BOSCH EYES EXPANSION IN MIDDLE EAST AMID REGIONAL SALES RISE
German company says its Saudi operations have not been affected by differences between Riyadh and Berlin
German multinational Bosch wants to expand in the Middle East after reporting strong regional sales for 2017, with its operations in Saudi Arabia “unaffected” by diplomatic differences between the kingdom and Germany.
“We want to focus very closely on new business opportunities in each country and of course the way forward is to really increase our local footprint further,” Volker Bischoff, vice president and general manager of Bosch Middle East, told The
National. Markets of interest include Iraq — where Bosch does not currently operate — Saudi Arabia and Pakistan, he said.
Bosch operates in 14 markets across the GCC, Levant and Pakistan. It has representative offices in the UAE, Riyadh, Pakistan, Lebanon and Qatar.
This week, it reported an 11 per cent annual increase in revenue to €500 million (Dh2.1bn) for the full year 2017, a continued uplift from the €450m reported in 2016. Net profit is not reported at regional level.
Sales growth in the region is outpacing global growth — the Bosch Group registered a 6.7 per cent rise in revenue to €78bn in 2017.
“It was a fantastic set of results given the overall economic challenges worldwide, and looking at the Middle East it was a very good year as well, and a little bit higher than in 2016,” Mr Bischoff said.
He hopes for high single-digit growth in 2018. “We are being cautiously optimistic about the year ahead, keeping wider macroeconomic factors in mind.”
The Bosch Group operates in four main sectors: mobility solutions, including automotive and self-driving cars; industrial technology; building technology, including security systems and access controls; and consumer goods, mainly home appliances.
In the Middle East, there are further sub-divisions: power tools, including drills, jigsaws and grinders for the construction industry; hydraulics systems through subsidiary Bosch Rextoth; turbo technology, including steam boilers and solar thermal systems; and computer software through Robert Bosch Engineering, which is part of the Mumbai stock exchange-listed Bosch India.
All divisions in the region are growing, but Bosch power tools and building technology are showing the strongest performance, Mr Bischoff said. Despite subdued regional growth in the past two years on the back of low oil prices, GCC economic growth is set to pick up in 2018.
“We’re seeing an ongoing recovery in the market,” Mr Bischoff said.
“There is more investment in construction and infrastructure, and we’ve seen a positive uplift from that, which has continued into 2018.”
Year-on-year growth in the Middle East for the first quarter of this year is in the single digits, “in line with our expectations”. The strongest markets are the UAE and Saudi Arabia.
German media reported last month that Saudi Crown Prince Mohammed bin Salman had ordered a freeze on government contracts to German companies amid strained relations between the two countries.
The kingdom recalled its ambassador to Germany last year over comments made by former foreign minister Sigmar Gabriel about the political crisis in Lebanon. Mr Bischoff said Bosch’s Saudi operations are conducted through selling products to 20-plus Saudi partners, rather than entering directly into government or other contracts. As such, the Saudi business is “unaffected” by the reported freeze. “There has been no official decree, so I would not be too worried about that,” he said.
Bosch is looking to expand its Saudi business in the coming years “in whatever form that may take”, Mr Bischoff said, referring to government plans to relax foreign ownership laws.
“But the detail needs to be looked at and we will always take our long-standing partners into consideration.”
Bosch hopes to enter Iraq by 2019 — a “promising market with lots of potential”, he said.
The company was on the brink of setting up a representative office in Iraq in 2014 but security issues forced it to shelve those plans until now.