19.04.2021

Liebherr profit drop

Liebherr has published its accounts for 2020 which show that total revenues declined 12 percent to €10.3 billion, while pre-tax profits for the period fell more than 62 percent to €278 million, due to the lower volumes, but also sharply higher finance costs – even though the company has no real net debt.

Revenues at Liebherr Ehingen which manufactures mobile and crawler cranes held up well, coming in just 4.8 percent lower than in 2019 at just over €2.5 billion. The number of employees working in the business surprisingly increased by 13 percent to 5,056. 46 percent of sales came from Europe, 24 percent from North America, 15 percent from Asia and Oceania almost six percent from Africa and the Middle East with balance from other European markets – non EU – and South/Central America.

Tower crane revenues declined 18.5 percent to €444 million, with most of the shortfall coming from the EU which represented 68 percent of total sales. Non-EU Europe, made up a further 14 percent of revenues, also were down a little while the remaining regions - all held steady with the company saying that it is optimistic for 2021.

Sales of maritime cranes declined 10.4 percent to €795 million, with declines spread fairly evenly around the regions although Europe - both EU and Non-EU which represents almost 50 percent of sales - was hit the hardest.

Revenues in the foundation machine business, largely duty cycle crawler cranes, were 17 percent lower at €258 million with the declines most noticeable in its two largest markets the EU and North America. Together these markets represent almost 70 percent of sales with the EU accounting for 35 percent and 33 percent in North America.

Total sales of all crane types for the year were €4 billion, a decline of roughly seven percent compared with the previous year.

In its outlook for 2021 Liebherr says that the order intake in the first quarter has been favourable which indicates a significant increase in sales in 2021 as a whole.

It added: “Overall economic opportunities arise from the global recovery of various industrial sectors in which the Liebherr group is active in. At the same time, there is still uncertainty about the speed of macroeconomic recovery. For instance, it is unclear whether international trade will pick up or continue to decline, or whether the economic policies implemented by many governments can prevent debt from spiralling.”

A joint introduction to the annual report from Isolde and Willi Liebherr said: “2020 was a year unlike any other. The coronavirus pandemic affected us in ways we could never have imagined and presented us with many unprecedented challenges. How does one evaluate such a year from an entrepreneurial perspective and measure success in times like these?”
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Isolde and Willi Liebherr

“We could perhaps start by examining the usual key figures from our balance sheet or the profit & loss statement. However, economic success seems to pale in significance at a time when people’s wellbeing is the main priority. Health is and remains the most important consideration. This is why over the past year, our top priority has been to minimise the risk of infection among our employees, their families and our business partners, whilst ensuring that the business continues to run smoothly. This required an enormous effort and demanded a great deal from our employees. We would like to take this opportunity to thank our employees in particular. We would not have withstood the challenges of the past year without the outstanding efforts of our nearly 48,000 employees. They have shown incredible commitment under the most difficult circumstances and have demonstrated a huge amount of creativity and loyalty. We would therefore like to thank everyone at Liebherr for their contribution during these times, which are also challenging on a personal level. In view of this, we feel even more proud to report that the group’s total”

“Sales inevitably fell after three years of strong growth, which affected some of our product segments more than others. We were even forced to introduce HR policy changes in one part of our business. However, the impact of the pandemic on the group as a whole was significantly less than we had originally thought it would be at the outset. We could even close the year with a positive operating result. Our group has proven its strength. In a time that is characterised by social distancing, we have managed to remain close to our customers, figuratively speaking. We maintain long standing partnerships with many of them and we know that we owe our positive year end results to the continuing trust our customers have placed in us. Therefore, we would like to express our sincere gratitude for their loyalty.”

“Today, we can therefore draw a positive overall conclusion from the year 2020. It has shown us that we will get through the pandemic together and it allows us to view the 2021 financial year with optimism.”

Vertikal Comment

As we have said before Liebherr sometimes seems like an impenetrable tank, pressing on through good times and bad towards further growth and refinement. The fact that it is family owned, diversified and with a balance sheet to die for, helps it weather storms like the financial crisis and now Covid-19 with a hardly a blip.

While the pandemic has hit revenues and profits, they are significantly better than might have been expected, with the fluctuation nowhere near any level that might trigger a change in course. One thing that stands out is that while many companies talk of employees being the most important part of their business, Liebherr clearly really means it. You only need look at the head count fluctuations for the year, which declined significantly less than half a percent, North American being the exception with an eight percent reduction. Investment in new facilities continued, as did recruitment in regions where the company needed it. All in all, it demonstrates a focus on the business, its people and its customers rather than results, which after all are just a scorecard of last years activities.

Overall, it looks like business as usual for Liebherr.