• Germany remains most important single market
• Southern and Eastern Europe report above-average growth
• Spain benefits from company acquisition

Eastern Europe was the fastest growing region in the Würth Group for the second year running in 2017, with growth in excess of 20 percent. Southern Europe was able to continue with the growth momentum seen in 2016, with sales up by 11.6 percent. In both regions, this strong growth was favored by acquisitions. On the whole, however, all regions reported strong organic growth.

Germany is the most important individual market for the Würth Group, accounting for 42.4 percent of sales. In 2017, this market reported satisfactory sales growth of 6.1 percent, bringing sales to EUR 5.4 billion (2016: EUR 5.1 billion). The companies outside of Germany reported more substantial growth of 8.5 percent. Although growth momentum is not at the same level in all regions, the differences are less pronounced than in previous years and there are no longer any distinct crisis regions.

One of the Würth Group’s strengths is decentralization. Thanks to the geographical diversification, our more than 400 companies in over 80 countries allow us to participate in regional growth markets and thus, at least in part, to compensate for stagnation or sales declines in individual countries. Depending on the maturity of the individual markets, the strategic approaches to market penetration vary from region to region. In fledgling markets, the focus is on expanding the sales force. The established entities concentrate on refining their sales divisions and expanding their sales channels, such as branch offices and e-business, through a regional approach, customer-­specific segments and a policy of seeking out potential.

The Würth Group’s roots are in Germany. Adolf Würth GmbH & Co. KG was established back in 1945 as a screw wholesale business in Künzelsau. In 2017, the largest single entity in the Group generated record sales of EUR 1.5 billion and employed a workforce of 6,805 as sales representatives and in-house staff, attending to our customers’ needs. With 469 branch offices, in which our customers can cover their immediate needs, our Group’s flagship is closer to our customers than any of our competitors. In addition to the expansion of the branch office network and the further expansion of direct sales, the parent company is forging ahead with activities in the e-business segment. Adolf Würth GmbH & Co. KG also tops the internal ranking table as far as operating result is concerned. The company increased its profit to more than EUR 150 million. This earnings power is setting standards within the Group and is also key to further positive development. Investments in forward-looking distribution and logistics solutions would not be possible without this strong earnings performance. In addition to Adolf Würth GmbH & Co. KG, the Group also has other extremely successful companies operating in Germany: Würth Elektronik eiSos, Arnold Umformtechnik, Würth Industrie Service, Reca Norm, and Fega & Schmitt Elektrogroßhandel are prime examples. These companies have been showing extremely dynamic development for years now. Out of a total of more than 32,000 sales representatives, 6,167 of them are employed in Germany. Overall, Germany generated an operating result of EUR 421 million (2016: EUR 351 million), thus representing the most profitable region.

Western Europe is the Group’s second largest sales region after Germany. Western Europe includes countries such as France, the UK, Austria, and the Benelux countries. Western Europe formed the geographical starting point for the inter­nationalization of the Würth Group. In 1962, Reinhold Würth set up the first company outside of Germany, Würth Nederland B.V. This was followed by Würth AG in Switzerland and Würth Handelsgesellschaft m.b.H. in Austria. This move allowed him to lay the foundation for one of the key success factors of the Würth Group. With sales up by 5.2 percent to EUR 1,857 million, Western Europe reported much stronger growth than in the previous year, when sales increased by only 1.4 percent. The Swiss companies continued to stand in the way of more substantial sales growth. The restructuring of our Swiss direct sales company, which has been operating on the market for more than five decades, is still underway. The biggest source of sales in this region is France, which accounts for just under 40 percent. Sales growth here lagged slightly behind the average for the region. In the UK, in contrast, the companies outstripped the Group’s growth rate measured in local currency terms. In euro terms, the UK remains slightly above the average. It is not yet possible to fully predict the consequences of Brexit on our activities. We do not, however, expect Brexit to have any major impact. The positive development in Austria, the second largest market after France, continues. This market reported the strongest sales growth, with 8.0 percent.

The Americas region was not quite able to continue with the double-digit sales growth seen in 2016, but reported satisfactory growth of 8.4 percent in local currency terms. At 1.5 percentage points, acquisitions had a positive effect on growth. It has always been part of the Group’s growth strategy to add targeted acquisitions to successful business areas where it makes sense to do so. The US was always a focal point of these activities in the past, most recently in 2015 with the acquisition of Northern Safety Company, Inc., a company known for its strong sales, and in 2016 with the acquisition of the US company House of Threads, Inc.

Two other companies were acquired in 2017: On 1 November 2017, Würth took over the US company Dakota Premium Hardwoods LLC, which has its registered office in Waco, Texas. The company mainly sells wood products, fittings, laminates and accessories primarily to small and medium-sized carpentry workshops in Texas that specialize in manufacturing kitchen furniture. In a fragmented market, Dakota Premium Hardwoods LLC is one of the market leaders in Texas with six locations (Waco, San Antonio, Austin, Houston, Dallas and El Paso). The company generated sales of USD 76 million in 2017 and employed a total workforce of 116 at the end of 2017.

On 1 November 2017, Würth took over the company Weinstock Brothers Corp., which has its registered office in Valley Stream, New York. This family-owned business, which was established in 1898, distributes C parts in the connecting and fastening technology segment to customers in the commercial steel construction sector, and is the market leader in this industry in the US state of New York. Weinstock Brothers Corp. reported sales of USD 15 million in the 2017 fiscal year with 16 employees. The acquisition of Weinstock is a good addition to the regional network following the acquisition of House of Threads, Inc., whose operations are predominantly confined to the south-east of the US. Overall, Würth Industry of North America (WINA) was strengthened in a targeted manner through acquisitions and the company took further measures to forge ahead with WINA’s growth strategy.
Following the change in government in 2017, the macroeconomic situation in the US remains positive. Thanks to the further reduction in the unemployment rate, private consumption – the factor that has traditionally propped up the US economy – increased significantly. Investor confidence is also reflected in the strong performance on the US stock markets. Experts expect the tax reform adopted by Congress at the end of 2017 to provide the US economy with a further boost in 2018.

In contrast to the region of North America, sales growth in South America benefited from tailwind in the form of exchange rate developments. In local currency terms, growth came to 10.4 percent, which translates to 13.9 percent growth in euro terms. Developments at the largest single company in this region were particularly encouraging: After a two-year consolidation phase, Würth Brazil edged close to the goal of double-digit sales growth again in local currency terms.

The Southern European region was able to continue with the dynamic sales development seen in 2016, reporting above-­average growth in 2017, too. The companies achieved sales in the amount of EUR 1,432 million, up by 11.6 percent. The development in Italy, by far the biggest driver of sales in this region, was particularly noteworthy. With growth of 11.4 percent, the Italian companies reported an extremely successful year. In Spain, the Würth Group reported an increase of 14.8 percent, the highest growth in Southern Europe. The increase in sales is also due to the acquisition of the Walter Martínez Group, which consists of four operating companies and mainly supplies fastening materials to industrial customers. The family business, which was set up in 1988, generated sales of EUR 17 million in 2017 and employed 55 people. The acquisition, with locations in Zaragoza and Madrid, laid an important foundation for the expansion of the industrial business in Spain. After adjustments to reflect the acquisition, growth in Spain came to 11.3 percent, which is still well ahead of the level for the Würth Group as a whole.

The Scandinavian region is home to one of the model companies in the Würth Group, Würth Finland. With more than four decades of operations behind it, the company impresses with its excellent market penetration and high profitability. The branch office concept is the decisive success factor here. Würth Finland now has 182 branch offices, ten percent of all the Group’s branch offices. The entity therefore also spearheaded the spread of this successful sales concept within Würth Line in recent years. All in all, the Scandinavian region closed the 2017 fiscal year with sales growth of 4.3 percent.

With an increase of 21.0 percent to EUR 784 million, the ­Eastern European region showed the fastest pace of growth in 2017. This momentum is still partly due to an acquisition made by Würth’s electrical wholesaling business (W. EG) in the first four months of 2016. At that time, Würth had taken over the operating business of a competitor in Estonia, Poland and Slovakia in order to further expand the market position of W. EG. The acquired companies were successfully integrated into the existing portfolio of the electrical wholesaling business and are developing according to plan. If we adjust the sales growth to reflect the acquisition of the electrical wholesaling business, the rate of growth in the Eastern European region comes in at just under 15 percent, twice as high as the level for the Group as a whole.

The share of sales attributable to the Asia, Africa and Oceania region has been stable at a level of just under five percent for years now. Although the region is very large in terms of area, the companies in Asia, Africa and Oceania only play a minor role for the Würth Group at present.