The Liebherr Group notched up a turnover of € 10,551 million euros in 2018, breaking through the € 10 billion barrier for the first time in the company’s history. This represents an increase of € 739 million, or 7.5%, compared with the previous year.
According to the International Monetary Fund, global economic growth in 2018 was slightly below the previous year's rate of 3.7 %. Industrialised nations saw a similar growth rate of 2.3 %. Meanwhile, emerging and developing economies saw growth of 4.6 % – also slightly below the previous year’s level. The US economy showed improved growth of 2.9 % compared with the previous year, whilst growth in the eurozone slowed to 1.8 %.
Despite a slight decline in overall economic growth, 2018 was a record year for the Liebherr Group. Both the construction machinery and mining equipment divisions recorded overall increases in sales revenues, as did all other product areas. Revenues from construction machinery and mining equipment rose by € 667 million, or 10.8 %, to € 6.833 billion, with especially strong contributions from the Earthmoving, Mobile Cranes and Mining divisions. In the other product areas, which include Maritime Cranes, Aerospace and Transportation Systems, Gear Technology and Automation Systems, Domestic Appliances, Components and Hotels divisions, turnover rose by a total of € 72 million, or 2.0%, to € 3.718 billion.
Record sales generated in 2018 can be attributed to the very favourable economic conditions and higher demand in several sales regions. Sales continued to increase within the European Union, which is Liebherr’s most important sales region. This can be attributed, among other things, to renewed growth in Germany, which is Liebherr’s largest market, and to the favourable economic situation in France and Great Britain. Sales in non-EU countries fell compared to the previous year due to the downturn in the Russian economy. The business also performed very positively in North America, Central and South America, and Asia and Oceania, driven in particular by the markets in the USA, Australia and China. This contrasts with a slight drop in sales in Africa and in the Near and Middle East.
The Liebherr Group achieved a net profit of € 321 million in 2018, slightly above the previous year's level. The operating result has not increased significantly compared to the previous year. The financial result declined, mainly due to negative effects of currency movements.
The qualifications, enthusiasm and commitment of the Group's employees make a key contribution to its business success. Liebherr's long-term commitment to its employees is in keeping with its tradition as a family-owned company.
Staff headcount increased significantly during the 2018 financial year with the Liebherr Group employing 46,169 people worldwide. This represents an increase of 2,300 employees, or a 5.2 % increase compared with the previous year. Whilst the number of Liebherr employees in Europe, North America, Central America, South America, Asia and Oceania grew, the numbers decreased in Africa and the Near and Middle East.
The Group intensified its efforts to recruit apprentices and graduates during the reporting period. Standardised learning management software was also introduced in order to support human resource management.
The Group aspires to generate sustainable value for its employees, customers and suppliers and for society as a whole. As an independent family company with a longterm focus, Liebherr is aware of its responsibilities and is committed to sustainable development. Its products, processes and infrastructure are geared to the minimum possible consumption of resources. The focus in all areas is on safety, efficiency and environmental sustainability. Last year, a large number of the Group’s companies worked on projects looking at social, environmental and economic aspects of sustainability.
As a high-tech company, Liebherr pursues the goal of making a decisive contribution to shaping technological progress in sectors relevant to the Group. Liebherr invested € 586 million in research and development last year. The bulk of this was used in the development of new products. A large number of joint research projects with universities, other higher education institutions and research institutes were initiated and continued. A special area of focus for this research project is the construction site of the future. Liebherr is partnering with the Centre Construction Robotics at RWTH Aachen Campus. The aim of this partnership is to redesign the construction site of the future and to redevelop digitalisation from the pre-production phase, throughout the added value chain to the semi-automated construction site. Opportunities are also being explored in the “Bauen 4.0” (Construction 4.0) project initiated by the German Mechanical Engineering Industry Association (VDMA) which is intended to increase the efficiency and productivity of construction processes through networks and communication.
Important issues across the wide range of products and services include, as they have done for many years, increasing energy efficiency, networking, automation and lightweight product design. One important project involves research into additive manufacturing processes in the aerospace industry. It reached a milestone last year by delivering the first mass-produced component using 3D printing: a 3D-printed bracket for the nose landing gear on the Airbus A350 XWB. This is the first 3D-printed system component that Airbus has approved for use. The Group is also forging ahead with e-mobility initiatives, developing charging cable cooling units for charging stations and carrying out research into an electric turbo compressor for fuel-cell-powered vehicles.
The Group has traditionally emphasised the importance of making regular investments in its production facilities and its global distribution and service networks. Last year, the Group invested € 829 million, an increase of € 51 million compared to last year. Offset against this was depreciation of € 513 million.
The Group invested a considerable amount of money during 2018 in various company sites. A new development and exhibition centre was opened in Kirchdorf an der Iller (Germany) where new construction and material handling machinery will be developed, tested and inspected. Construction has also started on a new logistics centre. In addition, the Group has invested in Bad Schussenried (Germany) which will serve as a new manufacturing site for concrete pumps. New production lines for large engines are being set up in Bulle (Switzerland) and Colmar (France). A new aerospace training centre for employees and customers in Toulouse (France) is also planned.
Liebherr is starting to install a powerful land-based heavy-duty crane in the port of Rostock. The TCC 78000 land-based portal crane is not just going to be used to load Liebherr cranes, which are continuing to increase in size, but will also be available for external heavy load handling in the port of Rostock.
Outside Europe, Liebherr is investing in projects such as the development of the Newport News site (USA). The expansion of the crane, construction machinery and concrete technology divisions is intended to support the Group’s long-term growth strategy in the US market.
In order to ensure the sustainable success of the Group, opportunities and risks are identified at an early stage to be evaluated and controlled. The Group has a continually optimised risk management procedure in place, and an internal control system to help it meet operational, market-related and legal requirements.To ensure the integrated recording, analysis and evaluation of risks, all managers responsible for the risk management and internal control systems used in the individual Group companies are involved. Risks are identified and assessed locally in the individual companies, then countermeasures to limit the risks are introduced and the impacts are evaluated.
This localised approach also makes it possible to identify and assess areas of opportunity efficiently. The information gained about market-related and technological developments is used in opportunities management to reach decisions about future areas of business and production processes. At the corporate level, the current risk situation is regularly reviewed and the effectiveness of the systems and processes used is assessed. The internal audit department monitors compliance with Group guidelines and the implementation of the risk management and internal control systems.
Events of particular significance which occur after the reporting date should be recorded here, together with their expected impact on the Group’s assets, financial position and earnings. The Liebherr Group had no such events to report after the end of the 2018 business year.
The International Monetary Fund predicts a slowdown in global economic growth of 3.5 % in 2019 compared with the reporting period. The same applies to industrialised nations which have a projected growth of 2.0 %. Emerging and developing economies are expected to see slightly slower growth of 4.5 %.
The World Trade Organisation forecasts a modest fall in trade growth from 3.9 % to 3.7 % in 2019. According to the market forecasting network Euroconstruct, the construction industry in Europe is likely to slow down. It is predicted that markets in Germany and most other European countries will see slower growth than in 2018. On the other hand, the International Air Transport Association (IATA) is cautiously optimistic about 2019.
According to forecasts issued by the World Bank, prices for energy sources, which were approximately 33.0 % higher in 2018 compared with 2017, are set to stabilise. A modest price increase of + 1.0 % is anticipated for non-fuels.
It would be fair to conclude that there are still no obvious signs of a looming recession and there will be strong demand in most regions and sectors in 2019 as well.
In order to illustrate the individual opportunities and risks, similar types of risks and opportunities have been grouped together.
Macroeconomic opportunities will arise from global economic growth. On the other hand, geopolitical uncertainty is likely to escalate into an outbreak of trade wars. For example, we may see higher tariffs imposed by the USA and likely retaliatory measures by its trading partners. A trade war would be especially serious for the People's Republic of China and falling growth here presents a further risk. Another factor is the ongoing negotiations between the European Union and the United Kingdom and renegotiation of free trade agreements. The very high levels of debt in certain countries also present an additional risk.
The sections on each of the divisions contain reports on the opportunities and risks relevant to that division. Specific cost changes due to increasing macroeconomic uncertainty or cyclical factors which cannot be directly passed on through contractual price indexation may pose risks that affect the Group’s performance.
Operational business harbours market price risks, in particular due to exchange rate and interest rate fluctuations. Liebherr monitors these risks continuously and uses appropriate financial instruments to hedge selected transactions. The Group enters into financial transactions only where these are linked to its operational business activity or are for hedging purposes. On principle, Liebherr does not conduct transactions of a speculative nature.
The global nature of our business activities, together with our broadly diversified product base and the risk management system in the Group in place, ensure that the relevant risks are kept under control. Based on the currently available information, there are no further identifiable risks which could have a substantial detrimental effect on Liebherr’s assets, financial position and earnings in the 2019 business year and threaten the survival of the Group as a whole.
Despite the slight slowdown in economic growth, the Group expects sales revenues to continue to rise in 2019. The fact that the order books are already very full at the beginning of the year is a promising sign. Liebherr expects growth in both the construction machinery and mining equipment divisions, as well as the other product areas. Especially strong growth is anticipated in the Earthmoving, Mining and Domestic Appliances divisions.
The Liebherr Group will also continue to invest substantially in its international production facilities and in its distribution and service network. The number of people employed in Liebherr companies will increase again.
* Restatement first time adoption of IFRS 9 / 15 / 16.
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