The following is excerpted from the question-and-answer section of the transcript.
(Questions from industry analysts are provided in full, but answers are omitted - download the transcript to see the full question-and-answer session)
Question: Akshat Kacker - JPMorgan Chase & Co, Research Division - Analyst
: Akshat from JPMorgan. Two, please. The first one, again, on your FY '21 margin guidance. Can I confirm that the new guidance roughly implies flat
margins sequentially in Q4 versus Q3, which would roughly imply second half margins for the group at close to 7%? And also, interested in hearing
your view if that is a good level of profitability to think about as we go to the first half of FY '22. Or should we expect a meaningful step-up from
the reversal of these short-term cost pressures and the restructuring plan that you have in Germany?
The second one is coming back to the question on outperformance. As Sascha was asking, you have previously talked about increasing ramp-ups
and several launches globally. Can I get into some more detail on lighting specifically? Over the last few quarters, even on a geo-adjusted light
vehicle production basis, there has been very limited outperformance. Can you just shed some more light or tell us more details of what's going
on in that division? And when do you expect the organic growth to improve?
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APRIL 14, 2021 / 7:00AM, HLE.DE - Q3 2021 HELLA GmbH & Co KGaA Earnings Call
Ulric Bernard Schaferbarthold - HELLA GmbH & Co. KGaA - MD of Finance & Controlling and Member of Management Board - Hella
GeschSftsfnhrungsgesellschaft mbH
Yes. Akshat, starting with your first question. So as Mr. Breidenbach stated, so March was a very good month. So actually, we are trading at the
upper end of our guidance. So the uncertainty with the months of April and May remains high. So the visibility we have is only, let's say, some days,
if really it comes to also sales development and there is a high uncertainty, even if there is only 7 weeks now to go until the end of our fiscal year.
So this is where we see the risk of downside so that we remain cautious, if really it comes to where we could come out with the top line and also
on EBIT with also costs we have to spend to, let's say, secure supply delivery.
As of today, I would say, a good trading -- so we would -- so there is the opportunity we could remain on the upper end as of today, but with high
risks, we actually see which could occur. And there's also some downside risks. So the range remains, but it does not mean that we actually see
that we, at the end, we would then print, let's say, a Q3 margin. Also, in Q4, this would really be then a case where, let's say, additional risks occur,
and we would have to spend even more what we expect.
Going forward, if we look at then the start into our new fiscal year, with the comments Mr. Breidenbach did, so we actually see the risks that these
additional costs of EUR 8 million to EUR 9 million will remain also in the half -- in the first 2 quarters of our new fiscal year. So this, in addition to a
slightly higher cost run rate, is certainly something, which we will try to compensate. But it really then also depends on how, let's say, the volatility
of the market and the -- remains, and how also we are able to run our operations.
Today, it's day by day. I'd say we are -- as I said, we are prioritizing really to secure deliveries of our customers, independent how costly it is, and it
is very ineffective now how we are running our operations. If that remains in the first half of the year, in that way, so that certainly comes for that
-- in these upcoming months with a high burden also for us. So let's see. It's too early now really to, from my perspective, give now a guidance on
next year.
On the other hand side, we see -- and this was also a comment Mr. Breidenbach did, so the demand in the market is there. The order book is good.
So if really we would see an improvement now in this high market volatility, especially due to the shortage on semis, I think there is a good
opportunity for us now to improve the profitability, if really these additional costs would then disappear.
Rolf Breidenbach - HELLA GmbH & Co. KGaA - Chairman of Management Board, President & CEO of Hella GeschSftsfnhrungsgesellschaft mbH
Coming to your second question with regard to lighting, of course, we will remain strong in the premium car segment. And the add-on and
additional growth improvement will, at least, partly come from now some of the launches in the BEV area or rollout in the BEV area. And this is true
for all regions: China, the U.S. and also Europe. So this is the -- you asked for, let's say, the change and the future growth acceleration in lighting.
And as I said, we had a good order book with regard to successful BEV, the car manufacturers 2.5, 2 years ago, and this now will pay off in the
months to come with, as I said, headlamp lighting rollouts. And yes, this is, I think, the main growth driver in the months to come.
Question: Michael Punzet - DZ Bank AG, Research Division - Analyst
: Michael Punzet from DZ Bank. I have one question with regards to your logistics costs. You mentioned several times that you see -- or you are facing
higher logistic costs. In your view, is that only related to the semiconductor shortage? Or do you assume this will also more a structural change in
the logistics business, for example, with lower passenger flights, which also carry a lot of materials from one continent to the other? And should
we expect, or could we expect some more burdens from that in coming quarters?
Rolf Breidenbach - HELLA GmbH & Co. KGaA - Chairman of Management Board, President & CEO of Hella GeschSftsfnhrungsgesellschaft mbH
From our perspective, the burdens are already there because the freight costs have increased significantly and are also a bottleneck, be it sea freight
or air freights. This is true for all the regions and all the means of transport, especially sea and airfreight. And it's already there, so this will continue.
Question: Akshat Kacker - JPMorgan Chase & Co, Research Division - Analyst
: Akshat from JPMorgan. One quick follow-up, please. Dr. Breidenbach, you mentioned an outperformance of 1% to 5% in the medium term. I just
want to clarify, was that for China specifically? Or was that for the group?
Rolf Breidenbach - HELLA GmbH & Co. KGaA - Chairman of Management Board, President & CEO of Hella GeschSftsfnhrungsgesellschaft mbH
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