Bosch Reports 5.06% Growth In Q4CY12

Bosch announced its results for the quarter ending December 2012 (Q4CY12) yesterday. The company reported a healthy revenue growth of 5.06% to Rs 2131.8 crore, on a yearly basis. However, the margins were heavily pressured. On a YoY basis, the EBITDA of Bosch declined by 21.82% to Rs 266.14 crore and the net profit by 38.80% to Rs 172.06 crore.

This also marks the end of Bosch’s financial reporting year. In CY12, revenues for Bosch grew by a robust (relative to industry) 6.4%. This growth was despite the automotive market being weak and the subdued global economic scenario. Profitability, however, dropped because of higher material costs due to unfavourable exchange rates, higher depreciation on account of higher capital base and higher employee costs.

Bosch, which has most of its revenues coming in from the automotive sector, was directly affected by the marginal growth in automotive production. Moreover, the negative trend in medium and heavy commercial vehicles (M&HCV) and tractors affected the company to a larger extent. The growth drivers for Bosch proved out to be the Starter Motors and Generators division, automotive aftermarket and the non-automotive business.

Following are the updates in terms of divisions:

• Diesel systems: stagnated due to exports and weakness in M&HCVs and tractors
• Starter Motors and Generators: growth of more than 50% due to the success of new products
• Packaging Technology: completion the construction of new production facility to meet growing demand
• Power Tools: continuation of the double-digit growth
• Security Technology: growth of more than 30%
• Solar Energy and Thermo Technology: steady growth

To further concentrate on opportunities in the divisions of security systems, thermo technology and solar energy, Bosch created a fourth business sector ‘Energy and Business Technology’.

Although the results for Bosch have been pressured, we maintain our positive outlook on the prospects of the company. This is mainly because of the direct link of economic health to the automotive industry. Any improvement in the economic health would result in a revival in the auto industry and thus in the performance of Bosch. Moreover, its presence in other divisions offers promise and provides for high growth thus aiding to the overall performance of Bosch.