Vitesco Technologies, a leading international developer and manufacturer of state-of-the-art powertrain technologies for sustainable mobility, has announced its first-quarter results for 2022. The company’s sales were kept almost at the level of the previous year’s quarter, which was characterized by catch-up effects. This revenue was achieved despite persistent semiconductor shortages and lockdown-related production losses in China. Furthermore, Vitesco Technologies reports a new record order intake for its electrification business.
“We are particularly proud of our record order intake for electrification products. We were able to generate close to €3.7 billion with electrification orders in the first quarter of 2022,” says CEO Andreas Wolf.
Of this, €3.5 billion were attributable to the business unit Electrification Technology. In total, the company booked an order volume of €4.5 billion in the past quarter. This volume includes Hyundai Motor Group’s 2-billion-euros-order for the EMR4 axle drive, which was announced recently.
In addition, another major order has recently been booked: Vitesco Technologies will supply its battery management system to a global customer for around €1.7 billion. The system is designed for the 400-volt and 800-volt architecture of battery electric vehicles and enables wireless communication between the individual components. The start of production is planned for the first half of 2024.
Another solid quarter in a challenging market environment Group revenues in the first quarter were €2.26 billion (Q1 2021: €2.30 billion), a decrease of 1.9 percent. Adjusted for changes in the scope of consolidation and exchange rate fluctuations, revenues fell by 5.6 percent. Sales of electrification products totaled €263 million. Adjusted operating profit increased year-on-year to €45.2 million (Q1 2021: €17.1 million). This corresponds with an adjusted EBIT margin of 2.0 percent (Q1 2021: 0.7 percent). Net income in the first quarter amounted to €-11.3 million (Q1 2021: €-31.7 million). Earnings per share stood at €-0.28.
CFO Werner Volz: “The consequences of the COVID-19 pandemic, the continuing supply bottlenecks for important components such as semiconductors, price increases for raw materials and energy, and the effects of Russia’s aggressive war in Ukraine on global supply chains present us – like the entire industry – with major challenges. However, we were able to achieve a solid overall result again this quarter through a continued strict cost discipline. We even managed to exceed market expectations.” This led to an advance release of the preliminary financial figures for the first quarter of 2022.
Free Cashflow amounted to €48.2 million (Q1 2021: €239.1 million), mainly due to the build-up of inventories given the tight supply situation and an increase in trade receivables. The previous year’s figure was positively influenced by proceeds from the sale of business operations and spin-off effects.
As of March 31, 2022, Vitesco Technologies has a solid balance sheet with an equity ratio of 35.9 percent (March 31, 2021: 33.8 percent). The strong liquidity position was increased and further strengthened in the past quarter by the placement of a Schuldschein loan in the amount of €200 million.
The economic impact of the Russian war of aggression in Ukraine on the entire industry, including Vitesco Technologies, cannot yet be fully assessed. In the first quarter, however, the company’s overall result was burdened by the effects of inflation in the form of increased energy and transport costs. The consequences of the re-emergence of the COVID-19 pandemic in China were also noticeable in the first quarter. “The pandemic has affected the production capacities of our sites in China in various ways. Daily, we hold intensive talks with our customers and suppliers to ensure the stability and sustainability of production and supply to the greatest possible extent,” said CEO Andreas Wolf.
Business units’ results
Business unit Electrification Technology achieved revenue of €161.7 million in the first quarter (Q1 2021: €165.2 million). Despite the sustained demand for high-voltage electric drives and power electronics, the semiconductor market shortage situation also caused a drop in sales in the business unit Electrification Technology. The gross margin was nonetheless improved compared to the previous year’s quarter. Adjusted EBIT improved to €-68.1 million (Q1 2021: €-73.3 million). This corresponds to an adjusted EBIT margin of -42.1 percent (Q1 2021: -44.4 percent).
In the business unit Electronic Controls, revenues in Q1 2022 amounted to €946.3 million (Q1 2021: €984.4 million). Adjusted EBIT stood at €22.0 million (Q1 2021: €1.8 million), corresponding to an adjusted EBIT margin of 2.3 percent (Q1 2021: 0.2 percent). Loss of sales and additional costs due to the semiconductor market situation was particularly noticeable in this business unit. However, the adjusted EBIT margin improved by 2.1 percentage points compared to the prior-year quarter due to operational improvements.
In the Sensing & Actuation business unit, revenues came in at €885.9 million in Q1 2022 (Q1 2021: €876.5 million). Adjusted EBIT amounted to €84.3 million (Q1 2021: €67.1 million). This corresponds to an adjusted EBIT margin of 9.5 percent (Q1 2021: 7.7 percent).
The effects of the semiconductor shortage were also felt in this business unit, particularly in the form of higher material prices. The growth in demand in Germany and North America contributed to the improvement in results.
Expectations for the second quarter and fiscal year 2022
The global production volume is likely to be at the level of or slightly above the level of the previous year due to continuing supply shortages and associated higher logistics and material costs, production shortfalls due to local lockdowns in China, and the consequences of the Russian war in Ukraine. A slight decline in vehicle production is expected for Europe and China.
Vitesco Technologies expects sales of €8.6 to €9.1 billion for 2022. At the same time, the company assumes that the adjusted EBIT margin will be between 2.2 and 2.7 percent. A free cash flow of more than €50 million is expected for 2022.