Stuttgart The Bosch technology group maintained its earning power in the past year despite a difficult environment. According to preliminary figures from Friday, the return on sales was just above the previous year’s figure at 4.2 percent. The Bosch Group increased its sales by a good 12 percent to 88.4 billion euros, 20 percent of which in China. Adjusted for exchange rate effects, growth was ten percent.
“The demanding 2022 fiscal year has shown once again that Bosch is crisis-proof and at the same time full of innovative strength,” said Bosch boss Stefan Hartung, who has been running the foundation company for a good year now. This year, the company intends to grow further and strengthen its earning power.
This is particularly necessary in the largest Mobility division, the motor vehicle business. The world market leader increased its sales there by 17 percent to 52.6 billion euros. Hartung assured that the meager return of around one percent could be increased last year.
But Bosch has to make advance payments for the expensive transformation to electromobility. Because so far the company has not made any money with the components that were developed exclusively for electric cars. According to Hartung, China will play a key role here.
The competition is particularly fierce when it comes to the powertrain. Not only suppliers, but also car manufacturers want to do business. “This year we expect our business with e-axles and motors in China to break even,” announced Hartung. This is not the case in other regions.
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And that’s not all. Bosch now generates most of its sales in China with Chinese suppliers of electric cars and not with the German car manufacturers, who recently suffered significant sales declines in the Middle Kingdom.
Bosch recently announced plans to invest around 950 million euros over several years in a new center for research, development, and production at the Suzhou site. After the chip factory in Dresden, this is the largest single investment in the company’s history. With Bosch’s power electronics, the Chinese manufacturers of electric cars will become even more powerful and thus more dominant in their home market than they already are.
The investment caused a stir because there are currently many calls in politics and business to become less dependent on China because of the geopolitical risks and ongoing violations of human rights. Hartung referred to large investments in India, Vietnam, Egypt, Mexico and the USA totaling well over a billion euros in order to be even more broadly positioned in the future. But withdrawing from China is not an option for him.
Recovery in China plays a key role
On the contrary: the hoped-for recovery in China plays a key role in his outlook for the current year. “The stimulus can only come from China because interest rate increases in Europe and the USA are having a dampening effect on demand,” emphasized Hartung, who also has regional responsibility for China in the group management.
CFO Forschner is also noticing a slowdown in the economy in important sectors and expects ongoing cost pressure in the value-added chains. At the same time, a considerable investment of capital is necessary to finance growth in future technologies.
“An innovative company like Bosch has to do a lot of upfront work,” emphasized the CFO. “In economically rough seas we will keep the balance – between securing our profitability and financial power on the one hand and investments and possible acquisitions on the other.”
Yield should increase again
According to Bosch, it needs an operating return of seven percent in order to be financially independent in the long term as a company that is not listed on the capital market. The group is aiming for this goal by 2024/25, said Hartung. In recent years, this mark has been missed due to the transformation to electromobility and declining global car production since 2017.
This year, Bosch expects production of 86 million vehicles after 85 million in 2022. Overall, Bosch is planning electromobility sales of six billion euros for the current year. The management did not want to say how high the turnover is at the moment.
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The company also costs a lot of money by hiring software engineers on a massive scale. Their number increased last year by 6,000 to 44,000 in the group. Of these, more than one in three works in India. “A further 10,000 are to be added by the middle of the decade,” announced Personnel Manager Filiz Albrecht.
However, there are no special programs to specifically hire software specialists who have become free after the waves of layoffs at the large US tech companies. Albrecht relies on the image: According to surveys, Bosch is one of the most attractive employers in the world. In total, the group employs a good 420,000 people, 18,400 more than a year earlier. A third of the employees work in Germany.
The other divisions make up for the difficult car business. However, the boom in demand for household and electrical appliances has weakened significantly. Bosch is feeling the reluctance of household appliances and power tools. Revenues only increased by two percent to 21.5 billion euros. The Industrial Technology division, on the other hand, achieved sales growth of 14 percent to 6.9 billion euros.
Energy and building technology benefited from high demand. According to the CFO, sales rose to seven billion euros. Since 2018, Bosch has invested 400 million euros in the heat pump business. Another 300 million euros are to be added by the middle of the decade.
The managing director responsible for this, Christian Fischer, who is also Hartung’s deputy at the top of the group, reports that the heat pump business has grown by 50 percent. This is driven by the climate targets set by politicians. In the EU, the number of installed heat pumps is expected to increase sixfold to 30 million in this decade. Bosch wants to be part of this.
The chip business is also one of the growth drivers. Bosch has confirmed that it will invest three billion euros in expanding its semiconductor business by 2026. The Swabians also have enough money for a new commercial for micromechanical sensors with the Stuttgart cult rappers “Die Fantastischen Vier”.
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