The lighting and electronics specialist Hella
In the fourth quarter of the business year, Hella had to post impairment losses of 533 million euros. Because: Global vehicle production will in all probability also be significantly below pre-crisis levels in the coming years. This will lead to lower utilization of the global Hella production network, it said.
The Hella share fell in the morning by around 2.6 percent to 40.82 euros. In the current year it has already lost around 17 percent of its value in the wake of the market turbulence. From the point of view of analyst Gungun Verma of the US investment bank Goldman Sachs, the final results confirmed the weakness of the automotive business, both in the fourth quarter and in the full year. In terms of inflow of funds and cost control, however, Hella is on the right track.
The auto supplier had already published key data for the past fiscal year at the end of July and was hit hard by the consequences of the pandemic. While currency- and portfolio-adjusted sales fell by around 14 percent to 5.8 billion euros compared to the previous year, adjusted operating earnings before interest and taxes (adjusted EBIT) even plummeted by around 60 percent to 233 million euros. Hella has now confirmed the preliminary figures.
The reported operating result (EBIT) was minus 343 million euros after plus 808 million euros in the previous year. At that time, however, Hella had profited from the sale of the wholesale business. Hella intends to propose to the Annual General Meeting on September 25 that the dividend payment for the 2019/2020 financial year be suspended due to the net loss and negative market expectations.
Even before the Corona crisis, Hella felt the effects of the sluggish auto economy, and now the pandemic is also coming. “In view of the challenging market environment, we can be satisfied with our results overall,” said Breidenbach.
Despite the difficult conditions, Hella was able to achieve a positive adjusted free cash flow from operating activities. It was 227 million euros and thus only slightly below the previous year’s figure. Free cash flow is an important indicator, especially for investors and analysts, as it provides information about the company’s financial strength. If it is negative, money will be burned.
According to the information, Hella currently has a financial cushion of around 2 billion euros. The group sees itself well positioned to master the crisis. Despite the first signs of a recovery in the Chinese automotive market at the end of the fiscal year, Hella was unable to compensate for the considerable losses, especially in Europe and North America. Nevertheless, the automotive division continued to develop better than the market, said Breidenbach.
Hella has confirmed its recently issued forecast for the new 2020/2021 financial year that has been running since June. According to this, the Westphalians expect a currency- and portfolio-adjusted group turnover of around 5.6 billion euros to 6.1 billion euros, the adjusted profit margin before interest and taxes (EBIT margin) should be around 4.0 to 6.0 percent.
Because of the stresses caused by the Corona crisis, the auto supplier recently tightened its austerity course and is cutting hundreds of jobs. Breidenbach expects competition to become more intense and cost pressure to increase further. Around 900 jobs are to be cut in administration and development at the company’s headquarters in Lippstadt by the end of 2023. According to the manager at the annual press conference, there are also 300 to 450 additional jobs that are to be cut at other locations over the next three years.
According to the information, the global workforce has already been reduced by around 5,400 positions since August 2018. But the general market environment has once again changed significantly. This made further steps necessary. At the same time as the planned job cuts in Germany, Hella also wants to take a close look at its global locations.
Despite the crisis, Breidenbach wants to continue investing in research and development and assumes that the trend towards electromobility, assisted and autonomous driving and digitalization will play into Hella’s cards. Regardless of this, Hella must learn to act in shrinking, shrinking markets./eas/men/mis
ISIN DE000A13SX22
AXC0156 2020-08-14/11:58
Copyright dpa-AFX Wirtschaftsnachrichten GmbH. All rights reserved. Redistribution, republication or permanent storage without the express prior consent of dpa-AFX is not permitted.
–
