New business strategies

Schuler focuses on new markets and digital business models

| Editor: Ahlam Rais

Schuler intends to gain new market shares through consistent digitalisation.
Schuler intends to gain new market shares through consistent digitalisation. (Source: Schuler)

Schuler’s incoming orders have increased by 10 per cent in 2018. However, continuous pressure to make adjustments in Germany has negatively impacted sales. The firm will also be undertaking a joint venture with Porsche in 2019.

In the 2018 fiscal year, Schuler increased its order intake by 10 per cent with successful sales in new markets and digitised applications. However, ongoing pressure to make adjustment in Germany, international trade conflicts and special effects had a significant negative impact on the Göppingen-based press manufacturer's sales. "We will consistently focus Schuler on new markets, digital business models and profitable core businesses”, said CEO Domenico Iacovelli, in office since April 2018. In mid-2019, Schuler and Porsche plan to start building their joint high-tech press plant, which has now finally been agreed.

Sales just maintained, 2018 sales down compared to previous year

Schuler's incoming orders rose to € 1,255 billion in 2018 (previous year: € 1,141 billion). Despite the rather low order backlog at the end of 2017, Group sales remained virtually unchanged at € 1,212 billion (previous year: € 1,220 billion). The regions of Europe and China grew, while business in North America suffered significant losses.

Sales margins were subject to multiple burdens. The challenges posed by the new WLTP test procedure for automobile manufacturers led, particularly in Germany, both to the abandonment of new capacities and to the postponement of already agreed projects. At the same time, costs rose due to the collective wage agreements from recent years. Customer business in China suffered from the trade conflict between China and the USA.

In 2018, Schuler had extraordinary expenses in the low double-digit million range due to capacity adjustments within the Group and write-downs on the capitalized goodwill of the die manufacturing subsidiary AWEBA. EBITA fell to € 45.3 (111.9) million. Schuler achieved consolidated earnings after tax of € 13.5 (67.4) million.

Cautious optimism for 2019 and beyond

At the end of 2018, Schuler's equity capital ratio of 40.1 (38.1) per cent of the balance sheet total was still above average in the German mechanical and plant engineering sector. The company employed 6,575 (6,570) people worldwide, 4,195 (4,237) of them in Germany – which is barely any fewer than in the previous year.

CFO Norbert Broger said: "2018 was a very challenging year in terms of operation and strategy. This is why it was all the more important that we were able to reverse the negative trend in incoming orders and achieve an increase of 10 per cent for the first time. We therefore entered the new year with a decent order backlog of € 926 million. Therefore, and thanks to the cost reduction measures already initiated, we are confident that we will be able to show medium-term earnings improvements”.

Concentration on the profitable core business

Irrespective of the positive order development, the pressure to adapt remains high, especially in Germany, said CEO Iacovelli. "In 2018, we therefore began making Schuler more dynamic and bringing customer-driven innovations to market more quickly. The aim is to concentrate on the Group's profitable core business and increase profitability in the coming years. This includes the consistent segregation of loss-making business areas wherever necessary".

In recent months, Schuler has developed new product strategies for each business division. Expensive ‘over-engineering’ needs to be a thing of the past. Schuler has already decided to withdraw from the unprofitable production of packaging machines and lines for the production of large-diameter pipes in 2019.

Expansion of service business and value creation in China

Cost benefits in production in China and Brazil are to be exploited to a greater extent and the global service network is also to be expanded in Germany. The locations in China will receive additional engineering positions.

‘Smart Press Shop’ with Porsche sets new standards

From 2019, Schuler and Porsche will build what is probably the world's most modern press plant for the digitised automobile production of the future in Germany. Operation is scheduled to start in 2021. "The establishment of the corresponding joint venture between the two companies under the name Smart Press Shop is perfect”, said Schuler CEO Iacovelli. "The new press shop will set new standards for the automotive industry both in terms of performance in industrial manufacturing and in the digital networking of data streams in the production process”, he explained.

The new Smart Press Shop will supply the Porsche plant in Leipzig in particular with body parts at low logistical cost and with the lowest possible ecological impact. For Schuler, the joint venture is an example of close cooperation with the world's leading automobile manufacturers. "At the same time, we are focusing on new markets and digital business models”, said CEO Iacovelli. Schuler intends to gain additional market shares from 2019 with new mechanical presses in the mid-price segment and consistent digitisation of the main product lines. "For Schuler and our customers, digitisation is not a vision, but a reality. And it is above all a great opportunity for all of us – not a risk”, explained the Schuler CEO.

For more news visit our facebook page or twitter.

copyright

This article is protected by copyright. You want to use it for your own purpose? Infos can be found under www.mycontentfactory.de (ID: 45823698 / english)