VDL Groep records continued growth in the first six months of 2018
VDL Groep in Eindhoven has succeeded in achieving the growth forecast for the first six months of 2018. This industrial family business recorded a combined turnover of 3.1 billion euros for the first six months of the year, which is an increase of 29% compared with the first six months of 2017 (2.4 billion euros). In the first six months of 2018, the operating profit increased by 3 million euros in comparison with the same period last year. The financial result after taxes for the first six months was lower than the same period a year before, being 69 million euros in comparison with 75 million euros. This difference is primarily due to the possibility to profit from several sources of extraordinary income. The total order portfolio (excluding the Car Assembly division) has grown across the board, from 769 million euros at the end of 2017, to 957 million euros in mid 2018, which is an increase of approximately one-quarter. In the space of just one year, the number of individuals employed by VDL Group increased by 11 percent to 17,238 employees in mid 2018.
Due primarily to growth in the high-tech and automotive segments, the turnover achieved by the Subcontracting division increased to 668 million euros, in comparison with 564 million euros in the first six months of 2017. The order portfolio increased from 402 million euros on 31 December 2017, to 460 million euros after the first six months of this year. The Subcontracting division was profitable in the first half of the year and we anticipate that this growth will be sustained. As already reported when announcing the declaration of intent last month, we expect to be able to shed more light on a possible acquisition of Siemens Hengelo in the last quarter. We will not make any announcements about this intended acquisition in the period ahead, which will focus on the due diligence and liaison with works councils, trade unions and the Dutch Competition Authority.
In the first six months of 2018, the Car Assembly division realized a turnover of 1,882 million euros. This figure is a significant improvement on the 1,326 million euros generated for the first six months of 2017. This growth in turnover has been facilitated by increased production of the MINI and BMW X1 models for the BMW Group. Despite the huge growth achieved by VDL Nedcar, the result has decreased in comparison with the same period last year. Investments in the development of our employees are an important contributing factor to this situation. The upscaling of our company has been accompanied by a strong growth in the number of individuals we employ, all of whom have completed internal training courses at VDL Nedcar. A total of 7,081 employees work in Born. We have also invested in the optimisation of processes and production lines. Last but not least, the ultimate result has been affected by our delivery of fewer cars than planned as the result of strike days.
Turnover in the Buses division increased from 245 million euros for the first six months of 2017 to 256 million euros for the first six months of 2018. The order portfolio has increased too, from 228 million euros at the end of 2017, to 281 million euros as per mid 2018. VDL Bus & Coach ended the first six months of 2018 with a loss. This can be explained by the increased investments ensuing from our successful strategy on electric vehicles, for which lucrative orders have been won again recently. The electric truck, which we launched with our partner DAF Trucks in May 2018, is presenting use with new opportunities for growth too. We have also invested significantly in the development and/or expansion of (new) markets, such as Spain and Scandinavia. Investments are based on our aim to make the Buses division profitable on a structural basis.
The Finished Products division generated a turnover of 272 million euros in the first six months of 2018 in comparison with 291 million euros in the first six months of 2017. This slight decrease can be attributed to the time at which projects were completed by the various project organisations that form part of this division; in the first six months of 2018, a relatively lower number of projects were completed in comparison with the same period last year. The order portfolio for Finished Products has increased, from 139 million euros at the end of 2017 to 217 million euros as per mid 2018. This division finished the first six months profitably and prospects for the second half of the year are positive.
“We are satisfied with events at VDL Groep in the last six months”, comments President and CEO Willem van der Leegte, “and are also positive about the improvement of our operating result again. Despite the need to remain vigilant to economic changes and cost increases, we will continue to commit ourselves fully to investments in our employees, production processes, products and markets. One important concern continues to be the organisation of growth and we are also striving to realize the gradual improvement of our result.”
VDL Groep has high expectations for the second half of 2018. The total turnover achieved by VDL Groep for the year as a whole will be more than 6 billion euros. The well-filled order portfolios across the board are very reassuring. The expectation is that the net result will be higher than the result for 2017 (153 million euros). Another positive development is the growth in the total number of individuals employed by VDL by 1,101 employees to 17,238 employees in the current year, despite the shortage of employees with technical qualifications in the labour market.