Schuler accepts high one-off burdens on 2019 earnings for future concept
by Hans Diederichs
As expected, the strategic realignment of press manufacturer Schuler resulted in high one-off burdens on earnings in 2019. Due to cyclical effects, new orders were down but performed much better than the German machine tool industry as a whole. Consolidated sales reached € 1.136 billion (prior year: € 1.212 billion). Earnings before interest, taxes and goodwill amortization (EBITA) fell to minus € 75.5 million (plus € 45.3 million).
As part of its future concept, Schuler invested heavily in 2019 in the restructuring of its manufacturing sites; in its focus on core competencies in press construction, automation and service; and in the strengthening of the Group’s innovation capabilities. The company has thus responded to the far-reaching structural changes taking place in the global automotive industry.
“Group’s inner strength permits extensive realignment”
“As a press manufacturer, Schuler is part of the dramatic transformation of the global automobile industry toward electromobility, autonomous vehicles, and digital networking. In 2019, we identified and began to implement the resulting strategic and structural consequences for our company,” stated CEO Domenico Iacovelli at the presentation of the company’s results for fiscal year 2019 in Göppingen, Germany.
“This obviously had a significant impact on earnings. However, there was no alternative. Schuler has the financial strength, the global footprint, and the technological quality to be able to withstand such a one-off burden for the workforce, the balance sheet, and earnings in a market environment characterized by challenging transformation processes and political risks. This makes us confident that we can expand our leading position in metalforming technology in the medium term and thus achieve better results once again,” added Iacovelli.
Normal operating business slightly profitable
Together with the previously announced writedowns on the intangible goodwill of subsidiaries AWEBA and Yadon, the structural measures to realign the company amounting to € 84 million, and other one-off items, Schuler recognized negative special items of almost € 96 million in 2019. Net income after taxes was minus € 121.9 million (plus € 13.5 million). In its normal operating business – in other words EBITA before restructuring costs – Schuler generated a slightly positive result of € 8.5 million in a very challenging business environment.
New orders well above one billion euros
Schuler started its fiscal year 2020 with an order backlog of € 868 (€ 926) million. New orders received in 2019 amounted to € 1.092 (€ 1.255) billion. Europe accounted for the largest share of new orders (€ 562 million, thereof Germany € 293 million), followed by the Americas region (€ 253 million), and China (€ 221 million). With a decline in consolidated new orders of 13 percent in 2019, Schuler performed much better than the German machine tool industry as a whole, which suffered a decline of 22 percent according to the latest figures of sector association VDW.
Schuler CFO Thomas Kamphausen explained that the company had borne the full load of costs incurred by its structural adjustments in 2019. “We do not anticipate any further significant additional special items in 2020. Major cost reductions resulting from our structural adjustments are to be expected as early as 2021,” he said. “As far as our regular business development in 2020 is concerned, it is too early to estimate any effects of the Corona virus disruptions on our revenue and profits at this point.”
At the end of 2019, Schuler’s equity ratio amounted to 35.4 (40.1) percent – and was thus still above the industry average. The number of Group employees fell to 6,276 (6,574). At year-end 2019, headcount in Germany amounted to 3,962 (4,195).
Future concept: focus, localization and innovation
Announced in summer 2019, Schuler’s future concept is based on three main pillars. As the name CORE suggests, Schuler will focus in future on its core business of building cutting-edge presses, as well as the optimization and digitalization of automation systems for the manufacturing processes of its internationally operating clients in the automotive, industrial, hydraulic and other sectors. In addition, Schuler is systematically strengthening its offerings in the field of service and smart networking.
In 2019, Schuler sold its die construction unit for the production of car body panels to Deutsche Werkzeugbau, a company set up by a strategic investor group. However, its core business of cutting-edge die construction for customers in the metalforming industry was spun off from Schuler Pressen GmbH and established as a separate growth business under the umbrella of the AWEBA Group, a subsidiary of Schuler.
Schuler Innovation Rate 2019 grows to 45.4 percent
The second pillar of Schuler’s future concept is a significant acceleration of new development and time-to-market processes in the field of press construction. The Group’s calculation basis for this objective, the Schuler Innovation Rate (SIR), doubled to 45.4 (prior year: 22.9) percent in 2019. This figure indicates that current product innovations accounted for almost half of all new orders received in Schuler’s main business fields of Automotive, Hydraulic and Industry during the past fiscal year. This enabled Schuler to offset a large part of the reduced demand from the automobile industry for classic forming technology products.
The third pillar of the future concept is a strict focus on localizing production and added value. Together with Group investment Yadon, Schuler China mainly serves customers throughout Asia. Schuler’s Brazilian operations focus in particular on the North and Latin American markets. Germany remains the location for machines and equipment produced for Schuler’s European customers. The high quality standards at all sites create a manufacturing network which can flexibly balance out peaks in demand between the regions. Within Germany, Schuler has pooled its press production in Erfurt and is expanding its home base in Göppingen to become a central innovation site. In the coming months, an additional service center with its own production and assembly capabilities serving customers throughout Germany will also be set up in Göppingen.
Source and photo: Schuler AG