After corona dip in 2020, VDL Groep works on recovery in first half year
After being hit hard by the consequences of the corona pandemic in 2020, VDL Groep has been working on recovery in the first half of 2021. Revenue and results of the industrial family business with its head office in Eindhoven have increased compared to 2020. Compared to 2019, the figures are lagging behind. For the second half of 2021, major challenges remain current, for example regarding the availability of materials.
After the first six months of 2021, combined revenue amounts to 2.5 billion euros, an increase of 25 percent compared to 2.0 billion euros after the first half of 2020. Before the corona crisis, after the first half of 2019, VDL recorded a combined revenue of 2.9 billion euros, 16 percent more than today. Net profit for the first two quarters of 2021 was up from 25 million euros last year to 69 million euros this year (2019: 76 million euros). VDL Groep’s order book (not including the Car Assembly division) increased from 1,365 million euros in week 1 of 2021 to 1,631 million euros in week 37. Since the end of 2020 (15,464), the workforce has grown slightly to 15,505 employees.
‘Thanks to our strategy of spreading risks through diversification of activities, we see that the recovery has started after the corona year 2020,’ says CEO Willem van der Leegte. ‘That gives you confidence. Nevertheless, due to the consequences of the corona crisis, global trade conflicts and economic and cyclical developments (such as high inflation and low interest rates), we continue to face significant challenges. For example, unbalanced supply chains result in the limited availability of materials and components. These developments are also accompanied by fluctuations in the prices of materials. Circumstances that require extra skills from our companies.’
The revenue of the Subcontracting division increased from 703 million euros last year to 885 million euros. This increase of 26 percent is mainly due to the fact that the VDL companies active in the high-tech sector are extremely well prepared for customer growth. The focus of recent years on high-quality innovation has further strengthened this position. The Subcontracting division is profitable.
After two quarters, revenue in VDL Nedcar has reached 1,125 million euros. This is up 25 percent from the 903 million euros of a year ago.
While the corona crisis initially reduced global market demand for new cars, during the first half of the year, production at VDL Nedcar in Born was forced to stop on several working days due to a shortage of electronic components. We are holding constructive consultations with all those involved on how to make up for this loss of production.
By bringing in new client Canoo, we have taken an important first step towards securing the future of VDL Nedcar in the longer term. In any case, VDL Nedcar will build 16,000 vehicles for this American start-up in 2022 and 2023. The intention has been expressed that, depending on market demand, the volume for subsequent years will increase.
VDL Nedcar’s aim is to serve multiple customers simultaneously. Discussions are currently taking place with interested parties. Its ambition is to build cars for both start-ups and established brands, as well as the local assembly of battery packs and expanding activities in the value chain, such as prototyping, homologation and sales & after-sales, in cooperation with partners or otherwise. The construction of fully electric cars at VDL Nedcar is a seamless match with VDL Groep’s broad mobility proposition.
Revenue of the Buses division increased by 28 percent from 146 million euros a year ago to 187 million euros. The order book of this division has decreased. The corona crisis has had a strong grip on the Buses division, and in particular the coach activities. A positive aspect is that European customers are increasingly using VDL coaches in public transport. The coach market will need time in the coming years to recover from the effects of the pandemic. Although VDL already has the lightest coach with the lowest consumption on the market, zero-emission coaches are planned.
Because governments, as a contracting authority or as a direct customer, must ensure a structurally covering public transport network and do not want to delay climate goals, public transport companies continue to focus on making the fleet more sustainable by using new zero-emission vehicles. VDL is well positioned as a forerunner in the field of electric mobility.
The route taken to concentrate the production of electric city buses in Valkenswaard and Roeselare is taking shape. Preparations are also in full swing in the first quarter of 2022 in Heerenveen (now VDL Bus Heerenveen, soon VDL Smart Spaces) to produce industrial building modules, including piping, for construction group Van Wijnen. For the chassis activity, the transition to more assembly activities of special vehicles for third parties has been continued. VDL Bus Chassis in Eindhoven has been renamed VDL Special Vehicles.
The new generation of VDL Citea, the electric city bus by VDL Bus & Coach, was launched in the spring (Zero Compromise programme). The combination of design, maximum weight reduction, in-floor batteries and an optimised climate system allows the e-buses of different types to carry more passengers and the vehicles’ range of action has been increased. The new generation of VDL Citeas will be produced in Valkenswaard and in the new CO2-neutral plant in Roeselare, the construction of which will start in the autumn.
With more than 900 buses in 11 countries in Europe, VDL Bus & Coach is well prepared. The 100 million electric kilometres achieved in February of this year result in a saving of approximately 15 million kilogrammes of CO2 emissions.
The VDL companies that are part of the Finished Products division jointly generated 305 million euros in revenue over the first half of 2021, compared to 232 million euros over the same period in 2020. This 28-percent increase can be explained by the recovery of reduced market demand as a result of the corona crisis. The order book of the Finished Products division has increased.
Emergency Measure Bridging for Preservation of Work [Noodmaatregel Overbrugging voor Werkbehoud - (NOW)]
Because VDL was confronted with a substantial loss of turnover during the corona crisis, 36 million euros in NOW funds were received in the first six months. This has helped to continue to pay the salaries of employees, supplemented by VDL to one hundred percent, who were temporarily unable to perform any or insufficient work. We have opted to repay the NOW requested for VDL companies in the first quarter if those operating companies (excluding NOW) have completed the first half of the year profitably. We have also not invoked the emergency measure for profitable VDL companies with a significant loss of revenue, which are therefore eligible for NOW support.
From the very beginning of the corona crisis, it has been clear that the pandemic in the high-quality manufacturing industry is about the availability of three factors: materials, employees and market demand. If we want to be able to produce, we need these three factors at the same time, in sufficient quantities. During the second half of 2021, too, major challenges are expected to remain topical, for example with regard to unbalanced supply chains and specifically about the availability of materials. In addition to maintaining employment, investment programmes in the fields of innovation, electronics and digitisation remain important to VDL Groep.