Würth Group: Multi-channel strategy shows its worth in coronavirus crisis

• Digitalization boost proves that multi-channel strategy is great success factor, especially against challenges posed by coronavirus
• E-business sales in the first quarter of 2020 improved by 9.5 percent: Tradespeople could bank on Würth’s supply security at all times
• Anniversary year: Würth Group celebrates 75 years in business, Reinhold Würth celebrates 85th birthday
• Outlook 2020: Volatile global economy prevents reliable forecasts
• Transition from a distributor to a manufacturer: Course has been set

The Würth Group has seized the potential of its multi-channel strategy to remain a reliable partner for the skilled trades and the industry in times of the coronavirus pandemic. The Group detailed the opportunities and possibilities presented by the current situation at the press conference on its financial statements.

This crisis highlights the strengths of and opportunities presented by the multi-channel strategy very clearly,” Robert Friedmann, Chairman of the Central Managing Board of the Würth Group, said about the situation during the coronavirus pandemic. “We have expanded all available channels that comply with lockdown restrictions. Now, we are seeing the expansion of digitalized processes over the past years bear fruit in this time of crisis.”

Coronavirus crisis slows development

While the outbreak of the coronavirus pandemic has slowed the development of the Group overall, the Würth Group considers itself on the right track: In accumulated terms, the Würth Group reported sales growth of 2.8 percent as of March 2020.

“Of course, the virus has had a great impact on parts of our business,” Friedmann continued.

Würth Group companies in countries heavily affected by the COVID-19 disease such as Italy, France and Spain have felt the effects. Still: Würth France managed to grow its e-business activities by 29.1 percent in the first quarter of 2020 despite the extensive lockdown restrictions in place, Würth Italy reported almost 30 percent growth as well, while Würth Austria and other companies of the Würth Group doubled their Click & Collect orders (orders via app or phone and pick-up from the parcel stations outside the Würth shops). The lockdown, which has been in place almost all over Europe, has resulted in almost no delivery bottlenecks at Würth.

In Germany, the Würth Group was well prepared to meet the crisis and suffered only minor setbacks. The German Electrical Wholesale Unit even reported sales growth of 9.2 percent in the first quarter of 2020. Only companies operating in industries close or related to the automotive industry had to resort to short-time work.

Sales at Adolf Würth GmbH & Co. KG have been developing very well against the current backdrop, as tradespeople were able to continue their work almost unaffected. Adolf Würth GmbH & Co. KG reported a sales plus of 7.6 percent in the first quarter of 2020. The Group’s parent company used its multi-channel offering to ensure supply security for its customers at all times.

“We are proud that we were able to always provide our tradespeople with the needed materials. Due to their status as essential businesses, the skilled trades have been able to keep going throughout the coronavirus outbreak, thereby making a great contribution to maintaining the infrastructure and operations in essential utilities and hospitals. Many facilities are currently retrofitting their spaces to comply with new distancing and hygiene rules,” Norbert Heckmann, Chairman of the Management of Adolf Würth GmbH & Co. KG, explained the situation.

Multi-channel strategy effective during lockdown

Würth’s multi-channel sales organization is based on the personal contact with the customer through the sales force and the shops – there are more than 530 shops in Germany alone and more than 2,200 worldwide – and online channels such as the online shop, the Würth App and e-procurement solutions.

The digital sales channels have gained greatly in importance during the crisis. The website of Adolf Würth GmbH & Co. KG, for instance, handles around 700 search queries per minute and around 400,000 customers log into the online shop and the Würth App each month. In March, when the coronavirus crisis started in Germany, e-business sales at Adolf Würth GmbH & Co. KG jumped 27 percent. These online tools are also used more and more as information channels: Customers are always up-to-date on product availability and the availability of the sales force and shops thanks to email-newsletters, social media and the website.

Security factor liquidity

The Würth Group remains financially stable: The Würth Group's equity climbed 7.4 percent to EUR 5,554 million in the last fiscal year, which corresponds to an increase of EUR 382 million. Thus, the equity ratio amounted to 44.0 percent at the end of the year (2018: 47.1 percent). The rating agency Standard & Poor’s once again confirmed the Würth Group’s “A/outlook stable” rating in 2019. Securing the Würth Group’s liquidity is a top priority in these uncertain times. As of the end of April 2020, the Würth Group’s liquidity reserves amount to more than EUR 800 million, including more than EUR 400 million in cash assets and the committed unused credit line of EUR 400 million running until July 2023.

2019 annual financial statements

The Würth Group reported a new sales record in 2019: The global market leader in the sale of assembly and fastening materials generated sales of EUR 14.3 billion (previous year: EUR 13.6 billion) and growth of 4.8 percent.

Despite the slowing development of the Würth Group in Germany (+2.2 percent), which is driven by the recent cooldown in the automotive industry, sales continued to develop positively thanks to multi-channel activities in the e-business channel: E-business sales experienced above-average growth and amounted to EUR 2.6 billion, pushing the share of e-business activities in total Group sales to 18.3 percent.

Operating result

The operating result was down on the previous year at EUR 770 million (2018: EUR 870 million). The pressure on the gross margin is one of the factors driving this development. It was not possible to pass rising purchase prices on to customers on the market. Other influencing factors were additional investments into the companies’ business models and the introduction of IFRS 16.

Employees

The number of employees was stepped up by 1,606, from 77,080 to 78,686 in 2019, which equals an increase by 2.1 percent. In Germany, the Group has 24,344 employees overall, up 2.4 percent over last year. In the field, the Group employs 33,979 sales representatives across the world (2018: 33,218). A total 996 employees were added through acquisitions.

75 years of Würth

In 2019, Adolf Würth GmbH & Co. KG generated sales of EUR 2,094 million (including intra-group sales) with its 7,418 employees, reaching another historic milestone in the company’s history: more than two billion euros in sales. This was good news on a special occasion, as the first company of the Group, and thus the entire Würth Group, is celebrating its 75th anniversary in 2020.

Investments

The Würth Group’s investment volume of EUR 705 million in 2019 was geared towards the expansion of the IT infrastructure and warehouse capacities for our distribution companies, and an improvement of production facilities, technical equipment and machinery for our manufacturing companies. In 2019, the Würth Group again financed all its investments from its operating cash flow.

Prepared for the future

In its 75-year history, the Group has never been exposed to a crisis of this magnitude. The COVID-19 pandemic is having a grave impact on the entire global economy. The currently very volatile economic situation across the world does not allow for any reliable forecasts for 2020. The Group is expecting to maintain its performance on a stable level, helped by its multi-channel strategy and its diversification of risk through its international footprint and diverse business models.

Top-quality logistics

With its new warehouse directly next to the A6 highway in the Gewerbepark Hohenlohe industrial park close to the company’s headquarters, Adolf Würth GmbH & Co. KG has created a main transshipment base—a collection point and hub—to consolidate and coordinate flows of goods throughout Europe. Roughly 20 percent of all orders handled by the new warehouse will go directly to European countries outside Germany: stocking up the warehouses of other Würth companies or shipping orders directly to end customers abroad. With this hub, the Group is pushing its logistics performance to the next level. Around 300 employees will work in two shifts in the new logistics complex.

“The new transshipment depot at Gewerbepark Hohenlohe industrial park directly next to the A6 highway will commence operations as planned. Plans for the innovation center are in full swing, which puts us in a great position for the time after the pandemic,” Friedmann commented.

Innovation strategy: from a distributor to a manufacturer

For the future, the Group is banking on its new innovation strategy: the transition from a distributor to a manufacturer. Always having the ear close to the market and the customers: Through the extensive network of sales reps and shops, Würth can incorporate the expertise of the skilled trades directly into its product R&D. Over the past 12 months, research and development capacities at the Künzelsau campus—the Group’s headquarters—could be expanded significantly and new jobs created. The company is tapping into new fields of expertise with new mechatronics labs and testing facilities.

Investments in the Group’s manufacturing expertise and other innovation projects at the current R&D site will continue to go forward, even though the completion of the new innovation center will be slightly delayed due to the current situation. Once complete, the innovation center will accommodate around 250 employees. Development teams from the fields of mechatronics, fastening systems, tools, technical chemicals and power tools are already working on making the innovation strategy a reality: employees of the research and development department of Adolf Würth GmbH & Co. KG collaborate with Group companies that operate in the manufacturing sector, as well as external researchers. The cooperation with Karlsruhe Institute of Technology KIT and the universities of Innsbruck and Stuttgart will create a cluster of knowledge and expertise.

About the Würth Group

The Würth Group is the global market leader in its core business—the sale of fastening and assembly materials. It consists of more than 400 companies in over 80 countries with approximately 79,000 employees on its payroll. Approximately 34,000 of those employees are salaried sales representatives.

In the Group's core business, the Würth Line, the sales program for the skilled trades and industry comprises more than 125,000 products: from screws, screw accessories and anchors to tools, technical chemicals and personal protective equipment. The Allied Companies of the Würth Group, which operate in business areas related to its core business, round off the range by offering products for DIY stores, material for electrical installations, electronic components such as circuit boards, tools, and financial services. They account for more than 40 percent of the Würth Group’s sales volume.