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Röchling Group Grows Despite Global Challenges in 2023

The Executive Board of the Röchling Group with (from left) Daniel Bühler, Raphael Wolfram, Evelyn Thome, and Franz Lübbers is satisfied with the past year and with the economic development to date in 2024 - despite some global challenges.

  • Sales Rise by 4.6 Percent to EUR 2,723 Million
  • Röchling Automotive: Focus on Sustainable Mobility Boosts Business
  • Röchling Industrial: Record Sales of Previous Years Virtually Matched
  • Röchling Medical: New Record for Third Year in a Row

 

Mannheim, June 6, 2024 | The Mannheim-based Röchling Group increased its sales by 4.6 percent to EUR 2,723 million in the past year, thereby setting a new record for sales since focusing on plastics processing at the start of the 2000s. The international plastics processing specialist, comprising the three divisions of Automotive, Industrial, and Medical, has proved itself to be well equipped to face the many global challenges and has an extremely sound positioning.

“We have achieved this in a market environment defined by Russia’s war of aggression in Ukraine, the conflict in the Middle East, and high inflation rates,” says Raphael Wolfram, Spokesman of the Executive Board of the Röchling Group and CEO of Röchling Automotive. The Executive Board is also pleased with the company’s financial position and financial performance, added Evelyn Thome, CFO of the Röchling Group. Above all, the Automotive and Medical divisions, which have had a hard time in recent years, reported significant improvements. The Industrial division almost matched its high sales level of the past two years.

The division with the highest sales was Röchling Automotive with a volume of EUR 1,261 million, an increase of EUR 111 million. Despite the sharp drop in demand and lower prices, Röchling Industrial was almost able to match its record sales for 2022. The sales generated amounted to EUR 1,206 million and were therefore just 2.3 percent lower than in 2022. Sales surged by EUR 37 million (17 percent) in the Medical division, which ended the past year with sales of EUR 260 million.

The Röchling Group achieved increases in all the regions in which it operates to a greater or lesser extent. The growth engines in the past year were the Americas region with an increase in sales of EUR 57 million (10.1 percent) to EUR 622 million, and Asia with growth of EUR 48 million (12.9 percent) to EUR 418 million. By contrast, growth in Germany and the rest of Europe was weak: Although sales rose by EUR 8 million to EUR 958 million in Germany and by EUR 7 million to EUR 725 million in the rest of Europe, the growth rates of 0.8 percent and 1.0 percent were well below those for the two other regions.

“The headcount within the Röchling Group, including temporary employees, has likewise developed positively,” commented Wolfram. Röchling had 11,988 employees in total as of December 31, 2023, working at  90 locations in 25 countries. One year previously, this figure was 11,737 – an increase of around 2.1 percent in the space of a year. The Group had 307 apprentices as of the end of 2023, five more than in the previous year. At 157, most of the apprentices are at Röchling Industrial, while Automotive has 98 and Medical 52.

The Röchling Group invested EUR 134 million in property, plant, and equipment in fiscal 2023, approximately EUR 8 million less than in the previous year. This was again mostly accounted for by the Industrial division.

The performance in the first quarter of 2024 reflects the trends in the relevant markets. At EUR 696 million, sales were down by 4.1 percent year-on-year as of the end of the quarter, but still slightly exceeded expectations. “For 2024, we are assuming that the sales level will be essentially stable compared to the previous year. We can therefore now confirm our goals for the year as a whole,” said Wolfram.

Röchling Automotive: Focus on Sustainable Mobility Boosts Business

For Röchling Automotive, the past year was defined by volatile call-off orders by car manufacturers. This reflects the consistently high level of uncertainty regarding drive technology and mounting production costs. Despite the different developments on the car markets of Europe, the US, and China, the division increased its sales by 9.7 percent to EUR 1,261 million. “In the past year, we have taken important steps to stabilize and refocus our business, and we will continue working to ensure a profitable and forward-facing positioning,” commented CEO Raphael Wolfram. “We have laid the strategic foundations and are now focusing on implementation. Much of the journey is already behind us, but we still have more to do.”

Röchling Automotive achieved strong growth in the US and China. While sales also increased in Europe, the division, like many other automotive suppliers, is struggling with capacity underutilization. As a result, the plant in Gernsbach/Germany was closed in 2023 and its production of reinforced thermoplastics was integrated at the Worms site, also in Germany. This move was accompanied by optimization activities within the organization. Since April 2023, these measures have been overseen by Dirk Aikes, Chief Financial Officer (CFO) on the Automotive Executive Board and previously CFO at Röchling Industrial.

Röchling Automotive is responding to the developments on the automotive market by strategically transforming its product portfolio towards sustainable mobility. Besides established product areas such as active and passive aerodynamics, the focus is on structural lightweight components for battery housings and cell protection structures in the field of e-mobility. “We are also advancing the development of products unrelated to the drive train, such as design active grille shutters (AGS), and we will reinforce our leading position in active aerodynamics,” said Wolfram.

Thanks to a close focus on innovation, customer proximity, and systematic optimization to enhance performance, Röchling Automotive again reported excellent incoming orders in 2023 across a varied range of customers and products. The decline in new orders for the SCR tank was thus entirely compensated by other products. More than 70 percent of new orders were for hybrid and battery electric vehicles, meaning that the positive trend from 2022 continued.

Investment

In total, Röchling Automotive invested EUR 42 million in property, plant, and equipment in 2023, significantly more than last year. This expenditure focused on new equipment and technologies for new start-ups, such as the site in Silao/Mexico where capacity is being doubled, and investment in future products with a high plastic share, such as battery protection structures for e-mobility.

Employees

Headcount at Röchling Automotive increased by 77 over the course of the past year to 6,082.

First Quarter of 2024 and Outlook

The varying trends in the markets continued at the start of 2024: While business in China continues to perform well and the growth prospects in the US are positive, business in Europe remains weak and is still well below pre-COVID levels. “For this reason, we have made the difficult decision to close our location in Wackersdorf in the first quarter of 2025 and to shift our focus in Germany to the strategic plants in Worms and Peine,” commented Wolfram. In addition, Time2Drive, a far-reaching profitability program, is being set up with the aim of establishing a forward-facing positioning for Röchling Automotive.

In recognition of Röchling Automotive’s excellence in innovation, the division, together with the Fraunhofer Institute as an equal partner and the Industrial division, were honored with the renowned “JEC Composites Innovation Award” for the “Reactive Thermoplastic PA6 Pultrusion” procedure in February. This allows the manufacture of cost-effective and highly resilient automotive components. The division is also continuing to advance the use of sustainable plastics with its natural fiber underbodies.

Röchling Industrial: Record Sales of Previous Years Virtually Matched

Despite the volatile situation and the challenges on the global markets, the Industrial division ended 2023 with an excellent result. Its sales amounted to EUR 1,206 million, only slightly lower (by 2.3 percent) than the record level achieved in 2022. This success is thanks to good market penetration, a rigorous price policy, and the strategic vision applied in recent years.

On the market for semi-finished thermoplastic products, Röchling Industrial experienced a decline in orders due to lower demand and the high rate of inflation. The division was able to compensate for this strained situation by expanding its business activities with fiber-reinforced plastics. The Composites product line benefited from megatrends such as the expansion of public transport and the energy transition.

“With our strategic alignment, the expansion of our product line for fiber-reinforced plastics in recent years and the integration of Röchling Industrial Weinfelden AG (formerly Compotech AG), we have set the course for long-term success,” said Franz Lübbers, CEO of Röchling Industrial. Röchling Industrial acquired the Swiss company, which specializes in the production, assembly, and painting of large-format molded parts and systems made of fiber-reinforced plastic, at the start of 2023. It ideally supplements the activities for ready-to-install interior panels and modules for the railway vehicle industry.

In 2023, Röchling Industrial strengthened its Executive Board with the appointment of Daniel Fritz as Chief Financial Officer and Wilhelm Korte-Dirxen as Chief Operating Officer. Florian Helmich assumed the role of Chief Technology Officer and Chief Sales Officer. “By expanding the Executive Board, we have assembled a dynamic team for the future,” commented Lübbers.

Innovation and the research and development of new products continue to play a crucial role at Röchling Industrial. In the past year, progress was made on the first pioneering developments at the Technology Center that opened in 2022 at the Industrial headquarters in Haren/Germany.

Investment

Röchling Industrial invested more than EUR 66 million in the expansion and replacement of production facilities worldwide. This expenditure focused on Germany, the US, and China.

In 2023, work began on the construction of an energy-efficient and climate-friendly industrial hall for the production of composite components in Haren/Germany. This industrial hall, which uses photovoltaic systems and heat pumps, contributes directly to the sustainability strategy developed by the company last year and represents another building block in the enhancement of energy efficiency.

Employees

Röchling Industrial had 4,515 employees worldwide as of December 31, 2023. This meant the division hired an additional 178 people. Activities in this area continued to focus on the training of the more than 150 apprentices in 16 different vocations.

First Quarter of 2024 and Outlook

There was still no recovery on the market for semi-finished and machined thermoplastic products in the first quarter of 2024. Despite consistently high pressure and the volatile situation on the global markets, Röchling Industrial achieved its targets for the first quarter. The low demand for thermoplastic semi-finished parts was partially compensated by the excellent order situation for the Composites product line. In particular, demand for fiber-reinforced plastics in the transportation and energy industries increased significantly. “We expect Industrial to record further success as the fiscal year progresses. We are again seeing that we have laid the foundations for long-term success with our three product lines of Thermoplastics, Machined Components, and Composites,” said Lübbers.

Röchling Medical: New Record for Third Year in a Row

With an increase in sales of 17 percent to EUR 260 million, Röchling Medical set a new record for the third year in a row in 2023. The US locations also enjoyed a successful year. Key products in the fields of medtech, pharma, and diagnostics experienced unusually high demand. Business in Europe was impacted by the armed conflict in Ukraine and high inflation.

“The UNIMED 333 corporate strategy introduced at the start of 2023 is progressing as planned. Activities focused on the merger of locations and the harmonization of systems and processes with a view to leveraging synergies across locations. The central components of the strategy are the standardization of ERP systems and a focus on the medical and pharma market,” commented Medical CEO Dr. Daniel Bühler. Accordingly, the two US locations were simultaneously switched to the new global ERP system and extrusion for industrial applications was relocated from the German Medical site in Waldachtal to Röchling Industrial from the start of the year.

Investment

In 2023, Röchling Medical invested around EUR 26 million in additions to its machinery, automation, and the expansion of a production building at its Neuhaus site in Germany. Further warehouse space was acquired at the Rochester site in the US to keep up with rising order volumes.

Employees

Röchling Medical had 1,328 employees as of the end of the reporting period, slightly below the previous year’s level.

First Quarter of 2024 and Outlook

Röchling Medical enjoyed a solid start to 2024 in a challenging market environment. As expected, the previous year’s boom in the US did not continue at the start of the year. In Europe, too, business was again impacted by the difficult geopolitical situation in the Middle East and the ongoing war in Ukraine. High rates of inflation and the delayed application of new regulations such as the European Union’s Medical Device Regulation (MDR) caused a market slowdown in development activities.

Despite these conditions, the Medical division generated sales of EUR 60 million in the first quarter of 2024, a slight drop of 3.9 percent as against the previous year (EUR 62.4 million). Incoming orders fell by 18.4 percent year-on-year to EUR 63 million, partly on account of changes in ordering practices in the market: Instead of large call-offs, there was a growing number of smaller orders.

There are emerging signs of a strategic shift in the medical and pharma field in 2024, with companies focusing on earnings optimization rather than sales growth. Rising market complexity – triggered by regulatory changes and supply chain challenges – is leading to portfolio streamlining and a concentration on core markets. To help meet these requirements, Roman Borkowski already joined the Röchling Medical Executive Board in mid-2023 as its Chief Quality & Regulatory Officer.

For Röchling Medical, 2024 will be a year of consolidation following two years of extremely high growth. The company is focusing on the successful implementation of the projects secured in previous years to lay the foundations for growth in the years to come. “We expect sales and earnings to be roughly stable year-on-year,” said Bühler.

Innovation is of considerable strategic significance. For this reason, a new innovation process has been implemented to maximize internal innovation potential and give all employees worldwide the opportunity to submit ideas for new products, technologies, and services, and see them become a reality.

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