Impacted by COVID-19, Weinheim headquartered global technology group, Freudenberg, has witnessed a 7.6% drop in sales to INR 75,305 crore (€ 8.8 billion) against INR 80,646 crore (€ 9,467 million) in the previous year. Profit from operations dropped by about 18% to INR 5,706 crore (€ 669 million) against INR 6,984 crore (€ 820 million).
The impact was visible in India as well, as sales showed a 16% dip to INR 2,130 crore in 2020 compared to INR 2,532 crore in the previous year. 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, the company stated.
As the group's objective is to always get about one-third of its revenue from sales of products introduced in less than four years, it spends on R&D substantially every year. Even in 2020, the group spent about INR 3,799 crore (€446 million) against INR 4,096 crore (€480 million) in R&D. This represents 5% of sales against 5.1% last year.
Georg Graf, Freudenberg Regional Representative, India, said, 'In addition to the pandemic, the transformation in mobility (specifically the 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 jeopardising 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. We have also made good progress with our strategic focus topics of e-mobility, digitalisation and sustainability.'
Outlook
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. While Ease of Doing business, transparency and e-governance has shown considerable improvement, skills development and technical training need 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 the Freudenberg Group markets, especially in the automotive industry.
'Against this backdrop, we are planning cautiously for the year ahead and expect a slight recovery of business in the markets relevant for the group. We will continue to invest in long-term projects. Key strategic topics will remain the transformation in mobility, digitalisation, and sustainable solutions. We are developing our portfolio selectively and in a targeted way and will strengthen it with highly promising technologies through acquisitions.' Graf added.