3. The 2003 Financial Year in the Würth Group (detailed summary)
Künzelsau. "The record sales figures and operating result attained testify to the success of the company policy pursued in the year 2003." This was the remark passed by Dr. Walter Jaeger, Chair of the Board of Directors of the Würth Group, at the presentation of the Goup's financial statements for the 2003 fiscal year. The presentation of the statements took place on Wednesday, 12th May 2004 at the company headquarters in Künzelsau-Gaisbach. The recruitment of 1,519 additional sales reps was a particularly significant contributory factor to the company's success, according to Dr. Jaeger.
The world's largest trading firm in the area of fastening and assembly technology, with its base in Künzelsau/Hohenlohe Region, recorded a overall growth of 1.7 percent in its consolidated sales figures to attain a total of 5.45 billion euro (compared to the previous year's value of 5.36 billion euro). Adjusted for exchange rates, the growth rate amounted to 4.4 percent. In the second half-year of 2003, following the end of the war in Iraq, a change in earlier trends began to manifest itself. In the third quarter the company recorded a sales gain of 1.8 percent and in the final quarter this growth rate rose to 2.7 percent.
With the record sales figures achieved in 2003, the Würth Group has added to the successes of previous years. This is because, with the exception of 1975, the trading company has managed to generate record sales figures in each year of its 59-year existence. These record sales figures also confirm the effectiveness of the company policy adopted in the past 2 years, whereby the company disregarded the difficult market conditions and invested strongly in the sales force by recruiting additional sales representatives.
In the 2003 financial year, our foreign companies yet again grew at a quicker pace than their domestic equivalents. The segment of the overall sales figures in the Würth Group which was generated by foreign companies amounted to 59.6 percent (previous year's value: 58.8 percent). Outside of Germany we increased trading sales by 3 percent to 3.25 billion euro (previous Year's value: 3.15 billion euro). Adjusting the figures to take into account the fluctuations of the dollar, sales in our foreign companies grew by 7.6 percent.
The 2003 financial year proved to be unsatisfactory for our companies in Germany. Of the 5.45 billion euro which was generated by the Würth Group, 40.4 percent were yielded by the German companies. In Germany, sales fell by 0.1 percent to 2.2 billion euro (previous year's value: 2.21 billion euro).
Adolf Würth GmbH & Co. KG, the single largest company within the Group, suffered especially greatly in 2003 due to the prevailing conditions in the construction industry and other construction-related trades. It was the poorest year which the sector had experienced since German reunification. The Central Association of German Handcrafts estimated a decline of approximately four percent in the craft trade in 2003. Adolf Würth GmbH & Co. KG, which is traditionally up to 60 percent dependent on the craft sector, ended the financial year with a decrease in sales of two percent amounting to 788 million euro in total (previous year's value: 804 million euro).
The sales trends within the Würth Group, divided according to Würth line and AC line, yielded the following picture: Due to the higher proportion of sales generated in the US, the growth rate of the 120 firms within the Würth line was 1.0 percent below the overall growth rate recorded in the Würth Group. In contrast, the 174 firms within the Allied Companies line grew by 3.1 percent. The sales figures of the Würth line amounted to 3.44 billion euro (previous year's value: 3.41 billion euro). Total sales in the Allied Companies line, which generates approximately 37 percent of Group sales figures, amounted to two billion euro (previous year's value: 1.95 billion euro).
"Profit growth must take precedence over growth in sales - this is an objective which we implemented in 2003", explained Dr. Walter Jaeger at the presentation of the end-of-year financial statements, referring to the disproportionately large growth in operating result (17.4 percent) compared to the growth in sales recorded. With 330 million euro (previous year's value: 281 million euro), the 294 companies within the Würth Group generated a new gross profit record and thus surpassed the former record of 305 million euro set in the year 2000 by 25 million euro.
As a result of the consolidation- and stabilization-oriented company policy which was adopted, annual profits rose by 52 million euro on the previous year's values to 219 million euro. The consolidation of balance-sheet structures with low acquisitions, the securing of liquidity and the optimization of working capital led to a further improvement in the company balance-sheet ratio. The economic equity of the Würth Group increased to 1.5 billion euro in 2003. The Würth Group therefore boasts the significant equity ratio of 48.0 percent (previous year's value: 45.5 percent), a rate which lies far above the average held by other European trading firms.
In the most recent evaluation of the financial situation of the Würth Group by the rating agency Standard & Poor's, the company's credit standing and development was yet again positively appraised and the company was once more awarded the rating "A/outlook stable."
By the end of the 2003 financial year, the Würth Group consisted of 294 companies in 80 countries. Due to the course of consolidation which had been decided upon, the number of purchased and newly-founded companies remained moderate. There were 5 acquisitions as opposed to 13 newly-established companies, whereby regional expansion within the Würth line virtually stagnated. The new companies established were primarily subsidiary firms of our Allied Companies line.
In the past four years, the number of employees has increased by more than 10,000. Up to the 31st December 2003, the number of employees rose by 2,143 on the previous year's value (39,809) to 41,952. This corresponds to an increase of 5.4 percent. Included in this figure are 561 new positions generated through company acquisitions.
In the past two years, the Würth Group has invested massively in the development of sales worldwide. The recruitment of 1,519 additional sales reps in 2003 was a factor which contributed particularly to economic success. The number of sales reps rose by 6.9 percent (1,519) to 23,488 (previous year's value: 21,969). The number of internal employees rose by 624 to 18,464 (previous year's value: 17,840). In Germany, employee numbers grew by 1.5 percent to 12,835 (previous year's value: 12,648).