Automotive industry crisis reduces Bosch's gross profit by 24%

The German company Bosch is facing a reduction of 24% in gross profit achieved last year compared to 2023, due to the crisis facing the automotive industry and the machine construction sector, according to an article published at the end of last week by the German news website Tagesschau, which belongs to the ARD television group.

According to preliminary data provided by Bosch to the cited source, gross profit fell by a third in 2024, reaching 3.2 billion euros, compared to 4.8 billion euros in the previous year. Turnover also suffered a decrease of 1%, reaching 90.5 billion euros, which means that the financial targets set for 2024 were not achieved. German journalists claim that the company's significant decline in operating profit was caused by weak demand at the European level.

Bosch CEO Stefan Hartung acknowledged the company's difficulties to Tagesshau, stressing that "despite all our efforts, we could not avoid economic realities." The automotive industry, the mainstay of Bosch's business, is facing increasing competitive pressure, especially from China, with production overcapacity and significant legislative uncertainties.

The source cited also indicates that another factor that has affected Bosch's performance is the below-expected growth in segments considered to be future-proof, such as electric mobility, heat pumps, hydrogen and sustainable technologies. Although Bosch has invested heavily in these areas, market development has not been fast enough to generate anticipated revenues. In addition to falling demand, the company continued to allocate considerable amounts to investments in these emerging technologies, which had an impact on profitability.

However, Markus Forschner, Bosch's CFO, said that no division of the company reported losses, even though some sectors suffered significant declines in revenue. In this context, Bosch continues to look for ways to optimize its operations to ensure sustainable growth.

Despite the difficult economic climate, Bosch intends to continue investing in the United States, where it has already allocated billions of euros for strategic acquisitions and the development of a semiconductor plant. Bosch management believes that, although the global economic environment remains uncertain, the US and Chinese economies could recover more strongly than previously expected.

Regarding the possible protectionist trade policies of the new Trump administration, Hartung emphasized that Bosch is prepared for various scenarios, but remains optimistic about maintaining a favorable business climate in the US. The company aims to strengthen its presence in the North American market, given that only around 20% of its revenue comes from this region.

To cope with the economic challenges, Bosch has begun a restructuring process, which includes staff reductions. In 2024, the company reduced its global workforce by 3%, reaching around 418,000 employees. It has also announced the elimination of more than 12,000 jobs, of which around 6,000 in Germany. This measure also targets strategic segments such as electromobility and automotive software, which has drawn strong criticism from unions and employee representatives.

Bosch representatives justify these layoffs by the low demand for electric cars and the postponement of important projects by car manufacturers. However, employees and unions warn that the staff reductions could continue if the economic situation does not improve.

Despite the difficulties, Bosch maintains its goal of returning to an upward trend in 2025. The company aims to increase revenue and profit, but a clear forecast will only be provided in May, with the publication of complete and audited financial results.