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FB Roundup: Bosch, Deichmann, Volkswagen

Bosch launches rapid Covid-19 test and prepares for global recession, Deichmann manages reputational risk over coronavirus rents, sales-hit Volkswagen reviews all projects as car production resumes.

Bosch launches rapid Covid-19 test and prepares for global recession

Bosch, the family-owned multinational engineering and technology giant, has developed and distributed a test for Covid-19 that delivers results after two and a half hours and is finalising a test that gives a verdict in less than 45 minutes.

The €7.7 billion ($8.4 billion) company announced this week its rapid Covid-19 test and Vivalytic analyser initiative was already being delivered around Europe with a “research use only” caveat until the Europe-wide CE marking of validation came by the end of May. An even faster test was in the final phase of development.

Bosch planned to produce more than a million rapid tests in 2020 and three million in 2021, Dr Volkmar Denner (pictured), 63, non-family chief executive, said at the socially distanced and livestreamed press conference. In addition to previous laboratory tests, the Vivalytic analyser will be used in hospitals and doctor's offices to protect medical personnel.

“The demand is huge,” Denner said.

“We are doing everything we can to significantly increase production and will increase it five-fold compared to previous plans by the end of the year.”

Bosch was making mouth and nose masks in 13 factories in nine countries. It also produced 5,000 litres of disinfectant a week in Germany and the United States to supply its employees in European and American plants. After an interruption at almost 100 Bosch locations worldwide in April, the company was organising for the gradual increase of production while protecting employees against the risk of infection.

“With a reliable supply we want to serve the slowly increasing demand of our customers and contribute to the fastest possible recovery of the global economy," Denner said.

“Our goal is a synchronised ramp-up of production and securing supply chains, especially in automobile production. We have already done this in China. Our approximately 40 plants on site are producing again and the supply chains are stable. We are working intensively on this in the other regions.”

However, Bosch was preparing for a global recession due to the pandemic which will have a “significant impact” on its business development in 2020. Automotive production was expected to drop by 20% for the year. Sales in the first quarter of 2020 were down 7.3% and the drop in March alone was 17%. The company made no forecast for the year as a whole.

Prof Dr Stefan Asenkerschbaumer, chief financial officer and vice chairman of the Bosch board of directors, said the greatest effort was required to at least achieve a balanced result.

“In this deep crisis, our broad positioning with different business areas is again an advantage,” Asenkerschbaumer said.

Bosch was focused on reducing costs and securing liquidity. Efforts included ongoing reductions in working hours and production restrictions at many locations worldwide, a waiver of wages for specialists and executives, including management, as well as the time extension of investments.

Deichmann manages reputational risk over coronavirus rents

Deichmann, Europe’s market leading third-generation footwear retailer, insists it will talk with its landlords about deferring rental payments on its shuttered stores after it was caught in the backlash against Adidas in Germany.

Deichmann, along with Swedish clothing retail family business H&M, German public consumer electronics chains Saturn and Media Markt and sportswear rivals Puma and Adidas came under fire from German politicians and media for announcing they were temporarily stopping their rent payments while trade collapsed during the lockdown. The Bundestag’s relief was intended to help struggling tenants. However, the global group Adidas, which saw its revenues in 2019 climb 8% to €23.6 billion ($25.6 billion), became the lightning rod for criticism when it sought to apply. Adidas apologised and continued to pay its landlords although 70% of its stores remained closed.

For the financial year 2018, Deichmann reported growth in the number of shoes sold and a net €5 billion increase in turnover in 25 European countries and the US, despite difficult market conditions. It is led by Heinrich Deichmann (pictured), 57, owner and chief executive, worth $8.1 billion, according to Forbes.

The Essen-based group declared that the allegation the family business was refusing to pay rent during the crisis, to the detriment of other parties, was “incorrect”.

The firm asked its landlords to defer rental payments accruing during the closure. It was in talks over which partial payments it could make in the short term and how it intended to arrange the deferment of payments, depending on the scope and duration of closures.

“We have no desire to create financial difficulties for landlords and will take steps to prevent this,” the business said.

“If there are signs of this happening in individual cases, we will do our utmost to help.”

Deichmann closed 1,500 outlets in Germany, which no longer generated any revenue, but still cost the family business in logistics, administration, procurement and rent. All 16,000 employees in Germany will receive their full wages until 5 April then some will be put on part-time rosters.

The company was also forced to close 4,200 stores—96% of its portfolio—in 28 of the 30 countries in which it had expanded.

If the lockdown closure carried on much longer, “it will ultimately threaten the existence of even financially sound companies,” the Deichmann business said.

“As online sales make up less than 10% of total sales, these do not even come close to compensating for lost revenue.”

Sales-hit Volkswagen reviews all projects as car production resumes

A €2.6 billion drop in sales of Volkswagen cars in the first quarter of 2020 has prompted the family-controlled automaker to reassess the importance of all its projects as it opens its doors to production again.

Controlled by the Piech-Porsche family, VW announced this week its reasonable start to the year after a difficult 2019 had been “substantially impacted” by the coronavirus pandemic from February onwards. There was a 25% drop to 1.1 million vehicles cars delivered to customers in January to March. Sales revenue fell by 12% to €19 billion ($20.7 billion) for the quarter.

Ralf Brandstatter (pictured), chief operating officer, said VW’s focus was now on ensuring liquidity.

“We are reviewing all our projects to reassess their importance to our short-term needs. However, this will have no impact on strategic projects such as the new ID.3.”

This summer, Volkswagen continued to plan the Europe-wide roll-out of the fully-electric ID.3. The company reaffirmed production of its new Golf mark 8 and its SUV range which was “very much in demand” in Germany and western Europe, China and South America.

The brand’s plant in Wolfsburg restarted production this week at up to 15% of the capacity before the pandemic, about 1,400 cars, increasing to 40%, more than 6,000, next week. Some 8,000 staff returned to work with measures to protect their health. A 100-point plan was devised to maintain safe social distancing and hygiene. VW shared the plan with more than 40,000 suppliers and logistics partners around the world.

Another 2,600 suppliers for VW, mostly in Germany, also returned to work. Dealers were able to deliver vehicles to customers with the reopening of 70% of dealerships.

“Step-by-step resumption of production is an important signal for the workforce, dealerships, suppliers and the wider economy,” Brandstatter said.

“In terms of managing the crisis, though, this is just the first step. Additional momentum is needed to stimulate demand in Germany and throughout Europe so that production volumes can be successively increased.”

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