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Taking normal inflation into account, Bosch exceeded its business targets in the challenging 2022, planning to grow annual sales by an average of 6% to 8% over the next few years, with a profit margin of at least 7%.
“Our goal is to develop in every region of the world and become one of the top three suppliers in our relevant markets,” said Dr. Stephen Hartung, Chairman of the Board of Management of Robert Bosch.
Bosch is realigning its mobility business to adapt to changing market and customer needs. The aim is to be able to meet the needs of existing and new customers better and faster with customized solutions from a single source. “We want to continue to be a leading technology provider and the partner of choice for our customers in the mobile industry. We are preparing for this,” said Hartung. The Mobility Solutions business unit, which today employs around 230,000 people at more than 300 locations in 66 countries around the world, will now be called the “Bosch Mobility” business unit. Within the company, they will be in charge of their own business and have their own leadership team.
mobile business
From 1 January 2024, individual departments will in some cases be redistributed and assigned horizontal responsibilities. Bosch’s chairman announced that he aims to grow the newly restructured mobile business by an average of around 6 percent a year through 2029, when annual sales will exceed 80 billion euros ($90 billion).
One of the pillars of its future growth will be the automotive software market, which is expected to triple by the end of the decade. In this market, Bosch Mobility will offer its customers software solutions for operating systems and domain-specific applications for software-defined vehicles.
Bosch is also aggressively expanding its automotive electronics business: In order to meet the growing demand for silicon carbide chips, the company plans to take over part of the business of US chipmaker TSI Semiconductor. Over the next few years, Bosch hopes to invest more than 1.4 billion euros in the American company’s Roseville, California, plant and restructure its manufacturing facilities. Starting in 2026, the first chips will be produced on 200 mm wafers based on the innovative material silicon carbide (SiC).
Total sales in 2022
In 2022, the technology and services provider’s total sales will rise to 88.2 billion euros, up from 78.7 billion euros the previous year. That’s an increase of 12.0%, or 9.4% after adjusting for currency. Earnings before interest and taxes (EBIT) from operations were 3.8 billion euros, also up from 3.2 billion euros in the previous year.
The operating EBIT margin rose from 4.0 percent to 4.3 percent. Presenting the company’s annual figures, he said: “We have met the challenges of 2022 well – our sales and margins are higher than expected. Speed up.”
Despite the aftermath of the Covid-19 pandemic, the Bosch Group’s sales rose by 3.5% in the first quarter of 2023. Developments in North America were particularly favorable, with double-digit growth of 18.0%. In Europe, the company also posted strong growth of 7.7%.
a challenging year
“The first few months of the new financial year show that 2023 will also be a challenging year,” said Dr. Markus Forschner, Chief Financial Officer of Robert Bosch.
He explained that he expects prices in raw materials and energy markets, as well as inflation, to remain high. Bosch predicts that by 2023, global economic output will grow by only 1.7%, and the year-on-year cooling will further expand.
Despite the poor economic outlook, Bosch is aiming for sales growth of 6% to 9% in 2023. Its operating EBIT margin target is around 5%. “In this way, we hope to get closer to our long-term goal of a margin of at least 7 percent,” Forschner said. “We have set ourselves an ambitious roadmap.”
The fight against climate change is causing huge upheavals in business and society, while also accelerating technological change. “This technological transformation is unlocking growth opportunities that we want to capture, both in our existing business areas and in related new areas,” Hartung said. “In this case, our ‘for a living’ The spirit of invention’ is ideal – not only with regard to the major trends of electrification, automation and digitalisation, but also with respect to software and artificial intelligence more than ever.”
investment in the future
“Despite the challenging environment, we can look back on a solid performance in 2022. Among other things, we have already laid the foundation for Bosch’s success in future markets,” Forschner said. All told, the company spent more than 12 billion euros last year securing its future. R&D spending increased to EUR 7.2 billion (EUR 6.1 billion in 2021), representing 8.2% of sales (7.8% in 2021). Capital expenditures also increased by EUR 1.0 billion to EUR 4.9 billion. The equity ratio increased slightly to 46.6% (2021: 45.3%). In addition to the upfront investment, ensuring exceptional delivery capabilities in times of great uncertainty takes capital. This resulted in a negative free cash flow of EUR 4 billion last year. As Forschner points out: “Even if Bosch did have the necessary funds and a very strong financial position, we had to strike a difficult balance between investment and cost discipline.”
Energy and Building Technology
Hartung sees the reform of the global energy system in particular as a source of additional business potential: “Growth will not just be in our path, even if we are very successful there,” says Hartung. “When it comes to the electrification of heating systems, our heat pumps are very popular.” At Bosch, this segment was as much a driver of above-average growth as automotive electrical systems. The company is expanding its heat pump capacity and hopes to have a total investment in Europe of more than 1 billion euros by the end of the decade. Following the start of series production in Eibelshausen, Germany earlier this year, Bosch recently announced the construction of another plant in Dobromerz, Poland. To make modernizing heating systems affordable for homeowners, Bosch is also promoting hybrid solutions; combining existing gas boilers with smaller-scale heat pumps can often eliminate the need for extensive retrofits. This can reduce modernization costs by up to 30% compared to a heat pump-only solution.
Bosch expects the European heat pump market to grow by 20% in 2023 – the associated sales growth is more than twice as fast as Bosch. This rapid growth is expected to continue until the middle of this century. Bosch is also benefiting from initiatives to improve the energy efficiency and cost-effectiveness of commercial buildings. With the acquisition of Hörburger AG, the company recently expanded its product portfolio to include building automation.
Industrial Technology and Consumer Goods
Bosch is also on a growth trajectory in its industrial technology and consumer goods businesses. In the industrial technology business area, for example, sales have now climbed to almost 7 billion euros. “The sales revenue target of 10 billion euros for 2028 is very important to be among the leaders in industrial technology,” said the Bosch chairman.
He adds that the recently acquired HydraForce and its approximately 2,100 employees will play a central role in this: “The acquisition of the American specialist has not only tripled our compact hydraulics sales,” he says. “Additionally, HydraForce’s dealer network will give us better access to the US market.” Bosch Rexroth is also entering a new area — the electrification of mobile machinery. The division recently launched the eLion program, a complete product portfolio in this area. It has also secured significant orders from off-highway vehicle makers. “Electrification of tractors, concrete mixers and excavators is exactly what the industry has been waiting for.”
The consumer goods business unit has also set ambitious growth targets: Bosch Power Tools, for example, aims to more than double its sales by 2030 and pass the 10 billion euro mark. To achieve this, the division has invested around 300 million euros in initiatives such as expanding its accessories business last year. Nine-figure investments are also planned for this year. One of their focuses will be North America, which alone accounts for more than 40% of the global power tool market. BSH Hausgeräte is also strengthening its local presence: For example, from 2024 it will produce refrigeration equipment for the North American market at a new plant in Mexico.
Fiscal Year 2022
Mobility Solutions, the company’s largest business segment, posted a strong sales increase of 16.0% (12.1% after adjusting for currency effects) to EUR 52.6 billion. Operating margin was better than expected, rising to 3.4% from 0.7%. “Despite chronic chip shortages and lackluster growth in auto production, we were able to significantly increase mobility-related sales,” Forschner said.
“And we were also forced to adjust our prices to accommodate the increased costs.” The industrial technology business unit benefited from a strong machinery market. Its sales rose by 13.9 percent (11.0 percent after adjusting for currency effects) to 6.9 billion euros. Its EBIT margin increased to 9.8 percent. The Consumer Goods segment was affected by a sharp drop in demand for household appliances and power tools. Despite this, sales rose by 1.5 percent (1.6 percent after adjusting for currency effects) to 21.3 billion euros. In addition, the gradual exit of its Russian business has weighed on earnings. Its operating EBIT margin was 4.5%, compared with 10.2% in the previous year. The Energy and Building Technologies business unit will post significant growth in 2022, growing by 17.4 percent (15.9 percent after adjusting for currency effects) to EUR 7.0 billion. One of the drivers of this demand is the high demand for climate-friendly heating technologies. The EBIT margin was 6.0% (2021: 5.1%).
regional development
“In all regions, the Bosch Group will be able to achieve significant sales growth in 2022 – especially in the Americas,” Forschner said. North American sales rose 25.7 percent to 14.4 billion euros. Adjusted for currency effects, the figure was 12.3%. In South America, sales amounted to 1.8 billion euros. This was an increase of 26.0%, or 16.7% after adjusting for currency effects. European sales revenue increased by 7.3% year-on-year, totaling 44.3 billion euros. Adjusted for exchange rate effects, the growth rate was 9.8%. In the Asia-Pacific region (incl. other regions), sales rose by 12.8 percent to 27.7 billion euros. Adjusted for exchange rate effects, the growth rate was 7.1%.
Increase in global headcount by 18,724 in 2022
As of December 31, 2022, the Bosch Group had a total of 421,338 employees worldwide, an increase of 18,724 over the previous year. Headcount increased in all regions, with most of the growth occurring in the Americas and Asia Pacific. In research and development, the number of employees increased by 9,422 to 85,543. Of this number, approximately 44,000 are employed in software development. — trade arab news agency
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