Bosch flags further cost cuts after giving 'subdued' outlook for 2024
FRANKFURT (Reuters) -Bosch, the world's largest automotive supplier, on Thursday warned of further cost cuts and staff reductions, forecasting stagnating vehicle production that will keep a lid on profit margins in 2024.
"For 2024, we aren't expecting any economic tailwind," Chief Financial Officer Markus Forschner said at the group's annual press conference. "Restructuring and process improvements will also have a negative impact at first, with their positive effect coming only after a delay."
Forschner said cuts were necessary to make sure Bosch remains competitive in an environment where most of its big peers, including Continental and ZF Friedrichshafen, have all announced layoffs.
He said any cuts would be put in place "with a sense of proportion", not elaborating how many of the group's 429,416 employees would be affected.
Bosch is well-positioned for deals but in no rush as it waits for the right targets, CEO Stefan Hartung said, declining to comment on a report saying Bosch was among parties interested in assets worth over $6 billion from Johnson Controls International.
Bosch said it will supply the first Chinese carmakers' projects in Europe in the next few years, adding it is also increasing capacities in China, especially in the braking systems business.
Turning to India, Hartung said it is a "huge opportunity" market but not as big as China, and that it would likely not experience similar growth rates as China did in the 1990s.
Bosch expects to resolve issues with 48-volt-system parts, which have caused losses for its contractor Mercedes, by the end of the second quarter of this year.
For 2024, Bosch expects revenues to grow by 5%-7%, compared with an increase of 3.8% last year. Its margin on earnings before interest and tax from operations will remain stable at best compared with the 5.3% generated in 2023.
Forschner said these targets were ambitious given first-quarter sales were down 0.8% year-on-year, reflecting more challenging conditions for the global automotive sector, including higher costs and a fierce pricing battle in China.
(Reporting by Christoph Steitz, Ilona Wissenbach and Andrey Sychev; Editing by Chizu Nomiyama)
