© Hella Electronics Production | August 11, 2020
Declining market environment forces HELLA to reduce headcount
In a difficult market environment, based on preliminary figures, automotive supplier HELLA generated lower group sales than during the previous year. "We have to face the challenging market conditions with foresight and focus in particular on our cost structures," says Dr. Rolf Breidenbach.
Group sales declined by 14.3% to EUR 5.8 billion compared to EUR 6.8 billion during the previous year. Adjusted earnings before interest and taxes (adjusted EBIT) amounted to EUR 233 million, down from EUR 572 million during the previous fiscal year. The reported EBIT amounts to minus EUR 343 million, which the company says it due to non-cash impairments totalling at EUR 533 million. "In an already declining market environment, our business development last year was additionally burdened by the Covid-19 pandemic," says HELLA CEO Dr. Rolf Breidenbach. "As a result, we have further accelerated our already ongoing cost programmes. As of March, we have introduced additional temporary measures such as short-time work and an even stricter cost control programme. This enabled us to cushion the hard market decline caused by Corona, but, as foreseeable, only partially compensates for the associated losses." The company’s outlook for the current fiscal year 2020/2021 reflects the market uncertainty and reduced vehicle production. HELLA expects group sales in the range of around EUR 5.6 billion to EUR 6.1 billion. "With our business model, we are well positioned as a company for the future and are a technology leader with many products in the electronics and lighting areas," says Dr. Rolf Breidenbach. "But there is still a high degree of uncertainty as to how vehicle production will develop in the future. Due to the significantly reduced market volumes and the high investment requirements in the industry, competitive intensity and cost pressure will continue to increase." In order to strengthen the company's position in the face of challenging market conditions and increasing price pressure in the long term, company management has decided on a long-term programme to increase its competitiveness. On the one hand, this includes further increased investments in automotive market trends, automation and software know-how. On the other hand, further structural adjustments in HELLA's worldwide location network are being considered. The company says it is planning to reduce the number of administrative and development positions at the its headquarters in Lippstadt by around 900. The personnel adjustments are to be made in the mid term up to the end of 2023. To this end, discussions with employee representatives will be commenced promptly. "We have to face the challenging market conditions with foresight and focus in particular on our cost structures," says Dr. Rolf Breidenbach. "We have already done a lot in recent years and have continuously improved our cost base. As part of this process, we have also reduced our global workforce by around 5,400 positions since August 2018. But the general market environment has now changed significantly once again. There is therefore no way around further structural adjustments. This is the only way we can make HELLA fit for the coming decade. At the same time, we are continuing to invest consistently in future topics and are pushing ahead with automation in our production plants."