Sustained growth by HERMA is being hampered by a sharp fall in demand in the cyclical mechanical engineering sector in particular, together with a weakening global economy. The specialist in self-adhesive materials, labels and labelling machines nonetheless grew by around one percent in fiscal 2019. Group sales climbed from 361.3 to 364.4 million euros. Although not entirely pleased with the overall pattern of business last year, managing directors Sven Schneller and Dr. Thomas Baumgärtner pointed to a moderate advance that was well above the rate of general economic growth in Germany. They conceded that the company had been unable to distance itself from the global downturn in industrial activity, despite making every effort. Looking at the current year they expect the economy to pick up a little, and are budgeting for growth of five percent. Given the many political and economic uncertainties shaping the immediate future, however, they described the target as “highly challenging”. It is currently impossible, for example, to assess the consequences of the coronavirus outbreak. In addition, the crisis in the automotive industry and its supply segment could trigger further job losses and thus an increase in consumer caution. That would have an immediate impact on the demand for self-adhesive materials and labels. In view of the scale of the company’s activities in the UK, its managing directors are also concerned about the ongoing delay in Brexit.
Increase in market shares
The number of HERMA employees rose slightly year-on-year, from 1,051 at the end of 2018 to 1,097. The export ratio increased a little as well, from 60.2 to 61.0 percent. In contrast, earnings fell considerably in fiscal 2019, but the decline is partly attributable to initial depreciation arising from the major investment in Filderstadt, in the amount of more than 100 million euros. “On the plus side, we have now concentrated state-of-the-art manufacturing technology for all three divisions at a single location. This is probably unique in our industry in this form,” insists Mr. Schneller. Furthermore, the entry into service of the new coating plant for self-adhesive materials is imminent; it will enable the company to harness its potential even more effectively. “In the Self-adhesive Materials division in particular, in recent years we have grown much faster than the market and gained market shares – that trend continued in 2019,” adds Dr. Baumgärtner. The division posted year-on-year sales growth of 4.0 percent, raising the total from 215.2 to 223.7 million euros. With sales of 84.5 million euros, the Labels division practically matched the previous year’s figure of 84.7 million euros, but earnings slipped because of stringent cost-cutting measures in the key automotive and chemical sectors, alongside other factors. The division most severely affected by the downturn was Labelling Machines. Its sales dropped by 10.1 percent, from 58.1 million euros a year ago to 52.2 million euros.
