Wilo Group successfully achieved and exceeded its financial targets for 2015

Wilo Group Executive Board (left to right): Dr. Markus Beukenberg (CTO), Eric Lachambre (COO), Oliver Hermes (Chairman & CEO) and Carsten Krumm (COO).
Photo by WILO SE

The 2015 financial year was very successful for the Wilo Group. Despite the sustained tough and uncertain macroeconomic environment shaped by numerous geopolitical conflicts, the traditional company from Dortmund achieved and even exceeded the targets it had set. Sales revenues increased by 6.7%, a bigger rise than expected, to a record high of around 1.3 billion euros. Profitability was also increased, with both EBIT and consolidated earnings up by more than sales.

On the way to becoming the digital pioneer in the industry

The major focus in the last financial year was digital transformation. “In 2015, Wilo has taken key steps towards moving into the digital era”, said CEO Oliver Hermes at the company’s annual press conference in Düsseldorf. “We have consistently pursued our corporate strategy and supplemented it with a digitalisation strategy.” The ambitious objective is to be the digital pioneer in the pump sector. The most visible expression of intelligent networking and technological progress is the state-of-the-art production site that will open at the company headquarters in Dortmund by 2018/2019.

After the very high levels of investment of recent years in new production and sales sites in China, India, Korea and Turkey, Hermes believes that development of the Wilo headquarters in Dortmund into a digital high-tech site is an important step towards securing the company’s claim of technological leadership. “This state-of-the-art production site will enable us to continue keeping our promise of making life easier for our employees, customers and partners. The site development program – Vision 2020 – is setting our direction for the future and will protect jobs”, the 45-year old explained. During 2016, Wilo will also be opening a new sales platform in Kazakhstan and a new plant in Moscow. Overall, the record investment in growth-oriented capacity expansion, new production technologies, and development and expansion of the sales infrastructure and production sites ran to 106.4 million euros.

More funding for research and development than ever before

The Wilo Group has invested 62.4 million euros in research and development, more than ever before, and has strengthened its innovation and technological leadership. Cooperation with iEXERGY GmbH has been reinforced and intensified as part of the digitalisation strategy. At ISH 2015 – the world’s leading trade fair for building services – the Wilo Group presented one major result of this cooperation in the shape of the Wilo-Stratos PICO-SmartHome, the world’s first heating circulation pump with Smart Home capability. It is the first of numerous digital systems and solutions for different applications. As a pioneer in the pump sector, Wilo sets standards and makes an active contribution to the design of official standards and directives. Current technical developments in drive technology are centred on extending the performance range of motors, as well as the introduction of asynchronous motors in the IE4 efficiency class, the highest achieved to date.

This enables Wilo to offer high-efficiency drive solutions using different technologies for almost every application. “This underlines our commitment to strengthening our technological leadership in a range of areas, with a particular focus on expansion in digitalisation”, said CEO Oliver Hermes, emphasising the company’s ongoing strategic development.

Increased profitability

Alongside the sixth sales record in succession, the Wilo Group achieved an increase in profitability. The operating result (EBIT) rose by 9.0 % to 121.2 million euros, while consolidated earnings were up by an impressive 15.3 % to 80.5 million euros. Both of these figures rose by more than sales. “In view of the unfavourable conditions in parts of the world economy, we are exceptionally proud of these results”, said Oliver Hermes.

Contrary to expert forecasts, the global economy grew more slowly than in the two previous years. A slight increase in growth in industrialised nations was offset by a weakening of the growth rate in emerging economies. This development can be primarily attributed to the slowdown in growth in China, as well as the recessions in Brazil and Russia. The 2015 financial year was characterised by falling oil and raw material prices, a strong rise in the value of the US dollar and high volatility on financial markets.

Regional diversification as a success factor

In a macroeconomic environment characterised by uncertainty, the Wilo Group has done very well to continue its profitable growth trend.A strong presence in international markets and regional diversification were key factors in this success. “Particularly in years with very heterogeneous regional trends and increasing uncertainty, this is a crucial advantage”, said Oliver Hermes. In mature markets, the Wilo Group recorded solid, sustainable growth overall. The picture in emerging nations was more differentiated in 2015.

Excellent business development in Europe

In Europe, Wilo achieved a 6.2 % increase in sales. Sales revenues rose by 43.8 million euros to 744.7 million euros. The most significant increases in sales were achieved in the Eastern European EU states and the British Isles. Sales revenues were up by over 20 % here. In Mediterranean countries, sales revenues rose by more than 16 % on the previous year. The overall economic situation in the region continued to stabilise compared to the previous year, which meant that growth could even be achieved in both Spain and Italy. This more than compensated for falls in sales in France and in the Nordic and Baltic states.

Market position in domestic market maintained

In the German-speaking region, sales revenues in the year under report were slightly above the previous year’s level. In Germany, the Wilo Group’s largest single market, businesses in the sanitary, heating and air-conditioning sector were running at full capacity due to the buoyant construction industry. However, the majority of investments tended to be in expansion and modification of bathrooms and sanitation systems rather than energy-efficient measures such as proactive replacement of outdated pump technology in existing buildings. In addition, an unusually mild winter dampened the demand for heating pumps.

Heterogeneous development in emerging nations

While double digit increases in sales were recorded in Turkey and the Gulf region, business activity in Russia was adversely affected by the economy moving into recession due to the sustained economic and political crisis in the region and falling oil prices. Despite this unfavourable economic environment, the Wilo Group achieved moderate growth in local currency in 2015. However, the significant devaluation of the Russian rouble led to a fall in sales in the reporting currency.

Southeast Asia increasingly important

In Korea, a relatively mature Asian market, the Wilo Group achieved solid and sustainable growth of 3.9 % in local currency. Sales revenues rose by over 15 % in the reporting currency. This success was based on the strong market presence, a distinct customer focus and the high level of innovation. With its quality products, individual system solutions and services, Wilo has been able to carve out a very good market position in the country. It was also a successful financial year in India and particularly in Southeast Asia, where sales revenues rose by over 16 %. The emerging nations of Southeast Asia are increasingly developing into a fourth key pillar of the company’s activities in Asia, alongside Korea, India and China. The slowdown in economic growth in China had an impact on the Wilo Group. While an increase in sales of around 15 % was achieved in the reporting currency, sales revenues in local currency were down slightly.

Wilo is going digital

Digitalisation has become a key factor in a company’s success, and this is also true in the pump sector. It changes the entire value chain, but particularly production processes and working procedures. Wilo has identified some tough challenges, but also great opportunities in implementing digitalisation in its products and processes. Thus, everything in the Wilo Group is focused on digitalisation and technological progress. The largest site development program in the company’s history at its Dortmund headquarters – with an investment volume of well over 100 million euros in the coming six years – and innovative new products will set the standards for the digital age. “These are investments in the future, which will reinforce our leading position against our competitors and secure our technological leadership in a range of areas”, says the confident CEO of the Wilo Group, Oliver Hermes. The foundation stone of the new Wilo headquarters in Dortmund will be laid this autumn.

For more information, please visit http://www.wilo.com.

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