Bosch Plans Spending Cuts After Currencies Rescue Sales
Robert Bosch GmbH, the world’s biggest car-parts maker, said it will hold back on investments this year as a recession in Europe caused profitability in 2012 to miss targets and sales rose only because of currency effects.
The operating return on sales was about 2 percent last year, compared with a long-term goal of 8 percent, Chief Executive Officer Volkmar Denner said at a press briefing. Revenue, which increased 1.6 percent to 52.3 billion euros ($69.5 billion) from 51.5 billion euros in 2011, would have fallen without a boost from exchange rates, he said.
“We can’t be satisfied with the business year 2012,” Denner said at the press conference in Bosch’s headquarters city of Stuttgart, Germany. “We’re looking at fixed costs very closely, and will be restrictive regarding investments and acquisitions.”
The European auto market contracted by 16 percent last year to the lowest in almost two decades, and carmakers such as PSA Peugeot Citroen (UG) and General Motors Co. (GM) have announced factory shutdowns in response. Bosch also said today that it wrote down 600 million euro in assets at its unprofitable solar-panel division, a unit whose future it’s reviewing.
“No final decision has been made for the strategic realignment” of the solar division, which posted a loss of about 450 million euros at its operating business last year, Denner said. The unit has been hurt by price declines of about 40 percent, he said.
The company didn’t specify earnings for other divisions. Bosch is scheduled to report detailed 2012 figures April 18.
Revenue in Europe fell 2 percent to 29.7 billion euros last year, Bosch said. Sales rose 9 percent to 10 billion euros in the Americas and 5 percent to 12.6 billion euros in the Asia- Pacific region.
“We expect a slightly better increase, but no strong revenue growth this year,” Denner said.
To contact the reporter on this story: Christoph Rauwald in Stuttgart, Germany, via email@example.com