For the financial year 2021, Endress+Hauser has exceeded its own expectations. The measurement and automation technology specialist achieved new records in incoming orders, sales, profit and headcount and continued to carry this momentum into the new year. Although the Ukraine conflict is dampening hopes for continuation of the solid growth, the company considers itself well equipped for a difficult economic environment.
Endress+Hauser delivered 2.6 million instruments in 2021. “Our customers placed a high degree of trust in us,” said CEO Matthias Altendorf at the annual media conference in Basel. “They were able to rely on us after the outbreak of the pandemic. And we were a reliable partner once demand picked up again.” Despite strains on the procurement markets and logistics chains, the company ensured material availability around the world and maintained its high delivery performance.
As a result, Endress+Hauser could not only build on the pre-Covid period but significantly improve key business metrics. Net sales rose 11.7% to €2.879bn. The Group experienced dynamic growth in Asia and America and a solid performance in Europe. While Africa was up, business in the Middle East, with its heavy dependence on the oil and gas industry, suffered a decline. China extended its lead as the company’s strongest sales market, followed by the US and Germany.
Incoming orders were some five percentage points higher than sales growth. Behind this development, the CEO sees catch-up effects, as well as renewed demand in nearly all industries. Advanced analysis and industrial digitalisation provided an impetus for the process instrumentation business. In the laboratory instrumentation business, which had been boosted by the demand for PCR diagnostics in 2020, the Analytik Jena subsidiary experienced strong growth through chemical analysis products.
Vocational training campaign and focus on sustainability
The family-owned company had 15,117 employees worldwide at the end of 2021, 663 more than the year before. New jobs were created primarily in production. Nearly all apprentices were offered positions in the company upon completion of their training. Endress+Hauser wants to strengthen its commitment to vocational training and eventually double the number of apprentices, students and interns over the coming years.
In the independent EcoVadis sustainability audit, Endress+Hauser scored 76 points, four more than the previous year. That puts the company in the top percentile of the comparison group. In addition, the company has created the position of corporate social responsibility officer at Group level. She will be responsible for further developing and driving forward the implementation of the sustainability strategy.
Scores of innovations, extensive investments
Of the more than 70 product innovations introduced by the company last year, many are related to digitalisation. In 2021 Endress+Hauser spent €213.4m on research and development, roughly 7.4% of sales and an increase of 9.4% over the prior year. 258 initial patent filings around the world testify to the Group’s strong spirit of innovation. The intellectual property portfolio currently encompasses 8,600 active patents and patent filings.
Endress+Hauser invested €192.8m in 2021 (6.4% less than 2020). Currently, staff are moving into new buildings in Reinach, Switzerland. Construction projects are still underway at production sites in Gerlingen and Waldheim, Germany and Aurangabad, India. The largest projects include an expansion of production facilities in Maulburg, Germany and Suzhou, China. Sales centers in Mexico and Finland will be constructing their own buildings, whereas the subsidiaries in Australia and Argentina will purchase premises.
Above-average rise in profit
Exchange rates had minimal impact in 2021, according to CFO Dr Luc Schultheiss’ report. Depreciation of the euro decreased sales by half of a percentage point. While expenses for materials, logistics and personnel rose, costs for business travel, customer support and trade fairs remained under the level of previous years, owing to the coronavirus pandemic. As a result, operating expenses grew below average. Operating profit (EBIT) increased 28.8% to €434m.
Due in part to the fact that financial investments generated a solid return last year, profit before taxes (EBT) improved 37.4% to €463.8m. Return on sales (ROS) climbed three points to 16.1%. Net income grew 40% to €356.8m due to a lower tax rate. The equity ratio reached 79.1%, an increase of 2.1 percentage points. The family company has virtually no bank debt.
War in Ukraine overshadows outlook
Endress+Hauser started the year with records in order backlog, and incoming orders were above plan for the first quarter. Although the Group planned growth in the upper-single-digit range for 2022, at the moment, it is uncertain whether this target is attainable. “Russia’s attack on Ukraine changed everything overnight,” said Matthias Altendorf. “This conflict is bringing suffering to millions of people and is impacting many companies at a time when the pandemic is far from over.”
Endress+Hauser stopped all deliveries to Russia at the beginning of the invasion. “We will adhere to the full scope of the sanctions,” emphasised the CEO. “At the same time, we have a responsibility to our employees and customers in Russia.” The sales centre in Russia employs 182 people. The Group wants to continue delivering to companies that supply civil society and are not subject to sanctions, such as those in the food and beverage, life sciences, and water and wastewater industries.
Strong community within the Group
“What’s important is not whether we by any means reach our financial targets, but that we continue to provide our customers with the best possible support in this situation,” emphasised Dr Klaus Endress, President of the Supervisory Board. The employees and management of the Group have the full trust of the Supervisory Board and the shareholder family. “We will stand together in the company and be there for our employees. Together, we will get through these challenging times and continue to be a reliable partner for our customers.”