FRANKFURT (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.
FILE PHOTO: A logo of Sensirion, the Swiss manufacturer of sensors, is seen during a news conference to present the planned IPO in Zurich, Switzerland March 12, 2018. REUTERS/Moritz Hager/File Photo
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.
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.
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.
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.
Reporting by Edward Taylor, editing by Deepa Babington