German auto supplier and technology company Robert Bosch on Wednesday said it expected automotive production to fall by at least 20% this year, as the coronavirus pandemic slams the brakes on factory production lines and saps demand.
"We are bracing ourselves for a global recession that will also have a considerable impact on our own performance in 2020," Bosch Chief Financial Officer Stefan Asenkerschbaumer said in a statement.
"Given the many imponderables, we feel unable to make a reasonable forecast for the Bosch Group for the year as a whole. It will take a supreme effort to achieve at least a balanced result."
(Also read: How Covid-19 is likely to take toll on global auto industry in 2020)
To cut costs, Bosch has pushed out time frames for making investments, reduced working hours for half of its staff in Germany and imposed salary reductions. Managers and executives are taking a 20% pay cut in April and May.
"Even if production has been ramped up again in China, and European industry is preparing for a ramp-up of its own, we have to steel ourselves for a severe global recession over 2020 as a whole," the company said.
In January, before the coronavirus crisis had become a global pandemic, Bosch warned that global car production may have already reached its peak and released preliminary full-year earnings which showed weaker demand in Asia.
(Also read: Coronavirus impact: Global auto output could fall by nearly 20 million this year)
Bosch sales remained almost flat at 77.7 billion euros ($84.26 bln) last year, but earnings before interest and taxes (EBIT) fell 38% to 3.3 billion euros, down from 5.4 billion euros a year earlier, with the EBIT margin dropping to 4.2% from 7% in 2018, it said.
In the medium term, Bosch plans to return to a roughly 7% margin from operations.
The EBIT margin in its mobility services division, which includes automotive parts, fell to 1.9% last year as the Stuttgart-based supplier was forced to invest in the shift from combustion-engined to electric cars and to restructure its business.
Research and development expenditure amounted to 6.1 billion euros, or 7.8% of sales, Bosch said.
Group sales have continued to show weakness, dropping by 7.3% in the first quarter with the Mobility services segment showing a 7.7% decline.
Separately, Bosch said it will be capable of producing half a million face masks a day after using its special purpose machinery unit to build a production line for face masks.
This story has been published from a wire agency feed without modifications to the text.