VDL figures show impact of material shortage

VDL figures show impact of material shortage

Fighting over batches of steel, stocks that rise because products cannot be finished, car factory Nedcar that was closed for more than a month: the presentation of the half-year figures of industrial group VDL on Friday gave a gloomy insight into the impact of the material and parts shortages on the industry.

At first glance, CEO Willem van der Leegte did not present bad figures. The turnover of the Eindhoven family business (15,500 employees) amounted to 2.5 billion euros in the first half of 2021. That is far above the dramatic first half of corona year 2020 (2 billion euros) and already close to the 2.9 billion of 2019.

But there is no cheerfulness at VDL. The figures could have turned out much better had there not been such a great scarcity of parts and raw materials worldwide. The operational management of many of the approximately one hundred operating companies is difficult. Chip shortages have shut down the Limburg car factory Nedcar (4,000 employees) for more than thirty days this year. “But there is a shortage of everything,” said Van der Leegte. “Glass, wood, steel, plastic.”

It is really a search for available parties, says Van der Leegte. “A supplier called in the morning and said: we have a batch of steel for you. Well, we had to coordinate that with customers.” A few hours later, VDL called back – and then the match was over. “Very strange things happen.”

With small quantities of raw materials, VDL tries to serve the same quantities of customers, which means that production lines have to be converted relatively often. This means that production costs relatively much money, says Van der Leegte. And then the customers are not even always waiting for the products: they often do not receive other parts for their end products. “We then say: it is now coming your way. ‘No’, the customer then says.” The result: rising stocks.

The profit in the first half year amounted to 69 million euros. Van der Leegte expects the impact of the deficits to be even greater in the coming quarter. He hopes to achieve a turnover of 5 billion euros for the entire year (5.8 billion in 2019): the last quarter is traditionally somewhat stronger at VDL.

Low demand coaches

In theory, VDL is still entitled to around 36 million euros in NOW support over the past six months, the company announced on Friday. This is because at some operating companies the loss of turnover compared to 2019 is still significant. The bus division, in particular, is still struggling with low demand. “The coach sector is one of the hardest hit sectors of the corona crisis, perhaps even more than the events,” said Van der Leegte.

However, the company will not use the full 36 million. At operating companies that have made a profit despite the loss of turnover, the requested money will be refunded. The company does not disclose how much that is. In 2020, VDL made a profit of around 100 million euros, while it received approximately the same amount of money in NOW support.

Friday was also the first time that CEO Van der Leegte spoke about the failed hostile takeover of electronics company Neways earlier this year. VDL wanted to take the printed circuit board producer from the stock market from Brabant before the summer, but received no support from the management and was eventually trumped by the Twente investor Bernard ten Doeschot.

Van der Leegte emphasized that 70 percent of the shareholders quickly agreed with the offer of 13 euros per share. When Ten Doeschot went over this with the support of the management, VDL did not feel the need to go along with it, according to the CEO. “We thought 13 euros was fair.” That you then lose, “you have to accept”. Van der Leegte said it will announce in October whether VDL will sell the existing 27 percent stake in Neways to Ten Doeschot.

VDL figures show impact of material shortage
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