– Freudenberg Group shows gradual recovery despite effects of pandemic Manages the crisis well
BANGALORE, India, April 27, 2021 /PRNewswire/ — The global technology group Freudenberg, Weinheim, has managed the crisis well.
Although sales in 2020 was at Rs. 75,305 cr (8.8 billion Euro), it was significantly below the figure of Rs. 80,646 cr (9,467 million Euro) for the previous year, the company reported a profit from operations of Rs. 5,706 cr (669 million Euro) (previous year: Rs. 6,984 cr (820 million Euro). The impact was visible in India as well as sales showed a 16% dip to close at Rs. 2,130 cr in 2020 as compared to Rs. 2,532 cr last year. Despite the effects of the pandemic, the international rating agency Moody’s Deutschland GmbH, Frankfurt am Main, confirmed its credit rating of Freudenberg at A3, with a stable outlook, as in the previous year. The Group therefore continues to hold an excellent single A rating.
In addition to stringent cost management, the significant improvement in the economic environment at the beginning of the fourth quarter of 2020 helped Freudenberg achieve these financial results. Furthermore, the Group reacted rapidly in the crisis and implemented targeted measures that took effect.
Freudenberg globally continued to invest in future growth. Freudenberg conducted research and development activities amounting to Rs. 3,799 cr (446 million Euro) (previous year: Rs. 4,096 cr (480 million Euro) . This represents 5.0 percent of sales (previous year: 5.1 percent). Research and development expenditure remained at a high level.
Especially for the Business Groups producing for the automotive, textile and mechanical engineering sectors, the economic environment globally and in India, at the beginning of the year was extremely challenging. “In addition to the pandemic, the transformation in mobility (specifically automotive sector which is our key industry) has led to seven of our ten Business Groups having to contend with, in some cases, sizeable losses. In contrast, three Business Groups have experienced a positive impact on their business. Freudenberg Home and Cleaning Solutions (FHCS) is benefiting from more stringent hygiene measures, Freudenberg Filtration Technologies (FFT) from the launch of mask production and Freudenberg Medical (FM) from a positive demand for new products. To tackle the crisis, we are continuing to adhere to our strict cost management and the related measures. Investments are being reduced to as low a level as possible without jeopardizing future growth, and we have avoided making cuts to our research and development activities. These different, and in some cases divergent, developments show just how important its broad-based positioning is for Freudenberg,” said Georg Graf, Freudenberg Regional Representative, India assessing the Freudenberg performance in 2020. “We have also made good progress with our strategic focus topics of e-mobility, digitalization and sustainability. Furthermore, we have continued a high level of research and development activities as an innovative technology group globally,” he added.
Freudenberg’s seven Business Groups in India have a total workforce of some 2,852 employees at around 50 locations – running six R&D centers and 15 production sites with state-of-the-art shop floors in India.
Research and development
Research and development expenditure remained at a high level. Freudenberg continued to invest in future growth. In 2020, Freudenberg conducted research and development activities spending to the amount of Rs. 3,799 cr (446 million Euros) (previous year: Rs. 4,096 cr (480 million Euros)). This represents 5.0 percent of sales (previous year: 5.1 percent). Freudenberg generates more than a third of its sales (34.1 percent; previous year: 34.7 percent) with products that are less than four years old.
One example: As demand for face masks rose in 2020, the Freudenberg Business Groups started to develop various materials for protective masks. Freudenberg Filtration Technologies began production of certified medical face masks with a filter efficiency of over 98 percent. In addition, filter media for FFP2 face masks providing high-level protection against viruses were developed. These masks have now also been certified by the FDA (Food and Drug Administration) in the USA.
Sustainability: 25 percent less CO2 by 2025
The sustainability of products and processes has been part of Freudenberg’s corporate responsibility for many years. In 2016, the Group developed a Group-wide sustainability strategy. In addition, sustainability was made an integral part of the strategy process. In the “Sustainability Drives Climate Action” project, the Group is developing a position with respect to the challenges and opportunities of climate change. Firstly, Freudenberg intends to reduce CO2 emissions by 25 percent by 2025. Secondly, the opportunities and costs of climate neutrality for Freudenberg are to be identified in 2021. In this context, Freudenberg has adopted a four-stage strategy. The top priority will be to reduce energy consumption. The second stage will be to cover the remaining energy demand using electric power to the greatest extent possible. Thirdly, the Group’s energy balance is to be improved by purchasing green electric power. Fourthly, Freudenberg is committed to offsetting CO2 emissions.
Sustainability has two dimensions for Freudenberg. Firstly, the sustainability strategy is concerned with how Freudenberg develops its own processes and uses plants to conserve resources. Secondly, Freudenberg develops products and solutions that make customers’ production more efficient and sustainable or allow products to be manufactured with greater resource efficiency. Two examples: Whether it is reducing usage of water, making manufacturing processes leaner or a reforesting project around the Blue Mountain in the outskirts of Mysore, sustainability is a key topic for Klüber Lubrication India. With 300 sunny days, Mysore was a perfect place for setting up a photovoltaic system. The solar panels spanning an area of 5,000 square meters are setup on the roof top of the production site at Mysore. The photovoltaic system significantly reduces smog-causing NOx emissions by 3.5 tons, SOx emissions, which directly result in acid rains, by 3.2 tons and also decrease asthma-causing particulates by 0.2 tons. In addition, the project has reduce CO₂ emissions by roughly 1,110 tons, which could mathematically be compensated by more than 88,000 trees.
Comfortemp Tencel padding from Freudenberg Performance Materials remains unique in the marketplace: the high-performance thermal insulation for sport and outdoor clothing is the first fully biodegradable padding made from sustainably produced cellulose fiber that completely degrades in soil within just under 60 days. When the garment has reached the end of its useful life, microorganisms in the soil degrade the padding completely in about 60 days without polluting the soil. That avoids waste and helps protect the environment.
Freudenberg Group portfolio improved through acquisitions on the basis of our strategy and strengthened our business. In May, Freudenberg acquired 100 percent of the shares in Low & Bonar PLC, London, United Kingdom, now Low & Bonar Limited, Edinburgh, United Kingdom. Low & Bonar is a global manufacturer of technical textiles with few branch offices present in India. The company will be integrated in the Freudenberg Performance Materials Business Group. Through this acquisition, Freudenberg is strengthening its business with performance materials and will further expand its technical know-how with the innovative technology of Low & Bonar.
At the end of December 2019, Freudenberg Performance Materials had already acquired the Filc Group, Škofja Loka, Slovenia. Filc produces needle punch nonwoven textiles and laminated materials. Despite the restrictions due to COVID-19, very good progress has been made with the integration of the two acquisitions.
Furthermore, Klüber Lubrication, München SE & Co. KG (part of Freudenberg Chemical Specialities), Munich, Germany, acquired Traxit International GmbH, Schwelm, Germany, in January 2020. This company is one of the world’s largest producers of wire drawing lubricants and has supplied a full range of lubricants for all applications to the wire drawing industry for about 140 years.
In order to mitigate the effects of the COVID-19 pandemic on the world’s poorest people, Freudenberg reacted immediately and provided funds of Rs.19 cr (2.25 million Euros) globally. Freudenberg donated Rs.12 cr (1.5 million Euros) for food and millions of masks to more than a hundred aid organizations in the vicinity of Freudenberg plants. These included schools, student organizations, senior citizens’ homes, voluntary fire services and many other charitable institutions – especially in socially deprived regions. In India, almost 400,000 masks were donated via Business Groups and via NGO’s such as Rotary Club, Parikrma Humanity Foundation, Terre des Hommes and members from the German Consulates in India. This way, charitable organizations and their partners can cover their mask requirements. In many places, people had the opportunity to protect themselves and others against the virus using high-quality masks for the first time. Masks were also distributed to the students from the Freudenberg Training Centre in Nagapattinam on a daily basis. In the final round of food kit donation, Indian food banks and aid organizations had received Rs. 90 lakh (105,000 Euros) from Freudenberg to help people facing hunger. In collaboration with Freudenberg, the Rotary Club in Bangalore concluded the distribution of 4,000 rations of dry food to families of senior citizens from slums, old age homes, orphanages, rural and tribal village members and daily wageworkers from urban areas. In addition to rice, lentils and flour, the packages also contain oil, sugar, turmeric and washing powder. The team also managed to donate medical kits consisting of reusable masks, hand wash, multivitamin supplements all put into a pouch distributed to help the needy in Bangalore. All families of the Freudenberg Training Centre students in Nagapattinam were also recipients of food kits.
Freudenberg also donated to the “Terre des Hommes” organization in India: The amount donated has been utilized to buy and distribute food to people in need around Delhi, Pune, Chennai and Ahmedabad.
For 2021, Freudenberg once again expects a generally challenging overall economic environment. Following a significant downturn in the world economy in 2020, especially because of the spread of COVID-19, economic growth is expected to recover in 2021. Despite the challenges of working in India, German companies are still very convinced of the long-term Indian opportunity, with its young well educated and connected population and its evolution as an IT and R&D powerhouse for global players. “India is the youngest-connect-democracy” in the world and is increasingly being considered a preferred partner in manufacturing across industries with companies realizing that India is more than a consumption market but is also a manufacturing and R&D hub that allows foreign companies to create and export products to other markets in this region. While Ease of Doing Business, transparency and e-governance has shown considerable improvement, skills development and technical training needs further investment. However, it will probably take a few years to reach the pre-crisis level. The geopolitical and economic uncertainties faced in 2021 are especially severe. One major uncertainty is the further development of the COVID-19 pandemic and its effects on the global economy and on the markets of the Freudenberg Group, especially in the automotive industry.
Against this backdrop, Freudenberg is planning cautiously for the year ahead and expect a slight recovery of business in the markets relevant for the Group. Freudenberg will continue to invest in long-term projects. Key strategic topics will remain the transformation in mobility, digitalization, and sustainable solutions. Freudenberg developing its portfolio selectively and in a targeted way and will strengthen it with highly promising technologies through acquisitions.
About Freudenberg in India
Freudenberg has held business ties with companies in India for more than 90 years. The Group has 15 production sites around India and employs around 3,000 people at 50 locations.
About the Freudenberg Group
Freudenberg is a global technology group that strengthens its customers and society long-term through forward-looking innovations. Together with its partners, customers and research institutions, the Freudenberg Group develops leading-edge technologies and excellent products and services for about 40 markets and for thousands of applications: seals, vibration control components, technical textiles, filters, cleaning technologies and products, specialty chemicals and medical products.
Innovation strength, strong customer orientation, diversity, and team spirit are the cornerstones of the Group. The more than 172-year-old company lives by its core values: a commitment to excellence, reliability and pro-active, responsible action. In 2020, the Freudenberg Group employed some 48,000 people in around 60 countries worldwide and generated sales of more than 8.8 billion Euros. For more information, please visit www.freudenberg.com.
Freudenberg Regional Corporate Center India Pvt. Ltd.
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