Bosch will pass on price increases to customers

Robert Bosch said it will have to pass on cost increases to customers as already-high production costs have been exacerbated by the effects of the war in Ukraine.

"The burden on our result is growing considerably due to steep increases in the cost of energy, raw materials and logistics," the supplier's finance chief Markus Forschner said Wednesday at the mega-supplier’s annual news and results conference.

"It's not just automakers that have to pass on price increases, but especially suppliers such as us as well," Forschner said, adding that the pressure on costs was "immense," especially in mobility. As an example, he said the cost of round and flat steel had tripled since 2020.

Forscher and CEO Stefan Hartung said price increases and favorable exchange rates would allow Bosch to achieve sales growth of more than 6 percent for 2022, with earnings before interest and taxes (EBIT) of 3 to 4 percent, a slight downgrade from an earlier forecast of least 4 percent. First-quarters sales were up 5.2 percent, Bosch said.

"We can’t be satisfied with 4 percent" at a time when automakers are reporting double-digit margins, Hartung said, adding that figure would have to be increased in coming years.

Sales in 2021 were 78.7 billion euros ($83.14 billion), with an EBIT of 4 percent. 

Mobility Solutions sales were 45.3 billion euros in 2021, an increase of 7.6 percent, but EBIT was just 0.7 percent.

On passing on price increases, "We’re confident we will find an agreement with our customers," said Markus Heyn, the head of the Mobility Solutions unit, citing increased costs for raw materials, logistics and semiconductors. 

With global automotive production expected to grow less than expected, largely because of semiconductor shortages and the resurgence of coronavirus in China, Heyn said volume alone could not make up for these cost increases.

Bosch said its earlier global production forecast of 88 million vehicles for 2022 "probably won’t be met."

Bosch executives said the supplier had largely halted exports to Russia because of sanctions, with activities inside the country at a standstill. Hartung said Bosch’s Russian activities accounted for 1.2 billion euros, a relatively small amount, but that Bosch was trying to support its employees there "in line with regulations." 

He said he had "no news" about any possible repatriation of Bosch’s Russian assets.

Bosch, based in Stuttgart, Germany, ranks No. 1 on the Automotive News Europe list of the top 100 global suppliers with worldwide original equipment automotive parts sales of $46.5 billion in 2020.

The vast majority – 94 percent – of Bosch’s share capital is held by the private Robert Bosch Foundation, with the remaining shares held by the company and a corporation owned by Bosch family.

Reuters contributed to this report