In 2022, the specialist for measurement and automation technology delivered more sensors despite strained procurement and logistics chains. Incoming orders, sales and employment reached new highs; profits fell due to a negative financial result. The company, which is celebrating its 70th anniversary in 2023, remains confident for the current year.
“Rarely has our business environment been characterised by so many challenges as in 2022,” said CEO Matthias Altendorf at the annual media conference in Basel, Switzerland. The challenges were Russia’s attack on Ukraine, threats of energy shortages in Europe, high inflation and rising interest rates in many countries along with supply and logistics chains that remained strained and the Covid-19 lockdowns in China.
The group’s net sales rose by 16.4% to €3.351bn. CFO Dr Luc Schultheiss put the organic growth —excluding currency effects — at 11.6%. “Endress+Hauser has built production and logistics networks over the years and we maintain long-term relationships with our suppliers,” said Altendorf.
Sales developed in the Americas and Asia-Pacific, in Europe and the Middle East. Africa was the only region to experience a business decline. China maintained its position as the top-selling market followed by the US, both now ahead of Germany, the third market. Endress+Hauser’s process instrumentation and the sensor business of Innovative Sensor Technology (IST) both performed. As expected, demand for laboratory instruments from service company for analytical technology Analytik Jena fell slightly after the end of the pandemic.
Investments in the future
More than €1bn has been pumped into better infrastructure within the past five years. Projects worth around €500m are being implemented. The four largest locations are in Maulburg, Germany; Suzhou, China; Jena, Germany; and Greenwood, Indiana, US.
Endress+Hauser introduced 43 new products to the market in 2022. The Group spent €242.4m — roughly 7.2% of sales — on research and development, 13.6% more than the previous year. The company applied for 235 patents for the first time at patent offices around the world.
Last year was overshadowed by the closure of the Russian sales center as a result of the sanctions following the attack on Ukraine. An export ban on measurement technology deprived the Russian business of its basis and led to the loss of 170 jobs.
New training positions were also created. In the future, 5% of all jobs will be set aside for interns, apprentices, students and trainees.
Currency effects and price increases boosted the group’s sales but weighed on the financial results. Because operating expenses rose at a faster pace than sales, operating profit grew by only 9.1% to €473.7m. Endress+Hauser thus achieved an operating margin of 14.1%, 1% less than the previous year.
Rising costs for currency hedging and, above all, high losses from financial investments resulted in a negative financial result. Profit before taxes fell 12% to €408.1m. A tax rate of 25.6%, up 2.5%, caused net income to fall by 14.9% to €303.5m. The company still had a financial footing. The equity ratio rose to 80.2%, 1.1% more than 2021.
A generational mindset
With 76 out of 100 points, the group occupied a leading position in the 2022 EcoVadis sustainability benchmark and placed in the top percentile of the comparison group. It calculated its carbon footprint along the value chain as the basis for the development of a climate strategy. Endress+Hauser has joined the Science Based Targets initiative (SBTi) with the goal of reducing emissions to net-zero by 2050.
Dr Peter Selders, who heads the competence center for level and pressure measurement technology, will then take over as group CEO. Steven Endress, currently the managing director of Endress+Hauser UK, will take a seat on the Supervisory Board as a second representative of the shareholder family.
In its 70th anniversary
As incoming orders grew another 8% faster than sales in 2022, Endress+Hauser started the current year with a high volume of orders. Incoming orders also developed positively in Q1 of 2023. While it expects the business to slow in the second half of the year, it still anticipates double-digit growth in 2023 fuelled by the creation of 500 jobs worldwide.
Decarbonisation and digitalisation provided additional impetus. To mark the company’s birthday, Endress+Hauser is inviting over 1,000 customers, partners and experts to Basel, Switzerland to discuss the transformation of the process industry.