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. Three questions from my side as well, please. The first one on R&D expenditure. Obviously, the overall levels for the business
has been supported by the strong order intake that you have reported. Can you just talk about your expectations for the current fiscal year, probably
in terms of absolute R&D spent? And going forward, how do you expect to find more synergies in R&D investments between your current business
and the incoming orders, please? That's the first one.
Second one, coming back on cost recovery. You showed that you could recover 30% of the inflation impact in fiscal year 2022. Can you just share
what kind of recoveries are you expecting going into FY '23? And is there any difference in your discussions with OEMs when you're trying to
negotiate for raw materials versus other inflation topics?
The last question is on cash restructuring. Can you just tell us what restructuring charges do you expect for the coming 2 years, please?
Michel Alain Maurice Favre - HELLA GmbH & Co. KGaA - Member of Management Board, President & CEO of Hella GeschSftsfnhrungsgesellschaft
mbH
Ulric, you take R&D and cash flow restructuring. I will take the pass-through. Pass-through, we will have as a possible 100%, I cannot say anything
else, as you know. On the financial point of view, probably between 70% to 80%. I speak of all the inflation. We will have some difficulties with
some customers, some regions probably to pass-through everything. But anyway, the message inside is 100%. We cannot be weak, and you know
my conviction on that. We have to defend our position, we are giving productivity to customers. So somewhere what really happened is that we
will not give the productivities to compensate the inflation. But any way, we must defend our position. So this pass-through is key for our suppliers
today in this sector.
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AUGUST 18, 2022 / 8:00AM, HLE.DE - Q4 2022 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
So on R&D, the increase on the upcoming 12 months will be in absolute numbers less than last year. So we assume the range of 5% to 7% in absolute
increase. on possibilities to reduce, we also have to see that the big increase is also related to some significant pre-invest into new technologies
and new, let's say, platform software concepts and standardization with some new products. We will benefit from these, let's say, platform investments
and also in the future. So they are with some new technologies.
If I take 77 GHz, for example, also our electronic power steering, these were very big projects now in the last 2 years, where we have -- where we
had high pre-investments already now considered in, let's say, in our results. And this, I think, and I see will not be exactly at the same level also
going forward. So we should see some easening there. In addition, we are still, let's say, in the implementation also of Phoenix.
So the shift also to our best cost development centers is ongoing. So and we see also that the capabilities are increasing, what we are able also to
perform in our technologies centers globally in -- partially -- to comment -- to Eastern Europe, China, Mexico, India. So we will reduce, let's say, also
cost levels on having more capabilities also not only in Germany where we were very dependent on -- or more dependent in the last year.
And for sure, we are continuously working on and are using also best practices also with Faurecia on standardization, working on tools and
methodologies. So there's a lot also here to improve from our point of view, efficiencies and to bring with that the cost level down.
On cash restructuring. So our assumptions on the 12-month perspective is that also with the implementation of Phoenix, we see a cash out of
around EUR 70 million on the next 12 months, and this should then go down in the years after.
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