BARCELONA -- Robert Bosch GmbH will not hit its target of generating a 7 percent pretax margin in 2005, given the rise in raw material prices and sluggish markets, Chief Executive Franz Fehrenbach said on Thursday.
But costs that Bosch will incur for compensating carmakers for faulty diesel fuel pumps will not be a factor, he added.
"We will not achieve a 7 percent pretax (margin) in 2005, but not because of this," he told Reuters at the Automotive News Europe conference.
He declined to say what the compensation costs might be, adding that negotiations were still underway.
Bosch may have to compensate customers for the image damage they sustained, as well as costs of fixing the pump problem, he said.
Some carmakers, such as Mercedes-Benz and BMW, had to cease production for days earlier this year and recall vehicles already sold to customers.
Fehrenbach said the company needed a considerable economic tailwind to boost its pretax margin to 7 percent, and that was lacking at present. It had a 6.4 percent margin in 2004.
Bosch last month cut its sales growth target for 2005 following a slower pace of expansion in the first quarter and said it would be tough to match last year's profit margin.
On other subjects, he said the unlisted German group expects some reduction in western European staffing levels as it shifts more output to low-cost production centers.
"Our long-term strategy does not foresee a high increase in the number of production personnel in western Europe, but it does foresee some kind of stabilization, to a manageable slowdown, to a manageable decrease," he told the conference.
He said Bosch would rely on normal staff fluctuations rather than forced layoffs to make the change, but stressed Bosch would remain a strong presence in Europe close to its customers.