German supplier Eberspaecher Group has announced that despite the unprecedented challenging fiscal year 2020 that was heavily impacted by the economic effects of the Coronavirus pandemic, the current year marks the sign of transformation for the company.
‘Exhaust Technology’, which is the company’s biggest division will change to a more independent operational structure and conduct business under the name of ‘Purem by Eberspächer’ in the future.
In terms of revenue, all three divisions of Eberspaecher Group were affected by massive revenue slumps in 2020 due to the Coronavirus pandemic. However, the company says this does not show in consolidated revenue. At around EUR 4.9 billion (Rs 40,508 crore), it was marginally down by 1.1% YoY. The decrease was attributed to the increased prices of precious metals, which are used in catalytic converters. The net revenue, which does not take into account these effects, was down 16.4 percent, which reflected the global slump in vehicle sales. In 2020, global passenger cars sales decreased by 15% and by almost 24% in Europe. Despite the difficult market environment, the company says it was able to report operating profit (EBIT) of EUR 33.5 million (Rs 277 crore) by quickly implementing comprehensive cost reductions. Eberspaecher created a package of measures, which includes necessary restructuring expenses, and therewith the conditions that are required for going strengthened into the future. Consolidated net income after taxes amounted to EUR - 53.1 million (Rs 439 crore). More than 82% of revenue was generated outside of Germany. The Group employs an average of 9,902 (-0.3%) persons globally at 80 sites. Great momentum developed in the automotive industry and its technologies as well as in global trade and the economy in the past year, and not just because of the Coronavirus pandemic. Martin Peters, Managing Partner, Eberspaecher Group said: “We are in a phase of transformation. We actively shape this in line with our corporate strategy, MOVE.”
Purem by Eberspaecher
The Exhaust Technology Division generated around EUR 4.4 billion (Rs 36,375 crore) in revenue in the past year. In Mexico, India, and China, additional production sites were started up and new products were developed for Clean Mobility and compliance with the upcoming emission standards. The German supplier says it was thus able to provide systems which shorten the cold start phase and therefore increases the efficiency of the exhaust emission conversion even further and decrease NOx emissions by up to 90% under test conditions.
In the future, the exhaust technology division will be known as ‘Purem by Eberspaecher’ in the market. By changing the division’s name, the automotive supplier aims to strengthen the operational independence of the division and opens up the possibilities for global collaborations with other companies.
“We are currently seeing great changes in the global automotive industry and economy and we are acting proactively in response,” said Peters about the strategic alignment.
Eberspaecher says it expects a consolidation in the supplier industry, particularly with regard to mature markets and products, where global alliances will be increasingly popular. The family-owned company clearly stands by its core business and remains the owner of Purem by Eberspaecher. Dr. Thomas Waldhier, who has been managing the Exhaust Technology Division since 2012, will remain responsible for operational management.
“Purem by Eberspaecher is a strong pillar of our Group. The subsidiary generates means for further developing emission aftertreatment technologies and its international presence as well as for growth with new business sectors and technologies,” said Peters regarding the transformation. He adds: “Our Group operates successfully in diverse markets and has an extremely broad product portfolio for this purpose. The new brand will show this in a more organisationally differentiated manner.”
The company says in 2020, further transformational steps include the targeted development of innovations for tapping new products and markets. Eberspaecher says it has invested in two start-ups in the past year. The Group is currently further advancing its activities in three defined search fields, ‘Thermal Comfort for Mobility’, ‘Urban Mobility Solutions’ und ‘Hydrogen for Mobility’, through its Business Innovation unit. Eberspaecher aims for a comprehensive view of mobility in this respect.
The two Divisions, Climate Control Systems and Automotive Controls, develop key technologies for future mobility. In the 2020 fiscal year, they generated revenue in the amount of EUR 483.8 million (Rs 4,000 crore) (Climate Control Systems) and EUR 50.2 million (Rs 415 crore) (Automotive Controls). These figures were down year-on-year due to the Coronavirus crisis.
“It is, and will always be, our intention to successfully grow with these two Divisions,” emphasised Peters. The successes in the field of digitisation and the megatrends, electric mobility and autonomous driving, show that Eberspaecher is managing to do so. Once production had been ramped up again as from summer 2020, electrical heaters were in increased demand, which are primarily used in electric and hybrid models. The company says customers showed great interest in vehicle electronics, including products for extra-safe vehicle electric systems that are mainly used in autonomous vehicles. On the other hand, the figures for air-conditioning systems for buses decreased significantly as particularly demand for coaches and intercity buses decreased considerably due to the mobility restrictions. The sale of traditional pre-heaters was also down on the original planning as a result of the economic downturn. Furthermore, Eberspaecher advanced the digitisation of its components. The Group plans to have products for monitoring cooling chains in special vehicles ready for market in the current year.
Outlook for 2021
“These are challenging times. At the same time, we have shown that we are using the crisis as an opportunity and that we have advanced both our products and organisation,” said Peters. During the pandemic, the focus remains on health protection through comprehensive hygiene measures. Global mobile office solutions have been established for employees. Up to now, Eberspaecher has registered only individual cases of the infection spreading between employees due to consistent management. Martin Peters commented on the current situation and long-term perspective: “Our economic success depends on the continued positive development in the global vehicle market. Ultimately, our Group has to position itself in the demanding environment of competing drive types to enthral our customers with a balanced product portfolio at all times.”
The Group plans to grow rapidly with new technologies for this purpose and will increase revenue in the Division Climate Control Systems and Automotive Controls alone to one billion euro (Rs 8,267 crore) over the next four years.