Corona crisis causing significant drop in revenue and profit
The revenue and result of VDL Groep fell sharply during the corona year 2020. The fact that the industrial family business with its head office in Eindhoven nevertheless managed to keep permanent employees on board, partly thanks to support measures from governments, and was able to close 2020 profitably, is great news. Partly due to well-filled order portfolios, sentiment for 2021 is more positive, despite major challenges.
The combined revenue in 2020 amounted to 4.686 billion euros, a decrease of 23 percent compared to the annual revenue in 2019 (5.780 billion euros). The net result fell by 38 percent, from 156 million euros in 2019 to 97 million euros in 2020. In week 10 of 2020, the order portfolio stood at 1,249 billion euros, compared to 1.441 billion euros in week 10 of 2021. The number of employees decreased by 270 flexible workers (1.8 percent) to 15,464 employees by the end of 2020.
‘Satisfied, especially under these circumstances’
President and CEO of VDL Groep, Willem van der Leegte: ‘We can look back on a turbulent 2020. Because materials, employees and market demand were not simultaneously and insufficiently available during the corona crisis, the production of many VDL companies has temporarily come to a complete or partial standstill. Thousands of our employees, who cannot work from home, were unable to work, especially at the beginning of the crisis. I’m proud of our employees and the way we have steered ourselves through the crisis. Because market demand showed a recovery in the second half of the year and thanks to our spread of activities, we managed to keep our permanent employees on board - partly thanks to the use of the NOW schemes - and we were able to close 2020 profitably. That is great news, especially under these circumstances.’
83 percent of all VDL Groep employees (12,761) work in the Netherlands. VDL has been confronted with substantial turnover losses due to the coronary crisis. Revenue declines of tens of percent to over 75 percent per week were no exception, certainly in the first phase of the crisis. Partly with the help of the NOW schemes (NOW: Temporary Emergency Bridging Measure for Sustained Employment), which amounted to €103 million over the past year, substantial job losses were prevented. With these NOW funds, which have been supplemented by VDL, salaries of employees who were temporarily unable to perform work or who were unable to do enough work continued to be paid.
VDL Groep is always alert to new or additional activities that strengthen the portfolio. During the ‘first wave’ of the corona pandemic, Royal DSM and VDL joined forces to reduce dependence on foreign countries for personal protective equipment for healthcare employees. The resulting joint venture, Dutch PPE Solutions, produces medical mouth-nose masks at VDL in Helmond and will produce melt-blown polypropylene at DSM in Geleen in the spring of 2021. This is the critical layer in medical face masks that filters out viruses.
After market demand showed a recovery in the second half of 2020, discontinued talks about acquisitions were revived. In October, this led to the acquisition of Jansen Poultry Equipment (JPE) in Barneveld, one of the largest producers of high-quality poultry systems for the laying, breeding and broiler sectors. JPE is an addition to the activities of VDL Agrotech.
With the acquisition of TBP Electronics, just before the turn of the year, VDL strengthened its position as an industrial partner in electronics. With the core competences of TBP, the high-quality assembly of printed circuit board assemblies (pcbas), VDL Groep is also taking an important step towards becoming a one-stop-shop industrial partner in the field of mechatronics.
Revenue of the Subcontracting division rose by 9 percent to 1.503 billion euros. The result of this division is positive. Our semiconductor, analytical, health, food and infrastructure activities in particular performed well. Significant investments in high-quality machines, buildings and employees pay off. The order portfolio increased over a 12-month period from 498 million euros to 555 million euros in week 10 of 2021. The outlook in this division is positive.
Revenue of the Car Assembly division decreased by 25 percent from 3.091 billion euros in 2019 to 2.320 billion euros in 2020. The year was closed with a positive result. Due to emission standards, global trade relations and disruptive developments, the car industry is experiencing turbulent times. The corona crisis has accelerated the associated developments. 125,666 cars were built in Born, the Netherlands, in the past year (2019 production volume: 164,097). The impact of the corona crisis will also affect market demand in this calendar year.
In October, one of our clients, BMW Group, decided that the models that are built at VDL Nedcar will from 2024 onwards be built at BMW Group. We are engaged in discussions with several potential clients. Globally, there is market interest in the quality, delivery reliability and competitiveness of our ultra-modern, automated factory with highly qualified skilled workers.
Buses & coaches
Revenue of the Buses & Coaches division fell sharply by 49 percent from 658 million euros to 339 million euros. This is a loss-making division. The corona crisis has had a strong grip on the Buses & Coaches division, and in particular the coach activities, from the start of the pandemic. Due to the travel restrictions that have been in place for more than a year, the travel industry has come to a virtual standstill and demand for coaches is therefore nil.
Public transport companies are faced with less income because they transport fewer passengers. Because governments, as a contracting authority or as a direct customer, must ensure a structurally covering public transport network and do not want to delay climate goals, they continue to focus on making the fleet more sustainable by using new zero-emission vehicles. VDL is well positioned as a forerunner in the field of electric mobility.
To adapt our organisation to the new reality, the cost level has been brought in line with market conditions in virtually all countries where VDL Bus & Coach is located. The previously set course to set up new multi-product factories and expand the manufacturing portfolio will be continued unabated. For the chassis activity, the transition to more assembly activities of special vehicles for third parties has been continued. After completing internal procedures, the VDL Bus & Coach location in Heerenveen will be converted into an assembly factory that will produce building modules. This means the production capacity of Buses & Coaches is better balanced.
VDL remains fully committed to expanding its lead on zero-emission public transport. The new generation of electric VDL Citea will be presented in the autumn. By sticking to our strategy, we offer sustainable mobility solutions and we are the European leader in the field of public transport, where one of five electric buses are VDL-made. With nearly 800 buses in 10 countries and more than 135,000 kilometres a day in many European cities and regions, the milestone of 100 million ‘clean’ electric kilometres has been reached. The Buses & Coaches order portfolio increased from 429 million euros in week 10 of 2020 to 512 million euros one year later.
Our companies that make up the Finished Products division jointly generated 524 million euros in revenue over the past year, compared to 654 million euros the year before. This 20 percent drop came due to falling market demand at companies in this division as a result of the coronavirus crisis. The Finished Products division closed the year with a profit. The order portfolio increased over a 12 month period from 322 million euros to 374 million euros in week 10 of 2021.
Expectations for 2021
The VDL Groep (excluding VDL Nedcar) order portfolio remains high, and has grown since the end of 2020 from 1.359 billion euros to 1.441 billion euros in week 10 of 2021. Although market demand seems to continue to recover, uncertainty also remains: the economic consequences of the corona crisis remain unpredictable. One of the challenges in this area at the moment is, for example, the delay in various supply chains. Based on order portfolios and forecasts, VDL Groep’s annual revenue for 2021, as well as the annual result, is expected to increase slightly compared to 2020. Even though we remain critical when it comes to spending, investment programmes in the areas of innovation and digitalisation will continue to be important.