Emobility demand remains ‘sizeable’, says motor parts giant

A supplier of electric bike motor components to Fazua (Porsche), Revonte and numerous others has described onward eMobility demand as remaining “sizeable”, despite supply throughout the supply chain now steadily improving.

In its latest financial statement, hGears said that the delayed deliveries due to COVID-19 in Q1 and supply chain related disruptions at the beginning of the year are now settling, leading to a “sequential quarterly improvement in revenue, predominately in e-Mobility, which increased 29.3% quarter-on-quarter and 12.2% year-over-year.”

With much of the world’s key electronics, including those for electric bike componentry, stemming from Taiwan and China, where there currently exist geopolitical tensions, the macroeconomic outlook improving will carry the greatest weight on company financials over the coming quarters. Specifically, hGears references twists in the Covid-19 pandemic and Russia’s war on Ukraine as two uncertainties, plus certain supply chain bottlenecks that are as yet not subsiding.

At the present time inflationary pressures, warned to be heading officially for 13% (in the UK), are eating into the profit margins of all companies and hGears is among those this week speaking of optimising the group’s cost structure. As part of this the group has mitigated inflationary pressures by executing pass-through clauses for raw materials and energy costs. Price increases for customers are also said to be in progress, which ultimately will add incremental cost to the cost of finished electric bikes.

Pierluca Sartorello, CEO of hGears, comments: “The Group’s success is driven by the quality of our products and strong market positioning. The macro-environment continues to present a broad spectrum of challenges for the industry. However, amidst these ongoing challenges, we have stayed focused and close to our customers, and the results of these efforts are another three new e-Mobility contract wins over those won last year. Moreover, despite these adverse conditions, our industry sources maintain that demand and the order backlog in the e-bike consumer market continue to remain sizeable. Against this background and backed by our current order book and ongoing ramp-up of new customers, we reconfirm our 2022 and mid-term outlook”.

Concluding, hGears says that adjusted EBITDA in full-year 2022 is expected to be on a par with the prior year. The positive impact of the operating leverage is expected to be realized in the second half of 2022 and 2023.

In respect of ongoing eMobility and other EV demand, the group remains positive about tripling the eMobility division’s business to reach €150 million in the mid-term, illustrating the potential for the marketplace deep into the future. In 2020 the business had its parts featured in 2 million of 4.6 million electric bikes sold in Europe.

For an exclusive look at the hGears business with Pierluca Sartorello, see CI.N’s recent interview here.