Recent years’ sales and inventory records are now negatively impacting the financial statements of German component distributors.
Following a -28% decline in Q1 2024, FBDi members saw their turnover plummet by 38% year-on-year to just under €890 million in Q2 2024, marking the lowest level since mid-2021. Incoming orders were equally disappointing, with new orders at €628 million (-28%), falling short of expectations. Despite a slight rise in the book-to-bill ratio to 0.71, due to weak sales, a recovery is not yet visible.
The semiconductor sector is particularly concerning. Sales for semiconductors dropped by a record 44% to €565 million, while incoming orders reached €365 million, a -27% decline compared to the same quarter last year but a 6% sequential increase from Q1 2024. Passive Components fared somewhat better, with Q2 sales decreasing by “only” 31% to €125 million. Electromechanical components showed a relatively smaller decline of 19%, reaching €130 million in sales. Although the order situation in both segments slightly improved, it did not indicate stabilisation. Other components, including sensors, displays, power supplies, and assemblies, followed the general downward trend. The distribution of sales among various component technologies shifted, with semiconductors now comprising only 63% of the total market.
FBDi CEO Georg Steinberger said: “2024 proves difficult, as expected. As my board colleague Tom Gerhardt said a few months ago, ‘after the booking pause comes the billing pause’. Orders remain at a low level and show little impetus for growth. Our positive impression from Spring has faded somewhat. Visibility in the supply chain to the end customer is worse than it has been for a long time. And compared to other countries, Germany doesn’t just seem to have only an inventory problem.
“Germany is very dependent on automotive and industrial electronics, and industrial electronics is also affected by the fate of automotive production in Germany. We estimate that the market as a whole relies about 50% on the automobile. And this is precisely where things are going wrong at the moment, be it the botched e-mobility strategy or the weakness in exports of fossil-fuelled vehicles. Coupled with the uncertainty among end customers due to the political and economic situation, not much good can be expected in the short term. However, plans for the digital and energy transformation that could drive our market forward have long been on the table. And there are also positive signs, for example in the production of renewable energy.”
Nevertheless, the FBDi remains optimistic: “German industry has little to report in the current hype about artificial intelligence, so I expect little impetus for the components sector. But we have by no means written off the rebuilding of the European energy industry and the transition to an all-electric society. We are convinced that this can be achieved with European innovations, not just Chinese ones. Perhaps German society should not lose itself in pointless political polarisation and instead focus on what once made the German economy great: ideas and engineering skills. The FBDi has set itself the goal of increasingly promoting developments from German think tanks and universities that could be suitable for the mass market.”
