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Voith Group to enter a new phase of growth in fiscal year 2017/2018

Published by , Assistant Editor
World Coal,

After a positive fiscal year 2016/17, German mechanical engineering company, Voith Group, has announced that it is entering a new growth phase strategically, operationally and financially strengthened.

According to the company, its operating business developed positively in Voith’s 150th anniversary year with a further increase in the profitability of its core business. The profit from operations at its three traditional Group Divisions: Voith Hydro, Voith Paper and Voith Turbo rose to a total of €304 million (previous year: €295 million); Voith Paper stood out here in particular, posting a significant increase of 40%. The return on sales from core business rose to 7.3% (previous year: 7.0%).

According to Voith Group, cash flow from operating activities also developed very well (€135 million). However, the profit from operations reported for the Voith Group as a whole fell as forecasted to €241 million (previous year: €275 million), mainly due to the planned start-up costs for Voith Digital Solutions. The start-up costs for Voith Digital Solutions amount to around €45 million in the current fiscal year. The Group’s net result climbed to an all-time high of € 596 million (previous year: €29 million).

The high proceeds from the sale of KUKA meant a significant improvement in the Group’s financial position in the past fiscal year. The equity ratio in the Group reached a historic high of 27.3% (previous year: 14.9%).

Dr. Hubert Lienhard, President and CEO of Voith stated: “Fiscal 2016/17 was a good year for Voith – with a clear confirmation that our operational earnings power has grown sustainably, a comfortable financial position and a significant improvement in our balance sheet. We’re fully on track to achieve our goal of positioning Voith as a significant shaper of the digital industry.”

Clear focus on issues of the future

The Group has pressed ahead with implementing its digital agenda in the past fiscal year. In fiscal years 2016/17 and 2017/18, Voith invested a total of around €100 million in developing digital products and services, on top of the around €225 million spent on research and development (in fiscal year 2016/2017). The expenditures for research and development in the past fiscal year amounted to 5.3 % of sales.

Alongside work on developing the Digital Solutions Group Division, which was established in 2016 and already has approximately 1400 employees, Voith also worked on expanding its portfolio of digital offerings successfully in the past fiscal year. In March 2017, for example, Voith Digital Solutions launched the “merQbiz” trading platform, the world’s first digital marketplace for recovered paper, in Manhattan Beach near Los Angeles, US.

As part of its digital agenda, Voith also made an initial acquisition in this field by purchasing a majority share in the digital agency Ray Sono.

In the past fiscal year, the Voith Turbo Group Division presented a strategic roadmap for tapping the market for electric drives. In the field of electromobility, the company aims to become a system vendor for electric drives and digital vehicle and fleet management systems in the coming years. It is to present its own fully electric drive for buses and a dynamic fleet management system to the trade public at the 2018 IAA Commercial Vehicles show.


Outlook: Voith Group on a good footing for future growth

The Group anticipates perceptible growth in sales and a further increase in orders received for the 2017/18 fiscal year that has just started. The profit from operations in core business is also expected to improve.

Voith also feels confident about its business beyond the current 2017/18 fiscal year. “Following the fundamental groundwork and changes in the past years, the Group is now fully agile, both strategically and financially, and is in good shape operationally to overcome the challenges the future holds,” summed up Lienhard.

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