Auto provider Johnson Electric Holdings and Sensirion slashed their earnings forecasts on Thursday, citing a slowdown in car sales and pessimism in regards to the prospects of a Chinese automotive sector recovery.
The news is the most recent to signal weaker international industrial operation and ripples from a trade conflict that has already driven China’s Geely Swiss engineering company ABB Germany’s Aumann and chemical substances titan BASF, to warn of disturbance ahead.
Hong Kong-stationed Johnson Electric, which manufactures micro-motors and electric power steering devices, said it expects gain for the six months ending September 30, 2019, to be “substantially lower” due to a significant decline in light vehicle manufacturing and a “particularly depressed” marketplace in China.
Sales of automotive items in Asia plunged 15%, and sales of business products slump 19% within the quarter, the company mentioned.
Johnson further blamed the impact of higher duties and geopolitical risks weighing on demand in other customer and industrial markets.
In June, China reported the worst-ever month-to-month autos sales drop, provoking concerns over the nation’s financial slowdown as the world’s biggest automotive market noticed demand drop for the 11th consecutive month.
In an analysis note, Bank of America Merrill Lynch analysts mentioned another “powerful” second quarter was expected for auto suppliers as world production continued to be “very destructive” in the second quarter.
“Restoration not in sight,” the analysts stated.
Switzerland’s Sensirion reduction its income forecast for 2019 (to 160-170 million Swiss francs, down from 175-190 million Swiss francs earlier. The corporate already reduced its adjusted EBITDA margin to 9-12% from 15-16%.