VDL Groep achieves forecast growth target
VDL Groep achieved this year’s growth forecast in the first half of 2023. The industrial family business with its head office in Eindhoven is on track to achieve a 5 to 10 percent increase in turnover growth in 2023. Net profit declined after the first six months of the year, although the net operating result has grown.
After the first six months of 2023, the combined revenue amounts to 3.2 billion euros. This is an increase of 22 percent compared to the 2.6 billion euros in the first half of 2022. The net profit for the first two quarters of 2023 decreased by 22 percent from 54 million euros last year to 42 million euros this year. This is primarily due to a provision for the costs of the first phase of the social plan at VDL Nedcar. The net operating result increased 44 percent to 78 million euros. The VDL Groep’s order book (excluding the Car Assembly division) stayed stable and high at 2,081 million euros in week 34. The number of employees has remained stable since the beginning of the year with 16,634 colleagues.
‘Turbulent first six months’
President and CEO of VDL Groep Willem van der Leegte: ‘We are looking back on a turbulent first half-year in which much revolved around organizing contraction and growth simultaneously. Both require a lot from our organization. In terms of our half-year figures, three of our four divisions had an increase in revenue. The operating result accordingly displayed matching growth. We expect to be able to meet the forecast growth for this year. The fact that our order book remains stable at a high level is an important indicator in this respect.’
Subcontracting
Revenue of the Subcontracting division increased from 1,087 million euros in mid-2022 to 1,321 million euros. This 22 percent increase is explained by the fact that the VDL companies that are active in this division have grown across the board. The focus on high-quality innovation and long-term, stable relationships with customers and other partners ensured that, in addition to production, we are increasingly given the opportunity to develop for our customers. We have further strengthened our position in our growth markets. Important for this were: considerable investments in equipment, the professionalisation of processes, automation (in the form of robotisation and digitalisation) and hiring and training employees. The Subcontracting division is profitable.
Car Assembly
After two quarters, revenue at VDL Nedcar has reached 1,262 million euros. An increase of 47 percent compared to the 856 million euros a year ago. This increase in revenue can be explained by the fact that as a result of global developments, one year ago our car factory in Born was regularly confronted with material shortages (particularly chips), resulting in a considerable loss of production.
The past half-year we were also confronted with production loss as a result of strikes. The plan to catch up on the resulting production backlog is on track, after agreement was reached about further enriching the social plan negotiated in 2021. Due to the strikes and the provision for the costs of the first phase of this social plan, VDL Nedcar is loss-making over the first half-year.
As a result of a reduction in work caused by a decrease in volume, it was announced that VDL Nedcar will switch over to a single shift effective 1 November. As a result, approximately 900 employees and 900 temporary workers will become surplus. We are making every effort to transfer them from work to work. In addition to the other VDL operating companies, more than 200 employers are giving thought to a potential job for surplus employees. The first information meeting with these companies has been scheduled for the near future. This will be followed by a job fair to enable employees to establish physical contacts and to facilitate introductions.
In the meantime, in Born we are undergoing a transition from an independent car manufacturer to a more broadly oriented partner in sustainable mobility, with the aim of providing higher added value and better future-proofing. The broadening of activities is increasingly taking shape in the following three areas: the assembly of vehicles for various clients, various sustainable mobility solutions at the Mobility Innovation Centre (MIC) and facilitating the growth strategy of VDL sister companies.
Buses and coaches
Revenue of the Buses & Coaches division decreased by 40 percent from 251 million euros a year ago to 153 million euros. The key explanatory factor is the challenges in the supply chains, which makes the delivery of vehicles a laborious process, a situation the entire sector is struggling with. The Buses & Coaches division is loss-making. In the meantime the number of new-generation electric buses for urban passenger transport, the VDL Citea, is increasingly evident in the urban streetscape. VDL Buses & Coaches will actively pursue further development of this new platform over the coming period, with due consideration to this product’s impact on the environment across its entire life cycle (Life Cycle Assessment). VDL will also assess the future of coaches. The third-generation VDL Futura platform will continue to be given further shape.
VDL Buses & Coaches will be present at Busworld 2023 in Brussels next month, Europe’s largest bus & coach trade fair. With the theme ‘Experience tomorrow’s mobility, today’, VDL will display its strategy and pioneering role in the area of sustainable mobility.
Finished Products
The VDL companies that form part of the Finished Products division jointly generated 437 million euros in revenue over the first half of 2023, compared to 400 million euros over the same period in 2022. This 9% increase can be explained by the fact that the companies in this division are well positioned across the board. The Finished Products division is profitable.
Outlook
In part on the basis of a stable, high order book, the expectation is that the forecast 5 to 10 percent growth in revenue will be achieved for all of 2023. At the same time, there are significant challenges in the second half of the year as well. For example how VDL Nedcar will be organised to switch over to a single shift and to ensure that our employees who will become surplus in Born will land well.
The new electric bus for urban passenger transport, VDL Citea, has set a new standard. This is expected to result in increased demand in the coming years. Although we are making progress, getting timely deliveries under control continues to be a challenge. Due to these conditions at VDL Nedcar and VDL Buses & Coaches, the net profit for the year as a whole is expected to be lower than what was achieved in 2022.