The weakening automotive industry economy is affecting business development in the Brose Group where fiscal 2018 turnover of EUR6.3bn was just below the 2017 level and earnings "were well below expectations", the supplier said in a statement.

CEO Kurt Sauernheimer told the shareholder and advisory board meeting in Wuerzburg a cost-cutting programme had been launched to increase the competitiveness of the Brose Group.

Economic fluctuations across the globe had made for a turbulent financial year.

"In the first half of the year we were still growing 6% but then turnover decreased by 7% in the second half," noted Sauernheimer.

"Our business development was better than the global automotive market, which declined by 1.2%, but we cannot be satisfied with our result.

"Reasons for this include unscheduled costs in the ramp-up of new products and expenses for quality assurance. At the same time, upfront investments in products for future automotive trends led to an increase in staff and higher investments. Our fixed costs rose disproportionately as a result. Higher raw material prices, punitive tariffs and special taxes also weighed on profit."

The door business division in Bamberg generated EUR3.2bn (down 0.5%) in revenue which was more than half of group turnover. The seat structures business in Coburg contributed around EUR2bn (off 2.4%). The electric motors and drives business in Wuerzburg accounted for over EUR1bn (up 0.9%) in turnover. 

Brose said that, despite the continuing difficult economic situation, all employees – including temporary workers – would "share in the business results for 2018" and it was setting aside around EUR46m for this purpose.

"Turnover in the first quarter of 2019 was 5% lower [year on year]. At the same time earnings were down significantly. Immediate actions have been taken to counteract this development that will already save tens of millions of euros this year."

The cost-cutting programme would adapt processes, structures and HR resources. The measures are intended to improve efficiency and strengthen innovation. This will enable the supplier to streamline its organisation and increase competitiveness. 

"This programme will help us achieve the required results so that we can make the necessary investments for future organic growth and preserve the independence of our family-owned company," said Sauernheimer.

Over the next three years, Brose would also spend around EUR1.5bn developing new products, technical equipment and global expansion of locations. 

Brose sees more opportunities than risks in the new mobility trends. Innovative products such as doors that open automatically and flexible solutions for the interior plus thermal management for electric vehicles are seen as growth opportunities.