The foundation group is reorganizing its automotive supply business.
(Photo: dpa)
Dusseldorf Higher prices and the transformation in the auto industry are having a negative impact on Bosch earnings. The foundation group gave an insight into its figures for the 2022 financial year on Thursday. The free cash flow slipped four billion euros into the red. Bosch can no longer finance its own investments and the higher costs from ongoing business. Bosch CFO Markus Forschner sees a need for action: “Even if we have the necessary funds and a high level of financial solidity, we have to strike the difficult balance between investing and cost discipline.”
The automotive supply business in particular is weakening. Although Bosch is the largest automotive supplier in the world, sales grew by around twelve percent to 52.6 billion euros, adjusted for exchange rate effects, and the operating return rose from 0.7 to 3.4 percent. But that makes the division the weakest in the entire group.
The profit margin of the industrial business was 9.8 percent, the consumer goods division 4.5 percent, the building technology division, which also includes the heat pump business, came to around six percent. The turnover of the entire group rose from 78.7 to 88.2 billion euros, the return was 4.3 percent, after four percent in the previous year.
Bosch: High investments squeeze margins in the automotive supply business
The auto parts business has high investment requirements. Like its competitors ZF and Continental, Bosch is suffering from the transformation from the earlier focus on mechanics and combustion technology to more software and electromobility. Bosch boss Stefan Hartung is not satisfied with the progress so far: “We want to increase our growth rate significantly,” he says.
First of all, Hartung makes corrections to the structure of the automotive supplier division. The division previously known as “Mobility Solutions” will be renamed “Bosch Mobility” and will operate within Bosch as a business sector with its own business responsibility, as can be seen from the group’s announcement on the annual figures. The division will also be divided into seven business areas, with a particular focus on software. The company sees the greatest potential for growth here. More than half of the research and development employees at Bosch Mobility are already software developers.
The chairman of the Bosch board of management also wants to expand heat pump capacities.
(Photo: dpa)
The goals for the Mobility division are ambitious: By 2029, Bosch wants to boost sales to over 80 billion euros. In order to achieve this, the division must grow by an average of six percent annually.
Heat pumps: Bosch is also electrifying the heating business
Hartung also sees great potential in the heat pump business. “We are encountering great demand with our heat pumps for the electrification of the heating system,” says the Bosch boss. The company therefore wants to expand its heat pump capacities and invest more than one billion euros in Europe alone by the end of the decade.
>> Read about this: Catching up with heat pumps – Bosch is building a new plant in Poland
For the current year, Bosch calculates overall sales growth of six to nine percent and an operating return of five percent. In the first quarter of 2023, revenue increased by 3.5 percent. “The start of the new financial year shows that 2023 will again be very demanding,” said CFO Forschner.
The costs are likely to remain high. For example, Bosch recently announced that it would invest around 1.4 billion euros in an existing chip factory in the USA.
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