Bosch Says Profit Targets Are More Difficult on Material Costs

Robert Bosch GmbH, the world’s biggest car-parts supplier, said it will be harder to meet its profit targets this year as high raw material costs and spending on new business areas hurt margins.

While revenue will increase in a range of 3 percent to 5 percent, it has become harder to meet the growth target of 7 percent to 8 percent, the Stuttgart, Germany-based company said in a statement today. Sales rose 5 percent in the first quarter.

“Economic uncertainties remain high, even if the euro-zone debt crisis has relaxed slightly,” Chief Executive Officer Franz Fehrenbach said in the statement. “With raw material prices remaining high and further investment needed in new business areas, it will be more difficult to reach our target corridor of 7 percent to 8 percent in 2012.”

The industrial technology division had a loss before interest and taxes of 364 million euros ($482 million) last year because of price competition, according to today’s statement. Bosch, which employs 302,500 people worldwide, is pursuing a 1.5 billion-euro push into solar energy. Last year, it bought Voltwerk Electronics GmbH from Conergy AG for technology to link solar panels to electricity grids.

Total earnings before interest and taxes declined 15 percent in 2011 to 2.7 billion euros. Sales grew 9 percent to 51.5 billion euros.

Speaking to journalists in Stuttgart yesterday, Fehrenbach urged the rest of the euro zone to follow Germany’s lead in improving competitiveness and said that if Germany reduced its trade surplus the region would have a “big trade deficit.”

“These other countries should not really blame Germany, they should work on their competitive edge,” he said. “Most of us have forgotten that between 1995 and 2005 we were ‘the sick man of Europe’ and Germany turned it around.”

Of Germany’s 170 billion-euro trade surplus, only 45 billion euros to 50 billion euros is inside the euro region, and the region itself has a trade surplus of some 15 billion euros, he said.

To contact the reporter on this story: Alex Webb in Frankfurt at awebb25@bloomberg.net

To contact the editor responsible for this story: Chad Thomas at cthomas16@bloomberg.net

Bloomberg reserves the right to edit or remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.