Stuttgart Many traditional family businesses are not exactly fans of the new traffic light government. But one day after Olaf Scholz (SPD) was appointed Federal Chancellor, Voith boss Toralf Haag is almost in an euphoric mood of optimism: “We are optimistic and are going into the new era with the federal government with confidence.” He appreciated the focus on sustainability in the Coalition agreement. After all, Voith wants to be climate neutral as early as next year.
But Haag would be a bad outside manager at the head of a family business if he didn’t smell additional business for his company. Promises don’t catch on with him. If his euphoria is to continue, he will above all require investments in sustainable technology. In his opinion, Voith would be well armed.
Because Haag realigned his strategy last year, as if he had foreseen the coalition negotiations. Under the label “Decarbonisation and Digitization”, the manufacturer of paper machines, hydropower turbines and drive technology wants to strengthen its core business and expand it with new, sustainable and digital businesses.
“Step by step, Voith is anchoring the megatrends of digitization and decarbonization in the Group and is making industrial sustainability its business model,” emphasized Haag when presenting the figures for the 2020/21 financial year (September 30).
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It happened to him that Siemens Energy wanted to give up its minority stake in Voith Hydro. Haag took hold of it and can now draw on unlimited resources when it comes to hydropower. However, despite the energy transition, there are no new major projects in this country, but rather abroad.
Expansion of the hydrogen business
The main business of paper also fits under the sustainability theme for Haag. Because paper packaging will increasingly displace plastic packaging. Haag wants to make the company a pioneer in the circular economy.
He strengthened the turbo machinery division through acquisitions. Haag sees growth potential here for intelligent alternative drives. In addition, the division entered the wind power business through collaborations, developing and producing gearboxes and generators for wind turbines.
Haag has identified hydrogen production and use as a new key topic for the next few years. Voith is increasing its commitment in all relevant areas of the hydrogen value chain – from the generation of green hydrogen, to transport in pipelines, storage in high-pressure containers to the electric drive train for hydrogen-powered city buses.
“In addition, Voith is examining strategic options in this area,” explained the company from Heidenheim. Overall, the traditional company has funds in the “mid three-digit million range” available for acquisitions. The 154-year-old family company wants to prepare for the transformation with a large number of future businesses.
The corona pandemic is also causing problems for Voith. “But we will come out of the pandemic stronger than before,” Haag is convinced. Incoming orders have risen by a quarter to around five billion euros. In the past fiscal year, Voith achieved an operating profit of 165 million euros, sales increased by two percent to 4.26 billion euros.
Expensive downsizing
The bottom line was that a loss could just be avoided. The main reasons are restructuring and downsizing. The additional costs due to plant closings in Germany and pandemic-related problems in Brazil totaled over 70 million euros. Overall, the global workforce decreased by 700 to just under 20,000 employees.
There is still potential for improvement in other key figures, such as the return on sales of 3.9 percent, the equity ratio of 20 percent and the ratio for research and development, which is currently still below five percent of sales.
The 55-year-old Voith boss Haag is nevertheless confident: “There is increasing demand for sustainable technologies for a climate-neutral industrial society,” says Haag. Voith will increasingly benefit from this. After two transition years, Haag is expecting slight growth in sales this year, but a clear increase in profitability.
The order backlog already has a record level of 6.25 billion. But with the long lead times in plant construction, this is generally not immediately transferable to the next annual turnover.
The family company is also becoming more modern in terms of personnel. With Stephanie Holdt as its new chief financial officer, the rather conservative group is first appointing a woman to the top management level. The 43-year-old financial expert is replacing Egon Krätschmer, who is retiring. Holdt worked for the Knauf Group for a long time and was most recently employed by the US building materials group in Chicago.
More: Siemens Energy withdraws from hydropower joint venture with Voith