Progress toward strengthening the core business of the Vossloh Group
At the end of 2014, the Executive Board decided that the Group should focus completely on the business related to rail infrastructure in the future. By signing the contract with Chinese company CRRC for the disposal of Vossloh Locomotives, now a further important step in this direction is taken. The other two business units of the former Transportation division were sold in 2015 and 2017 respectively. With its shunting locomotives, Vossloh Locomotives today serves a narrowly defined niche market in both technological and geographic terms, and had considerably burdened both the profit and net financial debt of the Group in the past few years. There were no synergies with the core business of Vossloh. With CRRC, a strong partner has now been found for Vossloh Locomotives, which will allow for the business to future-proof itself and for the harnessing of synergies. Andreas Busemann, Chief Executive Officer of Vossloh AG: “For us, it was important to put Vossloh Locomotives in a safe pair of hands. This is something that we owe above all to the people on-site and that we have achieved. We were impressed with the strategic concept of CRRC. The sale will give us stability and end the perennial outflow of cash, which is urgently needed for the core business. After investigating and conducting intensive negotiations with a number of possible partners for Vossloh Locomotives and Vossloh over several years, we have implemented the best possible choice and reached a very good overall result. Thanks to our strong balance sheet, we will also be able to comfortably absorb accounting losses.”
The Vossloh Group occupies leading positions in rail infrastructure and is a technological leader in many areas. Looking ahead, the mission is now to further strengthen the core business of rail infrastructure. Here, Vossloh believes it is in an excellent position and, compared to its competitors, especially well prepared due to its comprehensive portfolio. Focus is now increasingly on the expansion of the rail infrastructure business while simultaneously increasing profitability. In this respect, a further joint venture for the production of components for rail fastening systems has been established in China – in which Vossloh holds a stake of 51%. With the joint venture, Vossloh is increasing its vertical integration, gaining at the same time access to a previously untapped segment of the Chinese market. “Today, the Chinese market for rail fasteners is already an essential pillar of the Vossloh Group. Through the joint venture with Anyang Railway Equipment Co., Ltd., we will sustainably strengthen this business. With more than 600 employees, our partner is an established participant in the Chinese market for rail infrastructure outside of the high-speed market primarily covered by Vossloh,” adds Busemann.
Following the implementation of the performance program announced in April of 2019, Vossloh expects a significant improvement of profitability in its core business. Oliver Schuster, Chief Financial Officer of Vossloh AG: “We are working at full steam toward reaching an EBIT margin in the double-digit range in all divisions of the Vossloh Group in order to safeguard financial leeway for the future growth of Vossloh in an increasingly digitalized rail industry. We expect a tangible increase in profitability, compared to the adjusted EBIT margin in 2019, as early as next year.” For the 2019 fiscal year, the Vossloh Group projects Group sales of €900 million to €1 billion and an adjusted EBIT margin of €50 million to €60 million. Due to the good order situation in China among other things, Vossloh continues to expect Group sales of between €950 million and €1.05 billion and an EBIT of between €65 million and €80 million for fiscal year 2020.
Werdohl, August 28, 2019
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Vossloh is active in rail technology markets worldwide. The Company’s core business is rail infrastructure. The Group activities are organized into the three divisions of Core Components, Customized Modules and Lifecycle Solutions. In the 2018 fiscal year, Vossloh achieved sales of €865 million with approximately 3,800 employees.