German machine tool manufacturer TRUMPF has announced that its sales revenue for the 2019/20 fiscal year declined eight percent compared to that of the same period in 2018/19.
For the year ending June 30th 2020, the TRUMPF Group generated €3.5 billion in revenue, €300 million less than the €3.8 billion it reported the previous year. The company’s revenue decrease can largely be attributed to a reduction in its order intake, which fell from €3.7 billion in the 2018/19 financial year to €3.3 billion for 2019/20.
Despite the efficiency and cost-saving measures introduced by the firm towards the start of 2020, it was unable to escape the full impact of the COVID-19 pandemic. According to Nicola Leibinger-Kammüller, Chair of the Group Management Board of TRUMPF, the company’s revenue results could’ve been much worse had they not made difficult decisions.
“We have been experiencing a slowdown in the global economy since fall 2018. Coronavirus has further intensified this decline – as a crisis within a crisis,” commented Leibinger-Kammüller.
“However, our sales revenues fell much less than in the mechanical engineering sector as a whole. In addition, consistent cost management allowed us to keep the return almost at the previous year’s level,” she added.
TRUMPF’s 2019/20 financial results
Although TRUMPF is not a publicly-listed company and doesn’t need to publish its financials in full, the firm has chosen to release its top-line figures for the 2019/20 fiscal year. Following a significant decline in customer activity during the pandemic-induced lockdown earlier this year, TRUMPF’s Earnings Before Taxes (EBIT) fell from €349 million in 2018/19 to €309 million in 2019/20.
The company’s four largest markets during the 2019/20 financial year were Germany, the U.S, the Netherlands, and China. TRUMPF’s German business generated the highest proportion of its sales revenue, earning €610 million for the year up to June 30th, while the U.S. reported the second most at €410 million.
In many of the group’s core European markets such as Italy, Spain, and Eastern Europe, the economic shutdown resulted in the most damage, causing revenue to fall by “double digits.” Although the firm hasn’t disclosed its exact 3D printing revenue figures for 2019/20, it has revealed that its electronics business grew, increasing its revenue by 15 percent on the 2018/19 fiscal year.
A rise in demand for TRUMPF’s solar technology in China, and semiconductors in the U.S. and Japan were responsible for the revenue increase, but this wasn’t reflected within most of the firm’s business segments.
|Revenue Result||2018/19 Fiscal Year||2019/20 Fiscal Year||Change (%)|
|Total Revenue||€3.8 billion||€3.5 billion||-8%|
|Order Intake||€3.7 billion||€3.3 billion||-11%|
|EBIT||+ €349 million||+ €309 million||-11.5%|
TRUMPF’s response to the COVID-19 lockdown
Over the course of 2019/20, the company has largely remained profitable due to its considerable order backlog, which generated €210 million more in sales revenue than incoming orders. TRUMPF also introduced the Truprint 2000 at Formnext 2019 which generated additional sales orders for the firm, and it has found new applications for its technologies as well.
The company began working with amorphous metal specialists Heraeus AMLOY in April 2020, to advance the application of amorphous alloys in the production of end-use 3D printed parts. In addition to optimizing its existing revenue streams, TRUMPF has also embarked on its “Koyer” earnings improvement program, which saw it scale back its expenditure and non-personnel costs.
Additional efficiency measures included encouraging staff to take accumulated holidays, as well as the introduction of shorter working days, in an effort to reduce the need for any staff redundancies. The company has stated that even though 27 percent of its workforce were no longer working full-time, its number of employees remains roughly the same as last year.
Even though TRUMPF is a multinational, which operates in many markets that are unrelated to 3D printing, it’s worth highlighting that other manufacturers have been forced to make cuts that the German firm hasn’t. Stratasys for instance has had to reduce its staff by ten percent, while 3D Systems has started to restructure its business due to a 28 percent revenue decline.
“We do not want to fall into the blind activism we see in other companies,” said Leibinger-Kammüller. “We want to think through the processes from top to bottom and, based on comparative studies, first form a well-founded opinion about how the home office has a proven effect on productivity.”
The 2020/2021 financial year and beyond
After the introduction of TRUMPF’s ‘Koyer’ savings program, its investments were cut back by 33 percent to €194 million, from the €288 million spent in the 2018/19 financial year. Despite its current spending restraint, the company managed to make several acquisitions before March 2020, which could contribute to its return to revenue growth during 2021.
TRUMPF also decided to exclude its R&D spending from its efficiency savings and invested €377 million over the 2019/20 fiscal year, which only represents a slight reduction on the €399 million spent in 2018/19. What’s more, the firm opened a new €6 million smart factory earlier this month in Ditzingen, Germany, which could contribute further to its economic recovery.
Leibinger-Kammüller concluded that although the company had prevented its sales from declining after the pandemic outbreak in March, that it would still take some time to return to normal levels.
“The decline in sales revenues and new orders was halted in the first three months [of 2020],” stated Leibinger-Kammüller. “We see cautious signs that the economic downturn is coming to an end, although there is still no upturn.”
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Featured image shows TRUMPF’s Luton-based showroom. Photo via TRUMPF.