Dortmund. Despite the economic crisis, WILO SE (Dortmund) has strengthened its position. WILO SE with its 63 fully consolidated production and sales companies in 43 countries is one of the leading manufacturers of pumps and pump systems for heating, cooling and air-conditioning technology, for water supply and drainage and sewage. On 4 May of this year, Oliver Hermes, Chairman of the Executive Board of the Wilo group and responsible for Finance, Controlling and Human Resources, and Dr.-Ing. Holger Krasmann, member of the Executive Board responsible for Technology and Production presented the annual accounts 2009 at the annual press conference.

 

Company result significantly improved
The family-owned company founded in 1872 could significantly improve in central areas. Despite the turnover decrease by 5.2 % to 926.1 million Euros, the company result after taxes increased from 45.2 to 68.6 million Euros compared to the previous year. EBIT has increased by 2.6 % to 90.9 million Euros. In relation to turnover, EBIT increased from 9.1 to 9.8 %. The return on sales was at 7.4 %. The equity improved by 24.5 % to 351.8 million Euros. The equity ratio increased to 47.7 % of the total assets (previous year: 42.3 %). The cash flow from operative business activity grew by 23.4 % to 142.3 million Euros. This positive development is mainly due to the considerably improved Working Capital Performance. The annual average number of employees worldwide slightly increased to 6,027 employees (2008: 6,024).

 

The annual account in detail
Oliver Hermes, Chairman of the Executive Board since January 1st, 2010 and responsible for Finance, Controlling and Human Resources, explained the most important key figures and developments in front of the press. He emphasised that the international financial and economic crisis developed their own powerful dynamics due to a chain reaction in the course of the year which also surprised economic forecasters.

 

Wilo group’s turnover was also hit by the resulting disruptions on the markets. Locally, the demand developed very differently. Despite the crisis, the Asian market prospered with a plus of 12.0 %. Subsidiaries in India, China and Korea contributed to a different extent to this growth in turnover. The strongest decline had been registered with 18.4 % in Eastern Europe, whereas in Western Europe a decline of 4.6 % was recorded. Germany as the most important single market for Wilo registered a slight minus of 0.9 % and thus nearly kept the previous year's level. Without considering the declined OEM demand, turnover would have increased by 7.2 % in Germany in 2009. In America, Africa and the Middle East turnover decreased by 1.5 %.

 

The company's new strategy which was defined by the executive board and top management in summer 2009 will lead to an even closer customer orientation in the three market segments Building Services, Water Management and Industry. Despite the crisis, market shares could be gained in the main segment Building Services, and this in several countries. Strategic preparations for development have been done in the segment Water Management in order to make it a second important pillar of Wilo’s business activity. In the segment Industry, growth is also envisaged in the upcoming years by applying a selective strategy.

Oliver Hermes then explained further individual positions of the annual accounts 2009. The increase of the EBIT and the EBIT margin is due to the consistent cost discipline in view of the global economic crisis and to the measures taken to improve efficiency and earnings. Thus the general sales and administrative costs could be reduced by 2.9 % (= 7.4 million Euros). The changes in the fiscal result were influenced by existing derivates for price protection in foreign currency businesses and the procurement of raw materials.

 

The Chairman of the Executive Board was satisfied with the financial status of the company. The total assets increased by 10.3 % to 736.8 million Euros in 2009. The long-term assets increased by 3.8 % to 261.0 million Euros and the current assets increased by 14.2 % to 475.8 million Euros. Mr. Hermes explains further: "Our more effective Working Capital Management - together with cost management and the focus on strategic investments – has contributed to the fact that liquid assets have more than tripled in comparison to the previous year by 94.9 million to 140.4 million Euros. This way we have considerably reinforced our internal financing capability. So we maintain our financial independence, as the long-term destabilisation on financial and capital markets will make the access to financial resources still difficult."

 

Technological leadership by consistent innovation
Following this, Dr.-Ing. Holger Krasmann, member of the Executive Board “Technology and Production” and also responsible for research and development of the Wilo group, reported about the various innovation activities. The R&D budget had been increased by 2.3 % to 35.3 million Euros as it is of strategic future importance. This means that R&D expenses were 3.8 % of the turnover.

 

As an example for successful product development Dr. Krasmann mentioned the extremely power saving high-efficiency pump  "Wilo-Stratos PICO" for heating and air-conditioning, whose innovative pump motor achieves an all-time high energy efficiency. With up to 90 % electricity cost savings compared to old uncontrolled heating pumps, it is more efficient than any other pump of the energy efficiency class A. Already shortly after the trade fair premiere in March 2009 a considerably growing demand began, which made the new high-efficiency pump start very successful on the market.

 

In this context, Dr. Krasmann referred to the extensive effects of the new EuP Directive for manufacturers, processors, investors and users. According to this directive, only glandless circulation pumps with the EU label of the energy efficiency class A are allowed to be sold in the European Union from January 2013 on. From August 2015 on, the Energy Efficiency Index (EEI) is further lowered. More than 90 % of all pumps currently offered on the German market do not comply with these demands. The tightening-up of the requirements will wipe out the largest part of the current product range and initiate a massive innovation boost for developing new, even more efficient pumps. Wilo is well prepared to meet this high technical challenge which will contribute to separate the wheat from the chaff concerning brand quality. "Wilo-Stratos PICO" already complies with the second stage of the EuP Directive.

 

The WILO SE has strongly emphasised its claim of technological leadership by launching the decentralised pump system "Wilo-Geniax" in 2009 which allows a decrease in heating energy consumption by 20 % on average. The initial idea had been the further development of the previous "supply-oriented heating" with one central heating pump to the "demand-oriented heating", whose decentralised miniature pumps installed at the heating circuits or heating surfaces are only activated if heat is actually required. In the course of the complex development 32 patents were filed. Dr. Krasmann mentioned the high quality control, the increase of comfort and the automatic hydraulic balancing as the most important system advantages. "Wilo-Geniax" fulfils all prerequisites to gain long-term acceptance as an economically and ecologically groundbreaking system alternative in single and multi-family houses as well as in public and commercial buildings.

 

The company also forces technical innovation in the segment Water Management. Guaranteeing an extensive fresh water supply and sewage disposal for the entire world population is one of the biggest challenges of our time. This is why big investments are done in research and development at several international locations to meet the considerably increasing demands for effective problem solutions with new, economic and ecological convincing systems.

 

Concerning investment policy, the manufacturer was rather reluctant due to the unsure economic basic conditions, and rather focussed on strategic areas. In total, the investment volume was reduced by 24.1 % to 39.7 million Euros in comparison to the previous year. A central aspect were tangible assets in capacity extensions, productivity improvements and the extension of available sales locations.

 

Outlook 2010
Regarding the current business year the Wilo Executive Board was "moderately confident". The Wilo group has a strong international position to also master the year 2010 with all its more severe macroeconomic and entrepreneurial uncertainties and risks in comparison to the previous years. The business policy pursued for years - to force innovations and technologies - created important prerequisites, just as the international market presence did. As a new aggravation of the global economic crisis cannot be excluded, appropriate measures have been taken. The company will continue to analyse different scenarios of effects of the global financial and economic crisis and will develop short-term countermeasures for reducing possible negative effects.

 

The sales structure which has been adapted as part of the new company strategy will additionally lead to more market and customer proximity by means of the increased orientation to the three market segments. The subdivision of these market segments in customer-specific sub-segments will ensure even shorter reaction times.

 

The internal performance shall also be improved in 2010. The focus is on lean processes design, reduced production and general costs as well as a more efficient and more flexible organisation of the supply-chain management.

 

The Wilo Executive Board includes the following members with the following responsibilities from 1 May on:

- Dipl.-Oec. Oliver Hermes, Chairman of the Executive Board; Finances, Controlling and Human Resources
- Dr.-Ing. Holger Krasmann; Technology and Production
- Dipl.-Ing. Alexander von Schweinitz; Sales and Marketing

 

In the light of slightly positive forecasts and the recovering business climate the Wilo board expects an increase of the company’s turnover of approximately 5 % for the year 2010. The growth shall mainly be generated in Western Europe and Asia. On the contrary, the EBIT margin will remain below the figure of the year 2009 in consequence of disproportionally increasing sales and administration requirements to improve the infrastructures in growing markets, of already agreed rate increases and of project costs for efficiency increase in different areas.

 

The board finished the outlook with the following statement from the corporate mission: „As a family-owned company we are committed to the location Germany, to social responsibility as a company and to the sales partnership with HVAC wholesalers and craft businesses. The strong brand Wilo stands for technical progress and is supported by the socially relevant subjects of energy efficiency and sustainability."