Mainland China, Bosch and ZF, which once dominated the global parts list, also cut their expenses and jobs in the second half of last year, and the news of income warning was even reported in newspapers. In the sense of crisis, everyone lowered their short-and medium-term performance expectations in succession, trying to make a difficult transition the night before the drastic changes in the industry.
COVID-19 swept the world, and this anxiety was once again put under a magnifying glass. Just recently, the mainland group was unable to cope with the impact of the epidemic. According to German media reports, the group is about to launch a cost-saving plan of hundreds of millions of euros, and further layoffs are possible in the future to cope with the decline in market demand caused by the epidemic virus.
Almost at the same time, ZF also announced that due to the decline in demand caused by the epidemic, the company plans to lay off10.5 million people by 2025, accounting for about 10% of the current total number of employees.
These former strong players, big players who have been profitable all the year round, have competed before, whose bayonet is sharper and whose boxer is more powerful. Nowadays, under the pressure of cash flow and business transformation, the dimension of everyone's concern has long changed. What we are most concerned about now is the depth of the pocket, the thickness of the shield, and who can live longer on the basis of ensuring the basic disk.
The epidemic is at its peak and crocodiles are also very anxious.
Elma, CEO of Continental Group? Degenhardt told employees in a recent internal video conference that the company plans to launch a cost-saving plan of hundreds of millions of euros, and does not rule out the possibility of further layoffs. The person in charge said that such a decision was painful, but the management had no choice. At present, the company cannot provide any employment security for some positions.
Although a spokesman for Continental declined to comment on the report, as early as March this year, at the annual press conference, some senior executives revealed plans to further cut costs by considering medium-term market development.
The general environment is not optimistic.
With the spread of COVID-19 virus to Europe, as a traditional automobile industry power, the development of the whole industrial chain slowed down sharply, and the automobile sales even plummeted by 78% in April. This aspect is inseparable from the government's tightening of economic measures. The closure of terminal stores and the continuous blockade of neighboring countries have also brought a heavy blow to sales.
Angela. Merkel) The government launched an economic stimulus plan in Germany at a cost of 654.38+03 billion euros, but the relevant policies ignored the demands of car companies for government incentives and special treatment.
According to foreign media reports, the CEO of Continental Group is not satisfied with the government's fiscal stimulus measures. He even directly stated that a series of policies will not stimulate the development of the automobile industry. "We have given up our expectations of the government's economic stimulus plan and can't expect politicians to provide any recovery help."
Just recently, ZF issued a memorandum of strategic contraction. Due to the impact of the epidemic on the production and sales of new cars, the company plans to lay off 65,438+05,000 people by 2025, accounting for about 65,438+00% of the total number of employees at present.
In an email to employees, ZF announced that this round of layoffs will cover 12000 to 15000 people, half of whom will be in Germany. According to the latest annual financial report of the company, by the end of 20 19, they have148,000 employees worldwide, which means that nearly 10% employees will be affected by layoffs.
"Due to the freezing of customer demand, we will have a serious financial loss in 2020."
Wolf Henning, CEO of the company? Scheider wrote in an e-mail memo that these losses forced them to become financially independent and began to deal with potential cash flow problems. This crisis will last longer. Even in 2022, it is expected that it will be difficult for ZF to achieve the established sales target.
It is an unavoidable fact that these big players, who have never been short of money in the past, are now determined to reduce their business scale because of financial problems and press the "pause button" for some non-core businesses.
At the beginning of May this year, Bosch CEO Volkman? Denner said at the annual press conference that the epidemic has made the automobile industry question the long-term presupposition of autonomous driving and globalization, and the full impact of the epidemic will take several years to be fully known.
Due to the persistent impact of the epidemic, some investments in new information technology projects, plans to expand factory production capacity and autonomous driving technology that Continental originally planned to invest in 2020 have been temporarily put on hold.
At present, the company can't confirm the specific time to restart these key businesses, but the chief financial officer Wolfgang? Schaffer is optimistic about the temporary suspension of autonomous driving business. "If the investment in L4 and L5 autonomous driving is delayed for six months, it does not mean that we will lose the market, because the gold market in this emerging field will not appear until 10 years later."
Dull first-quarter results
With the impact of the epidemic, the financial data of parts companies are very bleak.
In the first quarter just past, Continental Group's sales amounted to 9.84 billion euros, which was higher than previous internal expectations, but still lower than 1 1 billion euros in the same period last year. In addition, the Group's earnings before interest and tax in this quarter decreased to 430 million euros, compared with 820 million euros in the same period of 20 19, a decrease of 47%.
The mainland said in a statement that the current environment is still full of too many uncertainties. For example, the duration and severity of production interruption are still difficult to predict, and the negative impact on supply chain and market demand exceeds the company's expectations.
It is worth mentioning that due to the impact of the epidemic blockade ban on core markets, including the United States, the mainland expects its performance to be even worse in the second quarter. After the investment decreased by 26% in the first quarter, they will continue to seek a 20% investment contraction.
As of April this year, Bosch has been forced to close about 65,438+000 factories around the world due to the epidemic. A Bosch spokesman has revealed that even if all factories resume normal operations and produce 300 million parts every day, the coronavirus crisis will leave a far-reaching impact in other aspects.
Bosch sales fell in the first quarter compared with the same period last year? 7.3%, the worst 3? In June, it decreased by 17%. Affected by the epidemic and the global economic downturn, the company predicts that the cumulative global automobile production will drop by at least 20% in 2020.
French auto parts giant Faurecia is also facing the same problem. Its sales in the first quarter decreased by 65,438+03.5% year-on-year to 4.33 billion euros.
In March this year, the company abandoned its previous financial goal and applied for a loan of up to 800 million euros. According to Faurecia's forecast, the market situation in Europe and North America will be more severe in the second quarter due to the persistent impact of the epidemic, and this passive situation will not improve until the second half of the year.
Valeo, a French parts giant, also said in April that in the face of the production and marketing crisis caused by the new official pneumonia, the company has taken measures such as drastically cutting costs. In the first quarter just past, their revenue dropped from 4.84 billion euros in 20 19 to 4.45 billion euros, down 8% year-on-year.
The supplier said that in view of the increased uncertainty related to the epidemic in the second quarter and the second half of the year, they suspended the release of any performance forecast for 2020. As of April, the COVID-19 crisis has led to the closure of production lines and exhibition halls in Valeo's major markets, with sales in Asia (including China market), the Middle East and the Pacific region having the largest decline.
Although Valeo's spokesman said when announcing the quarterly results, the company still has an unused credit line of 2.3 billion euros, which has enough prepayment liquidity to resist the epidemic crisis. However, in early April, Valeo received an additional credit line of 654.38 billion euros, and many senior executives, including the CEO, have also accepted the salary reduction plan arranged by the company.
Left-handed borrowing, right-handed acquisition
According to financial data, Borg Warner's performance in the first quarter was unsatisfactory, with net sales of $2.28 billion, down 1 1%, and net profit of $654.38+29 million, down 19%.
Due to the supply chain problems caused by COVID-19, Borgwarner also temporarily reduced the salary of the company's senior management and board members by about 20%, and temporarily reduced the basic salary of salaried employees by 65,438+00%. In order to improve the company's cash flow, the company has adjusted the revolving credit line in March this year, raising it to $65.438+$50 million. By the end of April, Borgwarner had obtained another deferred loan of $750 million.
Despite this, Borg Warner still said that it has already cooperated with Delphi (Delphi? Technologies), they expect to complete the acquisition of the latter by the second half of 2020.
The acquisition of Delphi will be the biggest transaction of Borg Warner in recent 10 years, aiming at strengthening Delphi's expertise in the field of power electronics and optimizing Borg Warner's investment portfolio in the field of clean technology. It is widely believed in the industry that the acquisition of Delphi has consolidated Borgwarner's leading position as a complete supplier of electrification solutions in the future.
Borgwarner is just a typical case of left-handed borrowing and right-handed acquisition.
According to the incomplete statistics of the automobile commune, in order to seize the interests of emerging fields such as electrification and autonomous driving in advance, the parts giants have never stopped the pace of mergers and acquisitions and capital operation this year.
Despite performance bottlenecks and cash flow problems, ZF acquired Wabco, an American supplier of commercial vehicle parts, for $7 billion at the end of May. From the perspective of the industry, although the two companies reached the relevant agreement as early as 2065438+March 2009, there are still some risks in the acquisition of ZF when the COVID-19 epidemic is rampant and the financial data is dim.
In February this year, French supplier Faurecia announced the completion of the acquisition of SAS and repurchased the remaining 50% shares from Continental Group for 225 million euros.
In mid-April, Michelin announced that it had signed a letter of intent for long-term cooperation with Swedish startup Enviro, intending to acquire 20% of the company's shares, totaling about 3 million euros, and become the largest shareholder of the latter. Michelin's move is intended to lay out the tire recycling industry and lay a technical and R&D foundation for a sustainable product portfolio.
Acquisition and integration are only part of the self-revolution.
With the arrival of the turning point of the industry, the parts giants began to "slim down" constantly, selling or divesting those departments that are not important in the medium and long-term strategic planning to concentrate funds. This also gave birth to Weiner (former Electronics Division of Autoliv), Delphi Technology (former Powertrain Division of Delphi), Andoto (former Seat Division of johnson controls) and other emerging companies.
Of course, under the overall downward trend of the industry, similar divestiture actions are often not easy to be smooth. Continental, for example, has been preparing to spin off its powertrain division. They had hoped to conduct an initial public offering (IPO) in the first half of this year, but due to the sharp decline in profits, they had to postpone the relevant listing plan until 2020.
Unexpectedly, COVID-19 hit the whole industrial chain hard, and the board of directors of the company had to make the worst decision: it decided not to implement the spin-off plan for the time being this year, and then consider it separately after the market and capital environment improved.
In the era of traditional fuel, the parts giants who make huge profits, like high-speed buses, have been enjoying the envy of the industry on a stable track.
However, at the moment when the growth engine is turned off, these high-speed buses have to adjust their tracks and reverse their direction at the turning point of the "new four modernizations", even at the expense of selling assets and traveling light, in order to cope with the technical and financial crisis brought about by the transformation.
The appearance of COVID-19 made the bus at the turning point fall into a quagmire again, and it was impossible to keep the high-speed operation in the past. The efforts to get out of the quagmire not only test the pattern of decision makers, but also relate to the strength of enterprises in technology, strategy and capital.
Text/North Shore
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