Bleak China autos outlook triggers raft of profit warnings
11/07/2019 10:57
FRANKFURT, July 11 (Reuters) - Auto suppliers Johnson
Electric Holdings 0179.HK and Sensirion SENSI.S slashed
their earnings forecasts on Thursday, blaming a slowdown in car
sales and pessimism about the prospects of a Chinese car sector
recovery.
The news is the latest to signal weaker global industrial
activity and ripples from a trade war that has already forced
China's Geely 0175.HK Swiss engineering company ABB ABBN.S
Germany's Aumann AAGG.DE and chemicals giant BASF BASFn.DE ,
to warn of turbulence ahead. urn:newsml:reuters.com:*:nL8N24A1B9 urn:newsml:reuters.com:*:nL8N24A485
Hong Kong-based Johnson Electric, which makes micro-motors
and electric power steering systems, said it expects profit for
the six months ending September 30, 2019 to be "substantially
lower" because of a significant decline in light vehicle
production and an "especially depressed" market in China.
Sales of automotive products in Asia fell 15% and sales of
industry products fell 19% in the quarter, the company said.
Johnson also blamed the impact of higher tarriffs and
geopolitical uncertainties weighing on demand in other consumer
and industrial markets.
Last month, China reported the worst-ever monthly vehicles
sales drop, exacerbating concerns over the country's economic
slowdown as the world's largest car market saw demand fall for
the 11th consecutive month. urn:newsml:reuters.com:*:nL4N23J1NN
In a research note, Bank of America Merrill Lynch analysts
said another "tough" second quarter was expected for auto
suppliers as global production continued to be "very negative"
in the second quarter.
"Recovery not in sight," the analysts said.
NO SIGN OF RECOVERY
Switzerland's Sensirion cut its revenue forecast for 2019
(to 160-170 million Swiss francs, down from 175-190 million
Swiss francs previously. The company cut its adjusted EBITDA
margin to 9-12% from 15-16% previously.
"The current crisis in the automotive industry, the
significantly weaker than expected global industrial production
as well as the continuing global trade disputes negatively
impact demand in all end markets," Sensirion said.
"In contrast to the assessment at the beginning of the year,
we do not see any signals from our customers pointing to the
originally expected recovery in the second half of 2019,"
Sensirion further said.
That comes after Germany's Aumann on Wednesday said it
expects full-year revenues to fall by up to 17% rather than
rise. Earnings before interest and taxes are expected to fall to
around 22 million this year, down from 29.3 million in 2018.
Aumann shares fell sharply on Thursday after the company -
which makes machines to manufacture electric cars components -
said its order intake in the first half of the year was
disappointing after carmakers postponed orders. urn:newsml:reuters.com:*:nASP00148R
On Monday, Geely said net profit in the first half of 2019
had dropped by 40% due to a greater-than-expected fall in China
car sales. urn:newsml:reuters.com:*:nFWN24904Y
(Reporting by Edward Taylor, editing by Deepa Babington)
((Edward.Taylor@thomsonreuters.com; +49 69 7565 1187;))