Hungarian automotive industry: week 20
Last week, Hungary´s economy saw better-than-expected GDP results, an increase in industrial production output and improving investor confidence. After an initial improvement the forint received a big hit by the end of the week. It was also a productive period for the country´s automotive industry: a new Ikarus bus was unveiled, Audi presented its latest, more efficient diesel engines, Autoliv announced its plans to hire 800 employees by 2018 and Bosch employed its 1,000th engineer in Budapest. Let´s look at what happened in the 20th week this year.
Let's see what happened in the 20th week this year.
Manufacturers
Last week, Rába reported on outstanding Q1 results. The Rába group, the largest Hungarian-owned automotive manufacturer, reported that the company´s outstanding cash-flow generation continued, while its net loan reached a ten-year low in the first quarter this year.
Rába group's consolidated, group level sales reached HUF 11.8 billion in the first three months of 2014, registering a 3.5 percent increase compared to the base period of 2013. The company wrapped up the first quarter with an EBITDA exceeding HUF 1 billion and HUF 444 million worth of operating profit.
Last year’s outstanding cash-flow generation continued this year with HUF 2,222 million, with net loan dropping to HUF 6.8 billion, a record low for the past ten years, reported the company last week in a statement.
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| New V6 engines to start rolling off the production line in Győr |
Soon more powerful, more efficient and cleaner diesel engines will roll off the production line in Audi's Győr-based engine plant. Audi presented the latest generation of its 3.0 TDI engine at the 35th International Vienna Motor Symposium.
Audi offers the new, turbocharged 2,967cc V6 in two versions producing 218 bhp (160kW) and 272bhp (200kW). Depending on the model, peak torque can be as much as 600 Nm. Audi's currently most popular V6 diesel engine is the 258bhp power source with 550Nm torque.
The less powerful variant offers a performance of 204bhp. The most powerful unit, is the 313bhp biturbo engine, will remain in Audi's engine portfolio.
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| The most powerful Hungarian-made car |
We had the opportunity to try the most powerful Hungarian-made car, the Mercedes-Benz CLA 45 AMG. The 360bhp 4-cylinder engine, the world's most powerful mass-produced four-pot power source, converts this rather pretty family coupe into a brute.
New bus from Hungary unveiled
Soon after it had been unveiled, the first PKD (partially knocked down) Ikarus bus started operation last Friday.
The idea of the PKD kit is that the completely new vehicles arrive from Magyar Autóbuszgyártó Kft. (Hungarian Bus Manufacturing Ltd.) in parts and are assembled by BKV. The transmission is provided by the Szentgotthárd-based Allison plant.
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| The new Ikarus bus |
Suppliers
The Bosch Engineering Center Budapest has reached a major milestone: the 1,000th engineer started work at Bosch' R&D complex.
The rapid progress of the Bosch Engineering Center Budapest shows up in the steady rise in staff numbers since its foundation, and more than 300 engineers have joined in the last two years alone.
The first phase of the Centre's expansion project was handed over last year, while the second phase will be ready next year.
Autoliv´s Hungarian subsidiary announced its plans to hire 800 people by 2018. The Sopronkövesd-based subsidiary of the world's largest manufacturer of active and passive safety systems will double its production area, capacity and staff by 2018.
Felsőörs-based Omikron-Dokk's composite products are mainly delivered to automotive companies. We interviewed the company's sales director, Gergely Lipóczy.
University competitions
Summer is approaching, which means the season of university student competitions is here. The International Aventics Pneumobil competition, sponsored by Bosch Rexroth and held in Eger, Hungary, lines up engineering students who are enthusiastic, talented and who besides the classroom also feel home at the laboratory and the workshop.
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| Széchenyi István University at Shell Eco-marathon |
The Shell Eco-marathon began last week in Rotterdam. Earlier on, we interviewed Zoltán Zámbó, leader of engineering at the team of Széchenyi István University of Győr and we also spoke with the team from Kecskemét.
The Go-kart, Go Bosch competition ended with the victory of Miskolc University.
Economy
In Q1 2014, the Hungarian economy posted a significant, 3.5 percent increase, registering the best GDP growth figure since 2006. The data published last week are well above analysts’ expectations of 2.7 percent.
According to preliminary data, GDP was up by 1.1 percent quarter-on-quarter, corresponding to the q/q growth registered in Q3 2013. Automotive manufacturing continued to be the main contributors fuelling the outstanding rebound.
According to Minister for National Economy Mihály Varga, the economy is in “top form” and the country’s budget is "fine", but he acknowledged that the new government must deal with the expected shortfall in budget revenue due to low inflation. He added that considering Hungary’s low inflation rate, the National Bank of Hungary (MNB) still has room for further easing.
Improved forecasts
The y/y economic growth rate of 3 percent can be maintained in Hungary and the neighbouring economies, London-based financial analysts said after the publication of Hungary's better-than-expected GDP growth results in Q1.
According to the forecast of JP Morgan, the firm is anticipating a y/y GDP growth of 2.5 percent in Hungary, a 2.9 percent in Poland, 2.8 percent in the Czech Republic and 3.2 percent in Romania. The investment analysts of Goldman Sachs also reported on similar projections.
Based on the preliminary data from Q1, Goldman Sachs anticipates lower risks and improved its y/y GDP growth projection to 2.2 percent.
Weak forint
Last Thursday, the exchange rate of the forint received a major hit against the most important international currencies. The exchange rate of Hungary's currency was 303.46 against the euro in the morning and went up as high as 306.38 in the evening. By Friday, the forint managed to gain some strength, reaching 305.45 against the euro.
Industrial production
Industrial output was up by 10.6 percent year-on-year in March 2014 thanks to an increase in production in the automotive industry and related branches, reported the Central Statistical Office (KSH). The export of transport equipment manufacturing, accounting for almost one third of the export of Hungary's entire export volume, rose by 26 percent.
The domestic sales of companies in the branch of transport equipment manufacturing increased by 58.2 percent year-on-year. Out of subsections with a significant weight the production of transport equipment representing nearly three tenths of manufacturing rose by 28.3 percent.
In March 2014, new export orders grew by 43.7 percent in transport equipment manufacturing, 42.5 percent in the manufacture of pharmaceuticals, 28.3 percent in the manufacture of machinery and equipment and 28.1 percent in the manufacture of electronic and optical products.
Investor confidence index
According to Deloitte's latest CE Private Equity confidence survey, investor confidence in CE has continues to rise. With 18 months of unbroken improvement it is approaching levels not seen since the region’s peak period between 2003-2007.
The region's prospects are improving as a result of fundamental reasons such as long-term low interest rates and inflation, which encourage investors to take higher risks. CE-based companies are once again enjoying a lucrative period, which is why the European private equity market is gaining a healthier look.
To the investors – especially those from the U.S. – Central European investment opportunities seem more and more attractive.
