Vitesco Technologies reports improved profitability amidst challenging market

Vitesco Technologies, a global leader in drive technologies and electrification solutions, has released its financial results for the second quarter and first half of 2024, highlighting improved profitability despite a difficult market environment. CEO Andreas Wolf noted, "The key financial figures for the second quarter of 2024 demonstrate a gradual recovery in the automotive sector. Despite ongoing challenges, we have managed to enhance our profitability."

In the second quarter, Vitesco Technologies recorded consolidated sales of EURO 2.02 billion, down from EURO 2.44 billion in the same period last year. This decline reflects reduced orders from vehicle manufacturers and the strategic phase-out of non-core businesses. Sales of electrification products totaled EURO 347.8 million, a slight decrease from EURO 354.3 million in Q2 2023. After adjusting for changes in consolidation scope and currency effects, sales fell by 11.5 percent.

Despite these challenges, the company's disciplined cost management led to an increase in adjusted EBIT to EURO 81.7 million from EURO 66.6 million in Q2 2023. This represents an adjusted EBIT margin of 4.0 percent, up from 2.9 percent a year earlier.

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For the first half of 2024, Vitesco Technologies saw a decrease in sales to EURO 4.02 billion, compared to EURO 4.76 billion in H1 2023, with a 9.5 percent decline when adjusted for consolidation changes and currency effects. The reduction in contract manufacturing for Continental and business divestitures impacted sales significantly. However, adjusted EBIT improved to EURO 114.7 million, up from EURO 97.4 million in H1 2023, with an adjusted EBIT margin of 2.9 percent, compared to 2.1 percent previously.

The company's free cash flow saw a notable decline, reaching -EURO 387.5 million in Q2 2024, largely due to planned non-recurring items related to Continental. For the first half of the year, free cash flow stood at -EURO478.1 million. Capital expenditure increased to EURO 120.4 million in Q2 2024, up from EURO 92.8 million, with a capex ratio of 5.9 percent.

Vitesco Technologies also reported a solid balance sheet as of June 30, 2024, with an equity ratio of 39.4 percent. The company’s order intake for Q2 2024 was approximately EURO 3.2 billion, including EURO 1.3 billion in electrification components.

The company is expanding its footprint in China, with a new battery management production facility that is expected to meet rising demand in the region. Wolf emphasised the positive impact of this expansion, noting, “Our enhanced presence in China and the new battery management facility position us well to cater to the growing market demand.”

Looking ahead, Vitesco Technologies anticipates continued challenges due to a projected decline in global vehicle production. For the fiscal year 2024, the company forecasts sales of approximately EURO 8.1 billion, with an adjusted EBIT margin of around 4.0 percent. Free cash flow is expected to be around -EURO 400 million, excluding merger-related integration costs.

CFO Sabine Nitzsche highlighted the strong performance of the Powertrain Solutions division, which achieved an adjusted EBIT margin of 9.4 percent, while the Electrification Solutions division saw a slight decline in sales and an adjusted EBIT margin of -3.9 percent. Nitzsche expressed optimism for improved profitability in the electrification segment starting in the third quarter.

Overall, Vitesco Technologies remains focused on navigating the challenging market while continuing to drive profitability and growth.