Hella reports a slump in profits

Hella reports a slump in profits

Massive bottlenecks in electronic components have significantly affected the sales and earnings development of the international automotive supplier Hella in the first six months of the 2021/2022 financial year. Hella presented the complete and final half-year figures today, thereby confirming the preliminary key data published on November 29, 2021. Accordingly, the Hella Group's currency and portfolio-adjusted sales fell by 2.6 percent to 3.0 billion euros in the first half of the year (June 1 to November 30, 2021). In the second quarter, sales fell by 11.9 percent after adjusting for currency and portfolio effects to 1.5 billion euros.

Due to reduced sales volumes and increasing cost burdens, the adjusted operating result (adjusted EBIT) fell to 156 million euros in the first six months (previous year: 269 million euros); the adjusted EBIT margin is 5.1 percent (previous year: 8.7 percent). In the second quarter, the adjusted EBIT margin was 4.1 percent (previous year: 12.1 percent). The group earned a good two-thirds less in the second quarter than a year earlier. The reported EBIT amounted to 149 million euros in the first half of the year (previous year: 94 million euros). The reason for the lower previous year's figures is the expenses recorded at the time for the program to sustainably increase competitiveness. 

"The market environment is currently characterized by major challenges. As a result of the massive bottlenecks in the global supply and logistics chains, global vehicle production fell drastically, especially in our second quarter," says Rolf Breidenbach, Chairman of the Hella Management Board. "Despite these adverse conditions, we held up well overall. Our automotive segment continued to perform significantly better than the overall market, which underlines our good strategic orientation in this area. In addition, our two other segments, Aftermarket and Special Applications, also recorded positive business development."

In the automotive segment, sales fell by 4.9 percent to 2.6 billion euros in the first half of the year (previous year: 2.7 billion euros). Nevertheless, the segment has developed significantly more strongly than the global automobile market, partly due to new large-volume series launches. This fell by more than 15 percent in the same period.

Prognosis lowered

In view of the business development to date, the expected lack of market recovery in the second half of the year and increasing cost burdens, Hella further reduced its sales and earnings forecast for the current financial year on November 29th. Accordingly, for the 2021/2022 financial year (June 1, 2021 to May 31, 2022), the company expects currency and portfolio-adjusted sales in the range of around 5.9 to 6.2 billion euros (previously adjusted: around 6.0 to 6.5 billion euros) and an EBIT margin adjusted for structural measures and portfolio effects of around 3.5 to 5.0 percent (previously adjusted: approximately 5.0 to 7.0 percent). Especially with a view to the third quarter of the financial year, the company sees major challenges in the form of lower production volumes and further increasing cost burdens against the backdrop of the ongoing material and component crisis.

"The industry environment remains challenging. We expect vehicle production to decline significantly in the current financial year. Component shortages are therefore expected to continue until 2023. The corona pandemic also continues to result in considerable uncertainty," says Hella CEO Rolf Breidenbach. “Nevertheless, we are confident that we will continue to develop significantly better than the overall market, not least on the basis of our established cost management as well as our innovative product portfolio and well-filled order book.”