Bosch gets big boost from auto division
Company predicts improved profit margin for 2014
Robert Bosch got a big boost from its automotive division, which was the only business unit within the diversified company to report a sales increase in 2013.
Strong demand for gasoline direct-injection and diesel-injection systems lifted the automotive unit's revenue by 7 percent to 30.7 billion euros ($41.7 billion), Bosch, the world's largest partsmaker, said in a statement today based on preliminary figures.
The unit had an earnings before interest and taxes (EBIT) margin of 8 percent last year, up from 4.5 percent in 2012, according to a spokesman. It is the first time the auto division has hit its 8 percent profitability target since 2010.
Bosch reported that companywide 2013 revenue rose 2.7 percent to 46.4 billion euros, with foreign-exchange fluctuations causing a 1.5 billion-euro burden. Last April, Bosch forecast an overall sales increase of as much as 4 percent.
Excluding an extraordinary 1.3 billion euro charge for losses on its solar business, Bosch's overall EBIT margin in 2013 would have been 6 percent, up from around 5 percent, according to preliminary figures. Bosch is set to unveil full-year earnings on April 30.
Sizable charges aren't expected this year, company officials said at a press briefing Tuesday.
Bullish about 2014
Bosch forecast that profit margins will widen in 2014 as Europe's economy recovers and extra costs from the solar-energy division it's eliminating disappear.
"We want to make a further step toward our profitability goal" of an EBIT margin of 8 percent, Bosch CEO Volkmar Denner said at the briefing in Stuttgart. The company plans to complete the withdrawal from the solar industry in the "coming weeks and months."
Bosch, which also makes packaging equipment, water heaters and power tools, anticipates the economy in the European Union will grow 0.7 percent this year, the region's first expansion since 2011. The closely held company, which generates more than 65 percent of revenue from auto parts, has sidestepped the European slowdown by expanding in Asia and North America.
Weakness in Europe's industrywide car sales, which slumped for a sixth straight year in 2013, and the euro's gains on currency markets held back sales growth at Bosch last year.
Bosch expects higher sales this year, boosted by a 3 percent increase in global auto production. Currency moves aren't expected to be a "significant" burden this year, Chief Financial Officer Stefan Asenkerschbaumer said at the briefing.
The German manufacturer agreed to sell the main factory of its unprofitable solar operations to Solarworld AG in November after deciding to exit the business in March 2013. The unit has accumulated 3.7 billion euros in losses because of increased competition from China. Bosch is sticking to a plan to complete the deal with Solarworld in the coming weeks, the CEO said.
Bloomberg and Reuters contributed to this report