Endress+Hauser grows significantly

Endress+Hauser expe­ri­enced strong growth across all regions, sec­tors and prod­uct areas in 2018. The ongo­ing dig­i­tal­iza­tion of the indus­try and pos­i­tive devel­op­ment on the inter­na­tion­al mar­kets pro­vid­ed impe­tus. The Group increased sales and prof­its, invest­ed heav­i­ly and cre­at­ed hun­dreds of jobs worldwide. 

“The bot­tom line is, 2018 was a good year for Endress+Hauser world­wide,” explained CEO Matthias Altendorf at the Group’s annu­al media con­fer­ence in Basel. The Group increased net sales by 9.5 per­cent to 2.455 bil­lion euros, despite fac­ing strong head­winds from for­eign exchange rates. Expressed in local cur­ren­cies, sales grew by 12.7 percent.

US moves to number one

The busi­ness was bol­stered by a strong econ­o­my in the process automa­tion sec­tor. Con­tin­ued high demand from pri­vate con­sumers, as well as recov­er­ing oil and raw mate­r­i­al prices, con­tributed to the sol­id growth. After years of some­what restrained invest­ment activ­i­ty, large-scale projects made a return. Accord­ing to Chief Finan­cial Offi­cer Dr Luc Schultheiss, Endress+Hauser’s per­for­mance “exceed­ed the indus­try average.”

The firm made excel­lent progress in Europe. Busi­ness was dynam­ic even in Africa and the Mid­dle East as well as in the Asia-Pacif­ic region. The strongest growth was seen in the Amer­i­c­as, how­ev­er. “After 65 years, the US replaced Ger­many as our largest sales mar­ket,” report­ed Matthias Altendorf. Chi­na also grew at a dou­ble-dig­it pace. “If this trend con­tin­ues, Chi­na could soon take over the top spot,” added the CEO.

Profits rise sharply

For­eign exchange rate fluc­tu­a­tions not only slowed down sales growth, but also sti­fled cost struc­tures, despite notable cost increas­es on the mate­ri­als side. Oper­at­ing prof­it (EBIT) increased by 31.4 per­cent to 330.6 mil­lion euros. Even though no one-off income was rec­og­nized in 2018, in con­trast to the pri­or year, prof­it before tax­es (EBT) still rose by 14.6 per­cent to 315.7 mil­lion euros. Return on sales (ROS) climbed 0.6 points to 12.9 percent.

Net income rose by 11.2 per­cent to 232.5 mil­lion euros, which reflects an effec­tive tax rate of 26.4 per­cent which increased over the pri­or year due to a change in the com­po­si­tion of the prof­it. The equi­ty ratio reached 71 per­cent, an increase of 0.8 points. The Group has no con­sid­er­able bank liabilities.

Innovations for the digital age

Endress+Hauser’s growth was fueled by a wealth of inno­va­tions. The com­pa­ny brought 54 new prod­ucts to the mar­ket last year. Research and devel­op­ment expens­es climbed to 184.2 mil­lion euros, rep­re­sent­ing 7.5 per­cent of sales. The com­pa­ny filed 287 ini­tial patents in 2018. At the end of the year, Endress+Hauser held near­ly 7,800 patents and oth­er intel­lec­tu­al prop­er­ty rights.

About one-third of the new patents were relat­ed to the IIoT, dig­i­tal com­mu­ni­ca­tions, diag­nos­tics and elec­tron­ics. “Dig­i­tal­iza­tion is pen­e­trat­ing all areas,” empha­sized Matthias Altendorf. Apart from 1,000 devel­op­ers active in the Group’s cen­ters of com­pe­tence, var­i­ous start-ups estab­lished by the Group are also busy work­ing on prod­ucts, solu­tions and ser­vices for the dig­i­tal age. Endress+Hauser is fur­ther­more col­lab­o­rat­ing close­ly with indus­try part­ners such as soft­ware spe­cial­ist SAP.

A fur­ther dri­ver of growth was process analy­sis. “The opti­cal ana­lyz­er busi­ness per­formed extreme­ly well,” said Matthias Altendorf. Endress+Hauser estab­lished a Euro­pean sup­port cen­ter for advanced ana­lyz­ers in Lyon, France. The net­work of sales spe­cial­ists in this area is grow­ing in Europe. The CEO is hop­ing for addi­tion­al impuls­es to spur this busi­ness area.

Hundreds of new jobs

The pos­i­tive devel­op­ment was reflect­ed in the cre­ation of numer­ous jobs. At the end of 2018, Endress+Hauser had a glob­al work­force of 13,928, an increase of 629 over the pri­or year. Hir­ing was espe­cial­ly strong in pro­duc­tion and pro­duc­tion-relat­ed areas, as well as in the ser­vice units. The com­pa­ny cre­at­ed 200 new jobs in the Basel region alone.

The com­pa­ny invest­ed near­ly 750 mil­lion euros with­in a five-year peri­od, “all of which the com­pa­ny financed through its own funds,” as CFO Luc Schultheiss point­ed out. In 2018, 158.6 mil­lion euros flowed into build­ings, machin­ery and IT. The two largest projects involve the expan­sion of the plants in Reinach, Switzer­land and Maulburg, Ger­many. The Group is also under­tak­ing a large project in the US that will bun­dle the Gulf region sales, ser­vice and sup­port orga­ni­za­tions in Hous­ton, Texas.

Top sustainability ranking

“As a fam­i­ly-owned com­pa­ny, sus­tain­able devel­op­ment is impor­tant to us,” empha­sized Matthias Altendorf. One of the strate­gic indi­ca­tors is the annu­al Eco­Vadis bench­mark, which assess­es com­pa­nies with respect to sus­tain­abil­i­ty. In 2018 Endress+Hauser con­tin­ued to improve, scor­ing 68 out of a pos­si­ble 100 points to place in the top 5 per­cent of its com­par­i­son group. Endress+Hauser plans to use the Eco­Vadis plat­form to even­tu­al­ly eval­u­ate its own suppliers.

“We feel it’s impor­tant for the future of Endress-Hauser to con­tin­ue to have mem­bers of the share­hold­er fam­i­ly work at the com­pa­ny,” empha­sized Klaus Endress, Pres­i­dent of the Super­vi­so­ry Board. “This strength­ens the bonds between the fam­i­ly and the com­pa­ny.” A deci­sion was thus made to allow mem­bers of the fam­i­ly to work at all lev­els with­in the com­pa­ny. The Fam­i­ly Char­ter pro­vides clear guide­lines; can­di­dates who choose this path will receive close sup­port from the Fam­i­ly Council.

Continued solid growth

Endress+Hauser got off to a good start in 2019. Incom­ing orders and net sales for the Group are track­ing well above pri­or year lev­els. The com­pa­ny nonethe­less expects this trend to cool off in the sec­ond half of the year. “We are still antic­i­pat­ing sol­id growth in the mid-sin­gle-dig­it range,” said Luc Schultheiss. Accord­ing to the CFO, the com­pa­ny plans to invest 260 mil­lion euros this year, and assum­ing the busi­ness con­tin­ues to per­form well, 500 new jobs will be cre­at­ed worldwide.