The slower economic growth in China and the fall in commodity prices, particularly the price of oil, had a negative impact on Endress+Hauser's business performance, analyzed CEO Matthias Altenhof at the annual press conference in Basel at the beginning of May: "The lower demand from the Chinese economy for raw materials and energy had a negative impact in many countries from the Pacific to South East Asia and South America." Political crises and economic uncertainty had a negative impact on the investment climate worldwide.

The Group's consolidated turnover increased by 6.5% to over 2.1 billion euros in 2015. However, as Chief Financial Officer Dr. Luc Schultheiss explains, growth was driven by exchange rate effects. In Swiss francs, the actual reporting currency of the parent company, turnover actually fell by 6.6%.

Key markets below expectations

Two major markets, the USA and China, were in the red. Germany, Endress+Hauser's largest market, was up, but fell well short of its own target. Europe (+1.9 %) developed robustly. Growth in America (+7.3 %) and Asia (+13.8 %) mainly reflected currency effects, despite the momentum in India. By contrast, sales in Africa and the Middle East (+13.1%) showed real momentum.

The Swiss Group companies coped with the Swiss franc's appreciation at the beginning of 2015 at the expense of margins. The higher production costs were only partially offset by cheaper procurement. The company aims to gradually make up for the location disadvantage with greater efficiency. Although Altendorf emphasizes: "We are not planning to relocate any jobs!"

New business areas are developing well

According to the company boss, consumer-related and non-cyclical sectors such as food, water/wastewater and life sciences developed well in 2015. Business with services and comprehensive automation solutions recorded high growth rates. Endress+Hauser also recorded above-average growth in the analysis sector. Matthias Altendorf: "This confirms our strategy of strengthening process analysis and developing laboratory analysis as a market."

Declining profit

As a result of the disproportionate increase in costs, the Group's operating result (EBIT) fell by 6.3% to EUR 251.3 million. The financial result was negative; an effect of currency losses and lower income from investments. This is reflected in earnings before taxes (EBT), which fell by 14.7% to 234.2 million euros. Despite a slightly lower tax rate, earnings after tax also fell by 14.1% to 164.7 million euros.

Profitability decreased accordingly. The return on sales (ROS) fell by 2.7 points to 10.9%. "This is still a very good figure for our industry," emphasized Luc Schultheiss. Productivity - defined as net value added in relation to personnel expenses - fell from 1.37 to 1.31. Here too, the CFO believes the company remains "at a good level".

Digital expertise is becoming more important

"The past year has shown us how important the right corporate strategy is," said the CEO. The global presence with sales and production, the broad support across different industries and the comprehensive portfolio of products, solutions and services had helped in the difficult environment in 2015. Endress+Hauser intends to continue along this path with the new Strategy 2020+. The development of digital expertise is another focal point.

According to Matthias Altendorf, 2016 will be "even more difficult" than last year. Endress+Hauser has set itself the target of single-digit growth and wants to maintain profits at a similar level to 2015. Matthias Altendorf: "We are currently still a long way off our targets, even if the figures are moving in the right direction." The CEO therefore wants to keep a close eye on costs.