Endress+Hauser Off to a Strong Start in 2021

Endress+Hauser navigated 2020, the pandemic year, well. The company, specializing in measurement and automation technologies, managed to maintain profitability at top levels despite a decline in sales and strengthened its financial position. The Group created new jobs and expanded its global sales and production network. CEO Matthias Altendorf believes that Endress+Hauser is well positioned for both uncertain times and periods of economic recovery.

Our business creates value for society

Speaking at the annual press conference held in Basel, Switzerland, CEO Matthias Altendorf said that Endress+Hauser succeeded in protecting people's health and maintaining strong support for its customers. "During the pandemic, we helped keep important areas of our daily lives functioning. The work we do matters to both our customers and society." Endress+Hauser products are used, for example, to manufacture vaccines, and Analytic Jena, one of its subsidiaries, provides PCR technologies to detect coronavirus. [caption id="attachment_125035" align="aligncenter"] Digitalization has already established itself in Endress+Hauser's production facilities.[/caption]   During the pandemic, digitalization played an important role in accelerating speed in products, collaboration, and internal processes. Customers had long been able to conduct their daily operations through the Endress+Hauser website. During this period, the number of registered users on the platform doubled and online transactions grew by 39%. When needed, the 'Visual Support' application brings service technicians virtually to customer facilities. Factory acceptance tests can now even be performed remotely with video support.

Strong currency effects impacted sales

However, the Group's sales declined by 2.8% to EUR 2.577 billion in 2020. But currency developments had a major impact on this figure. Apart from the Swiss franc, all major currencies lost value against the Euro. Without these effects, according to Chief Financial Officer Dr. Luc Schultheiss, Endress+Hauser would have nearly reached the previous year's sales level. "We are above industry average in local currencies and performed well in the market." Different developments were observed by region, industry, and segment. Of the three countries with the highest sales, only China recorded growth and is now Endress+Hauser's largest single market. On the other hand, sales declined in Germany and the United States. Contrary to process engineering, laboratory instrumentation recorded strong growth. While cyclical industries deteriorated during the crisis, non-cyclical sectors maintained their stability. Matthias Altendorf said, "Broad support in the market helped us."

High level profitability

Endress+Hauser's profitability was not impacted last year. In 2020, on the cost side, currency movements had a positive effect on items such as material expenses. Operating expenses declined as many business trips and events were cancelled. Personnel expenses increased below average. Overall, operating profit (EBIT) declined by only 1.9% to EUR 337.1 million. Because financial results experienced some decline, earnings before tax (EBT) fell by 2.7% to EUR 337.6 million in 2020. Sales return (ROS) remained at 13.1%. Net profit declined by 4.1% to EUR 254.9 million due to high tax expenses. The Group has virtually no bank credit. Equity ratio increased by 1.4 percentage points to 77.0%. CFO Luc Schultheiss emphasized a "sound financial position."

Strong adaptation during the crisis

Supervisory Board Chairman Dr. Klaus Endress said, "Shareholder family members are pleased and proud that Endress+Hauser navigated this difficult year so well." At the start of the pandemic, the company announced that it would avoid short working hours if possible and would not lay off any employees due to the crisis. For the Supervisory Board Chairman, this was an important signal. Klaus Endress emphasized, "There was great solidarity within the company that helped us during the pandemic." The number of employees increased by 126 worldwide in 2020, reaching 14,454. Almost all trainees were offered a position after completing their training. Endress+Hauser aims to increase the share of women in management positions to around 30% by 2030 – double the current rate. The company had already significantly reduced its environmental footprint in recent years. In the pandemic year, carbon dioxide emissions per million euros in sales declined further from 10.1 to 8.9 tonnes.

Major investments and abundant innovation

In 2020, Endress+Hauser continued major investment projects with spending of EUR 205.9 million (9.1% less than the previous year), primarily aimed at production. The two largest projects are expansion projects for factories in Maulburg, Germany, and Reinach, Switzerland. In addition, facilities in Gerlingen and Waldheim in Germany and Aurangabad in India are also being expanded. Sales centers in Canada and Mexico are also constructing new facilities. The company spent EUR 195.1 million on research and development, equivalent to 7.6% of sales. Endress+Hauser filed patent applications for 276 inventions for the first time. This is 42 fewer applications than in 2019. For CEO Matthias Altendorf, this shows the disadvantage of working from home: "People are more creative when they inspire each other and seek solutions through collaboration." However, there is no decline in the Group's innovative power: 40 new products were launched in 2020; this figure is expected to reach 74 in the current year. Good start to the new year Endress+Hauser targets growth in the mid-single-digit percentage range in 2021. The Group started the new year with good momentum. In the first three months, incoming orders exceeded company targets as well as the already strong first quarter of 2020. Currency movements continue to impact consolidated sales. Additionally, the company expects lower profitability as most of last year's savings were one-time. CEO Matthias Altendorf emphasized, "The outlook remains uncertain." The CEO said that in addition to new waves of the pandemic and new virus variants, supply chain concerns continue to create anxiety across the industry. Endress+Hauser is therefore increasing its inventory and strengthening its supplier network. New, efficient logistics centers were put into operation in China and Germany.