Bosch has warned that its Mobility Solutions division may face layoffs and that its target of achieving a 7% profit margin will be delayed by one to two years due to the company's prediction of a very challenging economic environment this year.
According to preliminary data released by Bosch, its sales in 2023 increased by 8% after adjusting for exchange rates, reaching 91.6 billion euros (approximately 98.56 billion US dollars), with a pre-tax profit margin of 5%.
Breaking down by business division, Bosch's Mobility Solutions division achieved strong sales of 56.3 billion euros, representing a 7% growth, or 11% after adjusting for exchange rates. "Our products are in demand in both traditional and emerging business areas. This will motivate us to continue our efforts for development," said Dr. Markus Forschner, member of the Bosch Group's board of management and Chief Financial Officer.
By region, sales in Europe grew by 6% to 46.8 billion euros, or 8% after adjusting for exchange rates. Sales in North America reached 15.2 billion euros, representing a 4% increase, or 8% after adjusting for exchange rates. Sales in South America were 1.7 billion euros, down by 6% year-on-year, but increased by 4% after adjusting for exchange rates. Forschner noted that the weakness of the Brazilian real was a decisive factor.
Additionally, sales in the Asia-Pacific region saw a slight increase of 1% to 27.9 billion euros, or 9% after adjusting for exchange rates. "These data reflect the sluggish development in various sectors of the Chinese economy. Our strong growth in India and Japan only partially offsets this weakness," Forschner said.
For 2024, Bosch still expects global economic growth to remain moderate, with a growth rate between 2% and 2.5%. "According to our estimates, global economic growth will not accelerate until 2025. Therefore, the outlook for all our key industries appears bleak," said Forschner.
"The year 2023 was more difficult than expected... The coming years will demand more from all of us," said Bosch CEO Stefan Hartung in a statement.
Bosch stated that it is negotiating with employee representatives in the Mobility Solutions division regarding "personnel adjustments" and added that, according to an agreement reached with the Works Council, layoffs will not be considered before 2027. Additionally, Bosch will continue to recruit in promising business areas and invest $4.3 billion in employee retraining.
Nevertheless, Bosch has postponed its target profit margin timeline by one to two years. The company intends to further intensify efforts to improve costs and competitiveness to successfully enter future markets.
