Vitesco Technologies Q1 2023: Solid Quarter Despite Continuous Cost Increases

Highlights

Quarterly sales of around €2.31 billion (Q1 2022: €2.26 billion) 

Adjusted EBIT: €37.1 million (Q1 2022: €47.7 million) with an adjusted EBIT margin of 1.6 percent (Q1 2022: 2.1 percent) 

Order intake YTD: more than €4 billion for electrification components 

Vitesco Technologies confirms outlook for 2023 

Vitesco Technologies, a leading international provider of modern drive technologies and electrification solutions for sustainable mobility published its first quarter 2023 results. 

"E-mobility is a global megatrend. Sales of electric vehicles are growing enormous across all relevant markets," says CEO Andreas Wolf. "We recognized this trend early and continue to fully embrace it." The company's focus on the electrification business was again significantly strengthened as of January 1, 2023, when Vitesco Technologies reorganized its four business units into two new divisions: Powertrain Solutions and Electrification Solutions. This organizational adjustment allows Vitesco Technologies to sharpen its strategic focus on electrification to operate more effectively, efficiently, and flexibly in the market for sustainable drive technologies. 

Key figures for the first quarter 

Group sales in the first quarter came in at €2.31 billion (Q1 2022: €2.26 billion), which equates to an increase of 2.5 percent. When adjusted for changes in the scope of consolidation and exchange-rate effects, sales rose by 1.4 percent. Core business contributed €1.60 billion (Q1 2022: €1.49 billion) to total sales, while non-core business accounted for sales of €713.1 million (Q1 2022: €770.9 million). Adjusted EBIT of €37.1 million (Q1 2022: €47.7 million) was generated, which equates to an adjusted EBIT margin of 1.6 percent (Q1 2022: 2.1 percent). Net income amounted to a loss of €50.7 million (Q1 2022: loss of €11.3 million) and earnings per share to minus €1.27 (Q1 2022: minus €0.28) due to one-time effects. 

Given the market-driven build-up of inventories and the ongoing investments related to the order intakes from previous quarters, free cash flow stood at minus €41.1 million (Q1 2022: €48.2 million). Capital expenditures[1] on property, plant, and equipment and software amounted to €98.0 million (Q1 2022: €52.1 million). The ratio of capital expenditures to sales is therefore 4.2 percent(Q1 2022: 2.3 percent). 

As of March 31, 2023, Vitesco Technologies had a solid balance sheet with an equity ratio of 39.1 percent (March 31, 2022: 35.9 percent).  

"Overall, we can be satisfied with the first quarter of 2023. We are confident that our cost discipline and operational optimizations will help us to achieve our targets for the fiscal year", says CFO Werner Volz. 

In the first quarter of 2023, Vitesco Technologies' order intake came to €1.4 billion with electrification components accounting for €839 million. Until today, the total order intake from the electrification business adds up to more than €4 billion. 

The business activities of the two divisions 

The Division Powertrain Solutions generated sales of €1.61 billion in the first quarter of 2023 (Q1 2022: €1.64 billion). In the same period, the division's adjusted EBIT improved to €117.3 million (Q1 2022: €111.3 million), which equates to an adjusted EBIT margin of 7.3 percent (Q1 2022: 6.8 percent). The Division Powertrain Solutions experienced the effects of the shortage of semiconductors, especially due to higher material prices. The planned sales decrease in non-core business contributed to the reduction in sales. 

The Division Electrification Solutions grew its sales to €716.8 million in the first quarter of 2023 (Q1 2022: €634.3 million). This was driven by consistently high demand for high-voltage electric drives and equates to a sales increase of 13.0 percent. Due to the continued high ramp-up costs of the electrification products, adjusted operating profit amounted to a loss of €72.0 million (Q1 2022: loss of €61.3 million), corresponding to an adjusted EBIT margin of minus 10.0 percent (Q1 2022: minus 9.7 percent). 

Q2 and full-year outlook for 2023 

Vitesco Technologies expects the market environment to be challenging in the second quarter of 2023. Although a slight improvement is anticipated, supply bottlenecks may continue to cause lower production volumes. Anticipated improved material availability and the lifting of COVID-19 restrictions in China are fueling expectations of a considerable year-on-year improvement in global vehicle production in the second quarter of 2023. 

The market outlook and the Group's full year guidance for 2023 remain unchanged compared with the expectations published at the 2023 annual press conference. As with the assumptions for global vehicle production, all assumptions remain subject to a high degree of uncertainty.