- Mannheim-based plastics processor generates sales increase to a total of 2.207 billion euros in 2021
- Raphael Wolfram, CEO and CFO of Röchling Automotive, appointed spokesman of the Group Executive Board
Mannheim, 2 June 2022 | The Röchling Group, which celebrates its 200th anniversary this year, has weathered the second year of the coronavirus pandemic well and generated a significant increase in sales last year. However, the Mannheim-based plastics processing company, which was founded in Saarbrücken/Germany in 1822 by Friedrich Ludwig Röchling as a coal trading company, was not able to match its pre-corona sales level. With sales of EUR 2.207 billion in 2021, Röchling posted growth of 8.2 percent (EUR 168 million) compared to the previous year. EUR 858.6 million of this was generated in Germany, EUR 633.8 million in the rest of Europe, EUR 406.8 million in the Americas, and EUR 308 million in Asia.
Earnings before taxes (EBT) also developed positively. After the pandemic-driven drop to just EUR 2.3 million in 2020, it almost returned to pre-coronavirus levels at EUR 79.4 million. The number of employees rose slightly from 11,094 to 11,245 within twelve months, which is primarily attributable to additional personnel at Röchling Industrial. A total of 4,458 employees worked in Germany, 3,282 in the rest of Europe, 1,808 in the Americas, and 1,697 in Asia. 574 employees worked for Röchling in Baden Württemberg, 1,106 in Rhineland-Palatinate, and 154 in Hesse.
The economic growth was primarily driven by the Industrial division, which, thanks to its extensive industrial focus, surpassed the billion-euro mark for the first time in its history, posting growth of EUR 206 million to a total of EUR 1.008 billion. The Medical division also expanded its business from EUR 163.9 million to EUR 182.6 million in 2021. In contrast, the Automotive division generated a decline of EUR 56 million to EUR 1.020 billion. This drop was primarily caused by the continuously strained global automotive market, coupled with the shortage of semiconductors.
At the present time, it is difficult to make a forecast for the current year, which alongside the pre-existing challenges is characterized above all by the war in Ukraine. Despite the exceptional influences, the Röchling Group made a good start to the year 2022. At the end of the first quarter, sales amounted to EUR 618.1 million and were thus significantly above plan and nearly EUR 60 million higher than in the first quarter of the previous year.
The growth in the first quarter of 2022 was again driven by Röchling Industrial with an increase of 27.6 percent compared to the same quarter of the previous year, and by Röchling Medical with an increase of 17.5 percent. The situation for suppliers of the automotive industry remained under strain in the first quarter in view of temporary closures of automotive manufacturers’ plants, which was reflected in a slight sales decline of 5.8 percent at Röchling Automotive. The significant sales growth at Röchling Industrial resulted in a continued increase in personnel. At the end of the first quarter of 2022, the Röchling Group employed a total of 11,475 people.
After a difficult year in 2020, we as a Group returned to our old strength last year. Our business was stimulated by global demand for plastic products from Röchling Industrial. We are confident that we will repeat the good performance of the past year in 2022. Although the current economic challenges are manifold and seem like they will stay that way for a while, we expect sales to grow by a low single-digit percentage overall,” said Raphael Wolfram, new spokesman of the Executive Board of the Röchling Group and CEO and CFO of Röchling Automotive, at the annual financial press conference in Mannheim on Thursday. As part of its modernized governance, the Röchling Group will in future dispense with the post of a CEO and assign the task of coordinating and representing the Group Executive Board to the newly appointed spokesman. The previous CEO ad interim, Rainer Schulz, was dismissed at the end of May 2022. In the future, he will again act as a member of the Advisory Board of the Röchling Group.
To further strengthen its sustainability activities, the company has established a "Röchling Board Sustainability" to address key sustainability topics. One focus is the expansion of the sustainable product portfolio, for which Röchling will present two new product families at K 2022 in Düsseldorf, Röchling-BioBoom® for bioplastics and Röchling-ReLoop® for recyclates. Certification in accordance with the international sustainability standard ISCC PLUS to promote the use of bio-based raw materials in industry is also part of Röchling's sustainability strategy.
Röchling Industrial: Safe Haven with Record Sales
Demand for semi-finished products and finished parts made of thermoplastics and composites from Röchling Industrial remained at a very high level in all relevant industries last year. This was the result of reliable global production in the corona year 2020 and an individual approach to various industries. “We continued this momentum into last year. We make our customers a clear promise that the supply of Röchling products is secured despite the supply chain problem thanks to our global positioning,” says Franz Lübbers, CEO of Röchling Industrial. The division’s industrial orientation is also demonstrated by last year’s renaming of the companies to Röchling Industrial.
By increasing volumes and successfully passing on the rise in material costs, the division achieved record sales above the billion-euro mark and thus played a major role in the Röchling Group’s good annual result. The growth was also reflected in earnings before taxes, which were higher than in the previous year and once again demonstrated the profitability of the division. “Due to our high level of expertise and the commitment of our entire team, as well as our anti-cyclical investments, we were able to record this sensational record year,” says Lübbers.
Röchling Industrial invested a total of EUR 58.4 million last year. In addition to global investments in production facilities and logistics centers, the completion of the construction of the Industrial Center in Haren/Germany was another cornerstone for the focus on industrial management and strengthening the innovative capabilities in the division.
As of 31 December 2021, Röchling Industrial had a total of 4,196 employees. This is a year-on-year increase of 333 employees. To guarantee a pleasant and safe working environment, Röchling Industrial consistently implements the chemical industry’s global “Responsible Care” initiative, and thus continuously improves environmental protection and safety in the company in addition to health protection.
The signs continue to point to growth at Röchling Industrial for the current year: “We have made an excellent start to 2022 with record figures for the first four months,” says Franz Lübbers. As well as organic growth, there is going to be further growth through acquisitions in Röchling Industrial’s core industries.
Röchling Automotive: Results Marred by Semiconductor Shortage and Short-Time Work
Despite full order books, the global problems in the supply chains and the ongoing tense situation on the semiconductor market put pressure on the recovery of the international automotive markets. European automotive manufacturers were particularly affected by the shortage of semiconductors, which led to plant closures and short-time working at their plants. This had consequences for suppliers. According to industry experts, around eleven million cars could not be built in 2021 due to a shortage of components. In Germany alone, the number of cars manufactured decreased by three percent to 2.3 million units.
For Röchling Automotive, the decline in the number of diesel cars sold was particularly noticeable, as the division is a global market leader in the production of SCR tanks. The economic pressure resulted in a reduction in the number of employees. As of 31 December 2021, 5,752 people were employed at Röchling Automotive, a decline of 259 within the preceding twelve months. After a minus in the previous year, the division again achieved a positive result.
In total, Röchling Automotive invested EUR 34 million last year, slightly below the previous year’s figure. The investments were associated, for example, with production expansions in Kunshan/China and Suzhou/China and the purchase of a building and land in Gijzegem/Belgium.
“The shutdown at automotive manufacturers due to the disruptions in the global supply chain and the semiconductor shortage had a direct impact on our sales volume. Thanks to a strong November and December, however, we reached the billion-euro mark and thus achieved a satisfactory result despite the difficult conditions,” says Raphael Wolfram, CEO of Röchling Automotive.
The fact that the corona pandemic has not yet been completely overcome in 2022 is also shown by the lockdowns as part of the zero-covid strategy in China. Due to local outbreaks and the lockdowns imposed as a result, two automotive plants had to be closed for almost a month. Production there could be maintained only thanks to the special dedication of the employees.
In January and February, business remained strong for Röchling Automotive. However, the outbreak of the war in Ukraine at the end of February put an end to the positive development and even led to short-time work at some plants. This was due to a lack of release orders from automotive manufacturers, who were no longer receiving cable harnesses from Ukraine and had to temporarily stop production.
Röchling Medical: Business Strengthened by Portfolio Adjustments
Röchling Medical has taken up the target of ensuring long-term profitability and stability by 2025. Last year, it therefore began to adapt its organization and processes and to intensify existing customer relationships and establish new ones. At the end of last year, for example, Dr. Andreas Gabriel and Joachim Lehmann were appointed to the Medical Executive Board as Chief Operating Officer and Chief Financial Officer, respectively. By 1 August at the latest, Dr. Daniel Bühler from the Berlin-based medical technology company Biotronik will join the company as new CEO for Röchling Medical. He will also be appointed to the Group Executive Board. The current CEO of Röchling Medical, Dr. Boris Fröhlich, will concentrate on his duties as Chief Sales Officer. He currently holds this position in addition to his other duties. In addition to the personnel and organizational changes, the portfolio of the business sector was also adjusted last year.
The first positive effects can already be seen: With sales of EUR 46.3 million in the fourth quarter of last year, Röchling Medical surpassed the previous year’s level (EUR 38.1 million). Although the earnings before taxes for last year are negative overall, the division was much more robust than in the previous year. “In 2021, we saw extensive postponements of elective operations, many of which are not being rescheduled. The lack of catch-up effect had a negative impact on our customers’ business and therefore for us. The market recovery from the pandemic occurred much earlier in the USA than in Europe,” says Evelyn Thome, CFO of the Röchling Group.
Investments at Röchling Medical amounted to EUR 24.3 million, nearly six million euros above the previous year’s level. The main investment was in the construction of a building to increase production capacity at the site in Neuhaus am Rennweg/Germany, but there were also investments in machinery and automation. “We are investing in the future success of our customers,” says Evelyn Thome. At the same time, the division relies on its employees: Headcount increased from 1,155 to 1,228 by the end of 2021.
Despite the negative external influences, Röchling Medical made a robust start to 2022 with a positive outlook for the coming months. For example, incoming orders of EUR 70.8 million in the first quarter were nearly EUR 15 million higher than in the previous year’s quarter. Price adjustments and material cost adjustments in the preceding months had a positive effect on sales, which at EUR 51.6 million were nearly eight million euros higher than in the first quarter of 2021. For the second half of the year, the division expects sales to be stable at a high level unless the war in Ukraine has a severe impact.
Outlook: Röchling Industrial Continues to Ensure Stable Profitability in the Röchling Group
The war in Ukraine is not only slowing economic growth, but also increasing prices. In April, the International Monetary Fund lowered its forecast for the years 2022 and 2023 to 3.6 percent, while the experts expect consumer prices to increase by 5.7 percent in advanced economies and by 8.7 percent in emerging and developing countries this year.
This trend is also having a massive impact on the plastics industry at a time when many companies are still dealing with the aftermath of the coronavirus pandemic. Supply bottlenecks and price increases of raw materials and intermediate products are having negative effects on companies’ production capabilities. Accordingly, the plastics industry is responding with lowered forecasts. According to a survey by the German Chemical Industry Association (VCI), 54 percent of the companies surveyed assume that they will register a decline in production and sales this year.
The embargo of Russian gas deliveries being discussed in the EU would directly affect Röchling at only a few locations, as gas is used to run the plants only for special technologies. If supplies do stop, however, the indirect effects would be substantial due to the current economic weakness in Europe.
In the first quarter of 2022, the main challenges for the Röchling Group were the ongoing shortage of raw materials, material price increases by suppliers, lack of transport capacity, employee health and safety, and cost-optimized production despite quarantine-related employee absences. “We are experiencing an extremely challenging economic environment, in which our broad diversification is once again proving its strength. We completed the first quarter in line with our plans and achieved what we set out to do. The outlook for the coming months remains cautious, and we are preparing for a strained macroeconomic situation in all divisions,” says Wolfram. Nevertheless, the Executive Board still expects a clearly positive result for the full year. The Industrial division in particular will contribute to the Röchling Group’s profitable growth this year.
200 Years of Röchling
Friedrich Ludwig Röchling laid the foundation for today’s Röchling Group in 1822, when he founded a coal trading business in Saarbrücken/Germany. With no children of his own, he left the business to the four children of his brother Christian – Theodor, Ernst, Carl, and Fritz Röchling. Today’s more than 200 shareholders are all descendants of Christian Röchling and his wife Charlotte.
The opening of further branches of the business enabled rapid expansion within Germany and entry into the iron trade. At the same time, efforts were made to integrate upstream and downstream stages of production. The family company gained independence from suppliers by mining its own coal and iron ore. Growing demand was covered by commencing the production of coke and iron in the company’s own plants.
In 1881, Carl Röchling purchased the Völklingen Ironworks and, under the name Völklinger Eisenwerk Gebrüder Röchling, refocused the business on industrial steel production. The company had fully arrived in the coal and steel industry and by 1890 had become the biggest manufacturer of iron girders in Germany. Röchling withdrew from this industry in 1972, as it later did from many others. In 1920/21, Röchling acquired Holzveredelung GmbH in Berlin, a pioneering company in the emerging artificial materials industry, and thus established a second material tradition: plastics.
In the year of its 200th anniversary, Röchling is a global manufacturer of customized, high-performance plastic products in the three Industrial, Automotive and Medical divisions. In 2022, 200 years after it was founded, Röchling operates more than 90 production sites in 25 countries and has around 11,250 employees.