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Röchling Pursuing Growth in Newly Industrializing Countries

  • New Plant in Chengdu, China
  • Expansion of Plant in Suzhou, China
  • New Plant in Vadodara, India
  • New Plant in Itupeva, Brazil

Mannheim, Germany, May 24, 2012... The Röchling Group got off to a good start in 2012. In the first quarter, it increased sales by 4 percent to EUR 305.7 million. Incoming orders rose to EUR 314.1 million, matching the very good level of EUR 313.8 million in the same quarter of the previous year. “Our growth curve still points upward, though with a bit less momentum,” commented Georg Duffner, President and CEO. “Despite the slowdown caused by the sovereign debt crisis in the eurozone, we remain on a very good course.”

In the 2011 fiscal year, the economic environment was no longer quite as favorable for the Röchling Group as in the previous year. Given the sustained debt crisis in the eurozone, the economic picture deteriorated progressively from the mid-year point on. In the USA, by contrast, the economic outlook began to brighten again due to the increasing stabilization of the domestic labor market. In Germany, the economy again benefited from robust growth. The gross domestic product grew by 3.0 percent net of inflation. However, economic growth slowed – following dynamic growth in the first nine months – by 0.2 percent by the end of the year.

The Röchling Group proceeded full steam ahead with its course for growth. In 2011, it increased Group sales by 13 percent to EUR 1,133.5 million. “This is the highest level seen since we focused on the plastics business in 2006,” Mr. Duffner reported. Incoming orders rose by 8.1 percent to EUR 1,129.3 million. “In view of the good outlook, in 2011 the Group launched the largest investment program in its history – valued at almost EUR 100 million. Nevertheless, our financial position remains very solid,” emphasized Marc Trube, CFO of the Röchling Group. The number of employees at the Röchling Group increased during the 2011 fiscal year by 10.6 percent from 5,931 to 6,559.

Record Growth of 15 Percent at High-Performance Plastics

The High-Performance Plastics division increased its sales by 15 percent to a record EUR 608.9 million. Investments in tangible assets rose by 172 percent to EUR 53.4 million. The focus was on expanding production locations in Haren/Ems, Lahnstein, and Brensbach, Germany.

The Company also expanded production in Singapore in order to broaden its activities in the overall Southeast Asian region. With the aim of further expanding the Company’s position in the future markets of Brazil and India, property in Itupeva (Brazil) and Vadodara (India) was also purchased. New plants will be constructed there this year.

As a result of the good business development in the High-Performance Plastics division, the number of employees rose by 10 percent to 3,045 (previous year: 2,763).

Several excellent application areas illustrate the diverse potential uses of high-performance plastics. For example, following a successful certification in 2011, Röchling now equips rolling stock with bonded external and internal claddings. For champagne production, Röchling provides large-scale components made from Polystone® for grape presses in the French Champagne region. These components make it possible to exert greater pressure.

Environmental technology is another major application area for Röchling Group’s cutting-edge products. Röchling supplied machined finished parts made from Trovidur® EN for the first plant to convert marine algae into fuel. The new technology helps reduce CO2 emissions.

Using the high-performance plastic Robalon® reduces fuel consumption in the agricultural industry. This material requires 13 percent less pulling force than steel, thus reducing fuel consumption by up to 14 percent.

Röchling also has good expectations for its gas pipeline insulation business. The new fiber-reinforced compound material Durolight PIP protects the sensitive insulation of pipes, through which liquid natural gas (LNG) flows at minus 168 degrees Celsius. After application, the material becomes rigid and resistant within short time. The two new, PE-based high-performance materials LubX® C and LubX® S promote energy conservation and environmental protection. Starting in 2012, they will reduce energy consumption in conveyor and automation technology significantly in comparison to traditional sliding materials, while simultaneously boosting process stability.

“However, we are concerned about the enormous increase in raw material prices,” commented Ludger Bartels, CEO of the High-Performance Plastics division.

Automotive Plastics Grow by 11 Percent

In the Automotive Plastics division, the Röchling Group increased its sales by 11 percent to EUR 525.4 million. Of all sales regions, Asia recorded the strongest growth with 45.7 percent higher sales. The stable development of volumes in China and numerous new projects with Chinese and Japanese manufacturers were decisive factors. Sales development in North America was also encouraging. The automotive boom and the production launch of various new orders were growth drivers.

The Röchling Group also sent a clear signal for additional growth in the Automotive Plastics division, increasing its investments by 142 percent to EUR 40 million. Of that amount, 76.5 percent was dedicated to expanding production capacity. For example, the capacity expansion involved the construction of a new hall at the Worms site and the commissioning of new equipment for the production of lightweight underbody panels.

New plants in Chengdu (China), Akron (OH, USA), and Pitesti (Romania) were added to the worldwide production network.

In Chengdu, the third Chinese plant, Röchling produces controllable air duct systems on 13,000 square meters of space. Starting at the end of this year, the site in Akron, Ohio, will supply air flaps and underbody panels to Ford and General Motors. The new plant in Pitesti, Romania, is driving forward the expansion of our automotive business in Eastern Europe.

On December 31, 2011, the Automotive Plastics division had a total of 3,477 employees (previous year: 3,136). Staffing numbers increased primarily in the Europe-North, Asia, and America-North regions.

Large Order from Ford

A large order from Ford was a key event in the 2011 fiscal year. It has an annual volume of EUR 32 million. The Röchling Group equips the Mustang, F-150, and Transit models with air induction systems. Production of the systems for the Transit will commence in March 2013, with the Mustang’s systems following in April and the F-150 components in July 2014. Since Ford is drastically reducing the number of its suppliers, this new contract is of great strategic importance.

The Röchling Group received another large order of EUR 19 million annually from Volkswagen. Starting this year, it will equip 40 small, compact, and medium-sized models with muffler filters. These models include the Golf VII, the Passat, and the new Audi A3. The first filters will be manufactured in June 2012 at the site in Peine (Germany). The Röchling Group achieved an additional success in the premium segment. Since last year, it has been equipping the entire German premium car segment with underbody panels. Joining Audi and BMW, Mercedes also decided to fit its S-class with these leading-edge products.

The first large order for electric cars marks the increasing importance of this segment. Starting next year, Opel’s electric model, Junior, will be rolling across the pavement fitted with LWRT underbodies from Worms. At the Hannover Messe and at eCarTec, the leading international trade show for electric mobility, the Röchling Group also presented an underbody panel for electric cars featuring an integrated charging coil. In addition, Röchling introduced interior floors made from Stratura for the StreetScooter electric vehicle. Besides the construction of e-cars, Röchling also supports other environmentally friendly mobility technologies. For example, the Group participated this year in a research project to develop a Fiat Panda powered by natural gas and hydrogen.

Expanding International Scope Continues to Have Top Priority

Throughout the current 2012 fiscal year, the Röchling Group will continue to pursue expansion of its international scope. “Our paramount goal is to become less dependent on the performance of regional markets,” Georg Duffner reported. “We are therefore expanding our position in growth countries like Brazil, India, and China, as well as in the USA.”

Röchling will also strengthen its commitment to growth sectors such as medical technology. “This market is heavily innovation-driven and is thus an excellent fit for Röchling,” Ludger Bartels observed.

However, it is too early to make a forecast for business development in 2012, according to Duffner. Certainly worldwide economic momentum has regained strength, but rising raw material prices and energy costs are curbing optimism.