The global technology group Freudenberg, Weinheim, has managed the pandemic crisis quite well. Although sales in 2020 was at Rs. 75,305 cr (8.8 billion Euro), significantly below the figure of Rs. 80,646 cr (9,467 million Euro) for the previous year, the company reported a profit from operations of Rs. 5,706 cr (669 million Euro) (previous year: Rs. 6,984 cr (820 million Euro). The impact was visible in India as well, as sales showed a 16% dip to close at Rs. 2,130 cr in 2020 as compared to Rs. 2,532 cr last year. Despite the effects of the pandemic, the international rating agency Moody’s Deutschland GmbH, Frankfurt am Main, confirmed its credit rating of Freudenberg at A3, with a stable outlook, as in the previous year. The Group therefore continues to hold an excellent single A rating.
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. Furthermore, the Group reacted rapidly in the crisis and implemented targeted measures that took effect.
Freudenberg globally continued to invest in future growth. Freudenberg conducted research and development activities amounting to Rs. 3,799 cr (446 million Euro) (previous year: Rs. 4,096 cr (480 million Euro). This represents 5.0 per cent of sales (previous year: 5.1 per cent), reflecting that the group’s R&D expenditure remained at a high level.
Especially for the Business Groups producing for the automotive, textile and mechanical engineering sectors, the economic environment globally and in India, at the beginning of the year was extremely challenging.
Assessing the Freudenberg performance in 2020, Georg Graf, Freudenberg Regional Representative, India, said, “In addition to the pandemic, the transformation in mobility (specifically 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 jeopardizing 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, digitalization and sustainability. Furthermore, we have continued a high level of research and development activities as an innovative technology group globally.”
Freudenberg’s seven Business Groups in India have a total workforce of some 2,852 employees at around 50 locations – running six R&D centers and 15 production sites with state-of-the-art shop floors in India.
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. India is the youngest-connect-democracy in the world and is increasingly being considered a preferred partner in manufacturing across industries with companies realizing that India is more than a consumption market but is also a manufacturing and R&D hub that allows foreign companies to create and export products to other markets in this region. While ease of doing business, transparency and e-governance has shown considerable improvement, skills development and technical training needs 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 on the markets of the Freudenberg Group, especially in the automotive industry.
Against this backdrop, Freudenberg is planning cautiously for the year ahead and expects a slight recovery of business in the markets relevant for the Group. It will continue to invest in long-term projects with key strategic topics remaining the transformation in mobility, digitalization, and sustainable solutions. The Group is developing its portfolio selectively and in a targeted way and will strengthen it with highly promising technologies through acquisitions.