Stabilus SE

XETRA:STM

Earnings Call Transcript

[Operator]

Good morning, ladies and gentlemen, and welcome to the Stabilus S.A. conference call regarding Stabilus' financial results in the first quarter of fiscal year 2022. [Operator Instructions] The floor will be open for questions following the presentation. Let me now turn the floor over to your host, Mark Wilhelms.

[Mark Wilhelms, CFO & Member of Management Board]

Yes. Hello, and good morning from the Stabilus team. On the call here, you've got Michael Büchsner, our CEO; Andreas Schröder, Investor Relations; and Mark Wilhelms. As mentioned in the introduction, we will now take you through the results of the first 3 months of the new Stabilus business year. So with this, I hand over to Michael Büchsner, who will lead you through the important M&A steps we've taken and so on.

[Michael Büchsner, CEO & Chairman of Management Board]

Yes. Thank you very much, Mark. Welcome also from my side, ladies and gentlemen, to our quarter results call today. First of all, then you'll find that on the presentation, we entered -- you find it on Page #5, we entered in a partnership with [ Cultraro Automazione ] out of Turin. In the past quarter, we acquired 32% of its total shares, and thereby, we are building the next [indiscernible] in terms of shaping Stabilus and continuing our growth path of closing with this acquisition, which is in the space of growth, [indiscernible] linear venture, [indiscernible] for Industrial and [ autocommunications ]. Actually, we constantly have been [ deferring ] in the last '21 or already. We financed it with cash, and that means we are happy to announce that because in terms of the rationale, we spend our product portfolio, and as I said, closing some significant [indiscernible] in terms of [ miniaturization ], time of our innovation process years back, road map and topics to invest to our technology in [indiscernible] because with the changes out there in the economy, we improvement of 2 parts: [ smallification ], so things get smaller, [indiscernible] electrification, ours and other devices; will vision where we're going directly into this of this future trend of the industry. So think of [indiscernible], a leading investment of motor programming and software. And with these 2 [indiscernible] our gaps in terms of programming and software, on one hand side, with [ Synapticon ]; and on the other side, in terms of miniaturization, acknowledging that things get more [indiscernible], following the demographic change and the need for smaller [indiscernible] is perfectly [indiscernible]. We already -- we did first software applications for the automotive industry as well as the industrial applications of our product. And with first developments for the automotive and for the automotive and perfect for dampening small movement of smaller [indiscernible], as I said, perfect fit both companies in terms of closing white spot gaps out there with our products. So that's the first good news here. And then on the next page, Page #6 of your presentation, another topic we've been massively working on last year was our long-term strategy. As you know, we had our Strategy 2025 in place, and the team has, over the last 6 months, on the Strategy 2030, has to continue our success of being market leader in intelligent motion. That's our vision. Our goals remain ambitious, profitable and sustainable growth, for sure; company of choice, next level motion control solution and to be a model corporate citizen. I will explaining a bit what we mean to different. But what you see on Page 6 is our strategy, our strategic pyramid. And our KPI, total sales of EUR 2 billion as of 2030 with 15% adjusted EBIT margin. Then to underline our [ opening ] of choice, employee and customer Net Promoter Score of more than 50 -- higher than 50, which is an ambitious target itself. Also a target in terms of next motion, our controlled [ solution ] provider is a growth of EUR 0.5 billion sales with new innovative technology. As I said before, world is changing rapidly. We see more tendency in terms of miniaturization, comfort, demographic change, programming and software, and this will be -- drive our strategy going forward as well. In terms of model corporate citizen, we want to be -- and we are on a very good path towards that. Company will [indiscernible], as you've seen in our nonfinancial report, migrating to a strategy, but this is just the starting point of our [ towards ] being model corporate citizens. On the bottom, you see that are driving [ beans ], left-hand side, motion control innovation, so next product generation, motion ecosystem, which currently concludes not only the portion but also how to market things, how to get close to our customers, how to drive our customer base and create sustainable future. A profit company, right in the center of our doing the middle [ bean ] here of the [ China ], and then for sure Asia center of gravity. A lot of things going on in Asia. You'll see the numbers, Mark will do in as well. Heavy growth there for us, good profit, a place to invest also for our future success. And this is what we acknowledge on our forces, as you see on the bottom of our strategic pyramid here, right inside. And then all on the right, operational agility, which is just the overarching [indiscernible] of -- yes, optimizing things, doing things first, right, and all-time [indiscernible]. So we've been working on. First of all, another step in M&A, on top of Synapticon, which we announced before to close some white spots in terms of programming and software and miniaturization, and then the next milestone, Page #6 is our Stabilus long-term strategy 2030. This underlines we're not only looking on our short-term success and midterm success, very, very important for us is to have the decision which we not only tell our shareholders and partners, also make very visible to our employees and stakeholders there to underline the path of success we are on. Talking about Page #8, and thereby going to the financial results. In the last quarter, we had very good sales with a revenue of at EUR 243.7 million, which is a growth of [ 3.15 ] year-over-year with no acquisition effect for [indiscernible], our acquisitions are just new around; and an organic growth of 1.2%, cleaned up by the translation effect we had in our past business quarter. Adjusted EBIT is at EUR 29.3 million with an EBIT margin of 12%, a little softer than in the quarters before due to inflation, which we are working on to get it reimbursed by our OEMs. Actually, we had very good success, especially on the industrial side, but also with several OEMs on the automotive side to get reimbursement. And this is coming in, in the current quarter. So we will definitely see an upswing here in the months to come. So as expected, 12%. And heavily in recovery of inflation with our customers, we're seeing a lot of good news and success there already as we speak. In terms of profit, information here also, EUR 18 million profit, which is a growth year-over-year of 5.9%, which leaves us with a profit margin of [ 7 ] versus 6.1% in quarter 1 financially [indiscernible]. Talking a bit about free cash flow. Free cash flow is EUR 2 million. It was lower than in the quarter before and we compare order because of this acquisition effect. We invested [ EUR 22.6 million]. So without these investments, which we would have been out in the quarters before. But heavy investments in our future with this acquisition we did, which can, for sure, impacted our free cash flow. But nevertheless, our net leverage ratio is still in the same range of 0.7x, with net debt at EUR 124 million. Also important to know is, end of January '22, we issued a second promissionary note, Schuldschein, of EUR 55 million, just to balance our maturity profile and [indiscernible] our financial. What's important to know is, for sure, we are not done with our past activities in the months, years to come. The current issue of promisory note #2 is just giving us more freedom in that term. This leads me to our outlook, and we'll talk a little later about the outlook again. Forecast is still unchanged, revenue of EUR 940 million to EUR 990 million with an EBIT margin adjusted of 14% to 15%. So with that, first overview of our important changes when it comes to M&A activities and strategic elements and the financial results overview. I just hand over again to Mark for giving us some more details on the financials.

[Mark Wilhelms, CFO & Member of Management Board]

Thank you, Michael. So let's move forward to Slide #9. It Is a graphical show of what Michael just talked about. Here in the numbers, to reiterate that [ 5% ] growth of revenue, [ 1.2% ] organically. And keep in mind, the underlying automotive is in, year-over-year, was softer, over 13% down. So in that market, it's increasingly there. The EBIT numbers has been discussed. So let's jump over that and come to the bottom left hand side. Keep in mind, here, last year, we had a bit of negative [ sales ] [indiscernible]. In the third number, information that's not repeated and partly explained by year of having a better [indiscernible] of profit. Moving forward, come to the operational results, that is Slide #11 with European, the EMA region of Stabilus. Here, revenue on left-hand side in the graph, down 7.1%, organically 6.3%. As you see in the text and the comments on the right-hand side, [indiscernible] Europe, Middle East, Africa came down by 24%. So [indiscernible] the industry was producing 24% vehicles. We already had a 6.3% organic in terms of year-over-year reduction. Clearly, underlining our work, our products. It's the car manufactures, and last but not least, the end consumer we want to have. Previous quarters, [indiscernible] strength of our motion control products for car [indiscernible], vehicle owners or vehicle drivers. Same quarter once again clearly seems to underline that strategy works very well. Now speaking to the certain bullet points here in Stabilus automotive divisions. As mentioned, were impacted by the political production, organic change in Automotive Gas Spring, [ 22 ]; and Powerise, minus 16.7%. So in [indiscernible] in the market. In terms of [indiscernible] 7% are organic 3%. [Audio Gap] from a different base. EBIT margin inflation of [indiscernible], which still compares to many peers [indiscernible] below the state want to achieve. Quarter, material inflation and ongoing efficiencies created by the electric order and [indiscernible] behavior of many of our customers. This kind of put pressure on our margins. We are in negotiations, well advanced in negotiations to pass on material inflation to our customers to [indiscernible] 80%, which is [indiscernible] to get vaccines also support the 4 to EBIT growth in the [ firm ] business. Let's go to Slide 12, which talks about [indiscernible]. In terms of revenue, let's first take a look on the left-hand side. Year-over-year, [indiscernible]. Just stronger dollar [indiscernible] is compared to a light vehicle product in [indiscernible] at 4 million units, which year-over-year is 30.6% down. And now I'm speaking to the third bullet point. Automotive revenue in Americas is down by 12%. So doing much better off in the car industry here. And Powerise, down 24.9%, initially clearly falling from people to raise their eyeballs. We have shipped to Tesla a lot of parts in the past from the plant in Mexico, which is going to America. And with the overall supply change stabilizing out, our [ plant ] in China is now fully [indiscernible] all production for the Tesla plant. The resources clearly put some pressure on our U.S. team. There will be no either [indiscernible] sitting in that Mexican plant because it [indiscernible], for example, where we can [ polarization ] more than offset -- or temporarily change of utilization and rent. In terms of margins in Americas, you see [indiscernible] specifically the U.S. plant is booked on the of inflation, but also by a [indiscernible] than clearly been discussed in many other instance already, in the [indiscernible]. The labor market for lower mid-quality intense currently the range of overall working [indiscernible] increase in inflation [indiscernible] for higher labor costs or unavailable [indiscernible] that's giving us here some tail because our counteraction of selling our own people were, over time, [indiscernible] and is expensive. But it ensures that the quality of our product remains high by [indiscernible] each people to man the ship. As Stabilus forward, our customers will go feel the pain of the material inflation, and thus, you will see going forward better margin in our Americas operations. Similar to Europe, the price discussions are well advanced and higher steel, higher plastic revenue costs are a subject. It's very low [indiscernible]. And we'll find some and device adjustments going forward. Now we fix our -- final thing about Slide #12. We move forward to Slide 17, which is the APAC region. APAC here in our quarter 1, clearly the best region year over year. See on the graph on the left-hand side are [ 62% ] [indiscernible], still 53%, fantastic rate. Clearly is our strategic focus on the APAC region to work into the focus of our company development. Here you see the results from that. Now speaking to the comments on the right-hand side, year-over-year, typical production in APAC is [ 8.4% ]. Our revenue, as mentioned before, up by [ 63.4 ] or organic [indiscernible]. So clearly doing better segment. The third point shows you in detail their the growth. Automotive Gas Spring, 14% organic growth, obviously the finest in the car industry. And [ Powerise ] is [ 4.8% ] up versus [indiscernible] clearly that our product strategy works well. But here, okay, [indiscernible]. About America, keep in mind the special situation [indiscernible]. And S1 is [indiscernible] to continue resourcing. It's not precisely one units more in the other one. There's a bit of overhead [indiscernible] of foreign to the production system to ensure a continued supply of product to our customer. Industrial business is very well too in the Asian specific region, is up by 42.1%, right on a kind of [ solar] impact. We all know since year since Stabilus, Industrial revenue in Asia Pacific still offers room for growth to achieve a market share like what get in Europe or in the U.S. The action in Asia Pacific, up from the 17.4% to 21.1% in absolute terms and [indiscernible] year-on-year. Clearly, very nicely [indiscernible] revenue side, and it also underlines that once our plans are fully loaded, [indiscernible] efficiency with customers that weeks ahead give us a clear color, pattern that it then sticks to. And now it's just really efficient in running the plants and delivering good options. Moving forward to Slide #14, we look at the revenue split. This is the split between our automotive and industrial, [indiscernible] you see the industrial share last year, [indiscernible] there in terms of mix to the industrial business, nice growth in the Industrial business on a global scale by organically 10.3% on a global scale. Talking now to the comments on the right-hand side, product is down by 13.2%, and our Gas Spring business is down by only 9% and Powerise is up by 2.4% organically. So as mentioned before, this shows -- with us, we are in the right products, in the product set and continue [indiscernible] and there for the car manufacturers work. Industrial revenues are [indiscernible] already up. And following slide, which is #15, shows you in a bit of detail in that area we see both in Industrial. On the right-hand side, the comment section, you see [indiscernible] e-commerce, we are 89%.This is like 8 million [indiscernible] share of our [indiscernible]. Good performance in the industrial development. And we've seen that we had this wide, [indiscernible] nicely diversified business setup. There, of course, also some pickup. The decrease you see there in [ HF ] is clearly the creation [indiscernible] of all other [indiscernible].With this, I finish my part of the presentation and hand over back to Michael Büchsner who share some more details on the outlook, which is Slide #17.

[Michael Büchsner, CEO & Chairman of Management Board]

Thank you, Mark. Yes. Coming back to our guidance. Our guidance, as I said at the beginning of the section, is unchanged. If you remember, last year, we ended the year with EUR 937 million with an adjusted EBIT margin of 14.4%, and unchanged guidance for the year with EUR 940 million to EUR 919 million, [indiscernible] 15%. [Audio Gap] It is based on [indiscernible] euro exchange rates and year-over-year first light vehicle production development in '22. The meanwhile [indiscernible], IHS Markit expectations globally did change with a growth of 2.7% year-over-year, '21 to '22 in the table financial year '22. Light vehicle production thereby is expected to be, following IHS, EUR 81.7 million [indiscernible] EUR 79.5 million in the year 2021. As I said before, we have confirmed '22 [indiscernible] published in November. The [indiscernible] with the customers are well advanced to get [ reinforced ], as we've been seeing in the last quarter. And actually, some impact of [indiscernible] were especially -- and we're talking about that typically come [indiscernible] mainly produce segment cars [indiscernible] now. And this is only where our products are [indiscernible] of Powerise and other [indiscernible]. We continue to pursue our long-term strategy. At the beginning of the presentation, our strategic [indiscernible] all about the strong commitment in terms of focusing on sustainable profitable growth going [indiscernible] in terms of 5 pillars, which are motion control and variation here, as I said at the beginning of the session, gaining the driver and production of asset is [indiscernible] is very, very important to us. That's why we take this to [indiscernible] to talk about many of the things and question [indiscernible].Howeever, the side of vision, which is the main center of gravity for us, [indiscernible] the ecosystem but also [indiscernible] work on change channel management, which actually drives good growth we've been seeing in the last quarter. And the middle of our strategic pyramid, sustainable company and venture [indiscernible] Asia is growing disproportionately, also very good performance of [indiscernible]. Of gravity is -- also in the center of our automotive [indiscernible] agility bring things right first time and the right as highest quality. With that, we will [indiscernible] today, and we would open up for your questions, please.

[Operator]

[Operator Instructions] The first question comes from Akshat Kacker of JPMorgan.

[Akshat Kacker, Analyst]

I have 3 questions, please. The first one on the target of EUR 2 billion in sales and the 15% margins. [indiscernible] targets, how much of the growth is expected to be organic? Or if you have any split between automotive and industrial for us.

[Mark Wilhelms, CFO & Member of Management Board]

Thank you very much for your question, Akshat. The EUR 2 billion for [ 2022 ] is our target in terms of [indiscernible], the long-term vision of [indiscernible] automotive and industrial applications. This is what should be helpful for your model here and turn in the range of 40% industrial applications, 60% of [indiscernible] with our doing, we are rather migrating to year. In the terms of activity, the main falls here in this number is on organic [indiscernible]. Growth is here the driving [indiscernible].

[Akshat Kacker, Analyst]

A question on APAC and China. Firstly, congratulation in terms of growth and profitability. I think it was a highest power revenues within the group. So 2 parts to that question. The first [indiscernible] from the market, how do you see that evolving? And the second part is that generally, we have earnings in China stemming on the property market and eventually just linked. Interested in hearing what you are hearing from your team on the ground, both in terms of the consumer sentiment and business sentiment going forward?

[Michael Büchsner, CEO & Chairman of Management Board]

Talking a bit about the part [indiscernible] a very strong first quarter. And also here, the outlook is strong, by the way. Over years, the go-to the decision to invest in China and even [indiscernible] a plant. So we've been foreseeing that growth [indiscernible], foreseeing that growth on the Powerise side mainly, and that's why we build this plant in Pinghu and opened it last February. Now the quarters are progressing. We see this materializing. And from the [indiscernible], the industry saw progressive [indiscernible] and speed, and I'll talk in a bit about that. However, talking a little bit about [indiscernible] yes, a big share is Powerise. We will [indiscernible] our business. This goes with our [indiscernible]. We've been reaching on the industrial customers very well last quarter. And also Industrial side, we saw good growth in our business. Talking a little bit about the market expectations, and we [indiscernible] in terms of that the market in China could become softer in the month to come. Currently we do not see that on our forecast numbers due to the fact, those are superior products in terms of support [indiscernible] of comfort of mankind. So the OEM areas, the customers are -- and the end customers seeking for more comfort. That means the takeaway are [indiscernible] and from our forecast numbers, they remain [indiscernible]. So a very successful business win. We highlighted [indiscernible] -- we've been winning [indiscernible] CapEx and contract. But also with the cost, the local OEM producers, we've been winning the vast majority of the businesses out there, which underline our growth for the month [indiscernible].

[Akshat Kacker, Analyst]

That's great. probably for Mark on Synapticon on and Cultraro, these assets are now being consolidated on the equity line. So how should we think about on the [ bid ] on the P&L to ease in fiscal year '22?

[Mark Wilhelms, CFO & Member of Management Board]

Right now, we have just -- the value, as you call it [indiscernible] average. I'm not so sure. [indiscernible] Once the company [indiscernible] into the choice [indiscernible], which is really at the bottom of the P&L. So this consolidation at equity, not the revenue year-on-year cost, not the gross margin or just bottom line adjusted for our share of those 2 companies.

[Akshat Kacker, Analyst]

Understood. Do we have any numbers or indication in terms of the magnitude we should think about?

[Mark Wilhelms, CFO & Member of Management Board]

If you -- as a plug number put in for Cultraro, for example, x revenue was like 10% profit adjusted for our share, you've got something to work with for the time being.

[Operator]

Question from Philippe Lorrain of Berenberg.

[Philippe Lorrain, Analyst]

I don't -- I wanted to come back actually on the long-term interest rate and try to reconcile your EUR 2 billion sales target with the [indiscernible] which you provide. You mentioned in the comments responding to my colleague here, that you expect the main focus [indiscernible] now, and that would be the driving factor. However, in the same slide, you are mentioning as well that you continue to target long-term sales growth of 6% CAGR over time. If I take the EUR 2 billion for 2030 right now, and I take the high end of the sales range for 2022, that implies rather 9% CAGR number. Would you assign to M&A in that EUR 2 billion sales target for 2030, please?

[Michael Büchsner, CEO & Chairman of Management Board]

Before I also hand over to Mark for giving some guidance [indiscernible]. For sure, our sales target is in the range of EUR 2 billion. And our target growth is in the range of 6%. In the past, we also have been showing that under one or other than we've been outpacing this growth target of 6%. And -- that's I would say, that for us, the 6% are definitely the number we want to minimum work with. And then same side, when it comes to M&A targets, we are [indiscernible] in several discussions and on our [indiscernible] our companies, which are in the range of 50 to 100 or even above that. But as I said, the main concentration from for the time being is on the organic growth side, and there is only a small [indiscernible] of M&A activity and the EUR 2 billion.

[Mark Wilhelms, CFO & Member of Management Board]

Maybe [indiscernible] partner, we've got the company right, and as such cost sent at regions [indiscernible]. That is in the capital market communication. But of course, there are different [indiscernible] of business, different products that will support [indiscernible] we always currently see a very [ polite ] the vehicle market numbers, estimates for the time to come. And here and there, one has to work with solid softening effect to come to a number that is very credible. The 6%, we view as very credible in the overall setup. On average [ 6 ], but of course, there are years due to certain product we own, we will see a much stronger growth than the 6% going forward, which takes a little bit year-over-year calculation in the setup.

[Michael Büchsner, CEO & Chairman of Management Board]

In terms of -- in technical terms, we see still good growth opportunities on the Powerise side as well as on the Industrial side. And then something to consider and keep in mind also is the expected takeoff of door actuation systems down the road. So here also in the close or midterm, long-term future, good growth opportunities for electromechanical devices in both [indiscernible] shares in automotive and in the industrial side.

[Philippe Lorrain, Analyst]

If I may come back on that point that you make on operations. So if there is such significant growth in there, plus Powerise as well, that -- the mix that you're targeting, i.e., 50-50 between industrial applications and automotive, that's going to really materialize and not [indiscernible] like at some point the automotive sector outgrowing again the [indiscernible].

[Michael Büchsner, CEO & Chairman of Management Board]

The growth we are having are mainly centered around organic growth. The target of M&A activities, as you know them, are centered in the area of Industrial. We've been mentioning that before, right? Because our long-term vision is also to be even stronger on the electromechanical side in the industrial area. Now as we speak, we have several contracts on [indiscernible] suppliers, furniture suppliers for electronic [ uses ], which already underline that our first development, also along with our partner [indiscernible] fruits. They are small for the time being. We see growth opportunities out in the M&A target. Our time frame and in the space of [indiscernible] of electromechanical devices. So that's one part of the equation. And on the other hand, we still see good growth out with all kinds of channels in the industrial side with our motion [indiscernible] approval. So yes, the automotive part are in good terms. But we have also several activities ongoing to increase still our share on the inside and make it -- or move it into the range of [indiscernible].

[Operator]

We have one more question. It comes from Marc-René Tonn of Warburg Research.

[Marc-René Tonn]

First would be -- and I would also like to take the one by one. It would be on Industrial in the APAC region. I think [indiscernible] a similar market position, like what you enjoy in Europe and over time. Could you kind of, let's say, put this into a number, what we may expect there in terms of revenues [indiscernible] not this year, not next year, but just looking at this very huge market in revenue numbers.

[Michael Büchsner, CEO & Chairman of Management Board]

Yes, I hand over here to Mark for maybe [indiscernible] some technical topics here, right? Because if you look on to where Stabilus is coming from, when we started the activities a decade ago of producing gas springs bigger scale in China. So during the first attempt of selling these gas springs not only in the automotive space, but also in the industrial space. And then this growth did lead to a solid and profound base in these different kind of the industry or different areas of the industry over the past 10 years. And the acquisitions of our companies, like [ Fabrica ], [ Tesa ], this kick in. However, these companies think traditionally in Europe and North America. Outgrowing that business of structure we have -- and in terms of the management, [indiscernible], we see first fruits also in the Asia region and [indiscernible] of the last quarter. This is just a starting point for the [indiscernible] devices in Asia, which we certainly will continue to build up on. This starting point is, however, very relevant for us because now with this new plant in clean whom we can concentrate in one plant on all the power electrifications, other plants is concentrating then on [indiscernible] for dampening side, which then 2 driving factors for that growth in the Asian [indiscernible]. Our portfolio fits along with the product, really concentrating in 1 plant on the [indiscernible] product. And on the other side, our motion [indiscernible] at the end of the day drives a lot of growth [indiscernible] in the different segments of our business. [indiscernible] next year [indiscernible] the pairing growth by EUR 2 million. So expect growth in this space [indiscernible], opening system, but also electromechanical device [indiscernible]. So many [indiscernible] in terms of flow, which is a revenue by region. And we have showed [indiscernible] yellow box around the current year if you only move [indiscernible]. If on one hand, first time global Powerise revenue and automotive gas [indiscernible] tiny bit, but nevertheless. One interesting point, [indiscernible] has got nothing to do with [indiscernible] directly. Nevertheless, we've seen that you see [indiscernible] EUR 77 million, call it, EUR 75 million around revenue for Gas Spring and Powerise. We see that Asia Pacific is [ 3.5 ] and [ 11.4% ] for Powerise. So [indiscernible] advantage with a good growth in Asia Pacific to a nicely balanced regional split [indiscernible]. Where we have global revenue in the first quarter of [ EUR 19 million ] in Asia Pacific. It's not clear [indiscernible] the specialist is that Germany, as you know, is the strongest revenue in Germany in Europe. We see that the industry [indiscernible]. Going forward, in our trend, we talked about this EUR 2 billion revenue and [ 6% ], which [indiscernible for the industrial persist with almost down [indiscernible] at 20, but it's a round number. That was all 20% CAGR going forward for the [indiscernible] high products [indiscernible] and there's a good chance that the company [indiscernible] as insofar Automotive Gas Spring and Automotive Powerise is very balanced revenue set up between the 3 regions. We have the right product on hand. The product has worked for European and American customers [indiscernible], in Brazil [indiscernible] slightly more cost focused for many customers in that area. We [indiscernible] and the mass production advantages we get from also will allow us to [indiscernible] market share in the time to come.

[Marc-René Tonn]

Second question would be on the [indiscernible] We look at Powerise and you highlighted on the effect from shifting [indiscernible] for Tesla from the Americas to -- what was the only reason for the underperformance? In other words, let's say, if you would adjust for that, would Powerise be in line with the [indiscernible] or other, let's say, moving parts in terms, like project timing, which may have an impact on our outperformance in the specific quarter or like the mix in the -- depending on the [indiscernible], which have been produced, that would be -- so...

[Michael Büchsner, CEO & Chairman of Management Board]

Yes. Also here, the shift of Powerise was in the range of EUR 5 million. So it's in the range of 170,000 cars, which actually were shifted and takes care of EUR 5 million of this softer sales in the North American region. But clearly, what we see is also the North American OEMs are more impacted to that shortage than others. And this is why the sales region on the Powerise is less. So Ford, Chrysler and GM seem to be more impacted by the semi conduct [indiscernible] for short, actually, what we hear from the media, right? If you take it by region, it seems that the Asians are [indiscernible] the shortage of -- shortage of electronic component in a better way than the Europeans. The Europeans are somewhat in the middle field. Those who have the biggest concern in terms of electronic parts and semiconductors, it's certainly the big 3 [indiscernible]. And this is something that you see in this number of North America, on top of EUR 6 million sales, which were moved from North Asia or China.

[Marc-René Tonn]

We did expect this EUR 5 million probably to reoccur for the next 3 quarters as this has now started with the first quarter of this year. Am I right with that?

[Michael Büchsner, CEO & Chairman of Management Board]

Actually, the products are moved to China. They will subsequently be produced in China [indiscernible] at a fair assumption that, for sure, this volume stay in the -- Indonesia. Because our aim always was and will continue to be that we produce in the region for the region, that [indiscernible] in terms of not only strengthening the region, but also being close to specifically the customer, and the produced [indiscernible]. Tesla used to be produced in North America, now [indiscernible] equally to 5 million sales will all be in Asia in the next coming months and quarters.

[Marc-René Tonn]

So lastly, you mentioned that you have already some new products to kind of the base [indiscernible] fill the gap, which has occurred from that. So can you give us an indication on how long this may take until we see, let's say, the production coming back to the level where it had an reform?

[Michael Büchsner, CEO & Chairman of Management Board]

[ No? ]

[Marc-René Tonn]

Yes.

[Michael Büchsner, CEO & Chairman of Management Board]

In North America, we see stabilization of the [ colors ] of our OEMs. They are on a lower level for the next coming weeks, but on a level like late last year. And we see a first and better recovery from the time being in middle of February. So middle of February, we see increasing numbers on the North American side. However, as Mark pointed out, the situation is quite volatile. What we also did see in the past quarters was that customers pushing orders out. So for the time being, there is a light at the end of the tunnel. We see better sales coming up in February. But nobody really knows if there is still a high fluctuation in August or not.

[Mark Wilhelms, CFO & Member of Management Board]

And keep in mind, it's not the same number of this relocation of resourcing every month. The total lease to match the output of the Tesla plant in China and in the change happens. It's kind of more visible than once you are in a steady state with -- yes, but it's just in the [indiscernible] region.

[Operator]

We have one more follow-up question from Mr. Akshat Kacker.

[Akshat Kacker, Analyst]

One more follow-up, please. Akshat from JPMorgan. Can I see cost inflation and raw materials and the impact on the automotive business. Do you have a quantification on the raw material impact at a gross level or [indiscernible]? And how much of that do you expect to recoup from OEM?

[Michael Büchsner, CEO & Chairman of Management Board]

Actually to put it into a rough number, we saw a steel price inflation of anywhere between 15% and 20%, and inflation on the material side of all kinds of plastic resins in the range of 10%, 15%. So our bill of material is at 50%, right, of our product. And we see the impact or the only impact for the time being, on the gas spring side. And that brings you to an impact of anywhere in the range of 3% to 4%. And for seeing this from our customers, as we speak, are in the middle of negotiation and disclose first field. Strictly [indiscernible] on the right, on the Industrial side, we see similar impact on cars [indiscernible] dampening systems and also gas spring based on steel and resin predominantly. So also here, increase in the range of 4% to 5%. And this is what we, in 2 ways: so communicate to our customer base, and we are even further progressed under the automotive side because we work in price relief. So we are on a good path to recovering these costs in the coming months and quarters.

[Mark Wilhelms, CFO & Member of Management Board]

Super high level on average. We need to increase the prices by 3% in order to get the 20% margin to the 14, 15 that we are shooting for, and that we've delivered is part. Think difficult for many companies, one needs to recognize that we did the 15-ish percent in the past several times. I'm not using this to kind of push the customer to further, but we use this to get to the level that was part of the overall business situation.

[Operator]

Mr. Mark Wilhelms, there seem to be no further questions in the queue.

[Mark Wilhelms, CFO & Member of Management Board]

Well then, if there no further questions, we close the call. Thank you very much for participating. I wish you a successful day and a very good [indiscernible].

[Operator]

[indiscernible].