Automotive lighting and electronics product manufacturer Hella reported that due the coronavirus pandemic, the company has adjusted its company outlook for the current fiscal year 2019/2020.

Despite that Hella has developed sales and earnings that are in line with its expectations for the first nine months of the fiscal year 2019/2020, it still considered adjustment of the business guidance necessary. Hella indicated that on a provisional basis, currency and portfolio-adjusted sales decreased by 3.7 percent to EUR 4.8 billion (previous year: EUR 5.0 billion). The adjusted earnings before interest and taxes (adjusted EBIT) have sunk to EUR 347 million (previous year: EUR 410 million); accordingly, the adjusted EBIT margin is at 7.2% (previous year: 8.2%). In contrast, the adjusted free cash flow from operating activities has considerably improved in the nine-month period and is now at EUR 191 million (previous year: EUR 169 million).

Affected by the coronavirus epidemic and the response measures taken across the globe including increasing number of production shutdowns by customers, the estimated disruptions of the global logistics chains and the anticipated intensified decline in demand, have significant effects on the global automotive industry. Demands for automotive lighting and electronics solutions from Hella are thus impacted. The company was confronted with a significant decrease in customer demand at the end of third quarter.

Given the reduction in customer demand and the interruption of logistics chains, Hella said it does not expect to achieve its business objectives for the current fiscal year 2019/2020. The company is now anticipating currency and portfolio adjusted sales to be below the originally forecasted range of approx. € 6.5 billion to € 7.0 billion. As the visibility of the consequences of the pandemic is currently limited, it is not possible to estimate the amount more accurately at this time. Depending on the development and duration of the loss of business, also the EBIT margin adjusted for restructuring measures and portfolio effects is estimated to fall considerably below the originally forecasted target of 6.5% to 7.5%.

Hella is also planning to temporary shutdown its production facilities and preparing short-time work. A comprehensive set of measures to reduce staff and material costs was adopted. With these measures, which take into view recommendations from international, national and local authorities, the company is also helping to protect its workforce, to interrupt chains of infection and to contain the spread of the pandemic.