VDL Group realizes predicted growth

Headquarters of VDL Groep in Eindhoven.

The growth forecasted for VDL Groep this year has materialised in the first half of 2023. The industrial family business, headquartered in Eindhoven, is on track to achieve a revenue growth of 5 to 10 percent in 2023. The net profit has decreased after the first six months of the year, but operationally, the net result shows growth.  

As of the first six months of 2023, the combined revenue amounts to €3.2 billion. That is an increase of 22 percent compared to €2.6 billion after the first half of 2022. The net profit has decreased by 22 percent after the first two quarters of 2023, from €54 million last year to €42 million. This is mainly due to a provision for the costs of the first phase of the social plan at VDL Nedcar. The operational net profit has increased by 44 percent to €78 million. VDL Groep's order portfolio (excluding the Autoassembly division) remains consistently high: at €2,081 million in week 34. The number of employees has remained stable since the beginning of this year with 16,634 colleagues.

'Turbulent first half-year'

President and CEO Willem van der Leegte of VDL Groep: “We look back on a turbulent first half-year which has been characterized by organizing both contraction and growth simultaneously. Both demand a lot from our organization. Regarding our half-year results: three of our four divisions have grown in revenue. Operationally, the results also show corresponding growth. We expect that the forecasted growth for this year will be realized. The fact that our order portfolio remains stable at a high level is an important indicator for this.”

Supplies

The turnover of the Supply Division has increased from 1.087 billion euros in mid-year last year to 1.321 billion euros. This 22 percent rise can be explained by the fact that the VDL companies operating in this division have grown across the full spectrum. Our focus on high-quality innovation and long-term, stable relationships with customers and other partners have ensured that, alongside manufacturing, we are increasingly able to also develop for our customers. We further strengthened our position in our growth markets. Key factors for this have been: significant investments in equipment, professionalising processes, automation (in the form of robotics and digitalisation), and the recruitment and training of employees. The Supply Division is profitable.

Auto-assembly

The turnover of VDL Nedcar stands at €1,262 million after two quarters. This is an increase of 47 percent compared to €856 million a year ago. This revenue increase can be explained by the fact that our car factory in Born was regularly confronted with material shortages (mainly chips) a year ago due to global developments, resulting in significant production loss.
In the past six months, we have also faced production losses due to strikes. The plan to catch up on the production backlog as a result of this is on track, after reaching an agreement on further enriching the social plan agreed upon in 2021. Due to the strikes and the provision for the costs of the first phase of that social plan, VDL Nedcar was loss-making in the first half of the year.
As a consequence of reduced work volume, it has previously been announced that VDL Nedcar will switch to one shift per 1 November. As a result, approximately 900 employees and 900 temporary workers will become redundant. We are committed to helping them find new employment opportunities. In addition to the other VDL companies, more than 200 employers are participating in discussions about potential jobs for the surplus staff. An initial information meeting is planned shortly with these companies. Following this, a job fair will be organised to facilitate face-to-face contacts and introductions.
Meanwhile, at our site in Born, we are undergoing a transition from an independent car manufacturer to a broad partner in sustainable mobility, aiming for more added value and a more future-proof position. The broadening of activities in the following three areas: the assembly of vehicles for various clients, diverse sustainable mobility solutions in the Mobility Innovation Centre, and facilitating the growth strategy of VDL sister companies, is taking shape more and more.

Buses

The turnover of the Bus division has decreased by 40 percent, from 251 million euros a year ago to 153 million euros. The main explanation for this is challenges in supply chains, which make vehicle deliveries difficult to realize — issues that the entire sector is grappling with. The Bus division is unprofitable. Meanwhile, we are seeing increasing numbers of new-generation electric city buses, VDL Citea’s, on the streets. In the coming period, VDL Bus & Coach will actively further develop the new platform, looking at the environmental impact over the entire product lifecycle (Life Cycle Assessment). VDL is also considering the future of touring buses. The platform of the third-generation VDL Futura will be further shaped.
VDL Bus & Coach will be present at Busworld 2023, Europe’s largest bus & coach trade fair, next month in Brussels. With the theme ‘Experience tomorrow’s mobility, today,’ VDL will showcase its strategy and role as an innovator in sustainable mobility.

Final products

The VDL companies that are part of the Final Products division generated a combined turnover of 437 million euros in the first half of 2023, compared to 400 million euros in the same period of 2022. This 9 percent increase can be explained by the fact that the companies in this division are well-positioned across the board. The Final Products division is profitable.

Prospects

Based partly on a stable high order portfolio, the expectation is that the projected turnover growth of 5 to 10 percent for the entire year 2023 will be achieved. At the same time, there are also significant challenges in the second half of the year. For example, how VDL Nedcar will be structured to switch to single-shift operations and ensuring that our employees in Born who are made redundant are properly accommodated.
With the new electric city bus VDL Citea, a new standard has been set. As a result, an increasing demand from the market is expected in the coming years. Although we are making progress, getting deliveries on time remains a challenge. Due to these circumstances at VDL Nedcar and VDL Bus & Coach, a lower net result is expected for the full year than was achieved in 2022.