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The COVID-19 outbreak forces Hella to reduce its market outbook for fiscal year 2020

Automotive lights manufacturer Hella announced that the company has adjusted its outlook for the current fiscal year 2019/2020 because of the recent COVID-19 outbreak.
Germany Hella expresses its concerns on its market outlook during covid-19 outlook

Although Hella has achieved its business earnings meeting its expectations for the first nine months of the fiscal year 2019/2020, it still wanted to make adjustment of its business outbreak. Hella said that for the time being, 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 dropped 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  improved much in the nine-month period and is now at EUR 191 million (previous year: EUR 169 million).

Affected by the COVID-19 epidemic and the quarantine measures taken around the world including increasing number of production shutdowns by customers, the estimated disruptions of the global logistics chains and the anticipated decline in market demand, have great influence on the global automotive industry. Therefore, Hella has to face great decrease in customer demand at the end of third quarter.

Facing the reduction in market demand and the interruption of transportation, Hella said it might not achieve its sales objectives for the current fiscal year 2019/2020. The company is now estimating currency and portfolio adjusted sales to be below the originally forecasted range of approx. € 6.5 billion to € 7.0 billion. As it is hard to to see all of the consequences of the epidemic right now, 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 much below the originally forecasted target of 6.5% to 7.5%.

Hella is also planning temporary shutdown of its production facilities and preparing short-time work. A complete set of measures to reduce staff and material costs take into view recommendations from international, national and local authorities, the company is also trying its best to protect its workforce, to cut down chains of infection and stop the spread of the pandemic.
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