Overall economic environment
Global GDP is expected to grow by 3.9 percent year-on-year in 2018, 0.2 percentage points more than in 2017 (+ 3.7 percent).
Consequently, the result for Germany, the Würth Group’s largest sales market, is expected to be similarly positive: Germany’s “Wise Men” (Council of Economic Experts) expect gross domestic product to grow by 2.2 percent in 2018 as well (2017: + 2.2 percent). Other experts believe that the sustained record employment and rising real wages are responsible for the continued solid economic growth. The global economic upturn holds the promise of a good business environment for exporters as well. The construction sector is benefiting from low interest rates and companies are investing due to well-filled order books. The economy could also suffer setbacks, however, due to the uncertain outcome of the Brexit negotiations or the long-term effects of the US tax reform, for example. The North Korea crisis, a further escalation in the Syrian conflict and new trade barriers could also put a damper on the positive economic outlook.
The Würth Group generates most of its sales in the eurozone, where the pace of growth increased again in 2017. The forecasts for 2018 once again point towards a similar economic trend to that witnessed in 2017 (+ 2.5 percent): Economic growth is currently expected to come in at 2.1 percent in the eurozone. The Spanish economy is suffering due to the crisis in Catalonia. The Spanish economy had already started losing momentum at the end of 2017, which is why the forecast for 2018 only comes to 2.1 percent (2017: + 3.1 percent). Real economic growth in Italy is expected to remain roughly on a par with 2017 at 1.4 percent (+ 1.5 percent). The French economy is expected to achieve GDP growth of 1.8 percent in 2018, similar to the level seen in 2017 (+ 1.9 percent). This is due to growing optimism in the corporate sector and the lower unemployment rate under President Macron.
The forecasts for the UK are weak. Economic growth is expected to come in at 1.5 percent in 2018 (2017: + 1.4 percent).
The US economy grew by 2.3 percent in 2017 under the Trump presidency. Experts believe that the impact of the tax reform, in particular, will give the US economy further growth potential of 2.7 percent in 2018. Tax cuts for businesses and citizens will increase purchasing power and investment. At the same time, Trump is planning to impose revenge taxes on foreign companies to implement infrastructure projects.
The emerging markets of China and India, which are very important to the Würth Group, will remain global growth drivers. Experts predict growth of over five percent for the emerging markets in 2018. The export world champion China will continue to benefit from the recovery in global trade. As a result, growth in its gross domestic product will be roughly at the same level as in 2017 (+ 6.9 percent) at 6.5 percent. The outlook for India is also positive. After growth of 7.6 percent in 2017, the Indian economy is expected to report growth above the seven percent mark again in 2018. All in all, India is expected to grow at an even faster rate than China. The economic upswing looks set to continue for Latin America, too, with growth expected to pick up from + 1.3 percent in 2017 to up to 2.2 percent in 2018. As far as Russia is concerned, accelerated GDP growth of at least two percent is expected. Exports will continue to grow and consumer purchasing power will increase on the back of falling unemployment and lower inflation rates, according to experts. The economic forecasts for 2018 are optimistic as a whole. The International Monetary Fund (IMF) predicts that the global economy will continue to pick up speed this year.
Development of the Würth Group
- Further increase in sales and operating result
- Dynamic development in e-business activities
- New logistics center will secure sustainable growth
With sales of EUR 12.7 billion and an operating result of EUR 780 million, the Würth Group set new records for both key figures in 2017. The increase in sales comes to 7.5 percent, while the operating result grew by as much as 26.8 percent. This success over the last fiscal year serves as testimony to the fact that our customers value Würth’s product range, quality and service. One key factor is also our availability: From our online shop to the dense network of branch offices and our 32,000 sales representatives worldwide – a sales force that we want to strengthen further and expand in 2018 – right down to a simple Bauloc container located directly on the construction site: Würth’s customers know that Würth is available everywhere, and that Würth delivers. After all, one thing is important to people working in the trades: No matter where they are, at home or somewhere far away on a construction site in Germany or even abroad, they know that they will get the same quality and the same service. This reliability and predictability is one of Würth’s key unique selling points and is multiplied worldwide throughout all of our companies. One of the main tasks involved in shaping the future will be to continue working on these aspects.
We want to make our customers’ lives easy to provide them with a basis for their day-to-day work. Procurement, warehousing, basically inventory management as a whole, are tasks and challenges with which we can help them. Good, high-quality products with a long service life are just as important as competent contacts who are on hand to answer questions. Nowadays, it is no longer a matter of course to get real answers to questions. This cannot be said for Würth. At Würth, the word “partnership” is a term still shaped by individuals. By individuals and communication. This is the context in which we also see our role as an attractive employer. Professor Würth has always emphasized that we all spend a large portion of our lives in the workplace. So it is important that we do everything in our power to make sure that our employees enjoy coming to work every day. In these endeavors, we must remember that as the competition becomes more intense and the markets become more globalized, it will become more and more of a challenge for employers to prevail in the battle for talents. This is an issue that is closely related to the question of changing values in society at large, meaning that employers, too, have to be more flexible than ever before. Various prizes awarded to us confirm that Würth is on the right track in this regard, for example the “TOP National Employer 2018” award presented by the business magazine Focus-Business.
E-business activities
One key issue on which we are focusing in our global e-business activities, above and beyond the implementation of online shops, is the expansion of activities relating to digital sales. The various business units of the Würth Group have adopted different approaches. Within the Würth Line, for example, e-business sales specialists are supporting the sales representatives in their customer meetings and highlighting the advantages of digital purchasing in the context of a holistic procurement solution. Other measures include, for example, collaboration with digital agencies in order to make it easier for customers to find Würth products in search engines. Twenty-five Würth Line companies, in addition to 15 Allied Companies, are now using the Würth Group’s central online shop. The way in which the functions have been adapted to suit different regional requirements is particularly noteworthy. The interface for the online shop in China, for example, was structured completely differently and was equipped with additional functions required locally in order to meet Chinese requirements. Especially in markets like China, however, things are being taken even one step further: We are currently testing a collaboration with major online marketplace providers such as Alibaba in order to expand our sales activities, moving away from pure direct sales and seeking to establish ourselves as a company with various digital contact points.
Since the beginning of 2018, Adolf Würth GmbH & Co. KG has had a Berlin-based team focusing exclusively on the topic of big data. The move to the German capital was also motivated by the fact that it is easier to recruit specialists in this field there.
Other important drivers are the various industry-specific ERP systems, which are increasingly being turned into integrated procurement solutions for their users. As a result, the companies in the Würth Group are very keen to establish a presence in these software solutions in order to offer customers real added value in procurement.
Expansion of logistics
We are facing rising demands among our customers as far as the binding nature of deliveries and the reduction in delivery splits are concerned. This is why we have to make further investments in logistics in order to establish corresponding capacities and allow us to control the processes involved. Within this context, Adolf Würth GmbH & Co. KG will start building a central external warehouse in Waldenburg, near the A 6 federal highway, in 2018. This new building, which will span an area of 50,000 m², will house various dispatch points of Adolf Würth GmbH & Co. KG and external warehouses under one roof. In particular, different bulky goods warehouses will be bundled into the new building, reducing the delivery split, the number of packages and also the filling material required. In addition, new processes and technologies will help our customers to offer an even higher quality of service as of the end of 2019.
Overall statement on the future development of the Würth Group
The Würth Group expects to achieve sales growth in the mid single-digit range and growth in its operating result that will be slightly more pronounced in comparison in the 2018 fiscal year. We expect the development in gross profit to remain constant. We predict a slight positive development in collection days, stock turnover and staff turnover. All of these statements are subject to the proviso that innovation, employment and global economic growth continue to show positive development.
© Adolf Würth GmbH & Co. KG