Despite the challenging macroeconomic situation, technology and service supplier Bosch managed to increase sales and results in the 2022 business year.
Technology and service provider Bosch managed to increase sales and results in the 2022 business year. According to preliminary figures, the Bosch Group generated total sales of €88.4 billion. Thus, sales increased by about 12% year-on-year, or about 10% after adjusting for currency effects.
EBIT (earnings before interest and taxes) from operations reached €3.7 billion. The profit margin from the operations is expected to be around 4%. Bosch Chairman of the Board Dr. Stefan Hartung, in his presentation on the company’s annual figures, said, “The challenging 2022 business year shows once again that Bosch has come out of the crises with tremendous innovative power. In an environment that continues to be challenging, we are securing our growth opportunities around the world with targeted investments and expanding our international presence. We want to bring ‘Technology for life’ to people around the world, thereby making a meaningful contribution to society, from climate-friendly heating to energy savings and sustainable mobility.”
Recently, Bosch announced that it will invest approximately €950 million over ten years in an engineering and manufacturing center in Suzhou, China. The center will create mobility solutions and products in the fields of electrification and automation, specially designed to meet local market demand. Bosch is also helping to elevate its status as Europe’s high-tech location: Hartung says, “The best example is the expansion of our wafer factories in Dresden and Reutlingen. We plan to invest an additional €3 billion in our semiconductor business as a contribution to counter the chip shortage in the mobility sector in the years to 2026.” said. Bosch also plans to focus more on expanding its business globally in locations such as Egypt, India, Mexico, the United States and Vietnam.
Global trade: Collaboration is needed for prosperity and climate action
For Bosch, the changes in the market and technology environment, especially driven by connectivity, automation and electrification, and the growing importance of sustainability will be the driving force of growth in the years to come. Additional demand in developing regions such as ASEAN countries will drive further growth of the market. In this environment, Hartung believes the company is well positioned in terms of the economic and energy policy situation. However, energy scarcity, which drives inflation, may adversely affect consumption and thus monetary stability in the long run. Therefore, Hartung welcomes the introduction of a restrictive monetary policy by the central bank. At the same time, he warns against the formation of global economic blocs. “The disintegration of economic systems threatens innovative power and well-being for all,” Hartung said. Most importantly, climate action needs international cooperation.”
Hartung sees the further development of renewable energy sources as a way to resolve the conflicting goals of environmental and economic sustainability. “Transforming energy systems needs to be affordable, not cause power outages in businesses or homes, and outshine fossil fuels wherever possible.” Hartung says Bosch is doing its part and increasing the speed in fuel cell and hydrogen technology. “When it comes to electromobility, we receive a consistently high rate of orders,” Hartung said. said. As a result, Bosch expects to achieve sales of €6 billion in this segment as early as 2026. Business related to e-axles and engines in China is predicted to turn into profit this year already.
Climate-neutral technology: The energy crisis is driving the demand
The energy and climate crisis is driving global demand for climate-neutral technology, despite the challenges it poses. This opens up various new perspectives for Bosch as well: the company already sells over €20 billion in household products. Dr. Christian Fischer, Vice Chairman of the Bosch Board of Directors and also responsible for the company’s Home and Building Technology business, said: “Our product portfolio can positively impact around 90% of household energy consumption. 85% of this figure is related to heating and hot water, and 15% is related to household appliances. said. Bosch has already increased its heat pump unit sales by 50% in Germany in 2022. The European heat pump market is expected to grow 25% to 35% per year from today to 2025, and around 40% for Bosch, enabling it to gain market share. That’s why the company is expanding its heat pump production capacity in Europe. Since the beginning of the year, another production site in Eibelshausen, Germany has been growing rapidly. Bosch sees further growth potential in the transformation of energy systems. “However, this transformation has to be affordable. The costs of renovation and retrofitting in buildings should not be underestimated.” This explains why Bosch is focusing on hybrid heating systems consisting of heat pump and gas boiler. The Vice President sees additional potential in the combined optimization of energy flows in vehicles and buildings for the future: “We electrify everything from bicycles to hydraulics, and we know what we need to do with buildings as well as cars.”
Business developments in 2022: Mobility business records highest sales growth
“Despite the semiconductor shortage and the weak economy, all business sectors have managed to increase their sales,” said Dr. Markus Forschner, Member of the Bosch Group Board of Directors and Vice President of Finance. said. Mobility Solutions, the largest business sector, once again reached its highest sales figure in 2022 with €52.6 billion. The 17% increase in sales was 12% after adjusting for currency effects. “The good news is that our sales grew faster than automotive production,” Forschner said. said. Still, Bosch is not satisfied with its profitability. Profit margins are burdened by cost increases throughout the entire supply chain, as well as upfront investments in transforming the company’s mobility business, Forschner said. The Industry Technology business sector reached €6.9 billion with a 14% increase in sales. After adjusting for currency effects, the increase in sales was 11%. According to Forschner, the acquisition of HydraForce and Elmo are key milestones for Bosch’s industrial technology business. Forschner said the Consumer Goods business sector has managed to boost sales slightly despite consumers’ significant reluctance to buy appliances and power tools. Sales rose 2% to €21.5 billion. After adjusting for currency effects, that figure rose to 3%. In the Energy and Building Technology business sector, growth reflected the unabated demand for energy efficient home and building technology. Forschner reported that sales rose to €7 billion. The 15% increase was 13% after adjusting for currency effects.
Business developments in 2022: Stronger growth in the second half of the year
“Encouragingly, all regions have significantly increased their sales,” Forschner said. We saw particularly strong growth in the second half of 2022.” Sales in Europe amounted to €44.8 billion. The 8% increase was 10% after adjusting for currency effects. “Growth in Europe was affected more than any other region by the war in Ukraine and its consequences,” Forschner said. said. In North America, sales were up 25%to €14.3 billion and the increase was 11% after adjusting for currency effects. Thus, North America became the region with the second largest sales growth among all regions of the Bosch Group. Forschner reported that Bosch’s development in the field of heating and air-conditioning solutions was particularly encouraging. Sales in South America amounted to €1.8 billion. Thus, sales in this region increased faster than any other region: 30%, or 21% after adjusting for currency effects. Forschner; underlined that the strong economy is the key factor in this growth” In the Asia Pacific region, sales increased by 12% to €27.5 billion, or 8% after adjusting for currency effects. According to Forschner, the region has benefited from strong growth in India. In contrast, China’s changes to its Covid-19 policy dampened business developments there at the end of the year.
Outlook for 2023: Global economy loses momentum
Bosch predicts an economic slowdown and expects the global economic outcome to grow by less than 2% this year. “The global business environment already reflects economic burdens. Rising interest rates are putting pressure on investments, especially construction activities and private consumption.” In Europe, this is exacerbated by the marked rise in energy costs even after recent declines. In China, on the other hand, after the zero Covid policy is abandoned, a recovery will likely begin after the massive waves of infections subside. According to Forschner, Bosch is feeling an economic slowdown in key sectors and expects to see continued cost pressures in its value chains. At the same time, substantial capital expenditures are required to finance growth in future technologies. “An innovative company like Bosch must make high upfront investments,” Forschner said. said. Bosch aims to increase its sales and further increase its profitability throughout 2023. “We are on track to reach our long-term target profit margin of at least 7%,” Forschner said. In this volatile sea of economy, we will strike a balance between maintaining our profitability and financial strength on the one hand, and investments and possible acquisitions on the other.”
Source: Egirisim / Prepared by Irem Yildiz