VDL Groep continues strong growth in 2022
After a somewhat hesitant start, the year 2022 was primarily a year of strong growth for VDL Groep. Despite uncertain geopolitical circumstances and external challenges resulting from shortages (of employees and materials) and rising costs (of wages, energy and materials), three of the four divisions realised double-digit turnover growth. The fourth division showed modest growth. The results also grew. Because the order portfolio (excluding the Car Assembly division) remains at a high level, 2023 will again be dominated by organising growth.
The combined annual revenue amounted to €5.752 billion in 2022, an increase of 16% in comparison with the annual revenue in 2021 (€4.995 billion). The net result rose from €225 million in 2021 to €298 million in 2022, of which €122 million was non-recurring and €176 million operational. In week 11 of 2023, the order portfolio (excluding the Car Assembly division) stood at €2.019 billion, compared to €1.734 billion in week 11 of 2022. This represents growth of 16%. In a tight labour market, the number of employees rose during the same period by 940 to 16,585 (an increase of 6%).
‘A great show of strength through cooperation’
President and CEO Willem van der Leegte says: 'Of course, the fact that our VDL companies have been able to achieve strong turnover growth despite challenging external circumstances is a great show of strength through cooperation by our employees. Three of the four divisions, Subcontracting, Buses & Coaches and Finished Products together achieved growth of as much as 26%. The fact that Car Assembly, the fourth division, managed modest growth (2%) while a quarter of the production days at VDL Nedcar were lost through material shortages demonstrates excellent performance by our employees in Born, the Netherlands. The overall growth in 2022 confirms that our years of heavy investment in innovation (total 2022 investment programme: €246 million in premises and other assets and €170 million in research & development) are indisputably having an effect. We are well-positioned in our five growth markets, Science, Technology & Health, Mobility, Energy & Sustainability, Infratech and Foodtech to continue to offer our clients added value. The past year was therefore, in complex circumstances, largely dominated by organising that growth.'
The sales of the Subcontracting division increased from €1.851 billion in 2021 to €2.411 billion in 2022. This increase of as much as 30% can be explained by the fact that the VDL companies that are active in this division have grown across the board. The drive for advanced innovation and digitisation, as well as long-term, stable relationships with clients and other partners also strengthened our position further.
Trade conflicts, the coronavirus pandemic and the crisis in Ukraine strengthened awareness that we want to be less dependent on other continents. That led to more 'reshoring' (bringing activities back to the country of origin) all over the world. Because the VDL subcontracting companies are established in three continents, we are able to supply our clients world-wide, so that we experience less impact from geopolitical developments.
The order portfolio of the Subcontracting division rose from €855 million in week 11 of 2022 to €939 million in week 11 of 2023.
The revenue of the Car Assembly division showed a modest increase, from €2.051 billion in 2021 to €2.085 billion in 2022 (2%). The fact that 25% of production days at VDL Nedcar had to be scrapped, primarily due to material shortages, had a major impact. Nevertheless, thanks to the flexibility of our employees, VDL Nedcar's total production volume reached 101,672 vehicles in 2022 (2021: 105,214).
Considerable efforts were devoted to winning new clients. Current developments impacting on the automotive industry, such as the Russian invasion of Ukraine and protectionist measures such as the Inflation Reduction Act announced in the US, do not make this any easier. Such developments played a disruptive role in the choice of production locations by original equipment manufacturers (OEMs). As a result, newcomers in the global passenger car market wishing to take the step into Europe reviewed their priorities once again.
However, VDL Nedcar is conducting talks with various potential clients on serial production of cars and is also focusing on other automotive-related activities.
In the meantime, VDL Nedcar is undergoing a transition from an independent car manufacturer to a more broadly oriented partner in sustainable e-mobility, with the aim of higher added value and better future-proofing. The broadening of activities at VDL Nedcar in Born is visible in three areas: the Assembly of vehicles for various clients, various sustainable mobility solutions at the Mobility Innovation Centre (MIC) and facilitating the growth strategy of VDL sister companies which, like VDL Nedcar, are active in mobility. In recent years, land has been purchased and permit processes have been completed to transfer these wide-ranging activities to VDL Nedcar in Born.
Despite all the turbulence in the global automotive industry, we remain optimistic about the longer-term prospects of VDL Nedcar and the associated jobs in Born. VDL Nedcar has proven to be able to constantly position itself flexibly in support of its clients and to respond to the dynamics of the automotive sector.
Buses & Coaches
The sales of the Buses & Coaches division increased by 18% in 2022, from €384 million in 2021 to €454 million. This was primarily due to a further increase in revenue from public transport buses. The general trend among coach operators is that 2022 has been a very decent year. Sales and deliveries of VDL Bus & Coach were in line with market developments during the year. The focus lay on reducing stocks. Through orders for coaches for regulated transport, which were less severely affected by the consequences of the coronavirus pandemic, VDL Bus & Coach was able to resume production during the economic slowdown. In 2022, VDL Bus & Coach upheld its reputation as a leading transition partner on the road to zero-emission public transport. Vehicles including VDL Citea Electrics were delivered in Germany, Italy, Iceland, Luxembourg, Norway and in the home markets of the Netherlands and Belgium.
In September 2022, VDL Bus & Coach launched the new generation VDL Citea at the Innotrans mobility trade fair in Berlin. The response has been very positive. VDL Bus & Coach has started the delivery process of the new generation VDL Citea. VDL Bus & Coach is also active in innovations such as autonomous functions, hydrogen as a future fuel, sustainable use of composite materials and a 'second life' for batteries from buses for energy storage. The factory in Roeselare (Belgium) is up and running and will be the model of sustainability and innovation in 2023: an energy-neutral production location of more than 20,000 square meters fitted with solar panels and underfloor heating. With this, VDL Bus & Coach continues to lead in writing the next chapter on the route to an energy efficient future and the world of e-mobility. The Buses & Coaches order portfolio increased from €421 million in week 11 of 2022 to €497 million in week 11 of 2023.
Our companies that make up the Finished Products division jointly generated €802 million in revenue over the past year, compared to €669 million in 2021. This increase of 20% can be explained by the fact that our companies in this division are well positioned across the board. The order portfolio increased from €458 million in week 11 of 2022 to €583 million in week 11 of 2023.
The growth of 2022 is expected to continue at VDL Groep during 2023. The forecast growth of the industrial family company with its head office Eindhoven for the full year is estimated at around 5%. This brings the expected annual revenue for this year to around €6 billion. The investment agenda of VDL Groep for the current year is still more ambitious than that for last year. In 2023 the more than 100 VDL companies are expected to invest more than €300 million in premises and other operating assets.
The Eindhoven Brainport region, the home base of VDL Groep, is growing just as fast and is on the way to becoming the country's most important engine of economic growth. Everyone who wants to make a contribution to this must be given an opportunity to do so. In addition, sufficient attention must be devoted to the conditions that must be in order for the facilitation of this growth: the region must be accessible, there must be an attractive housing, living and business establishment climate, space for affordable housing, sufficient talent available and the energy grid congestion must be solved. With regard to energy shortages, we see opportunities in our innovative region to bring together local supply and demand.