Automotive lighting major Hella has announced that despite the continuing highly negative effects of the Covid-19 pandemic on the global automotive industry, it witnessed better than originally expected results for the first three months of fiscal year 2020/2021.
The currency and portfolio-adjusted consolidated sales in the first quarter (June to August 2020) dropped by 10.6 percent to 1.4 billion Euro (Rs 11,573 crore). The adjusted earnings before interest and taxes (adjusted EBIT) dropped to 56 million Euro (Rs 462 crore). The Tier 1 says due to provisions amounting to 169 million Euro (Rs 1,397 crore) taken into account in the first quarter for the long-term programme to increase competitiveness in Germany, the EBIT for this period was -115 million Euro (Rs 950 crore)
Dr. Rolf Breidenbach, CEO, Hella said: “As before, the environment for the entire automotive industry remains very challenging. Global light vehicle production continued to fall in the first three months of the new fiscal year, although not as significantly as first assumed. This is also reflected in our financial figures. In fact, we have performed better than we expected we would back at the beginning of the fiscal year. It is particularly encouraging that we remained operationally profitable in the first quarter despite the challenging market environment. This is not least due to our consistent cost management.”
The company says due to the lower passenger vehicle and light commercial vehicle production figures, sales in the Automotive segment fell by 12.6 percent. Nevertheless, the business held up better than the market itself, particularly in Europe and America, and also recovered considerably compared with the fourth quarter of the prior fiscal year. The main reason for this is the continued reduction in capacity utilisation.
In the first quarter of fiscal year 2020/2021, sales in the Aftermarket segment decreased by 6.7 percent to 110 million Euro (Rs 909 crore). The key factor behind the drop in sales within the segment was, in particular, the lower demand in the independent aftermarket business caused by the Covid-19 pandemic. In contrast to this, business involving advanced workshop equipment has developed positively as workshops have recently begun to increase their investments again.
Outlook remains positive for coming months
After the performance of first three months, Hella says it confirms the company’s outlook for the current fiscal year (June 2020 to May 2021). For this time period, it expects currency and portfolio-adjusted sales to be in the range of 5.6 billion Euro (Rs 46,295 crore) to 6.1 billion Euro (Rs 50,428 crore), and an adjusted EBIT margin in the range of 4.0 percent to 6.0 percent.
Dr. Rolf Breidenbach said: “The outlook for the coming months is relatively positive for us. The signs indicating a slight recovery in the market during the current fiscal year have intensified again recently. Taking the continuing unforeseeable consequences of the global Covid-19 pandemic into consideration, there are still high levels of market uncertainty that could have an impact on the development of our business. We are, therefore, remaining with the previously stated outlook for the time being.”