Sales downturn at brose

sales downturn at brose

Everything is relative – even the business figures of a globally operating company like the brose group. Kurt sauernheimer, chairman of brose's management board, notes that the company performed better than the global automotive market last year, where sales fell by 1.2 percent. But there is also a decline in sales at brose – and especially at the coburg location, the decline is relatively severe at minus 2.4 percent. Sauernheimer is therefore quoted in a press release of the brose group with the words: "we cannot be satisfied with our result."

Weakening economy

The weakening economy in the automotive industry, according to the press release, is also affecting the business development of the brose group. In 2018, the supplier generated sales of around 6.3 billion euros, just below the previous year's level. "However, the result was significantly below expectations", as it is. "While we grew by six percent in the first half of the year, sales fell by seven percent in the second half", sauernheimer explains. The causes were unplanned costs for the start-up of new products and expenses for quality assurance. At the same time, upfront investments in products for the coming automotive trends had led to an increase in personnel and higher capital expenditure. As a result, fixed costs have "risen disproportionately". Higher raw material prices, punitive tariffs and special taxes would have put an additional burden on the return on investment.

Three french sites

The seat structures business unit, which is located at brose's headquarters in coburg, contributed around two billion euros in sales (equivalent to a minus of 2.4 percent) to the group's turnover. The tur business unit, based in bamberg, generated sales of 3.2 billion euros (minus 0.5 percent). The drives division from wurzburg generated over one billion euros (plus 0.9 percent).

And how does brose intend to react to this development? According to a press release, a cost reduction program has been launched "to strengthen the competitiveness of the brose group". In view of a very poor start to 2019 (five percent lower sales than in the first quarter of 2018), a number of short-term cost reductions have also been introduced, which will lead to cost savings in the "clear double-digit millions" in the current fiscal year as stated in the press release. In addition, brose has launched a cost-cutting program to adjust processes, structures and personnel capacity.

Kurt sauernheimer is confident in view of this bundle of measures: "with this program, we are securing the results we need to make the necessary investments for future growth from our own resources and to maintain the independence of our family business." In the next three years, the company also plans to invest around 1.5 billion euros in the development of new products, technical facilities and the expansion of sites worldwide.

Opportunities through mobility trends

Brose sees "more opportunities than risks" in the new mobility trends. Innovative products such as self-opening doors, flexible solutions for interiors and thermal management for electric vehicles have become "opportunities for further growth" offer. Unaffected by the overall rather negative development, brose is, by the way, sticking to a share in sales for employees, including temporary workers. According to its own figures, the family-owned company is making around 46 million euros available for this purpose. 

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