Annual figures VDL Groep: turnover decreased slightly, operating result is stable
The turnover of VDL Groep in 2019 decreased slightly when compared to 2018. The decrease, prompted mainly by a lower production volume at VDL Nedcar, was smaller than forecast one year ago. The strategy of spreading risks by means of diversification once again proved successful. VDL Groep was able to keep the operating result stable despite the decrease of the turnover and a significant increase of the wage costs.
The combined turnover of the industrial family business with its headquarters in Eindhoven amounted 5.780 billion euros, compared to 5.973 billion euros in 2018. This represents a decrease of 3.2 percent. At 203 million euros, the gross operating result is comparable to the previous year (202 million euros). The net result is, due to extraordinary income in 2018, decreased by 12 percent from 178 million euros in 2018 to 156 million euros in 2019. The order portfolio, not including VDL Nedcar, has been filled amply throughout the year with a peak in week 5 of 1.269 billion euros, which is a historic record and no less than 60 percent higher than the year before. The number of employees decreased by 919 to 15,935 employees by the end of 2019.
In 2019, VDL Groep has demonstrated that it is a resilient organisation. VDL was confronted with a hesitant start in the semiconductor industry and a decline in the car manufacturing and truck and trailer industry, which was mainly caused by the trade conflict between the US and China.
‘Considering the playing field, we are satisfied with the course of 2019,’ explains president and CEO Willem van der Leegte. ‘Our significant diversity compensated the loss of turnover of more than 550 million euros at Car Assembly for approximately 400 million euros through our other activities. It is also positive that the operating result in respect of turnover improved slightly, and that we have strengthened our financial positions again over the past year. However, we must remain vigilant so that we are able to deal properly with future fluctuations as well.’
The turnover of the Subcontracting division increased by 3 percent from 1.343 billion euros in 2018 to 1.377 billion euros in 2019. The result of the Subcontracting division is positive. The order portfolio increased over a 12-month period from 442 million euros to 482 million euros in week 7 of 2020. The fact that our customers engaged in the high-tech segment have impressive order portfolios instils a lot of confidence.
The turnover of the Car Assembly division decreased in accordance with expectations by 15 percent from 3.653 billion euros in 2018 to 3.091 billion euros in 2019. The year was closed with a positive result. 2019 was a year with ‘two faces’ for VDL Nedcar. Various uncertainties cause the demand for cars to decrease since the autumn of 2018. As an independent car manufacturer, VDL Nedcar is always moving with market developments. That is why we had to cancel 700 jobs in the temporary workforce over the past months. 174,097 cars were built in Born in the past year. In comparison: VDL Nedcar produced 211,660 cars in 2018. Despite the fact that the car industry was, is and remains turbulent as a result of new emissions standards, global trade conflicts and disrupting technologies, we have succeeded in concluding a new contract with BMW Group. This new contract, in which the construction of a subsequent model was agreed, means that we will continue to assemble cars for BMW in Born far into the twenties in any event. This means that VDL Nedcar’s continuity has been secured for the long term.
Buses & Coaches
The turnover of the Buses & Coaches division increased by 48 percent from 446 million euros to 658 million euros. The position of VDL Bus & Coach in e-mobility improved further over the past year. The demand for electric transport is increasing. Conclusive proof that the Buses & Coaches division is on the right track. VDL Bus & Coach is improving continuously by expanding the portfolio with new technologies that optimise energy consumption, making it possible to increase the operating range, such as the application of next-generation batteries. The considerable investments caused VDL Bus & Coach to close the year 2019 with a slight loss.
According to a recent survey, more than 3,000 electric buses were registered in Europe over the past 8 years. 670 electric buses in 10 countries, delivered between 2015 and 2019, make VDL Bus & Coach the European market leader with a share of 22 percent. The electric Citea’s travel more than 130,000 kilometres each day. The total of 50 million kilometres travelled electrically results in a saving of 7 million kilograms of CO2 emissions. New electric buses have been announced or delivered in the Netherlands, Norway, Denmark, Sweden, Finland, Germany, Belgium, France, Switzerland and Italy. 2020 will be a difficult year for the Buses & Coaches division because 415 electric buses for concessions in the Netherlands were awarded to Chinese competitors. The order portfolio decreased from 530 million euros in week 7 of 2019 to 430 million euros one year later.
The turnover of the Finished Products division increased by 23 percent in 2019 from 531 million euros to 654 million euros. This increase can be explained by the moment at which our project organisations in this division close their projects. The result of the Finished Products division is positive. The order portfolio increased over a 12-month period from 345 million euros to 318 million euros in week 7 of 2020.
Expectations for 2020
The order portfolio of VDL Groep (excluding VDL Nedcar) remains high, and has grown since the end of 2019 from 1.151 billion euros to 1.230 billion euros in week 7 of 2020.
Nevertheless, the annual turnover for 2020 are expected to decrease when compared to the annual turnover of 2019. Turbulence in the passenger car market is likely to continue for some time, which means that the decrease in sales at Car Assembly will continue. A decrease in sales is also expected for the Buses & Coaches division.
New CLAs and new legislation will cause the wage costs to increase further in 2020. This creates concerns about the competitive position of the Dutch high-quality manufacturing industry in the medium term. This development is expected to have an impact on the result of 2020. VDL Groep nevertheless intends to follow an investment programme for 2020 of approximately 160 million euros.