measurement in such cases.

Taxable grants and tax-free investment subsidies, normally paid by public bodies, are set off against acquisition or pro-duction cost.

In accordance with IAS 17, tangible assets leased under finance leases are recognized as assets and written off over their economic useful life if substantially all the risks and rewards associated with the ownership of the leased asset lie with the lessee. Such assets are carried at the fair value of the leased asset at the inception of the lease or, if lower, at the present value of the minimum lease payments. A liability of the same amount is also shown on the statement of financial position.

In the case of operating leases, lease payments are recognized as expenses.

Land and buildings held to earn rentals from third parties are dealt with as investment properties. Such properties are measured at acquisition cost. Investment properties are depreciated over their useful lives. This approach normally corresponds to straight-line depreciation. As a general principle, systematic depreciation is calculated on the basis of a maximum useful life of 50 years and effected on a straight-line basis. The fair value is determined by the discounted cash flow method.

108

Participations are shown at acquisition cost or, if lower, at fair value. Investments in joint ventures and associated companies are shown at acquisition cost on first-time consolidation and subse-quently adjusted for changes in the share of the shareholder in the net assets of the company concerned.

Long-term loans are discounted if the amount of such discount is significant.

Inventories are shown at acquisition or production cost or at net realizable value, where this is lower. Inventories of raw materials and consumables and merchandise are measured by the weighted average cost method. Production cost includes directly attributable costs as well as production and material overheads and depreciation.

Receivables and other assets are recognized at amortized cost. Impairments are recognized for individual risks identified which are not covered by credit insurance. Impairments are effected using a separate account if circumstances become apparent as a result of which the conclusion can be drawn that certain receivables are subject to risks in excess of the general credit risk. The amortized cost is approximately equivalent to the fair value of the assets concerned. Long-term receivables are discounted if the amount of such discount is significant.

Securities carried as non-current or current assets that are available for sale are recorded at fair value as of the statement of financial position date. Value changes are shown under equity without an effect on net income.

Cash at bank or in hand is shown at its nominal value. Cash held in foreign currencies is converted using the exchange rate as of the statement of financial position date.

Non-current assets and groups of assets held for sale are shown separately in the statement of financial position if they are available for immediate sale in their present condition and the sale of such assets is highly probable within the next 12 months. Such assets are shown at the lower of fair value less costs to sell and book value. Systematic depreciation is not recognized on such assets from the date of reclassification. Liabilities included in a disposal group are shown separately under liabilities.

The requirement for the reversal of the impairment of assets has been complied with both for non-current and for current assets. Unless individual standards call for a different measurement, the updated acquisition or production cost represents the upper limit of measurement in such cases.

109


Provisions for pensions and similar obligations are determined by the projected unit credit method using actuarial prin-ciples, taking into account future income and pension trends. Service cost and the net interest on the net defined benefit liability are recognized with an impact on profit or loss. Remeasurements of the net defined benefit liability are disclosed under other comprehensive income. Plan assets are measured at fair value. Deferred taxes are calculated on temporary differences between the book values of assets and liabilities in the consolidated statement of financial position and their tax bases, taking into account the applicable national income tax rates valid on the date of realization and already in force on the statement of financial position date. In addition, deferred tax assets are recognized for tax losses carried forward if it is likely that such losses will be usable by the company. Deferred tax assets and liabilities are only set off against each other in cases where the income taxes concerned are levied by the same tax authority and concern the same period.

Other provisions allow for all recognizable risks and uncertain obligations towards third parties which will probably result in an outflow of resources which can be reliably estimated. Such provisions are recognized at their most probable settle-ment value and discounted if the amount of such discount is significant. Reimbursement rights in this connection are shown separately under other assets.

Liabilities are shown at their face value or at the repayment or settlement value, where this is higher. Non-current liabilities are discounted if the amount of such discount is significant.

Sales and other income are recognized at the fair value of the consideration received or receivable when the services are performed or the goods or products concerned are delivered.

The consolidated statement of cash flows is broken down into cash flows from operating, investing and financing activities. Effects arising from changes in the consolidated group and the effects of exchange rate differences have been eliminated from the consolidated statement of cash flows. The influence of these effects on cash and cash equivalents is indicated separately.

In connection with the drawing-up of the consolidated financial statements, it has been necessary to make assumptions and estimates concerning certain assets and liabilities (for example, as regards the useful life of assets with a finite useful life or the parameters for determining pension liabilities). Actual future figures may deviate from these estimates.

110

Fair value is determined on the basis of input factors in three defined categories. The following fair value measurement hierarchy is applied:

Level 1: Use of quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date.

Level 2: Determination of fair value using measurement procedures based on observed input factors for similar assets or liabilities in active markets or for identical assets or liabilities in markets that are not active.

Level 3: Measurement of assets and liabilities using measurement methods based on unobservable inputs as adequate observable market data are not available for the measurement of fair value.

111


Currency translations

The financial statements of all companies included in the consolidated financial statements which are not located in the eurozone are drawn up in the national currencies concerned. This is the currency of the primary economic environment in which the companies concerned operate (concept of functional currency).

In the accounts of individual companies, foreign-currency receivables and liabilities are translated at the exchange rates as of the date of the statement of financial position.

Goodwill created as a result of acquisitions on or after March 31, 2004, is carried as an asset of the economically independent foreign companies concerned in their respective functional currencies.

As a general principle, the annual financial statements of companies located in hyperinflationary economies are translated in accordance with the requirements of IAS 29.

In the consolidated financial statements, the financial statements of all companies not located in the eurozone are translated in accordance with the following principles:

Statement of financial position items are translated at the exchange rate as of the date of the statement of financial position.

Statement of profit or loss items are translated at average annual exchange rates.

Differences arising from the use of different exchange rates are recognized in equity without an effect on net income.

The same principles are used in the case of investments in joint ventures and associated companies consolidated by the equity method.

The exchange rates of currencies used for currency conversion which are material to the annual financial statements developed as follows:

Country Currency Closing rate Average rate 1 Euro = Dec. 31, 2013 Dec. 31, 2014 2013 2014

China CNy 8.3314 7.5550 8.1686 8.1575

india iNr 85.2246 77.4729 78.5205 80.7777

Japan Jpy 144.5122 145.2439 130.3060 140.5060

Norway NOk 8.3614 9.0144 7.8681 8.3928

russia ruB 45.2582 67.5895 42.5912 51.5000

united kingdom gBp 0.8331 0.7818 0.8497 0.8028

uSa uSd 1.3767 1.2166 1.3301 1.3219

Differences arising from the use of different exchange rates compared with the previous year are shown in the statement of changes in intangible and tangible assets with respect to non-current assets and in the consolidated statement of profit or loss and other comprehensive income with respect to equity.

112

(1) Intangible assets

Changes in intangible assets from January 1 to December 31, 2013:

[€ million] Co

nces

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Go

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Paym

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ACQUISITION/PRODUCTION COST

Status Jan. 1, 2013 487.9 417.3 0.1 905.3Changes in consolidated group 159.8 111.5 0.0 271.3

Exchange rate differences -32.9 -24.2 0.0 -57.1

additions 15.7 1.1 0.6 17.4

write-ups/revaluations 0.0 0.0 0.0 0.0

disposals -15.4 -0.8 -0.2 -16.4

reclassifications 1.0 0.0 0.3 1.3

Status Dec. 31, 2013 616.1 504.9 0.8 1,121.8

AMORTIZATION


Exchange rate differences -12.1 -0.2 0.0 -12.3

additions – systematic 49.2 0.0 0.0 49.2

impairment losses 0.1 0.0 0.0 0.1


disposals -6.3 0.0 0.0 -6.3


Status Dec. 31, 2013 309.0 26.1 0.0 335.1

Book value Dec. 31, 2013 307.1 478.8 0.8 786.7Book value dec. 31, 2012 210.0 391.0 0.1 601.1

113


Changes in intangible assets from January 1 to December 31, 2014:

[€ million] Co

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Paym

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Status Jan. 1, 2014 616.1 504.9 0.8 1,121.8Changes in consolidated group 46.1 32.0 0.0 78.1

Exchange rate differences 19.8 24.3 0.0 44.1

additions 23.7 0.0 0.8 24.5


disposals -13.7 0.0 0.0 -13.7

reclassifications 1.3 0.0 -0.7 0.6

Status Dec. 31, 2014 693.3 561.2 0.9 1,255.4

AMORTIZATION


Exchange rate differences 10.5 0.7 0.0 11.2

additions – systematic 58.0 0.0 0.0 58.0

impairment losses 1.6 0.0 0.0 1.6

write-ups/revaluations -0.1 0.0 0.0 -0.1

disposals -11.0 0.0 0.0 -11.0


Status Dec. 31, 2014 368.0 26.8 0.0 394.8

Book value Dec. 31, 2014 325.3 534.4 0.9 860.6Book value dec. 31, 2013 307.1 478.8 0.8 786.7

Goodwill was subjected to an impairment test as at December 31, 2014. The basic assumptions used for determining the value in use of the cash generating units included a growth rate of 2.0 percent (previous year: 2.0 percent) and WACCs ranging from 7.3 percent to 11.0 percent (previous year: ranging from 6.3 percent to 9.7 percent). On thisbasis, no impairment loss was identified.

An impairment test was also carried out with a variation in the discount rate of up to plus/minus 2.0 percentage points. On this basis too, there was no need to record an impairment loss.

114

(2) Tangible assets Changes in tangible assets from January 1 to December 31, 2013:

[€ million] Land

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Status Jan. 1, 2013 963.2 1,960.4 663.0 15.7 74.6 3,676.9Changes in consolidated group 35.2 67.7 15.9 1.2 0.2 120.2

Exchange rate differences -29.1 -59.9 -15.3 -0.8 -3.7 -108.8

additions 20.3 48.0 48.8 14.4 80.3 211.8

write-ups/revaluations 0.0 0.0 0.5 0.0 0.0 0.5

disposals -3.5 -72.0 -24.6 -1.7 -0.8 -102.6

reclassifications 17.8 44.2 21.2 -19.4 -64.9 -1.1

Status Dec. 31, 2013 1,003.9 1,988.4 709.5 9.4 85.7 3,796.9

DEPRECIATION


Exchange rate differences -13.4 -39.6 -10.8 0.0 0.0 -63.8

additions – systematic 28.9 95.8 57.8 0.0 0.0 182.5

impairment losses 0.0 2.6 0.1 0.0 0.0 2.7

write-ups/revaluations 0.0 -0.1 0.4 0.0 0.0 0.3

disposals -2.8 -64.2 -21.6 0.0 -0.1 -88.7

reclassifications 0.4 -2.0 1.6 0.0 0.0 0.0

Status Dec. 31, 2013 482.4 1,396.6 529.8 0.0 0.3 2,409.1

Book value Dec. 31, 2013 521.5 591.8 179.7 9.4 85.4 1,387.8Book value dec. 31, 2012 509.8 599.0 172.6 15.7 74.2 1,371.3

115


Changes in tangible assets from January 1 to December 31, 2014:

[€ million] Land

and

bui

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Ma

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and

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Oth

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Status Jan. 1, 2014 1,003.9 1,988.4 709.5 9.4 85.7 3,796.9Changes in consolidated group 3.2 6.1 1.6 0.0 0.0 10.9

Exchange rate differences 28.8 54.0 18.1 0.8 4.0 105.7

additions 23.6 57.3 45.6 19.1 98.5 244.1


disposals -14.2 -70.4 -35.9 -0.2 -0.9 -121.6

reclassifications 24.7 53.2 23.9 -13.8 -88.5 -0.5

Status Dec. 31, 2014 1,070.6 2,092.6 762.9 15.3 98.8 4,040.2

DEPRECIATION


Exchange rate differences 11.6 43.4 12.0 0.0 0.0 67.0

additions – systematic 30.2 95.7 60.0 0.0 0.0 185.9

impairment losses 1.8 5.5 0.2 0.0 0.0 7.5


disposals -8.7 -61.9 -33.5 0.0 0.0 -104.1

reclassifications 0.1 0.8 -0.8 0.0 0.0 0.1

Status Dec. 31, 2014 518.2 1,486.1 569.1 0.0 0.3 2,573.7

Book value Dec. 31, 2014 552.4 606.5 193.8 15.3 98.5 1,466.5Book value dec. 31, 2013 521.5 591.8 179.7 9.4 85.4 1,387.8

In the financial year under review, Freudenberg received government grants for tangible assets in the amount of €1.2 million (previous year: €0.1 million). The grants mainly concerned investment promotion and were netted against acquisition costs.

116

Leased assets

Leased assets are recognized under non-current assets at the following book values:

[€ million] Dec. 31, 2013 Dec. 31, 2014

intangible assets 0.3 0.1

land and buildings 3.7 4.3

machinery and equipment 0.9 1.1

Other fixtures, fittings and office equipment 2.5 1.1

Book value of leased assets recognized 7.4 6.6

The finance lease contracts were concluded at arm’s-length business conditions. Such leases normally include favorable purchase options. The lease contracts do not provide for any contingent rent payments or significant restrictions.

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Finance leasesminimum lease payments 2.5 1.4 1.9 5.8 1.4 1.3 4.8 7.5

discount 0.1 0.1 0.3 0.5 0.0 0.1 1.1 1.2

present value 2.4 1.3 1.6 5.3 1.4 1.2 3.7 6.3

Operating leases

minimum lease payments 61.7 92.8 37.3 191.8 63.7 110.9 42.7 217.3

Lease payments totaling €85.9 million (previous year: €81.0 million) under operating leases were recognized with an effect on net income.

117


(3) Investment properties

Details of land and buildings held by the Freudenberg Group as investment properties are shown in the table below:

[€ million] Third-party use Rent income

2013 100 % 3.9

2014 100 % 4.0

There were no significant direct operating expenses in the year under review or in the previous year.

There are no restrictions on the saleability of investment properties. Freudenberg is not under any contractual obligations to purchase, build or develop investment properties. Furthermore, Freudenberg is not under any contractual obligations to repair or maintain such investment properties going beyond its statutory obligations.

118

Changes in investment properties from January 1 to December 31, 2013:

[€ million]


Status Jan. 1, 2013 48.2Changes in consolidated group 0.0

Exchange rate differences 0.0

additions 0.0

write-ups/revaluations 0.0

disposals 0.0

reclassifications 0.0

Status Dec. 31, 2013 48.2

DEPRECIATION



additions – systematic 1.5

impairment losses 0.0


disposals 0.0


Status Dec. 31, 2013 28.9

Book value Dec. 31, 2013 19.3Book value dec. 31, 2012 20.8

119


Changes in investment properties from January 1 to December 31, 2014:

[€ million]




additions 2.8


disposals 0.0


Status Dec. 31, 2014 51.0

DEPRECIATION



additions – systematic 1.5

impairment losses 0.0


disposals 0.0


Status Dec. 31, 2014 30.4

Book value Dec. 31, 2014 20.6Book value dec. 31, 2013 19.3

The fair value of investment properties was €43.8 million (previous year: €38.2 million) and was calculated on the basis of discounted cash flows (level 3).

120

(4) Investments in joint ventures

The joint venture agreements with Trelleborg AB, Trelleborg, Sweden, and NOK Corporation, Tokyo, Japan, are of major importance for Freudenberg.

The purpose of the TrelleborgVibracoustic joint venture with Trelleborg AB is to strengthen activities in the automotive busi-ness. Trelleborg AB and Freudenberg SE each hold a stake of 50 percent.

NOK-Freudenberg Group China is a 50:50 joint venture between the Japanese NOK Corporation and Freudenberg SE with the objective of serving the high-growth Chinese market with locally-produced and imported sealing and vibration control products.

The summarized financial information of the joint venture parent companies is set out below:

[€ million]

TrelleborgVibracoustic GmbH, Darmstadt, Germany

NOK-Freudenberg Asia Holding Co. Pte. Ltd.,

Singapore Dec. 31, 2013 Dec. 31, 2014 Dec. 31, 2013 Dec. 31, 2014

Current assets 568.9 604.7 135.6 160.1

Of which: cash and cash equivalents 168.4 193.5 48.3 64.2

Non-current assets 640.1 707.2 118.8 134.2

Current liabilities 593.2 595.9 63.0 63.2

Of which: current financial liabilities 241.6 192.8 3.5 3.8

Non-current liabilities 150.3 174.0 0.8 0.0

Of which: non-current financial liabilities 3.7 1.9 0.0 0.0

Non-controlling interests 40.2 35.3 0.0 0.0

Equity without non-controlling interests 425.3 506.7 190.6 231.1freudenberg share 50.0 % 50.0 % 50.0 % 50.0 %

pro-rata share in equity 212.6 253.4 95.3 115.6

disproportionate capital measures of the shareholders 9.8 7.2 0.0 0.0

At-equity measurement 222.4 260.6 95.3 115.6

2013 2014 2013 2014

Sales 1,679.5 1,779.3 260.3 277.7

profit or loss from continuing operations 40.4 73.5 29.4 36.1

Other comprehensive income -12.9 32.5 -3.9 16.7

Total comprehensive income 27.5 106.0 25.5 52.8Of which: depreciation and amortization -67.1 -72.8 -12.1 -12.2

Of which: interest income 1.1 3.5 0.3 0.5

Of which: interest expenses -8.8 -7.6 -0.5 -0.6

Of which: income tax expense or income -28.2 -25.9 -10.8 -11.9

121


Freudenberg received dividends in the amount of €14.3 million (previous year: €0.0 million) from TrelleborgVibracoustic GmbH and €7.8 million (previous year: €1.9 million) from NOK-Freudenberg Asia Holding Co. Pte. Ltd.

The total carrying amount of interests in all individual joint ventures which are not material was €36.9 million (previous year: €30.6 million).

The pro-rata share of the profit or loss from continuing operations of all individual joint ventures classed as not material was €0.8 million (previous year: €0.2 million) and the pro-rata share in other comprehensive income was €- 0.1 million (previous year: €-3.7 million). The pro-rata share in total comprehensive income was therefore €0.7 million (previous year: €-3.5 million).

(5) Investments in associated companies

The most important non-controlling interests of Freudenberg were those in the Japanese companies NOK Corporation and Japan Vilene Company Ltd., both with registered offices in Tokyo, Japan.

The NOK Group manufactures and supplies sealing products, flexible printed circuits, roll products for office equipment and further products such as specialty lubricants.

Japan Vilene Company Ltd. manufactures nonwovens for the clothing, automotive, electrical and consumer goods industries as well as for applications in the medical sector and filtration.

122

These two significant associated companies published the following figures in their consolidated interim financial state-ments as at December 31 in each case:

[€ million] NOK Corporation Japan Vilene Company Ltd. Dec. 31, 2013 Dec. 31, 2014 Dec. 31, 2013 Dec. 31, 2014

Current assets 2,060.0 2,584.7 181.9 191.2

Non-current assets 2,332.8 2,619.4 201.9 216.0

Current liabilities 1,306.6 1,437.1 83.8 96.9

Non-current liabilities 553.3 714.0 61.3 42.3

Treasury shares -4.8 -2.9 0.0 -0.1

Non-controlling interests 208.9 271.2 0.0 0.0

Equity without treasury shares and non-controlling interests 2,328.8 2,784.7 238.7 268.1freudenberg share 25.10 % 25.10 % 33.40 % 33.40 %

pro-rata share in equity 584.5 699.0 79.7 89.6

goodwill 7.1 7.1 0.6 0.6

disproportionate capital measures of the shareholders 0.0 0.0 -15.5 -15.5

At-equity measurement 591.6 706.1 64.8 74.7 2013 2014 2013 2014

Sales 4,423.4 4,779.6 399.0 399.9

profit or loss from continuing operations 218.5 355.5 25.6 19.2

Other comprehensive income 407.4 319.4 26.3 12.6

Total comprehensive income 625.9 674.9 51.9 31.8

The decrease in the other comprehensive income of the two companies is due to exchange differences on translating financial statements in foreign currencies and to effects from changes in the value of securities available for sale.

Freudenberg received dividends in the amount of €7.6 million (previous year: €6.5 million) from NOK Corporation and €2.6 million (previous year: €1.7 million) from Japan Vilene Company Ltd.

As at December 31, 2014, the market values of the shareholdings were €924.5 million (¥134,283.7 million) (previous year: €517.2 million; ¥74,746.9 million) for NOK Corporation and €74.8 million (¥10,870.8 million) (previous year: €68.3 million; ¥9,871.9 million) for Japan Vilene Company Ltd.

The total carrying amount of interests in all associated companies classed as not material was €39.2 million (previous year: €35.2 million).

The pro-rata share in the profit or loss from continuing operations of all individual associated companies classed as not material was €7.0 million (previous year: €7.8 million) and the pro-rata share in the other comprehensive income of these companies was €1.9 million (previous year: €-3.3 million). The pro-rata share in the total comprehensive income was therefore €8.9 million (previous year: €4.5 million).

123


(6) Inventories

Inventories break down as follows:

[€ million] Dec. 31, 2013 Dec. 31, 2014

raw materials and consumables 202.4 229.1

work in progress 104.3 116.9

finished goods and merchandise 389.5 447.6

payments made on account 1.5 4.9

697.7 798.5

Inventories rose by €100.8 million compared with the previous year, chiefly as a result of adaptation to market demand. After eliminating the effects of changes in the consolidated group and exchange rate effects, inventories rose by about 9 percent.

Write-downs of inventories totaling €15.9 million (previous year: €22.6 million) were recognized as expenses in the reporting year.

Write-ups totaling €10.9 million (previous year: €11.3 million) were effected on inventories as the reason for the impairment losses concerned no longer existed.

The inventories shown are not subject to any significant restrictions on title or disposal.

(7) Receivables

[€ million] Res

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Trade receivables 846.3 0.0 846.3 929.5 0.0 929.5

Other assets 134.2 53.0 187.2 142.4 28.6 171.0

980.5 53.0 1,033.5 1,071.9 28.6 1,100.5

After adjustment for effects resulting from changes in the consolidated group and exchange rate effects, trade receivables rose by about 5 percent.

124

The other assets include pension plan assets in excess of the corresponding pension obligations in the amount of €1.7 million (previous year €25.4 million).

The other assets also include other tax receivables in the amount of €39.8 million (previous year: €38.0 million) and liability insurance claims totaling €5.3 million (previous year: €6.5 million).

The claims for reimbursement in connection with recognized provisions, which are included in other assets, are shown in the other provisions under note (12).

(8) Securities and cash at bank and in hand

[€ million] Dec. 31, 2013 Dec. 31, 2014

Securities 153.8 319.5

Checks and cash in hand 5.8 6.0

Cash at banks 513.3 592.2

672.9 917.7

The securities mainly concern commercial papers issued by industrial companies.

(9) Non-current assets held for sale and disposal groups

In the 2014 financial year, there were no non-current assets held for sale or disposal groups. The land with a book value of €7.5 million disclosed in the previous year was disposed of in the 2014 financial year.

125


(10) Equity

The subscribed capital in the amount of €450.0 million (previous year: €450.0 million) consists of 450 million no-par-value registered shares. The sole shareholder of Freudenberg SE is Freudenberg & Co. Kommanditgesellschaft, Weinheim (hereafter: Freudenberg & Co. KG).

The reserves break down as follows:

[€ million] Dec. 31, 2013 Dec. 31, 2014

Capital reserves 50.2 50.2

retained earnings 1,951.8 2,344.4

2,002.0 2,394.6

The capital reserves consist of contributions in kind made by the shareholder.

The retained earnings include net income earned by the Group in the past and not distributed as well as reserves of companies included in the consolidated financial statements including expenses and income recorded without effect on net income.

The profit distributed in the reporting year amounted to €90.5 million (previous year: €73.3 million). This corresponded to a profit per share of €0.20 (previous year: €0.16).

The Board of Management proposes that the 2014 net retained profit in the amount of €896.7 million (previous year: €713.7 million) should be carried forward to new account.

In the reporting year, income (+) and expenses (-) which had previously been recorded without an effect on net income with respect to the following components of other comprehensive income were reclassified to the statement of profit or loss:

[€ million] Dec. 31, 2013 Dec. 31, 2014

Exchange rate differences -1.7 -0.3

Securities -0.2 0.0

derivative financial instruments -5.9 -0.3

-7.8 -0.6

In the 2014 financial year, tax effects (income (+)/expenses (-)) recorded without effect on net income are attributable to the various items of other comprehensive income as follows:

[€ million] Dec. 31, 2013 Dec. 31, 2014

remeasurement of defined benefit plans -4.2 40.0

derivative financial instruments -1.7 0.1

Securities and other items 0.7 -7.7

-5.2 32.4

126

Non-controlling interests

The rise in non-controlling interests in the equity of consolidated affiliated companies from €322.9 million to €366.4 million is mainly the result of the allocation of profit for the year and exchange rate differences. Dividend payments had an offsetting effect.

In the case of the following affiliated company, the consolidated financial statements include significant non-controlling interests in the amount of 25 percent of the shares:

[€ million]

Freudenberg-NOK General Partnership, Plymouth, USA Dec. 31, 2013 Dec. 31, 2014

profit (+)/loss (-) attributable to non-controlling interests 10.5 13.4

Total amount of non-controlling interests 90.7 109.1

This affiliated company is included in the consolidated financial statements with the following values:

[€ million]

Freudenberg-NOK General Partnership Dec. 31, 2013 Dec. 31, 2014

Current assets 293.7 348.5

Non-current assets 193.6 232.3

Current liabilities 80.6 90.9

Non-current liabilities 61.5 64.1

2013 2014Sales 496.9 529.2

profit (+)/loss (-) 36.6 38.6

Total comprehensive income 24.7 85.8

Freudenberg-NOK General Partnership paid dividends in the amount of €5.1 million (previous year: €1.5 million) to the holder of the non-controlling interests.

Other non-controlling interests especially concern the EagleBurgmann Business Group, where they arise as a result of the contractual agreements concerning control.

127


(11) Provisions for pensions and similar obligations

The provisions for pensions mainly concern German, US and British companies. This item includes obligations arising from current pensions and future pension entitlements.

The Freudenberg Group pension scheme consists of both defined contribution and defined benefit pension plans. Defined benefit plans include both fixed salary and final salary plans.

The pension obligations of German companies are commitments financed by provisions. These obligations are subject to the rules of the pension plan concerned and the applicable statutory provisions. The plans include benefit commitments dependent on service periods and on salaries and provide for disability benefits and benefits for surviving dependents as well as for retirement benefits.

The pension obligations of US and British companies are mainly funded commitments, financed chiefly by employers’ contributions. These plans are managed by third party pension funds. The representatives of the pension funds are legally obliged to act in the interest of all participants in the plan. In cooperation with investment advisers, they are responsible for the development and regular review of investment strategies for the plan assets. Commitments based on age and years of service include both retirement benefits and certain forms of survivor benefits. Most US and British plans are frozen and future entitlements can no longer be earned by plan participants.

Apart from pension obligations, these provisions also include obligations similar to pensions, such as amounts paid to employees upon the termination of their employment which do not constitute termination benefits. These benefits vary in accordance with the legal, tax and economic conditions in the countries concerned.

All defined benefit schemes of the Freudenberg Group are subject to typical actuarial risks, especially investment and interest risks.

Current service cost and net interest on the net defined benefit liability are disclosed in the statement of profit or loss under personnel expenses in the relevant functional areas.

In the case of the defined contribution plans, there are no additional obligations apart from the payment of contributions. Contributions paid are expensed under personnel expenses and amounted to €65.1 million in 2014 (previous year: €63.9 million).

128

The defined benefit obligations were calculated on actuarial principles by the projected unit credit method. For the German companies, the calculation was based on the following actuarial assumptions:

Dec. 31, 2013 Dec. 31, 2014

discount rate 3.30 % 2.20 %

pension trend 2.00 % 2.00 %

As a result of the pension plan regulations, the assumed trend in salaries and wages only has an effect on the value of pension obligations in exceptional cases.

In the case of the foreign companies, the actuarial assumptions used for the calculations were within the following ranges:

Dec. 31, 2013 Dec. 31, 2014

discount rate 1.7 % – 5.1 % 1.2 % – 4.2 %

Salary trend 0.0 % – 2.9 % 0.0 % – 4.0 %

pension trend 0.0 % – 3.3 % 0.0 % – 3.0 %

Net obligations are shown in the following items of the statement of financial position:

[€ million] Dec. 31, 2013 Dec. 31, 2014

provisions for pensions and similar obligations 465.9 620.0

Other assets 25.4 1.7

Net obligations 440.5 618.3

Net obligations are calculated as follows:

[€ million] Dec. 31, 2013 Dec. 31, 2014

present value of funded obligations 271.3 359.3

fair value of plan assets -281.4 -327.0

Surplus (-)/deficit (+) -10.1 32.3present value of unfunded obligations 450.6 586.0

Net obligations 440.5 618.3

129


In the year under review, defined benefit obligations developed as follows:

[€ million] 2013 2014

Present value of defined benefit obligations, Jan. 1 718.9 721.9Current service cost 13.4 15.9

interest cost 25.2 29.1

gains (-) and losses (+) from remeasurement of defined benefit obligations -5.1 150.8

gains (-) and losses (+) on settlements 0.0 -3.1

past service cost 2.6 -0.2

Contributions by plan participants 0.0 0.7

liabilities extinguished on settlements 0.0 -11.4

Benefits paid -30.3 -36.1

reclassifications 15.7 28.1

Other changes -8.3 23.5

Exchange rate differences -10.2 26.1

Present value of defined benefit obligations, Dec. 31 721.9 945.3

In the year under review, plan assets developed as follows:

[€ million] 2013 2014

Fair value of plan assets, Jan. 1 271.9 281.4interest income 11.0 14.6

gains (-) and losses (+) from remeasurement of plan assets 7.6 0.3

Contributions by employer 11.0 10.6

Contributions by plan participants 0.0 0.7

liabilities extinguished on settlements 0.0 -11.4

Benefits paid -12.3 -15.7

reclassifications 0.0 1.1

Other changes 0.5 19.3


Fair value of plan assets, Dec. 31 281.4 327.0

The fair value of plan assets is distributed as follows:

Plan assets with quoted prices in active markets:

[€ million] Dec. 31, 2013 Dec. 31, 2014

Equity instruments 133.7 123.1

interest-bearing securities 133.3 90.4


281.1 225.9

130

Plan assets without quoted prices in active markets:

[€ million] Dec. 31, 2013 Dec. 31, 2014


0.3 101.1

As part of the optimization of the investment portfolio, Freudenberg acquired insurance contracts in the course of the reporting year which were measured at the fair value of the obligation under the corresponding benefit plans. The loss resulting from this acquisition, which is calculated as the difference between the acquisition cost of the insurance contracts and the fair value of the obligation, was recognized in other comprehensive income.

In the reporting year, gains and losses from the remeasurement of the defined benefit obligations and plan assets developed as follows:

[€ million] 2013 2014

Gains (+) and losses (-) from remeasurement, Jan. 1 -201.3 -188.0gains (+) and losses (-) from remeasurement of defined benefit obligations 5.1 -150.8

Of which as a result of changed financial assumptions 5.0 -126.7

Of which as a result of changed demographic assumptions -1.6 -9.4

Of which as a result of experience-based adjustments 1.7 -14.7

gains (+) and losses (-) from remeasurement of plan assets 7.6 0.3

reclassifications/other changes -2.0 0.2

Exchange rate differences 2.6 -5.9

Gains (+) and losses (-) from remeasurement, Dec. 31 -188.0 -344.2

In 2015, contributions in the amount of €7.1 million (previous year: €9.9 million) will probably be made to plan assets.

The weighted average duration of defined benefit obligations as at the end of the reporting year was 16.1 years (previous year: 15.5 years).

The possible changes in the defined benefit obligation as a result of changes in the discount rate, a major actuarial assumption, were calculated on the basis of the projected unit credit method. If the discount rate as at the statement of financial position date had been 0.25 percentage points lower, the present value of defined benefit obligations as at the statement of financial position date would have been €39.9 million (previous year: €29.0 million) higher. If the discount rate as at the statement of financial position date had been 1.00 percentage points higher, the present value of defined benefit obligations as at the statement of financial position date would have been €132.7 million (previous year: €96.7 million) lower.

131


(12) Other provisions

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Status Jan. 1, 2014 249.4 46.7 23.7 125.0 444.8increases 174.6 28.3 26.9 137.3 367.1

unwinding of discount and effect of change in discount rate 0.2 0.0 0.0 -0.2 0.0

amounts used -141.1 -14.0 -19.9 -62.1 -237.1

reversal -20.0 -11.0 -2.5 -21.3 -54.8

Exchange rate differences 6.3 1.0 1.3 3.6 12.2

Other changes -25.1 0.3 0.2 -0.9 -25.5

Status Dec. 31, 2014 244.3 51.3 29.7 181.4 506.7 Of which long-term 45.3 2.8 0.6 21.0 69.7Of which short-term 199.0 48.5 29.1 160.4 437.0

reimbursement claims connected with provisions and shown in the statement of financial position under other assets 1.3 0.0 0.0 1.8 3.1

The provisions for personnel obligations mainly include other long- and short-term employee benefits, provisions for vacation not taken, social security contributions and long service premiums.

The miscellaneous provisions include, inter alia, provisions for restructuring, litigation risks, advertising and environmental protection.

132

(13) Liabilities

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liabilities to banks(= financial debt) 48.8 106.4 90.3 245.5 56.6 107.4 70.3 234.3

Other financial debt,including leasing 6.8 2.2 1.6 10.6 6.0 1.3 4.3 11.6

Shareholder’s loans 310.0 225.0 75.0 610.0 340.0 225.0 75.0 640.0

accounts offreudenberg & Co. kg partners 153.5 172.4 0.0 325.9 156.3 194.2 0.0 350.5

Financial debt 519.1 506.0 166.9 1,192.0 558.9 527.9 149.6 1,236.4Trade payables 468.8 0.0 0.0 468.8 524.1 0.0 0.0 524.1advance paymentsreceived on orders 15.8 0.0 0.0 15.8 14.9 0.0 0.0 14.9

miscellaneous liabilities 283.2 62.1 1.3 346.6 296.9 77.9 0.4 375.2

Other liabilities 299.0 62.1 1.3 362.4 311.8 77.9 0.4 390.1

1,286.9 568.1 168.2 2,023.2 1,394.8 605.8 150.0 2,150.6

The average interest rate on long-term liabilities to banks is 1.93 percent (previous year: 1.83 percent).

133


The interest payable on the certificates of indebtedness (“Schuldscheindarlehen“) included in the liabilities to banks is based on variable and fixed components. Cash flows for variable and fixed interest and repayment of principal will probably be as follows from 2015 to 2023:

[€ million] Book value Cash flows

Dec. 31, 2013 2014 2015 2016 - 2023Certificates of indebtedness 170.0 3.3 3.4 188.4

Dec. 31, 2014 2015 2016 2017 - 2023Certificates of indebtedness 170.0 3.1 3.1 179.9

In the reporting year, other financial debt includes loans granted by third parties, on the long-term component of which interest is payable at an average rate of 3.12 percent (previous year: 2.20 percent). This item also includes liabilities in connection with finance leasing, with an average interest rate of 3.57 percent (previous year: 4.11 percent). Further details are given in the information on finance leases under note (2).

Interest on shareholder’s loans is payable at a rate between 1.18 and 4.47 percent (previous year: between 1.62 and 3.87 percent).

As in the previous year, the interest rates applicable to accounts of Freudenberg & Co. KG Partners vary between 1.00 and 5.50 percent.

Miscellaneous liabilities include liabilities for tooling cost contributions, other taxes, outstanding wages and salaries, holiday pay and special bonuses, as well as liabilities in connection with social security.

134

Contingent liabilities and other financial obligations

[€ million] Dec. 31, 2013 Dec. 31, 2014

Contingent liabilities

Bills of exchange 5.2 7.2

guarantees 3.5 1.2

miscellaneous contingent liabilities 5.8 2.7

14.5 11.1

Other financial commitments

Commitments arising from leasing contracts* 190.0 206.1

purchase commitments in connection with intangible assets 0.2 0.6

purchase commitments in connection with tangible assets 20.3 32.1

purchase commitments in connection with the delivery of goods and services 70.3 65.9

miscellaneous commitments 5.1 4.2

285.9 308.9

* See also the explanatory remarks on leased assets in note (2) to the Consolidated financial Statements.

In addition, the following contingent liabilities and other financial commitments concern joint ventures:

[€ million] Dec. 31, 2013 Dec. 31, 2014

Contingent liabilities

guarantees 2.0 2.0

warranties 0.2 0.2

2.2 2.2

Other financial commitments

Commitments arising from leasing contracts* 29.0 31.0

purchase commitments in connection with intangible assets 0.2 0.2

purchase commitments in connection with tangible assets 6.0 4.3

purchase commitments in connection with the delivery of goods and services 6.1 5.7

miscellaneous commitments 0.0 0.1

41.3 41.3

* See also the explanatory remarks on leased assets in note (2) to the Consolidated financial Statements.

135


Additional information on financial instruments

The term “financial instrument” is used to refer to any contract that gives rise to both a financial asset of one enterprise and a financial liability or equity instrument of another enterprise. A distinction is made between primary and derivative financial instruments. Primary financial instruments in the case of the purchase or sale of assets are recognized at the settle-ment date, i.e. the delivery of the asset concerned. Derivative financial instruments are recognized as of the trade date. In the event of loss of control over the contractually agreed rights to a financial asset, the asset concerned is derecognized. Financial liabilities are derecognized on the statement of financial position when the commitment is discharged or can-celled, or expires.

Under IAS 39, financial instruments are divided into the following categories:

Loans and receivables This category includes financial assets with fixed or determinable payments that are not quoted in an active market.

Held-to-maturity investments Held-to-maturity investments are financial assets with fixed or determinable payments and fixed maturity that an entity

has the positive intention and ability to hold to maturity.

Available-for-sale financial assets This category includes all the other financial assets which cannot be allocated to any of the categories mentioned

above.

Financial assets or financial liabilities at fair value through profit or loss. These include: – financial assets or financial liabilities held for trading and – financial assets or financial liabilities designated by the entity as at fair value through profit or loss upon

initial recognition.

The Freudenberg Group does not hold any financial assets or financial liabilities for trading purposes.

Freudenberg did not avail itself of the fair value option under IAS 39 under which it is possible to measure any financial asset or financial liability at fair value through profit or loss.

136

Primary financial instruments

Primary financial instruments are assigned to categories on the basis of the relevant items in the statement of financial position. The allocation to the categories unambiguously defines the accounting and measurement of the instruments.

Loans, receivables and liabilities are recognized at amortized cost. Available-for-sale financial assets are recognized at fair value without effect on net income except where the fair value of such assets cannot be reliably determined. In such cases, these assets are recognized at acquisition costs. Any impairments are shown in the statement of profit or loss with an effect on net income.

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ASSETS

Other financial assets 11.9 13.2 81.1 106.2




1,623.0 13.2 81.1 1,717.3

LIABILITIES

financial debts 1,192.0 1,192.0


Other liabilities 161.2 161.2

1,822.0 1,822.0

137


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ASSETS

Other financial assets 10.0 13.4 94.7 118.1




1,951.8 13.4 94.7 2,059.9

LIABILITIES

financial debts 1,236.4 1,236.4


Other liabilities 178.5 178.5

1,939.0 1,939.0

The Freudenberg Group currently does not hold any held-to-maturity investments.

The fair values of financial assets and liabilities recognized at amortized cost are approximately equal to their book values.

The fair values of financial instruments held by the Freudenberg Group and measured at fair value were determined on the basis of active markets for identical assets (level 1 input factors) at €13.4 million (previous year: €13.2 million).

138

Credit risks

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Trade receivables 846.3 685.7 119.9 16.8 4.7 5.0 1.9

Other assets 91.9 83.3 1.8 0.2 0.1 1.1 4.1

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Trade receivables 929.5 748.0 133.0 24.2 11.4 4.1 2.1

Other assets 94.6 87.9 2.2 0.1 0.4 1.5 0.8

In the case of trade receivables and other assets for which no impairments have been recognized and which are not past due, no defaults are expected. The major part of trade receivables (normally between 70 and 90 percent of each receivable) is covered by credit insurance. Otherwise, the book value represents the maximum credit risk associated with each receivable.

Thereof: not impaired as at Dec. 31, 2013 and past due within the following times

Thereof: not impaired as at Dec. 31, 2014 and past due within the following times

139


Impairment losses to trade receivables developed as follows:

[€ million] 2013 2014

Impairment losses as at Jan. 1 20.7 22.0Changes in consolidated group 1.2 1.9


additions (expenses for impairments) 8.3 8.2

amounts used -3.0 -4.3

reversals (write-ups) -4.7 -5.7

Impairment losses as at Dec. 31 22.0 23.0

Impairment losses to other assets developed as follows:

[€ million] 2013 2014

Impairment losses as at Jan. 1 1.9 1.9additions (expenses for impairments) 0.1 0.9

amounts used -0.1 0.0

reversals (write-ups) 0.0 -0.4

Impairment losses as at Dec. 31 1.9 2.4

In the year under review, impairment losses to receivables totaling €6.1 million (previous year: €4.7 million) were reversed as the reason for the impairment no longer applied and impairment losses in the amount of €9.1 million (previous year: €8.4 million) were set up. These impairment losses were recognized where payments were no longer expected or no longer expected in full.

140

Derivative financial instruments

Freudenberg SE is responsible for all the financing activities of the Freudenberg Group and also operates the cash management system for the entire Freudenberg group of companies. Group companies obtain the financing they require via cash pools or loans provided by internal financing companies or, in some countries, in the form of bank loans guaran-teed by Freudenberg SE.

The limits of action, responsibilities and control procedures in connection with derivative financial instruments are laid down in a binding form in internal directives for Group companies. The Freudenberg Group does not expose itself to additional financial risks through speculation with derivative financial instruments but uses such instruments only for hedging, and therefore reducing, risks in connection with underlying transactions. Future transactions are only hedged if there is a high probability of occurrence.

Freudenberg SE uses derivative financial instruments for hedging interest rate and foreign exchange risks.

Fair values are determined on the basis of quoted prices, accepted market information systems or discounted cash flows.

Derivative financial instruments for hedging recognized assets or liabilities (fair value hedges) are shown in the statement of financial position at fair value. Changes in the fair value are recorded in the statement of profit or loss. Financial instruments for hedging future cash flows (cash flow hedges) are also included in the statement of financial position at fair value, but changes in the fair value of such instruments are recognized without effect on net income under retained earnings, taking into consideration the applicable income taxes. Such changes are recognized in the statement of profit or loss when the underlying transactions concerned are effected. Ineffective portions of hedge transactions are always recognized in the statement of profit or loss.

As at December 31, 2014, there were no derivatives entered into for the purpose of interest rate hedging. In the previous year, interest rate swaps with a negative fair value of €0.1 million had been recognized. The face value of these derivatives was €0.7 million.

As at December 31, 2014, the face value of currency futures concluded for hedging foreign exchange risks and still open was €18.8 million (previous year: €14.4 million). The positive fair value of these instruments as at December 31, 2014 was €1.7 million (previous year: €0.2 million).

Of the total volume of derivatives, 0.5 percent (previous year: 4.6 percent) had a term of more than one year.

141


The following fair values of derivative financial instruments are included in the other assets and other liabilities respectively:

[€ million] Dec. 31, 2013 Dec. 31, 2014

Other assets Currency futures 0.2 1.8

Other liabilities

Currency futures 0.0 0.1

interest rate swaps 0.1 0.0

In the reporting year, value changes in the case of currency futures (cash flow hedges) are only recognized in equity with an insignificant value. In the previous year, value changes (gains) in the case of interestrate swaps and currency futures with a value of €0.4 million were recognized in equity.

The fair values of currency futures were determined on the basis of the quoted currency future prices for similar financial instruments (level 2).

Risks in connection with financial instruments

The Freudenberg Group is exposed to risks resulting from changes in exchange rates and interest rates and uses con-ventional derivative instruments such as interest rate swaps, caps and currency futures to hedge risks in connection with business operations and financing to a limited extent. The use of these instruments is governed by Freudenberg Group directives within the risk management system which lay down limits on the basis of the value of the underlying transactions, define approval procedures, exclude the use of derivative instruments for speculative purposes, minimize credit risks and govern internal reporting and the separation of functions. Compliance with these directives and the proper handling and measurement of transactions are regularly verified, observing the principle of separation of functions. Furthermore, risk management for financial instruments is integrated in the Freudenberg Group risk management system.

The risks which are hedged are chiefly as follows:

Interest rate risk:

In the case of fixed-interest loans or investments, there is a risk that changes in the market interest rate will affect the market value of the item concerned (market-value risk contingent on interest rates). In contrast, variable interest loans and invest-ments are not subject to this risk as the interest rate is adjusted to reflect changes in the market situation with a very short delay. However, there is a risk with respect to future interest payments as a result of short-term fluctuations in market interest rates (cash flow risk contingent on interest rates).

142

Risks associated with interest rate changes mainly affect long-term items. A fall in long-term interest rates results in a decrease in the fair value shown on the statement of financial position for derivative financial instruments concluded for interest rate hedging.

If market interest rates had been 0.5 percentage points higher or lower, on average, as of December 31, 2014, this would have had only an insignificant impact on net income.

As a general principle, external borrowings are repaid when due. The only interest rate risk related to these borrowings is therefore associated with variable-interest borrowings.

Currency risk:

The primary financial instruments are chiefly held in the functional currency.

Exchange rate differences caused by the conversion of financial statements into the Group currency are not taken into consideration.

If the value of the euro against major currencies (USD, GBP and JPY) had been 10 percent higher as at December 31, 2014, the profit before income taxes would have been €7.5 million (previous year: €5.7 million) lower. If the value of the euro against major currencies (USD, GBP and JPY) had been 10 percent lower as at December 31, 2014, the profit before income taxes would have been €9.2 million (previous year: €6.9 million) higher.

Liquidity risk:

Risks connected with cash flow fluctuations are identified at an early stage by the cash flow planning system already in place. As a result of Freudenberg‘s good rating (Baa1) and the credit lines granted by banks on a binding basis, Freudenberg can access ample sources of funds at all times.

Credit risk:

Specific provisions and individualized generic provisions are recognized to take account of identifiable risks not covered by credit insurance. Otherwise, the book value represents the maximum credit risk.

Freudenberg SE only concludes derivative financial instruments with national and international banks of at least investment grade rating. Credit risks are largely eliminated by distributing hedges between several banks and a policy of applying caps to individual banks.

143


(14) Sales

Sales include revenue from the sale of goods amounting to €5,783.0 million (previous year: €5,461.8 million), services in the amount of €137.8 million (previous year: €129.7 million) and licenses in the amount of €14.9 million (previous year: €13.2 million). Other sales totaled €46.6 million (previous year: €41.4 million).

(15) Cost of sales

Cost of sales indicates the cost of goods and services sold. Apart from individual directly attributable costs, such as personnel expenses and material expenses, overheads, including depreciation/amortization, are also shown under cost of sales.

(16) Research and development expenses

Apart from personnel and material expenses, research and development expenses chiefly include the cost of licenses and patents occurring in the course of development projects.

(17) Other income

Other income mainly includes income from disposals of financial assets, income from secondary business and income from disposals of non-current assets. Following the offsetting of exchange rate losses, the net exchange rate gain was €8.4 million (previous year: net exchange rate loss of €17.0 million).

(18) Other expenses

Among other items, other expenses include losses on disposals of non-current assets and financial assets. Exchange rate losses were set off against exchange rate gains.

(19) Interest and similar expenses

Interest expenses include interest on shareholder’s loans in the amount of €15.6 million (previous year: €15.7 million) and interest payable to the Partners of Freudenberg & Co. KG in the amount of €11.6 million (previous year: €10.1 million).

NOTES TO ThE CONSOlidaTEd STaTEmENT Of prOfiT Or lOSS

144

(20) Income taxes

This item shows German corporation tax (plus solidarity surcharge) and municipal trade taxes and similar taxes on income payable in other countries.

The figure also includes deferred taxes on temporary differences between the tax balance sheets and commercial balance sheets of individual companies, on adjustments to uniform measurement within the Freudenberg Group and on consolidation transactions.

Deferred taxes are calculated at the tax rates applicable in the countries concerned.

Income taxes break down as follows (expense (-)/income (+)):

[€ million] 2013 2014

Current taxes related to the reporting period -114.3 -171.5

Current taxes related to prior periods 1.9 -1.9

deferred taxes 17.9 26.1

-94.5 -147.3

The amount of deferred tax income related to changes in tax rates was €1.1 million (previous year: €0.7 million).

In the reporting year, deferred taxes related to transactions recognized directly under equity resulted in an increase in equity of €32.4 million (previous year: reduction in equity of €5.2 million).

As of December 31, 2014, tax losses carried forward amounted to €278.3 million (previous year: €323.9 million). Defer-red tax assets were recognized in respect of tax losses carried forward totaling €25.0 million (previous year: €27.8 million). Deferred tax assets were not recognized in respect of tax losses carried forward with a total amount of €253.3 million (previous year: €296.1 million) as it is not expected that these losses will be usable.

In the reporting year, tax losses carried forward totaling €8.2 million (previous year: €6.9 million) for which no deferred tax assets had been recognized were used.

145


Deferred taxes concern temporary differences and tax losses carried forward with the following amounts:

[€ million] Def

erre

d ta

xa

sset

s

Dec

. 31,

201

3

Def

erre

d ta

xlia

bili

ties

Dec

. 31,

201

3

Def

erre

d ta

xa

sset

s

Dec

. 31,

201

4

Def

erre

d ta

xlia

bili

ties

Dec

. 31,

201

4

intangible assets 6.4 84.2 7.3 93.4

Tangible assets 6.2 103.2 7.1 100.1

financial assets 1.4 0.0 1.1 0.9

inventories 26.4 0.7 30.0 1.1

receivables 7.0 8.9 8.0 6.4

Other assets 2.6 1.2 4.4 1.3

provisions for pensions and similar obligations 61.6 0.1 97.1 0.0

Other provisions 36.3 0.9 49.9 2.8

liabilities 13.1 1.1 18.3 7.5

Other liabilities 0.4 5.8 0.1 9.4

Tax losses carried forward 6.6 0.0 6.2 0.0

168.0 206.1 229.5 222.9

Offsetting -85.1 -85.1 -109.1 -109.1

Recognized in statement of financial position 82.9 121.0 120.4 113.8

No deferred tax items were set up on temporary differences arising from shareholdings totaling €35.5 million (previous year: €29.6 million) as short-term dividend payments are not expected.

Reconciliation of expected income tax with actual income tax expense

Freudenberg SE and its German subsidiaries are subject to corporation tax (plus solidarity surcharge) and the municipal trade tax on income. Income realized in other countries is taxed at the rates applicable in the countries concerned. The tax rate of 29 percent (previous year: 29 percent) used for calculating the expected tax expense is based on the structure of the Freudenberg Group relevant for taxation. It is calculated as the weighted average of the tax rates for the regions in which the Freudenberg Group realized its main income.

146

[€ million] 2013 2014

profit before income taxes 493.3 625.1

Expected income tax expense (-)/income (+) -143.1 -181.3different tax rates:

in germany 0.7 0.3

in other countries 0.1 0.1

Tax portion of:

Non-taxable income 66.2 58.2

Non-deductible expenses -17.8 -22.4

Current taxes related to prior periods 1.9 -1.9

Tax portion of new tax losses carried forward forwhich no deferred tax assets were recognized -4.3 -5.4

Tax portion of tax losses carried forward and used forwhich no deferred tax assets were recognized 1.3 2.0

Other taxation effects 0.5 3.1

Actual income tax expense -94.5 -147.3Effective tax rate (percent) 19.2 23.6

(21) Profit or loss attributable to non-controlling interests

[€ million] 2013 2014

profit 49.9 53.7

loss -3.5 -3.3

46.4 50.4

(22) Notes to the Consolidated Statement of Cash Flows

Freudenberg recognizes checks, cash in hand, cash at bank and short-term securities with an original term of up to three months as cash and cash equivalents. Cash and cash equivalents include funds with an amount of €2.6 million (previous year: €3.4 million) subject to restrictions on use. The funds subject to restrictions on use by Freudenberg largely concern cash and cash equivalents held by Group companies which can only be used with restrictions as a result of exchange controls.

The cash flow from operating activities takes into account payments for taxes amounting to €141.6 million (previous year: €138.9 million), dividends received from joint ventures totaling €22.4 million (previous year: €5.2 million) and dividends received from associated companies totaling €14.4 million (previous year: €11.1 million) – as well as interest paid of €40.2 million (previous year: €46.4 million) and interest received of €11.0 million (previous year: €8.8 million).

Payments to shareholders and non-controlling interests include dividends paid to the shareholder, to the Partners of Freudenberg & Co. KG and to holders of non-controlling interests in Group companies.

147


Application of Sec. 264 (3), HGB (Handelsgesetzbuch, “German Commercial Code“) and Sec. 264b, HGB

The following German companies of the Freudenberg Group took advantage of the exemption regulations of Sec. 264 (3), HGB, Sec. 264b, HGB:

Burgmann international gmbh, wolfratshausen

Capol gmbh, Elmshorn

Chem-Trend (deutschland) gmbh, maisach/gernlinden

Corteco gmbh, weinheim

CT Beteiligungs-gmbh, munich

dS Beteiligungs-gmbh, weinheim

dS holding-gmbh, weinheim

EagleBurgmann Espey gmbh, moers

EagleBurgmann germany gmbh & Co. kg, wolfratshausen

Externa handels- und Beteiligungsgesellschaft mit beschränkter

haftung, weinheim

fCS-munich gmbh, weinheim

ffT Beteiligungs-gmbh, weinheim

fhp Export gmbh, weinheim

fhp holding gmbh, weinheim

fiT Service gmbh, weinheim

freudenberg Chemical Specialities SE & Co. kg, munich

freudenberg dichtungs- und Schwingungstechnik gmbh, Berlin

freudenberg dS Tooling Center gmbh & Co. kg, weinheim

freudenberg fCCT SE & Co. kg, weinheim

freudenberg filtration Technologies SE & Co. kg, weinheim

freudenberg gygli gmbh, weinheim

freudenberg handels- und Beteiligungs-gmbh, weinheim

freudenberg haushaltsprodukte augsburg gmbh, augsburg

freudenberg home and Cleaning Solutions gmbh, weinheim

freudenberg immobilien management gmbh, weinheim

freudenberg interlining SE & Co. kg, weinheim

freudenberg iT information Services SE & Co. kg, weinheim

freudenberg iT SE & Co. kg, weinheim

furThEr NOTES

freudenberg iT Solution Consulting SE & Co. kg, weinheim

freudenberg mechatronics gmbh & Co. kg, weinheim

freudenberg New Technologies SE & Co. kg, weinheim

freudenberg Oil & gas gmbh, weinheim

freudenberg politex gmbh, weinheim

freudenberg process Seals gmbh & Co. kg, weinheim

freudenberg Schwab gmbh, velten

freudenberg Schwab vibration Control gmbh & Co. kg, velten

freudenberg Sealing Technologies gmbh & Co. kg, weinheim

freudenberg venture Capital gmbh, weinheim

freudenberg vliesstoffe SE & Co. kg, weinheim

fv Beteiligungs-gmbh, weinheim

fv logistik SE & Co. kg, weinheim

fv Service SE & Co. kg, kaiserslautern

fv verwaltungs-SE & Co. kg, weinheim

helix medical Europe gmbh, kaiserslautern

integral accumulator gmbh & Co. kg, weinheim

klüber lubrication deutschland SE & Co. kg, munich

klüber lubrication gmbh, weinheim

klüber lubrication münchen SE & Co. kg, munich

lederer gmbh, Öhringen

merkel freudenberg fluidtechnic gmbh, hamburg

OkS Spezialschmierstoffe gmbh, maisach/gernlinden

rE Coatings holding gmbh, Elmshorn

Seal Trade Eurasburg gmbh, Eurasburg

SurTec deutschland gmbh, Zwingenberg

SurTec international gmbh, Bensheim

vileda gesellschaft mit beschränkter haftung, weinheim

148

Material expenses

[€ million] 2013 2014

raw materials, consumables and merchandise purchased 2,025.4 2,160.8

Services purchased 168.6 193.6

2,194.0 2,354.4

Workforce and personnel expenses

In the year under review, an average of 34,094 (previous year: 33,293) persons were employed in the following functions:

2014 Germany Other countries Totalproduction 5,609 15,030 20,639

Sales 1,836 5,759 7,595

research and development 1,153 872 2,025

administration 1,090 2,745 3,835

9,688 24,406 34,094

Personnel expenses amounted to €1,811.8 million (previous year: €1,727.9 million).

Research and development

In the year under review, research and development activities amounting to €213.7 million (previous year: €193.0 million) were performed. Of this amount, €11.8 million (previous year: €10.9 million) were charged to third parties. The figure includes government grants for research and development projects totaling €2.3 million (previous year: €3.7 million).

149


Related party disclosure

Relations with the parent company Freudenberg & Co. KG, joint ventures, associated companies and other related parties within the scope of normal business activities were as follows:

2013 [€ million] Sa

les

Res

idua

l ter

m

up to

1 y

ear

Res

idua

l ter

m

mo

re th

an

1

yea

r

Dec

. 31

Res

idua

l ter

m

up to

1 y

ear

Res

idua

l ter

m

mo

re th

an

1

yea

r

Dec

. 31

parent company 4.5 1.2 0.0 1.2 386.1 300.0 686.1

Joint ventures 68.0 29.8 0.0 29.8 8.5 0.0 8.5

associated companies 19.7 4.4 0.0 4.4 11.8 0.0 11.8

Other related parties 3.6 1.8 0.0 1.8 26.5 0.0 26.5

95.8 37.2 0.0 37.2 432.9 300.0 732.9

2014 [€ million] Sa

les

Res

idua

l ter

m

up to

1 y

ear

Res

idua

l ter

m

mo

re th

an

1

yea

r

Dec

. 31

Res

idua

l ter

m

up to

1 y

ear

Res

idua

l ter

m

mo

re th

an

1

yea

r

Dec

. 31

parent company 5.6 1.3 0.0 1.3 416.5 300.0 716.5

Joint ventures 68.3 38.5 0.0 38.5 4.5 0.0 4.5

associated companies 21.2 4.7 0.0 4.7 15.9 0.0 15.9

Other related parties 4.1 2.6 0.0 2.6 28.9 0.0 28.9

99.2 47.1 0.0 47.1 465.8 300.0 765.8

The total remuneration of members of the Board of Management amounted to €9.7 million (previous year: €7.7 million).

The total remuneration of former members of the Board of Management was €2.6 million (previous year: €8.5 million). An amount of €42.7 million (previous year: €25.6 million) was assigned to provisions for pension obligations to former members of the Board of Management.

The members of the Supervisory Board and Board of Management of Freudenberg SE are listed under “Company Boards“.

Receivables Payables

Receivables Payables

150

Fees of the Auditor

The auditor, Ernst & Young GmbH Wirtschaftsprüfungsgesellschaft, performed the following services in the 2014 financial year:

[€ million] 2014

auditing services 1.6

Tax advisory services 0.2

Other services 0.4

Fees of the auditor 2.2

Major events after the date of the statement of financial position

Up to March 26, 2015 (the date when the annual report was approved for publication by the Supervisory Board), there were no events of major significance for the net assets, financial position and results of operations of the Freudenberg Group.

Weinheim, March 26, 2015

Freudenberg SEThe Board of Management

151

Financial Report – Notes to the Consolidated Financial StatementsShareholdings

No. Company Country Share of capital

[%]

freudenberg SE, weinheim germany –

I. Affiliated companies

Production companies, Germany

1 Capol gmbh, Elmshorn germany 100.00

2 Chem-Trend (deutschland) gmbh, maisach/gernlinden germany 100.00

3 EagleBurgmann Espey gmbh, moers germany 75.00

4 EagleBurgmann germany gmbh & Co. kg, wolfratshausen germany 75.00

5 freudenberg dS Tooling Center gmbh & Co. kg, weinheim germany 100.00

6 freudenberg filtration Technologies SE & Co. kg, weinheim germany 100.00

7 freudenberg haushaltsprodukte augsburg gmbh, augsburg germany 100.00

8 freudenberg interlining SE & Co. kg, weinheim germany 100.00

9 freudenberg Schwab vibration Control gmbh & Co. kg, velten germany 100.00

10 freudenberg Sealing Technologies gmbh & Co. kg, weinheim germany 100.00

11 freudenberg vliesstoffe SE & Co. kg, weinheim germany 100.00

12 helix medical Europe gmbh, kaiserslautern germany 100.00

13 integral accumulator gmbh & Co. kg, weinheim germany 75.00

14 klüber lubrication münchen SE & Co. kg, munich germany 100.00

15 lederer gmbh, Öhringen germany 100.00

16 merkel freudenberg fluidtechnic gmbh, hamburg germany 100.00

17 OkS Spezialschmierstoffe gmbh, maisach/gernlinden germany 100.00

18 pTfE Compounds germany gmbh, Biere germany 90.00

19 SurTec deutschland gmbh, Zwingenberg germany 100.00

Production companies, other countries

20 freudenberg S.a. Telas sin Tejer, villa Zagala argentina 100.00

21 klüber lubrication argentina S.a., Buenos aires argentina 100.00

22 EagleBurgmann australasia pty. ltd., ingleburn australia 25.00

23 freudenberg filtration Technologies (aust) pty. ltd., Braeside australia 100.00

24 klüber lubrication Benelux S.a./N.v., dottignies Belgium 100.00

25 Chem-Trend industria e Comercio de produtos quimicos ltda., valinhos Brazil 100.00

26 EagleBurgmann do Brasil vedacoes ltda., Campinas, São paulo Brazil 75.00

27 freudenberg Nao-Tecidos ltda., Jacareí Brazil 100.00

28 freudenberg-NOk-Componentes Brasil ltda., São paulo Brazil 75.00

29 klüber lubrication lubrificantes Especiais ltda., Barueri Brazil 100.00

30 SurTec do Brasil ltda., São Bernardo do Campo, São paulo Brazil 100.00

31 Burgmann dalian Co. ltd., dalian China 40.00

32 Burgmann Shanghai ltd., Shanghai China 40.00

33 Changchun integral accumulator Co., ltd., Changchun China 75.00

34 Chem-Trend Chemicals (Shanghai) Co., ltd., qingpu China 100.00

35 freudenberg & vilene filter (Changchun) Co., ltd., Changchun China 37.50

SharEhOldiNgS Of ThE frEudENBErg grOupaS aT dECEmBEr 31, 2014

152


[%]

36 freudenberg & vilene interlinings (Nantong) Co. ltd., Nantong China 50.00

37 freudenberg & vilene Nonwovens (Suzhou) Co. ltd., Suzhou China 50.00

38 freudenberg vilene filter (Chengdu) Co. ltd., Chengdu China 50.00

39 klüber lubrication industries (Shanghai) Co., ltd., qingpu China 100.00

40 Ningbo asia Shine Co ltd, Zhejiang China 100.00

41 Ningbo E&J Brushes Co ltd, Zhejiang China 100.00

42 SurTec metal Surface Treatment Technology Co. ltd., hangzhou China 100.00

43 helix medical laTr srl., San José Costa rica 100.00

44 EagleBurgmann kE a/S, vejen denmark 75.00

45 OÜ merinvest, kuressaare-mullutu Estonia 100.00

46 freudenberg Evolon S.a.S.u., Colmar france 100.00

47 freudenberg Joints Elastomères SaS, langres france 100.00

48 freudenberg Joints plats SaS, Chamborêt france 100.00

49 freudenberg politex S.a., Colmar france 100.00

50 freudenberg S.a.S., langres france 100.00

51 freudenberg Nonwovens lp, littleborough united kingdom 100.00

52 freudenberg Oil & gas Technologies ltd., port Talbot united kingdom 100.00

53 freudenberg Technical products lp, North Shields united kingdom 75.00

54 Scott-matrix limited, Newcastle upon Tyne united kingdom 100.00

55 apEC (asia) limited, hong kong hong kong 100.00

56 EagleBurgmann india pvt. ltd., pune india 50.00

57 EagleBurgmann kE pvt. ltd., Chennai india 75.00

58 EagleBurgmann mascot india private limited, mira road East, Thane india 33.99

59 freudenberg filtration Technologies india private limited, pune india 100.00

60 freudenberg gala household product pvt. ltd., mumbai india 60.00

61 freudenberg Nonwovens india pvt. ltd., Chennai india 100.00

62 klüber lubrication india pvt. ltd., Bangalore india 90.00

63 SurTec Chemicals india pvt. ltd., pune india 100.00

64 Corcos industriale S.a.s. di Externa italia S.r.l., pinerolo italy 100.00

65 EagleBurgmann BT S.p.a., arcugnano italy 75.00

66 fhp di r. freudenberg S.a.S., milan italy 100.00

67 freudenberg Tecnologie di filtrazione S.a.s. di Externa holding S.r.l., milan italy 100.00

68 marelli e Berta S.a.S. di Externa holding s.r.l., Sant’ Omero italy 100.00

69 politex S.a.s. di freudenberg politex s.r.l., Novedrate italy 100.00

70 Trasfotex s.r.l., quaregna italy 100.00

71 EagleBurgmann Japan Co., ltd., Tokyo Japan 25.00

72 freudenberg vileda Jordan ltd., amman Jordan 51.00

73 freudenberg Oil & gas Canada inc., Nisku Canada 100.00

74 freudenberg-NOk inc., Tillsonburg Canada 75.00

75 EagleBurgmann manufacturing malaysia SdN. Bhd., petaling Jaya malaysia 25.00

76 freudenberg Oil & gas Technologies Sdn. Bhd., kuala lumpur malaysia 100.00

153


[%]

77 EagleBurgmann mexico S.a. de C.v., Cuautitlán mexico 75.00

78 EagleBurgmann production Center S.a. de C.v., Santiago de querétaro mexico 75.00

79 freudenberg Telas sin Tejer S.a. de C.v., león mexico 100.00

80 freudenberg-NOk de mexico S.a. de C.v., Cuautla mexico 75.00

81 freudenberg-NOk de queretaro, S.a. de C.v., querétaro mexico 75.00

82 klüber lubricacion mexicana S.a. de C.v., querétaro mexico 100.00

83 freudenberg household products B.v., arnhem The Netherlands 100.00

84 freudenberg Oil & gas Technologies aS, drammen Norway 100.00

85 EagleBurgmann production Center Judenburg gmbh, Judenburg austria 75.00

86 freudenberg Spezialdichtungsprodukte austria gmbh & Co. kg, kufstein austria 100.00

87 klüber lubrication austria ges.m.b.h., Salzburg austria 100.00

88 freudenberg politex OOO, Nizhniy Novgorod russia 100.00

89 freudenberg household products a.B., Norrköping Sweden 100.00

90 SurTec Cacak d.o.o., Cacak Serbia 100.00

91 freudenberg Oil & gas pte. ltd., Singapore Singapore 100.00

92 freudenberg filtration Technologies Slovensko, s.r.o., potvorice Slovakia 90.00

93 freudenberg Espana S.a., Telas sin Tejer, S.en C., Barcelona Spain 100.00

94 freudenberg iberica S.a., S.en C., parets del vallès Spain 100.00

95 klüber lubrication gmbh ibérica S.en C., Barcelona Spain 100.00

96 EagleBurgmann Seals S.a. (pty) ltd., Edenvale South africa 75.00

97 freudenberg Nonwovens (pty.) ltd., Cape Town South africa 100.00

98 SurTec South africa pty. ltd., pretoria South africa 100.00

99 Chem-Trend korea ltd., anseong-si South korea 100.00

100 korea filtration Technologies Co., ltd., Seoul South korea 50.00

101 EagleBurgmann Taiwan Co., ltd., yenchao Taiwan 25.00

102 freudenberg & vilene Nonwovens (Taiwan) Co. ltd., yangmei, Taoyuan Taiwan 50.00

103 freudenberg far Eastern Spunweb Comp. ltd., Taoyuan, Taoyuan Taiwan 60.18

104 EagleBurgmann (Thailand) Co., ltd., rayong Thailand 25.00

105 accu-Tech s.r.o., Chrastava Czech republic 36.75

106 aluCON s.r.o., lázne Belohrad Czech republic 100.00

107 EagleBurgmann Bredan s.r.o., Jílové u prahy Czech republic 75.00

108 Tesnení a pružné elementy, k.s., Opatovice nad labem Czech republic 100.00

109 freudenberg Coskunöz kalip Sanayi ve Ticaret a.S., Bursa Turkey 75.00

110 freudenberg Sealing Technologies Sanayi ve Ticaret a.S., Bursa Turkey 100.00

111 klüber lubrication yaglama Ürünleri Sanayi ve Ticaret a.S., istanbul Turkey 100.00

112 freudenberg Simmerringe kft., kecskemét hungary 100.00

113 freudenberg Tömítés ipari kft., lajosmizse hungary 100.00

114 Chem-Trend limited partnership, howell uSa 100.00

115 dichtomatik americas, lp, Shakopee uSa 100.00

116 freudenberg filtration Technologies lp, hopkinsville uSa 100.00

117 freudenberg household products lp, aurora uSa 100.00

Shareholdings

154


[%]

118 freudenberg Oil & gas, llC, houston uSa 100.00

119 freudenberg Spunweb Company lp, durham uSa 100.00

120 freudenberg Texbond l.p., macon uSa 100.00

121 freudenberg-NOk general partnership, plymouth uSa 75.00

122 helix medical, llC, Carpinteria uSa 100.00

123 international Seal Company, inc., Santa ana uSa 75.00

124 kl Texas l.p. dba SummiT iNduSTrial prOduCTS, Tyler uSa 100.00

125 klüber lubrication North america lp, londonderry uSa 100.00

126 lakes region manufacturing, l.l.C., Belmont uSa 75.00

127 medventure Technology Corporation, Jeffersonville uSa 100.00

128 SurTec, inc., middleburg heights uSa 100.00

129 Tobul accumulator incorporated, Bamberg uSa 75.00

130 vector group inc., houston uSa 100.00

131 freudenberg Oil and gas fZE, dubai united arab Emirates

100.00

Sales companies, Germany

132 Corteco gmbh, weinheim germany 100.00

133 dichtomatik vertriebsgesellschaft für technische dichtungen mbh, hamburg germany 100.00

134 fhp Export gmbh, weinheim germany 100.00

135 freudenberg gygli gmbh, weinheim germany 100.00

136 freudenberg process Seals gmbh & Co. kg, weinheim germany 100.00

137 hänsel Textil interlining gmbh, iserlohn germany 100.00

138 klüber lubrication deutschland SE & Co. kg, munich germany 100.00

139 purtex gmbh, weinheim germany 100.00

140 Seal Trade Eurasburg gmbh, Eurasburg germany 75.00

141 vileda gesellschaft mit beschränkter haftung, weinheim germany 100.00

Sales companies, other countries

142 Chem-Trend australia pty ltd, victoria australia 100.00

143 freudenberg household products pty. ltd., melbourne australia 100.00

144 freudenberg pty. ltd., Thomastown australia 100.00

145 klüber lubrication australia pty. ltd., melbourne australia 100.00

146 EagleBurgmann Belgium B.v.B.a., St.-Job-in't-goor Belgium 75.00

147 fhp vileda S.C.S., verviers Belgium 100.00

148 klüber lubrication Belgium Netherlands S.a., dottignies Belgium 100.00

149 vector Tecnologia do Brasil ltda., rio de Janeiro Brazil 99.90

150 hänsel Textil Bulgaria ood, rousse Bulgaria 100.00

151 freudenberg productos del hogar ltda., Santiago de Chile Chile 100.00

152 klüber lubrication Chile ltda., Santiago de Chile Chile 100.00

153 Chem-Trend (Shanghai) Trading Co. ltd., Shanghai China 100.00

155


[%]

154 dichtomatik (China) Co., ltd., Shanghai China 100.00

155 EagleBurgmann Technology (Shanghai) Co., ltd., Shanghai China 50.00

156 freudenberg & vilene international (Shanghai) Trading Co., ltd., Shanghai China 50.00

157 freudenberg household products (Suzhou) Co., ltd., Suzhou China 100.00

158 freudenberg politex ltd., Shanghai China 100.00

159 freudenberg Spunweb (Shanghai) Trading Co., ltd., Shanghai China 60.18

160 Jump international Trading (Shanghai) Co ltd, Shanghai China 100.00

161 klüber lubrication (Shanghai) Co., ltd., Shanghai China 100.00

162 SurTec Chemical and Engineering (hangzhou) Co. ltd., hangzhou China 100.00

163 klüber lubrication Nordic a/S, Skovlunde denmark 100.00

164 SurTec Scandinavia apS, fredericia denmark 100.00

165 freudenberg filtration Technologies finland Oy, Naantali finland 100.00

166 freudenberg household products Oy ab, helsinki finland 100.00

167 freudenberg Simrit Oy, vantaa finland 100.00

168 kE-Burgmann finland Oy, vantaa finland 75.00

169 Chem-Trend france S.a.S.u., Entzheim france 100.00

170 Corteco SaS, Nantiat - la Couture france 100.00

171 dichtomatik S.a.S, mâcon loché france 100.00

172 EagleBurgmann S.a.S. (france), Sartrouville france 75.00

173 fhp vileda S.a., asnières Sur Seine france 100.00

174 freudenberg filtration Technologies SaS, les ulis - Courtaboeuf france 100.00

175 klüber lubrication france S.a.S., valence france 100.00

176 SurTec france S.a.S., Cugnaux france 100.00

177 fhp hellas S.a., kifisia-athens greece 100.00

178 aquabio ltd., worcester united kingdom 100.00

179 auto Suppliers limited, kidderminster united kingdom 100.00

180 Capol (u.k.) limited, Ness, Cheshire united kingdom 100.00

181 Chem-Trend (uk) lp, huddersfield united kingdom 100.00

182 Corteco ltd., lutterworth united kingdom 100.00

183 dichtomatik ltd., derby united kingdom 66.00

184 EagleBurgmann industries uk lp, warwick united kingdom 75.00

185 freudenberg filtration Technologies uk limited, Crewe united kingdom 100.00

186 freudenberg household products lp, rochdale united kingdom 100.00

187 freudenberg Oil & gas uk ltd., aberdeen united kingdom 100.00

188 kE-Burgmann uk ltd., Congleton united kingdom 75.00

189 klüber lubrication great Britain ltd., halifax united kingdom 100.00

190 SurTec Chemicals uk ltd., i.l., Birmingham united kingdom 51.00

191 vC uk lp, i.l., New york united kingdom 100.00

192 freudenberg Textile Technologies, S.a., guatemala City guatemala 100.00

193 E&J (hk) Co ltd, hong kong hong kong 100.00

194 freudenberg & vilene int. ltd., hong kong hong kong 50.00

Shareholdings

156


[%]

195 freudenberg household products ltd., hong kong hong kong 100.00

196 Jump (asia) distributors ltd, hong kong hong kong 100.00

197 klüber lubrication China ltd., hong kong hong kong 100.00

198 xETEx Trading limited, hong kong hong kong 50.00

199 Chem-Trend Chemicals Co. pvt. ltd., Bangalore india 100.00

200 pT EagleBurgmann indonesia, Bekasi, west Java province indonesia 24.98

201 pT. Jump distributors indonesia, Jakarta indonesia 100.00

202 Chem-Trend italy del dr. gian franco Colori S.a.s., milan italy 100.00

203 Corteco S.r.l. (a socio unico), pinerolo italy 100.00

204 dichtomatik S.a.s. di Externa italia S.r.l., genoa-voltri italy 100.00

205 EagleBurgmann italia S.r.l., Osnago italy 75.00

206 freudenberg S.p.a., milan italy 100.00

207 hänsel Textil italia Srl, milan italy 100.00

208 klüber lubrication italia S.a.s. di g. Colori, milan italy 100.00

209 marelli & Berta interfodere S.a.s. di Externa holding S.r.l., milan italy 100.00

210 Chemlease Japan k.k., kobe Japan 51.00

211 freudenberg Spunweb Japan Company, ltd., Osaka Japan 60.18

212 SurTec mmC Japan kk, Tokyo Japan 56.00

213 dichtomatik Canada, inc., markham Canada 100.00

214 EagleBurgmann Canada inc., milton, Ontario Canada 75.00

215 EagleBurgmann Nova magnetics ltd., dartmouth Canada 75.00

216 freudenberg household products inc., laval Canada 100.00

217 freudenberg Nonwovens inc., london, Ontario Canada 100.00

218 TOO freudenberg Oil & gas, atyrau kazakhstan 100.00

219 EagleBurgmann Colombia, S.a.S., Bogotá Colombia 75.00

220 freudenberg kucanski proizvodi d.o.o., Zagreb Croatia 100.00

221 SurTec d.o.o., Split Croatia 100.00

222 EagleBurgmann (malaysia) SdN. Bhd., petaling Jaya malaysia 25.00

223 freudenberg household products (malaysia) Sdn Bhd, puchong malaysia 100.00

224 klüber lubrication (malaysia) Sdn. Bhd., kuala lumpur malaysia 100.00

225 Chem-Trend Comercial, S.a. de C.v., querétaro mexico 100.00

226 dichtomatik de mexico S.a. de C.v., querétaro mexico 95.50

227 freudenberg productos del hogar, S.a. de C.v., mexico City mexico 100.00

228 dichtomatik B.v., Zwolle The Netherlands 66.60

229 EagleBurgmann Netherlands B.v., veenendaal The Netherlands 75.00

230 SurTec Benelux B.v., reuver The Netherlands 100.00

231 EagleBurgmann Norway aS, Skedsmokorset Norway 75.00

232 freudenberg household products aS, Skedsmokorset Norway 100.00

233 vestpak aS, Sandnes Norway 100.00

234 dichtomatik handelsgesellschaft mbh, vienna austria 95.00

235 EagleBurgmann austria gmbh, Salzburg austria 75.00

157


[%]

236 SurTec produkte und Systeme für die Oberflächenbehandlung gesmbh, guntramsdorf

austria 100.00

237 EagleBurgmann philippines, inc., Cavite philippines 22.58

238 Chem-Trend polska sp. z o.o. spólka komandytowa, Janikowo poland 100.00

239 EagleBurgmann poland sp. z o.o., warsaw poland 75.00

240 fhp vileda Sp. z o.o., warsaw poland 100.00

241 freudenberg politex Sp. z o.o., lodz poland 100.00

242 freudenberg Simrit polska Sp. z o.o., warsaw poland 95.00

243 freudenberg vilene Sp. z o.o., lodz poland 100.00

244 klüber lubrication polska Sp. z o.o., poznan poland 100.00

245 SurTec polska Sp. z o.o., wroclaw poland 100.00

246 ST ibérica lda., albergaria-a-velha portugal 100.00

247 freudenberg household products vileda Societate in Comandita, Bucharest romania 100.00

248 hänsel Textilrom srl, Bucharest romania 100.00

249 SurTec romania s.r.l., Brasov romania 100.00

250 EagleBurgmann OOO, Zavolzhie russia 75.00

251 freudenberg filtration Technologies OOO, Nizhniy Novgorod russia 100.00

252 freudenberg household products Eastern Europe OOO, St. petersburg russia 70.00

253 freudenberg vileda Eastern Europe OOO, moscow russia 100.00

254 klüber lubrication OOO, moscow russia 100.00

255 OOO freudenberg Sealing Technologies, moscow russia 100.00

256 OOO SurTec, moscow russia 100.00

257 EagleBurgmann Saudi arabia ltd., khobar Saudi arabia 51.00

258 dichtomatik a.B., landskrona Sweden 85.00

259 EagleBurgmann Sweden aB, Norrköping Sweden 75.00

260 freudenberg Sealing Technologies aB, Stockholm Sweden 100.00

261 EagleBurgmann (Switzerland) ag, höri Switzerland 75.00

262 freudenberg gygli ag, Zug Switzerland 100.00

263 freudenberg Schwab vibration Control ag, adliswil Switzerland 100.00

264 freudenberg Simrit ag, Zurich Switzerland 100.00

265 klüber lubrication ag (Schweiz), Zurich Switzerland 100.00

266 freudenberg proizvodi za domacinstvo d.o.o., Belgrade Serbia 100.00

267 Chem-Trend Singapore pte. ltd., Singapore Singapore 100.00

268 EagleBurgmann kE pte. ltd., Singapore Singapore 75.00

269 EagleBurgmann Singapore pte. ltd., Singapore Singapore 25.00

270 klüber lubrication South East asia pte. ltd., Singapore Singapore 100.00

271 SurTec Sk s.r.o., vráble Slovakia 100.00

272 freudenberg gospodinjski proizvodi d.o.o., maribor Slovenia 100.00

273 SurTec adria d.o.o., radovljica Slovenia 100.00

274 EagleBurgmann ibérica S.a., madrid Spain 75.00

275 vileda ibérica S.a., S.en C., parets del vallès Spain 100.00

Shareholdings

158


[%]

276 freudenberg & vilene international lanka (private) limited, Colombo Sri lanka 50.00

277 hänsel Textil lanka pvT ltd., Colombo Sri lanka 100.00

278 freudenberg filtration Technologies (pty) ltd., Cape Town South africa 100.00

279 klüber lubrication (pty.) ltd., randhart South africa 100.00

280 EagleBurgmann korea Co., ltd., gyeonggi-do South korea 25.00

281 freudenberg home and Cleaning Solutions korea ltd., Seoul South korea 80.00

282 SurTec korea Co., ltd., gyeongNam South korea 100.00

283 freudenberg household products (Taiwan) Co., ltd., Taipeh Taiwan 100.00

284 Chem-Trend Trading (Thailand) Co. ltd., Bangkok Thailand 100.00

285 Jump distributors (Thailand) Co ltd, Nonthaburi Thailand 100.00

286 klüber lubrication (Thailand) Co., ltd., Bangkok Thailand 100.00

287 lucky gecko Co ltd, Nonthaburi Thailand 100.00

288 EagleBurgmann Czech s.r.o., prague Czech republic 75.00

289 freudenberg potreby pro domácnost, k.s., prague Czech republic 100.00

290 freudenberg vilene s.r.o., prostejov Czech republic 100.00

291 klüber lubrication CZ, s.r.o., Brno Czech republic 100.00

292 SurTec Cr s.r.o., vrané nad vltavou Czech republic 100.00

293 EagleBurgmann Endüstriyel Sizdirmazlik Sanayi ve Ticaret ltd., istanbul Turkey 75.00

294 freudenberg household products Evici kullanim araclari Sanayi ve Ticaret a.S., istanbul

Turkey 100.00

295 freudenberg vilene Tela Sanayi ve Ticaret a.S., istanbul Turkey 100.00

296 dichtomatik kft., Budapest hungary 80.00

297 EagleBurgmann hungaria kft., Budapest hungary 75.00

298 freudenberg háztartási Cikkek kereskedelmi BT, Budapest hungary 100.00

299 Capol llC, Northbrook uSa 100.00

300 EagleBurgmann industries lp, houston uSa 75.00

301 EagleBurgmann kE, inc., hebron uSa 75.00

302 freudenberg Nonwovens limited partnership, durham uSa 100.00

303 EagleBurgmann venezuela, C.a., Caracas venezuela 41.25

304 EagleBurgmann middle East fZE, dubai united arab Emirates

60.00

305 Chem-Trend vietnam Company limited, ho Chi minh City vietnam 100.00

306 EagleBurgmann vietnam Company limited, ho Chi minh City vietnam 25.00

307 SurTec viet Nam Co., ltd., ho Chi minh City vietnam 100.00

Administration and other companies, Germany

308 Beteiligungsgesellschaft Carl freudenberg mbh, weinheim germany 100.00

309 Burgmann industries holding gmbh, wolfratshausen germany 75.00

310 Burgmann international gmbh, wolfratshausen germany 100.00

311 Carl freudenberg kg, weinheim germany 100.00

312 CT Beteiligungs-gmbh, munich germany 100.00

159


[%]

313 dS Beteiligungs-gmbh, weinheim germany 100.00

314 dS holding-gmbh, weinheim germany 100.00

315 dS verwaltungs-gmbh, weinheim germany 100.00

316 EagleBurgmann germany verwaltungs-gmbh, wolfratshausen germany 75.00

317 Externa handels- und Beteiligungsgesellschaft mit beschränkter haftung, weinheim germany 100.00

318 fCS-munich gmbh, weinheim germany 100.00

319 ffT Beteiligungs-gmbh, weinheim germany 100.00

320 fhp holding gmbh, weinheim germany 100.00

321 fiT Service gmbh, weinheim germany 100.00

322 freudenberg Chemical Specialities SE & Co. kg, munich germany 100.00

323 freudenberg dichtungs- und Schwingungstechnik gmbh, Berlin germany 100.00

324 freudenberg fCCT SE & Co. kg, weinheim germany 100.00

325 freudenberg handels- und Beteiligungs-gmbh, weinheim germany 100.00

326 freudenberg home and Cleaning Solutions gmbh, weinheim germany 100.00

327 freudenberg immobilien management gmbh, weinheim germany 100.00

328 freudenberg iT information Services SE & Co. kg, weinheim germany 100.00

329 freudenberg iT SE & Co. kg, weinheim germany 100.00

330 freudenberg iT Solution Consulting SE & Co. kg, weinheim germany 100.00

331 freudenberg mechatronics Beteiligungs-gmbh, weinheim germany 100.00

332 freudenberg mechatronics gmbh & Co. kg, weinheim germany 100.00

333 freudenberg New Technologies SE & Co. kg, weinheim germany 100.00

334 freudenberg Oil & gas gmbh, weinheim germany 100.00

335 freudenberg politex gmbh, weinheim germany 100.00

336 freudenberg Schwab gmbh, velten germany 100.00

337 freudenberg venture Capital gmbh, weinheim germany 100.00

338 freudenberg verwaltungs- und Beteiligungs-gmbh, weinheim germany 100.00

339 freudenberg wohnbauhilfe gmbh, weinheim germany 100.00

340 fv Beteiligungs-gmbh, weinheim germany 100.00

341 fv logistik SE & Co. kg, weinheim germany 100.00

342 fv Service SE & Co. kg, kaiserslautern germany 100.00

343 fv verwaltungs SE & Co. kg, weinheim germany 100.00

344 kaul gmbh, Elmshorn germany 100.00

345 klüber lubrication gmbh, weinheim germany 100.00

346 rE Coatings holding gmbh, Elmshorn germany 100.00

347 SurTec international gmbh, Bensheim germany 100.00

Administration and other companies, other countries

348 freudenberg produtos do lar ltda., São paulo Brazil 100.00

349 freudenberg Servicos Corporativos da america do Sul ltda., São paulo Brazil 100.00

350 freudenberg iT (Suzhou) Co., ltd., Suzhou China 100.00

351 freudenberg management (Shanghai) Co. ltd., Shanghai China 100.00

Shareholdings

160


[%]

352 freudenberg real Estate (yantai) Co. ltd., yantai China 100.00

353 Chem-Trend a/S, Copenhagen denmark 100.00

354 EBi atlantic a/S, vejen denmark 75.00

355 EBi middle-East a/S, vejen denmark 60.00

356 SpECi-TEx apS, vejen denmark 75.00

357 meri varad Zwei OÜ, kuressaare-mullutu Estonia 100.00

358 freudenberg immobilier SaS, Chamborêt france 100.00

359 Chem-Trend (uk) ltd., huddersfield united kingdom 100.00

360 Chem-Trend China investments ltd., huddersfield united kingdom 100.00

361 EagleBurgmann industries uk ltd., warwick united kingdom 75.00

362 fCS interim uk ltd., huddersfield united kingdom 100.00

363 filtamark ltd., Crewe united kingdom 100.00

364 freudenberg limited, littleborough united kingdom 100.00

365 freudenberg Technical products ltd., North Shields united kingdom 75.00

366 freudenberg vileda ltd., rochdale united kingdom 100.00

367 vC uk ltd., i.l., New york united kingdom 100.00

368 freudenberg Trading (hongkong) ltd., hong kong hong kong 100.00

369 freudenberg regional Corporate Center india pvt. ltd., Bangalore india 100.00

370 Externa holding S.r.l., milan italy 100.00

371 Externa italia S.r.l., pinerolo italy 100.00

372 freudenberg italia S.a.s. di freudenberg S.p.a., milan italy 100.00

373 freudenberg politex S.r.l., Novedrate italy 100.00

374 freudenberg-NOk St malaysia Sdn. Bhd., kuala lumpur malaysia 75.00

375 freudenberg iT, S.a. de C.v., mexico City mexico 100.00

376 vector Technology group aS, drammen Norway 100.00

377 freudenberg austria gmbh, kufstein austria 100.00

378 Chem-Trend polska Sp. z o.o., kobylnica poland 100.00

379 fim polska Sp. z o.o., Sroda Slaska poland 100.00

380 freudenberg household products Srl, Bucharest romania 100.00

381 freudenberg management imobiliar Srl, Brasov romania 100.00

382 freudenberg Nonwovens romania S.r.l., Brasov romania 100.00

383 EBi asia pacific pte. ltd., Singapore Singapore 25.00

384 EBi asia pte. ltd., Singapore Singapore 50.00

385 freudenberg immobilienmanagement Slovakia, s.r.o, potvorice Slovakia 100.00

386 freudenberg Espana S.a., Barcelona Spain 100.00

387 freudenberg iberica S.a., Barcelona Spain 100.00

388 vileda ibérica S.a., Barcelona Spain 100.00

389 TpE správni s.r.o., Opatovice nad labem Czech republic 100.00

390 freudenberg im hungária kft., Budapest hungary 100.00

391 freudenberg iT hungary kft., Budapest hungary 100.00

392 Chem-Trend holding lp, wilmington uSa 100.00

393 EagleBurgmann industries inc., houston uSa 75.00

394 fCS holding inc., wilmington uSa 100.00

161


[%]

395 freudenberg household products inc., aurora uSa 100.00

396 freudenberg iT lp, durham uSa 100.00

397 freudenberg North america limited partnership, plymouth uSa 100.00

398 freudenberg real Estate l.p., wilmington uSa 100.00

399 freudenberg Texbond inc., delaware uSa 100.00

400 freudenberg u.S.a. holdings, inc., manchester uSa 100.00

401 freudenberg-NOk holdings, inc., manchester uSa 75.00

402 intpacor inc., manchester uSa 100.00

403 klüber lubrication North america inc., londonderry uSa 100.00

404 pellon Corporation, durham uSa 100.00

405 upper Bristol ramp, llC, wilmington uSa 75.00

II. Investments in joint ventures (consolidated by equity method)

Germany

406 enmech gmbh & Co. kg, weinheim germany 50.00

407 Schneegans freudenberg gmbh & Co. kg, Emmerich am rhein germany 50.00

408 Sf gmbh, Emmerich am rhein germany 50.00

409 Trelleborgvibracoustic gmbh, darmstadt1) germany 50.00

Other countries

410 Cambus Teoranta, Spiddal ireland 50.00

411 vistamed ltd., Carrick-on-Shannon ireland 50.00

412 Corfina s.r.l., pinerolo italy 50.00

413 Schneegans freudenberg Silicon ges.m.b.h, losenstein austria 50.00

414 NOk-freudenberg asia holding Co. pte. ltd., Singapore2) Singapore 50.00

415 enmech hungary Bt, pécel hungary 50.00

416 TETl holdings, llC, dover uSa 41.25

417 TTkkE holdings lp, dover uSa 30.00

III. Investments in associated companies (consolidated by equity method)

Germany

Other countries

418 Bicomfiber S.a., Buenos aires argentina 24.00

419 Japan vilene Company ltd., Tokyo Japan 33.40

420 NOk Corporation, Tokyo Japan 25.10

421 NOk klüber Co., ltd., Tokyo Japan 49.00

422 ZET gaskets Sp.z.o.o., Brzostek poland 35.00

423 klüber lubrication korea ltd., Seoul South korea 48.00

424 korea vilene Co., ltd., pyeongtaek South korea 50.00

425 freudenberg & vilene filter (Thailand) Co. ltd., Chonburi Thailand 50.00

426 ishino gasket North america l.l.C., plymouth uSa 37.50

Shareholdings

162

1) Consolidated financial statements including Trelleborg automotive do Brasil industria e Comercio de autopecas ltda., São paulo, Brazil vibracoustic do Brasil indústria e Comércio de artefatos de Borracha ltda., Taubaté-Sp., Brazil Trelleborg automotive design (Shanghai) Co. ltd., Shanghai, China vibracoustic (Shanghai) Sales and Trading Co., ltd., Shanghai, China vibracoustic (yantai) Co., ltd., yantai, China vibracoustic Cv air Springs (yantai) Co., ltd., yantai, China wuxi Trelleborg vibration isolators Co. ltd., Jiangsu, China Zhangjiagang Trelleborg kunhwa automotive Components Co. ltd., Zhangjiagang, China Trelleborg automotive germany gmbh, Breuberg, germany Trelleborgvibracoustic Europe gmbh, darmstadt, germany vibracoustic asia holding gmbh, weinheim, germany vibracoustic Cv air Springs gmbh, hamburg, germany vibracoustic germany holding gmbh, weinheim, germany vibracoustic gmbh & Co. kg, weinheim, germany Trelleborg automotive france Sa, Carquefou, france Trelleborg modyn SaS, Nantes, france Trelleborg hong kong holdings ltd., hong kong, hong kong Trelleborg automotive india pvt ltd, New delhi, india Trelleborgvibracoustic (india) pvt. ltd., mohali, india Trelleborg Japan kk, yokohama, Japan Trelleborg automotive mexico Sa de Cv, Toluca, mexico Trelleborg automotive Toluca Sa de Cv, Toluca, mexico vibracoustic de mexico S.a. de C.v., lerma, mexico vibracoustic polska Sp. z o.o., Sroda Slaska, poland Trelleborg automotive S.r.l., dej, romania Trelleborg automotive OOO, Zavolzhie, russia Trelleborg automotive China holding aB, Trelleborg, Sweden Trelleborg automotive forsheda aB, Trelleborg, Sweden Trelleborg automotive group aB, Trelleborg, Sweden Trelleborg wuxi holding aB, Trelleborg, Sweden Trelleborg automotive Cascante Sau, Cascante, Spain Trelleborg automotive Spain Sa, martorell (Barcelona), Spain Trelleborg participaciones Sl, Barcelona, Spain Trelleborgvibracoustic-ikhwezi ltd., East london, South africa Trelleborg kunhwa Co. ltd., gyeongsan City, South korea Trelleborgvibracoustic (Thailand) ltd., Chonburi, Thailand vibracoustic CZ s.r.o., melnik, Czech republic Beltan vibracoustic Titresim Elemanlari Sanayi ve Ticaret a.S., Bursa, Turkey Blacktech Otomotiv Sanayi ve Ticaret a.S., Bursa, Turkey Trelleborg Cerkezköy ithalat ve ihracat Otomotiv Ticaret aS, Cerkezköy/ Tekirdag, Turkey Trelleborg Otomotiv Sanayi ve Ticaret aS, Cerkezköy, Turkey vibracoustic Cv air Springs Otomotiv Sanayi ve Ticaret a.S., Bursa, Turkey vibracoustic Cv air Springs magyarország kft., Nyíregyháza, hungary Trelleborg automotive uSa inc., South haven, uSa vibracoustic Cv air Springs uSa inc., wilmington, uSa vibracoustic North america holdings inc., plymouth, uSa vibracoustic North america lp, plymouth, uSa

2) Consolidated financial statements including Changchun NOk-freudenberg Oilseal Co., ltd., Changchun, China Corteco China Co. ltd., guangzhou, China merkel NOk-freudenberg Co. ltd., Taicang, China NOk-freudenberg group Sales (China) Co., ltd., Shanghai, China NOk-freudenberg group Trading (China) Co., ltd., Shanghai, China wuxi NOk-freudenberg Oilseal Co., ltd., wuxi, China NOk-freudenberg hong kong ltd., kowloon, hong kong Sigma freudenberg NOk pvT. ltd., New delhi, india


[%]

427 iSE industrial Sealing Equipment JlT, dubai united arab Emirates

36.75

428 SurTec middle East (l.l.C.), Sharjah united arab Emirates

35.00

163

Audit Opinion

audiT OpiNiON

We have audited the Consolidated Financial Statements prepared by the Freudenberg SE, Weinheim, comprising the Consolidated Statement of Financial Position, the Consolidated Statement of Profit or Loss, the Consolidated Statement of Profit or Loss and Other Comprehensive Income, the Consolidated Statement of Cash Flows, the Consolidated Statement of Changes in Equity and the Notes to the Consolidated Financial Statements, together with the Group Management Report for the fiscal year from January 1 to December 31, 2014. The preparation of the Consolidated Financial Statements and the Group Management Report in accordance with IFRSs as adopted by the EU, and the additional requirements of German commercial law pursuant to Sec. 315a (1) HGB [“Handelsgesetzbuch”: “German Commercial Code”] are the responsibility of the parent company’s management. Our responsibility is to express an opinion on the Consolidated Financial Statements and on the Group Management Report based on our audit.

We conducted our audit of the Consolidated Financial Statements in accordance with Sec. 317 HGB and German generally accepted standards for the audit of financial statements promulgated by the Institut der Wirtschaftsprüfer [Institute of Public Auditors in Germany] (IDW). Those standards require that we plan and perform the audit such that misstatements materially affecting the presentation of the net assets, financial position and results of operations in the Consolidated Financial Statements in accordance with the applicable financial reporting framework and in the Group Management Report are detected with reasonable assurance. Knowledge of the business activities and the economic and legal environment of the Group and expectations as to possible misstatements are taken into account in the determi-nation of audit procedures. The effectiveness of the accounting-related internal control system and the evidence supporting the disclosures in the Consolidated Financial Statements and the Group Management Report are examined primarily on a test basis within the framework of the audit. The audit includes assessing the annual financial statements of those entities included in consolidation, the determination of entities to be included in consolidation, the accounting and consolidation principles used and significant estimates made by management, as well as evaluating the overall presentation of the Consolidated Financial Statements and the Group Management Report. We believe that our audit provides a reasonable basis for our opinion.

Our audit has not led to any reservations.

In our opinion, based on the findings of our audit, the Consolidated Financial Statements comply with IFRSs as adopted by the EU, the additional requirements of German commercial law pursuant to Sec. 315a (1) HGB and give a true and fair view of the net assets, financial position and results of operations of the Group in accordance with these requirements. The Group Management Report is consistent with the Consolidated Financial Statements and as a whole provides a suitable view of the Group’s position and suitably presents the opportunities and risks of future development.

Mannheim, March 26, 2015

Ernst & Young GmbH Wirtschaftsprüfungsgesellschaft

Prof. Dr. Wollmert GrathwolWirtschaftsprüfer Wirtschaftsprüfer[German Public Auditor] [German Public Auditor]

PROJECT TEAM:Corporate Communications:Cornelia Buchta-NoackAndreas BaldaufStephan HansCorporate Controlling and Accounting:Volker ChristEllen FichtnerTanja HeilmannAnja KillianMartina LorenzSuse MannspergerBodo PeischSteve ScheffelFlorian Wätzig

DESigN:m & s communication, Düsseldorf, germany

PHOTOS:getty images, Dublin, irelandgeorg Kleinegees, Berlin, germanyMasterfile, Düsseldorf, germanyPanther Media, Munich, germanyAndreas Pohlmann, Munich, germanygerald Schilling, Ketsch, germanyMarco Schilling, Weinheim, germanyShutterstock, New York, USA

PRODUCTiON:Frotscher Druck, Darmstadt, germany

EDiTORiAL iNFORMATiON

Published by:Freudenberg group69465 Weinheim, germanywww.freudenberg.com

www.freudenberg.com

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2014 ANNUAL REPORT FREUDENBERg gROUP · 2017-06-12 · HigHLigHTS External reporting Internal...

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