Automotive lighting and electronic equipment supplier Hella KGaA Hueck reported fiscal year 2006-2007 sales up 8% to $US5.1bn. Earnings before interest and tax improved to $64m compared to $26m a year ago.
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Hella’s investment grade status was upgraded to “stable” by Moody’s Investors Service. The change was due to results that were well above target and can be attributed to the lighting division, Hella said.
The supplier began a programme called ‘Lion’ (Light on) a year ago in the lighting division to bring it back into sustainable profit. The key goal is a cost-reduction target of $414m over three years.
More than 500 employees are involved in the project worldwide, and, Hella said, have already implemented 3,800 improvement measures in the past fiscal year alone. In the first year, an above-target improvement of $138m was achieved within the five sub-programmes of the project.
In Germany, employment was reduced by 291 jobs during the fiscal year within the framework of an agreed program of cuts, without compulsory redundancies. The agreement, reached at the end of 2006 with the IG Metall union, will result in job cuts of up to 1,600 employees by 2011.
“Hella’s rating change is an important milestone in securing the independence of our company,” said chairman and president Jurgen Behrend.
“Having declared a tax loss of $29m last year, a swift return to black figures was the prime target. In addition to the positive result, the clear reduction of our net debt is an important sign of Hella’s ability to cope with future challenges.”
Hella’s largest division, lighting, and its two other business areas, electronics and aftermarket, command a top position in their markets with each achieving sales of $1.3bn. The company focuses specifically on new technological developments.
In addition to xenon-light and bending- light systems, Hella is now emphasising full-LED headlamps and energy management and is also working on camera-based driver assistance systems using its combined expertise in both lighting and electronics.
In the medium term, the company plans sales growth to $8bn without acquisitions. All three business divisions are expected to contribute to this target. Management is targeting a future sustained earnings improvement to $276m.
