Robots are not cup-cakes, even in China

Chinese-dominated KUKA has adjusted the already lowered FY 2018 guidance (sales: €3.3bn, adjusted EBIT margin: around 4.5%) once again. Management now expects sales of c.€3.2bn and an adjusted EBIT margin of 3.0%. The 2020 targets (sales: €4.0-4.5bn; adjusted EBIT: ~7.5%) do not look realistic according the new management. KUKA’s new interim CEO, Mr Mohnen (former CFO), did not have an easy start, as his predecessor’s guidance, given in October, did not really express a strong belief in it. The dismissal of Dr Till Reuter was not fully unexpected, but it was at very short notice. However, the new CEO is implementing a cost-cutting programme to generate c.€300m lower costs, but this is different to the one Mr Reuter had planned. China, the new owner’s home turf, has turned out to become a more difficult territory, which is also true for KUKA’s competitors, and being more or less a Chinese company (Midea) has been of no additional benefit. Additionally, it looks as if the teamwork between the two companies isn’t working well and the dream of conquering the Chinese market together is over. Midea does not really use KUKA robots in its own factories and the proposed support of KUKA in getting new clients also looks a bit weak. Furthermore, the global automotive industry has become more cautious in making new investments in the light of the looming trade war(s). All in all, Mr Mohnen has a lot work to do and needs some quick results in order to erase the ‘interim’ from his CEO title. Access to complete fundamental analysis on Kuka : [button label="Read more" link="http://www.alphavalue.com/#trial" target="_blank" color="blue" _fw_coder="aggressive" __fw_editor_shortcodes_id="19b23d3be648b41a3f4f96077c0b4e33"][/button]