BERLIN (Reuters) -German automotive supplier Bosch is aiming to be profitable this year but said that a definitive forecast is not possible due to economic and political uncertainties.
As a result, the company will need to pass on price increases to its customers, citing already-high energy and raw materials costs that have only been exacerbated by the effects of the war in Ukraine.
“The burden on our result is growing considerably due to steep increases in the cost of energy, raw materials and logistics,” Bosch’s finance chief Markus Forschner said.
The cost pressure is particularly high in Bosch’s core Mobility Solutions division, with steel prices three times higher than in 2020 and unlikely to change soon.
While Bosch increased sales in its core Mobility Solution business by 7.6% last year, to 45.3 billion euros, it generated an operating return of only 0.7%, after posting a loss the previous year.
“It’s not just automakers that have to pass on price increases, but especially suppliers such as us as well.”
The head of the Mobility Solutions division, Markus Heyn, said talks on price increases have been going on for a long time and that he was confident Bosch could reach agreement with the customer side.
Thanks to price increases and favourable exchange rates, the Bosch Group expects sales growth of more than 6% for the current year, after sales of almost 79 billion euros ($83.14 billion) in 2021, and a return on sales for 2022 of 3-4%.
($1 = 0.9502 euros)
(Reporting by Ilona Wissenbach; writing by Miranda Murray; editing by Jason Neely)