The deep slump 2009 was followed by an almost dizzying rate of growth last year: the Endress+Hauser Group (Reinach, Switzerland) reported a new all-time high in net sales and profit for 2010. The company, specializing in measurement engineering and automation solutions, created additional jobs and invested in its worldwide sales and production network.
The Group increased its net income in 2010 by almost 19.8 percent to over 1.31 billion euros – not only compensating for the drop in sales in 2009, but even significantly exceeding the previous best results of 2008. “We have recovered more quickly from the effects of the worldwide economic and financial crisis than expected,” said Chief Exe¬cutive Officer (CEO) Klaus Endress at the media conference on the financial statement in Basel. He stressed the dynamic nature of this development. “In 2009 we didn’t know where the work would come from at times. Last year we often struggled to complete all orders on time.”
The economic recovery was noticeable right from the start of the year. Only a few markets – such as Greece, Ireland and the Scandinavian countries – experienced no upturn. The company had the strongest growth in America, with an increase of 38.2 percent, even exceeding growth in Asia (28.5 percent). In Europe sales grew by 12.9 percent, in Africa and the Middle East by 10.0 percent. “As a result of the crisis, the emerging markets have grown in significance much faster than predicted,” explained Chief Operating Officer (COO) Michael Ziesemer.
Growth was driven in particular by the food & beverage industry, the largest sector for Endress+Hauser, where recovery was especially rapid in the plant building and machinery sectors (for example the manufacturers of filling machines). The primaries industry also made an above-average contribution – mining, for example, profited from the worldwide hunger for raw materials – as well as the pharmaceutical industry. The chemical, oil & gas, metal, power & energy and water & wastewater industries also developed well. Only the pulp & paper industry continued to struggle.
Strong influence of exchange rates
The development of the exchange rates had a marked effect on both the income statement and the balance sheet. On the one hand the weak euro supported the recovery of export-oriented industries in Europe. In addition, business carried out in US dollars, yen, British pounds or Swiss francs brought correspondingly higher yields. On the other hand, the loss in value of the euro – in the course of the year it slumped by 16 percent against the Swiss franc – led to net foreign exchange losses of 20.5 million euros. Nevertheless Endress+Hauser was still able to more than double its operating profit (187.4 million euros, plus 123.2 percent), as well as the net income (126.6 million euros, plus 114.6 percent). “This shows that we kept costs under control and budgeted carefully during the recovery, too,” emphasized the Group’s Chief Financial Officer (CFO), Fernando Fuenzalida.
As the equity (888.5 million euros, plus 30.5 percent) grew considerably stronger than the total capital employed (1.30 billion euros, plus 24.1 percent), the equity ratio increased by 3.4 points to currently 68.3 percent. Cash and cash equivalents have grown considerably, by 54.4 percent to 377.3 million euros, and meanwhile exceed bank loans (50.5 million euros, 24.8 percent less than 2009) more than sixfold. “We thus ensure that we are not dependent on third party investors,” stressed Fernando Fuenzalida.
New jobs, further investments
This financial independence allows the family-owned company to follow long-term goals and remain true to their own convictions. “As we had hardly reduced the size of our workforce during the crisis, we were able to respond immediately once recovery began,” emphasized the CEO. In 2010 jobs, on a small scale, were created once more, above all in worldwide sales. The number of employees in the Group increased by 175 to a total of 8,594; in the region of Basel, where 4,251 people are employed by Endress+Hauser, 33 new jobs were added.
Both during the crisis and throughout last year the company continued to invest in research and development. The Group earmarked 96.4 million euros (plus 2.5 percent) for this, 7.3 percent of net sales. With 219, patent applications reached a new record high. “We were able to provide our customers with important new products,” commented Klaus Endress. Endress+Hauser holds over 4,400 ‘live’ patents and patent applications worldwide.
Investment in buildings, plants and machinery decreased by 15.2 percent to 57.0 million euros. Previous years had been marked by many major building projects, most of which have now been completed. In Stahnsdorf on the outskirts of Berlin, a new facility for the development and production of silicon pressure sensors was inaugurated; in Cernay, eastern France, work on a customer center for the magnetic flowmeter plant has been completed. “In the meantime some of our production facilities have already reached the limit of their capacities,” the CEO added. The plants in Maulburg (level and pressure measurement) and Waldheim (glass sensors for fluid analysis), Germany, have already been expanded. Other building projects outside Europe are also in the pipeline.
The network for sales and marketing is also to be further reinforced. In 2010 Endress+Hauser Poland inaugurated new premises in Wrocław, the Chinese sales center took up operation of a goods distribution center in Shanghai, the Dutch sales center recently moved into a new building in Naarden, Endress+Hauser Thailand is to enlarge its current headquarters in Bangkok and the sales center in Malaysia is to invest in its own premises. The company’s presence in the Middle East is also to be strengthened with the opening of a sales office in Abu Dhabi. Working together with a partner, Endress+Hauser will set up a subsidiary in Saudi Arabia before the end of the year.
Excellent start to 2011
Just as 2010 ended well for Endress+Hauser, 2011 has started equally well – incoming orders and net sales currently exceed last year’s good figures by a two-digit number. Although the Group expects a weakening in this development in the second half of the year, the CFO is confident that the cautious target of 7 to 8 percent growth in sales will be significantly exceeded. Profit and equity are also expected to continue to grow. The Group has earmarked 88 million euros for investments in 2011 and expects to create over 600 jobs worldwide.
CEO Klaus Endress pointed out that there were still major uncertainties to contend with. In his eyes, the financial crisis is far from over, and the debts of many countries – especially in the euro zone – remain a burden for the future. He called the political unrest in northern Africa and the Middle East, as well as earthquake, tsunami and nuclear disaster in Japan a clear reminder that a company must always expect the unexpected. “We have to remain agile and alerted,” warned Klaus Endress. “We want to continue to make use of opportunities, but must not overlook the risks.”
The Endress+Hauser Group
Endress+Hauser is a global leader in measurement instrumentation, services and solutions for industrial process engineering. In 2010, the Group generated with over 8,500 employees worldwide net sales of around 1.3 billion euros.
Company-owned sales centers and a network of partners guarantee competent worldwide support. Production centers in eleven countries meet customers’ needs and requirements quickly and effectively. As a successful family-owned business, Endress+Hauser is set for continued independence and self-reliance in the future.
Endress+Hauser provides sensors, instruments, systems and services for level, flow, pressure and temperature measurement as well as liquid analysis and data acquisition. The company supports customers with solutions and services in automation engineering, logistics and information technology. Our products set standards in quality and technology.
Customers are primarily from the chemical/petrochemical, food & beverage, water/wastewater, life science, oil & gas, power & energy, renewable energies, primaries & metal, pulp & paper and shipbuilding industries. Endress+
Hauser supports its customers to optimize their process engineering procedures while taking into consideration reliability, safety, economic efficiency and environmental protection.
Founded in 1953 by Georg H Endress (1924 – 2008) and Ludwig Hauser (1895 – 1975), Endress+Hauser has been solely owned by the Endress family since 1975. The company group, headed by Klaus Endress since 1995, has developed from being a specialist in level measurement to a provider of complete solutions for industrial measuring technology and automation, with constant expansion into new territories and markets.
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