Coronavirus pandemic causes decline in revenue in the first quarter of 2020!
The current global economic uncertainty and transformation processes in key industries can be felt at automation specialist Balluff from Neuhausen, Germany: The total revenue in the 2019 financial year fell by 3.9 percent to EUR 469 million.
2019 wasn't an easy year for sensor and automation specialist Balluff. Although the company exceeded its own expectations by closing the year with a total revenue of EUR 469 million, growth fell short of targets with a 3.9 percent decline in revenue.
"We were expecting to see almost double-digit growth in 2019," explains managing director Katrin Stegmaier-Hermle. However, the economic development cooled off noticeably in the second half of the year.
"The uncertainty on the markets resulting from the continued exacerbation of international trade conflicts and profound structural transformation in individual industries have had a major impact on economic development," states Stegmaier-Hermle. This affected export-oriented industries such as the automotive sector and general mechanical engineering in particular – the company's two most important customer segments. "For this reason, it already became clear during the year that we would be unable to meet our targets in these circumstances."
Profound structural change
Structural changes resulting from the digital transformation and megatrends such as self-driving cars or electro-mobility present major challenges for manufacturers and suppliers in the automotive sector.
"Our biggest issues are and will remain our domestic markets of Germany, Austria and Switzerland. But revenue development in other markets such as North and South America, as well as Asia, also failed to meet our expectations," explains Stegmaier-Hermle. "This makes it all the more gratifying that our diversification strategy is paying off." The Packaging, Food & Beverage (PFB) division grew by around nine percent in the last financial year.
Balluff's management attributed this positive development to factors including consumers' increased environmental awareness, which puts manufacturers under greater pressure to innovate and therefore leads to investments in modern production facilities. But this positive development was not enough to balance out the declines of four percent in the Machine & Plant Engineering division and six percent in the Mobility division. .
Revenue losses due to the coronavirus pandemic
The first quarter of the current financial year closed with a decline in revenue of over seven percent. The onset of the coronavirus pandemic – first of all in China and then all over the world from March onwards – led to a drop in incoming orders. The East-West divide of the coronavirus pandemic is also reflected in the respective revenue curves of the regions.
"In this unprecedented situation, we considered it to be of critical importance for our customers that we maintain our ability to deliver and act," states managing director Frank Nonnenmann, who replaced Michael Unger as managing director on February 1, 2020.
"We countered the extreme drop in orders by reducing the production volume accordingly. In addition, we saved costs across all 38 sites and introduced reduced working hours for some of our staff at the Neuhausen site on April 1. Despite these challenges, thanks to comprehensive protective and hygiene measures and a strong team in the supply chain, we have been able to maintain our global production and logistics network and therefore remain in a position to deliver throughout this period."
"In all these steps, protecting our staff was our top priority at all times," explains Nonnenmann. The company appointed a ten-person coronavirus task force at an early stage. The team is still active, is monitoring developments on a daily basis and is reviewing the measures that have been taken at regular intervals.
"Although Asia and parts of Europe are taking cautious steps towards the 'new normal', the crisis is by no means over. This is why the coronavirus guidelines we have issued will remain valid until further notice. Mobile working plays a vital role here," adds Nonnenmann. All employees around the world are working from home wherever their role allows this.
Innovations as a way out of the coronavirus crisis
The company is expecting the economy to take a long time to return to normal and to continue to suffer from the serious impact of the coronavirus crisis, according to Katrin Stegmaier-Hermle. To deal with the current situation, Balluff is focusing on systematically further developing its range of products and solutions, especially for growth industries such as the pharmaceutical and packaging industries or the sectors of electro-mobility and renewable energy.
The company is adopting new approaches to reach these customer segments. "After the pandemic worsened at the start of March, we didn't bury our heads in the sand, but instead developed a way of contacting our customers despite trade fairs being canceled," explains managing director Florian Hermle.
Under the motto of "Experience automation online", the family-run company presented its product highlights for this year on a virtual event platform at the end of April. Over 25 experts presented new solutions in more than nine hours of live talks. These spanned a wide range of topics, from industrial image processing, software solutions and the automatic identification of tools, through to condition-based maintenance and approaches for the Industrial Internet of Things.
Alongside an increased focus on acquiring new customers, in the short term Balluff is also concentrating on supporting system-relevant sectors. For instance, some solutions are already currently being used to produce ventilators.