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.
Merck, a science and technology company, announced its participation in a collaboration with the Vaccine Formulation Institute and the European Vaccine Initiative. The effort will provide vaccine process development training courses within Transvac2, a collaborative infrastructure project under Horizon 2020.
“Involvement in this project is a natural extension to our longtime focus on accelerating vaccine development and manufacturing,” Udit Batra, member of the Merck Executive Board and CEO, Life Science. “Through the Transvac2 initiative, we are able to lend our expertise in vaccine research and development in this critically important field.”
Funded by the European Commission (EC), Transvac2 exists in part to accelerate vaccine development by enhancing European vaccine research and training and increase sustainability of EC vaccine projects by implementing a permanent research infrastructure for early vaccine development. Merck is among a list of collaborators joining the Transvac2 program.
As part of the program, Merck will hold a two-day training module in 2019 and in 2021 and will host applicants, selected by the Transvac2 Course Selection Panel, at Merck’s recently inaugurated M Lab Collaboration Center in Molsheim, France.
Participants will experience simulated lab processes, which will help them acquire fundamental skills needed for process development and will acquaint them with a single-use environment.
Merck’s focus, to find effective ways to accelerate vaccine development and manufacturing, includes collaborative work with leading research institutes and industries to introduce new technologies that advance the global vaccine industry. For this initiative, Merck is tapping its internal manufacturing expertise and process knowledge in viral vaccines and vectors.
Turning the first spadeful
New Center of Excellence for meat portioning
As part of an official celebration, the first spadeful of earth was turned today for the construction of a new factory at TVI Entwicklung und Produktion GmbH in Bruckmühl. A state-of-the-art complex covering around 9,000 square metres of available space will be built there, and it will include an office building and Customer Center as well as the production hall. Completion is planned for May 2020, and the total investment amounts to approx. 17.5 million euros.
TVI is the market leader in meat-portioning machines and complete portioning lines. The product portfolio includes solutions for tempering, pressing, portioning and automating, as well as grill stick winders and equipment for producing kebab skewers. Since January 2017 Multivac has held a majority share in the company – and with the construction of the new building it is now creating the ideal conditions for further sustainable growth.
A large number of guests took part in the celebrations at Bruckmühl, among them Richard Richter, Mayor of Bruckmühl, Alois Allgaier and Thomas Völkl, the two CEOs of TVI, as well as Multivac Directors, Guido Spix (CTO/COO) and Christian Traumann (CFO).
Continuing to expand the position in precision meat portioning
“The Portioning Machinery Business Unit is developing in a very satisfactory manner. By investing in the new factory, we are facilitating the expansion of our product portfolio and at the same time enabling TVI’s leading position in precision meat portioning to be consolidated,” explained Guido Spix, CTO and COO of Multivac. “The number of employees is due to increase from the current 120 to around 250 in the coming years.”
The new Center of Excellence for meat portioning will include a production hall of around 5,600 square metres for the Pre-fabrication and Assembly areas as well as the Logistics, Warehouse and Development departments. The new factory will use a deep-well system to ensure that the building is cooled by ground water.
In addition to this, there will be a three-storey office building with a total area of 1,920 square metres, in which a modern canteen, high-quality offices and a recreation room will be housed. “When designing the new facility with its state-of-the-art working environment as well as its various functional areas and meeting places, it was very important for us to create an environment for our staff, in which they feel at ease and can find all the requirements for their work,” explained Alois Allgaier, CEO of TVI.
A two-storey Customer Center covering an area of around 1,400 square metres, including several demonstration rooms and a Customer Lounge, rounds off the new complex. “This will enable us in future to offer our customers the ideal conditions for discussing and demonstrating our high-performance portioning solutions under real conditions,” said Thomas Völkl, CEO of TVI. “It will also be possible to carry out individual trials with customers’ own products, as well as testing the solutions for feasibility, output, return on investment, give-away and other critical factors.”
Instant coffee in Vietnam
Freeze-dried coffee production plant for Tata Coffee
Gea has completed a new freeze-dried instant coffee plant on a green field site in Vietnam for Tata Coffee Vietnam Company Limited, a 100% subsidiary of Tata Coffee Limited, India.
According to the timetable for the contract project which was signed two years ago, the new plant was inaugurated on March 6, 2019 – just 19 months after the groundbreaking ceremony.
Vietnam is the world’s second largest producer of green coffee, after Brazil. The plant in the Binh Duong Province produces 5,000 metric tons/annum of freeze-dried coffee. Gea supplied the entire production line from roast bean treatment right through to the packing of the freeze-dried powder using its proven technology. This included: Carine extraction which operates at optimal conditions, using precisely developed extraction times to obtain the highest possible yields while respecting the final product quality; aroma recovery; mechanical vapor recovery (MVR) evaporation; and a Conrad 600 XL Eco freeze dryer for highly efficient continuous operation with minimal energy consumption. The company also supplied a complete pilot plant, providing Tata with facilities where it can develop exclusive blends for customers.
Previous work carried out for Tata Coffee includes a coffee extraction and evaporation plant that Gea built for the company in India in 2013. Gea also has extensive experience of building coffee plants in Vietnam and this local experience was extremely useful as Gea project managers were able to provide Tata with support in sourcing experienced and reliable local partners for managing, utilities, installation and workshop facilities. The factory required nearly one million man hours to build and maintain an exemplary safety record. The site has been certified for LEED (Leadership in Energy and Environmental Design) and is expecting BRC (British Retail Consortium) certification shortly.
Kim Knudsen, Head of Sales, Coffee and Freeze Drying at Gea said that the Tata factory in Vietnam had been a model project for the company. “This type of project is ideal for us at Gea because our expertise and scope of supply allows us to build the entire coffee line using our own resources,” he said. “This means we can maintain control and take responsibility for the entire project from start to finish.”