German auto parts supplier Hella is preparing for a long low in the industry, and plans to cut around 900 jobs at its headquarters in Lippstadt by the end of 2023. Administration and development are affected, a specialist said on Tuesday. “The general market environment has now changed significantly again. Therefore, there is no way around further structural adjustments,” explained CEO Rolf Breidenbach.
Hella hopes that the job cuts and further cost-cutting measures at the locations in Germany will improve the operating result (EBIT) by 140 million euros. Despite this, the losses will continue to lead the family business to the edge of insolvency in the new fiscal year 2020/21 (as of the end of May).
Hella had made it through the crisis with reduced work hours, but is only expecting a slight recovery in 2020/21. However, Breidenbach emphasized that investments in automation and software were not to be saved. Revenue will be between 5.6 and 6.1 billion euros after having dropped 14 percent in 2019/20 to 5.8 billion euros.
Adjusted operating return on sales (EBIT margin) – without the cost of job cuts – should be between four and six (2019/20: 4.0) percent. That would be 220 to 370 million euros. In 2019/20, adjusted EBIT shrank by 59 percent to 233 million.
The bottom line, however, ends up in the loss zone: Because the company assumes that its own factories will not be as busy in the medium and long term as before the crisis, it wrote off a good half a billion euros on the production facilities. This led to an EBIT of minus 343 million euros.
In the past two years, 5400 jobs have been cut, especially abroad, a spokesman said. Now Germany is coming into focus, where at least a quarter of the global workforce employs 36,000 people.