Vitesco Technologies, the former Continental powertrain unit that was spun off last year, has received a 2 billion euro order for its electric axle drive system as the supplier transitions to electrification from internal combustion.
The order, from an unnamed automaker, was concluded this month, Vitesco said Friday in reporting its first-year financial results.
Electrification will be a “growth engine” at Vitesco, CEO Andreas Wolf said Friday at Vitesco’s first annual results conference, adding that plans to wind down “noncore” internal-combustion businesses were on track. Wolf said last month that Vitesco could be open to the sale of its engine unit.
Of the company’s total order intake of 11.2 billion euros in 2021, 5.1 billion euros were for electrification products. Vitesco’s Electrification Technologies unit increased sales by 45 percent, the highest among business units.
Sales were 8.3 billion euros in 2021, a 4.1 percent increase from 8 billion euros in 2020 (on a pro forma basis), Vitesco said, adding that it had met its forecast targets.
Adjusted earnings before interest and taxes (EBIT) were 148.6 million euros, for a margin of 1.8 percent, compared with a loss of 94.5 million euros in 2020, or minus 1.2 percent in 2020. Free cash flow was 113.3 million euros, compared with negative 455.7 million euros.
Wolf and CFO Werner Volz expect only modest growth in 2022, noting the continuing semiconductor shortage (expected to ease in the fourth quarter) and unquantifiable effects from the war in Ukraine. Sales are expected to increase to 9.1 billion euros, with an adjusted EBIT margin of 2.2 to 2.7 percent; free cash flow will be “more than” 50 million euros.
Wolf said Friday at Vitesco’s first annual results news conference that the supplier had practically no exposure to either Ukraine or Russia, with no factories in either country, although it does have one sub-supplier in Ukraine.
As Vitesco ramps up its electrification intake, it is starting to wind down its internal-combustion based businesses. Wolf said that even though plug-in hybrids showed strong growth in 2021, they are only a “transitional” technology and will be a “niche” by the end of this decade.
“What will happen in the second half of the decade is that electric cars will move to the forefront,” he said, noting that Vitesco did not develop technologies specifically for plug-in hybrids but for electrification more broadly to avoid “dead ends.”
Starting in 2023, Vitesco will combine its current four business units — Electronic Controls, Electrification Technology, Sensing & Actuation and Contract Manufacturing – into two: Powertrain Solutions and Electrification Solutions.
About one-third of Vitesco’s “non-core” internal combustion activities, in the area of electronic controls and sensing and actuation, will be phased out in the next several years, Vitesco said in an investor presentation in September when its shares were first listed.
Wolf said Friday that those plans were still on track. “In 2019 we transparently identified products in areas in which we were not competitive or are not compatible with our strategy,” he said, adding that the goal is to phase them out by 2028 or 2029.
Wolf also said that none of these products were loss making any more.
“We’re watching the market very closely,” he said. “Electrification has been gaining share quite quickly, which has an effect on how fast we phase them out.”