Market Report

Voith Continues its Growth Path in a Difficult Market Environment: Sales and Earnings Targets Met         

paperasia
  • Orders received see a favourable development, orders on hand once again at all-time high
  • Group sales (+13 per cent) and EBIT increased
  • Increase in cash flow and Group net income
  • All three Group Divisions make contribution to positive development

The Voith Group performed satisfactorily in a challenging environment over the 2022/23 fiscal year (October 1, 2022 to September 30, 2023). Both in terms of operating business and financially, Voith remains in a robust position. The Company increased all key performance indicators in the reporting year and reached the defined growth and earnings objectives. Group net income improved compared to the previous year. The broad sectoral and geographical diversification, the established market position in the three Group Divisions and regional supply chains contributed to the encouraging development.

Dr. Toralf Haag, CEO of Voith

In the past fiscal year, Voith has once again proven its resilience. Despite a challenging economic environment, we continued to generate profitable growth and increased cash flow. The clear focus on sustainable technologies is paying off.

2022/23 fiscal year at a glance: All key performance indicators improved
The Voith Group increased all of its key performance indicators over the 2022/23 fiscal year. All three Group Divisions contributed to this development.

At EUR6.14 (USD6.62) billion, orders received exceeded expectations once again and increased 19 per cent on the high level seen in the previous year. The orders on hand reached a new all-time high at EUR7.22 (USD7.79) billion. Over the same period, Group sales rose by 13 per cent to EUR5.51 (USD5.94) billion. The operating result (EBIT) was EUR245 (USD264.2) million. The return on sales improved to 4.4 per cent (previous year: 4.1 per cent), while the return on capital employed (ROCE) increased to 12.1 per cent (previous year: 10.5 per cent). The Group net income rose to EUR73 (USD78.72) million as a result of the favourable development of the operating business over the reporting period and despite the higher interest rate level and the associated increase in financing costs.

The increase in earnings was achieved and further investments in the future were made. Expenditure on research & development increased by 9 per cent to EUR232 (USD250.19) million. Financially, the Voith Group remains in a sound position. The equity ratio stood at 23.9 per cent in the reporting year (previous year: 24.1 per cent). The operating net cash flow saw a positive development in comparison to the previous year and returned a figure of EUR306 (USD329.9) million (previous year: EUR93 (USD100.2) million). Likewise, the net debt also improved.

Our net assets and financial position are sound. The reliable long-term access to capital gives us the necessary entrepreneurial scope to invest in further profitable growth and into the future viability of Voith.

Strategic focus: Industrial sustainability
Voith continues its commitment to the megatrends of decarbonisation and digitalisation. The ongoing transformation from a traditional mechanical engineering company to a sustainable technology group with a high level of digital expertise offers promising new business opportunities. To this end, Voith is continually investing in the strategic and technological refinement of its product portfolio, in new growth areas as well as in efficient structures and processes.

Voith has identified hydrogen technology, electrical drive systems, cargo rail and energy storage as growth areas – with the objective to use Voith’s existing broad expertise in the areas of hydropower, paper production, mobility and industrial applications beyond the current product portfolio.

Along with organic growth, Voith benefited from two acquisitions in the Group Division Turbo in the reporting period. IGW Rail (acquired in October 2022) and Argo-Hytos (acquired in August 2022) were included for the first time and for the full fiscal year for the first time, respectively, in the reporting year. This resulted in an acquisition-related increase of around EUR210 (USD226.4) million in orders received and around EUR230 (USD248) million in sales.

In the 2022/23 fiscal year, all three Group Divisions contributed to positive development
The Group Division Hydro sustained its position in the 2022/23 fiscal year in an ongoing challenging market environment. Orders received grew to EUR1.92 (USD2.07) billion (previous year: EUR1.18 (USD1.27) billion). One of the main reasons for the growth is the increase in volume in a current major project. Sales improved to EUR1.19 (USD1.28) billion (previous year: EUR1.05 (USD1.13) billion). EBIT increased minimally to EUR6 (USD6.47) million (previous year: EUR2 (USD2.16) million). Increasing profitability remains an important objective for the Group Division Hydro.

The Group Division Paper once again made the largest contribution to the sales and earnings of the Voith Group. The operating result (EBIT) reached EUR145 (USD156.3) million (previous year: EUR131 (USD141.2) million). Sales grew to EUR2.24 (USD2.42) billion (previous year: EUR2.20 (USD2.37) billion). Orders received decreased slightly on the high previous-year figure to EUR2.10 (USD226.4) billion (previous year: EUR2.26 (USD2.4) billion).

The Group Division Turbo recorded the clearest sales and EBIT growth of all three Group Divisions, also benefiting from the two acquisitions. Sales and EBIT increased to EUR1.99 (USD2.15) billion (previous year: EUR1.56 (USD 1.68) billion) and EUR80 (USD86.2) million (previous year: EUR48 (USD51.7) million), respectively. Orders received grew from EUR1.64 (USD1.77) billion to EUR2.05 (USD2.21) billion.

Outlook 2023/24 fiscal year: Slight decline on high level of orders received and sales, further increase in earnings anticipated
The current 2023/24 fiscal year is accompanied by great economic and geopolitical uncertainties. Alongside the war in Ukraine, these include the new conflict in the Middle East. Economic factors are also placing a burden on the development of the global economy. The extraordinarily high inflation rates in most countries and the associated restrictive monetary policy by central banks are dampening global economic growth. The growth prospects worldwide are continuing to deteriorate as a result.

Voith sees itself well prepared to meet these challenges. The broad sectoral and geographical diversification; the established market position in all three Group Divisions; and a sound balance sheet makes the Company resilient. A conscious decision has been made to continue investing, even in times of crisis, in research and development, partnerships and innovations, vocational training and in the ongoing strategic and organizational development of the Company. By doing so, Voith is in a good position to continue generating sustainable and profitable growth.

For the 2023/24 fiscal year, Voith expects a stable development in its key performance indicators. In particular, profitability shall further improve. With regard to the operating result (EBIT), the Company assumes a slight increase. Likewise, growth in the return on capital employed (ROCE) is planned. The level of orders received and Group sales below the high figures seen in the reporting year is anticipated.

About the Voith Group
The Voith Group is a global technology company. With its broad portfolio of systems, products, services, and digital applications, Voith sets standards in the markets of energy, paper, raw materials and transport & automotive. Founded in 1867, Voith today has around 21,000 employees and earns EUR4.9 (USD5.28) billion in sales. It has locations in more than 60 countries and is one of Europe’s major family-owned companies.