Despite Turbulent Conditions, VDL Groep Showed Recovery in 2021

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2021 was a hectic year for VDL Groep. External factors caused substantial turbulence. Nevertheless, the industrial family business in the high-end manufacturing industry with its head office in Eindhoven showed resilience: despite the fact that it did not achieve the results realised before the coronavirus pandemic, 2021 brought recovery. The year 2022 has once again been marked by turbulence due to external factors. However, VDL Groep continues to invest and innovate.

The combined annual revenue amounted to €4.955 billion in 2021, an increase of 6% in comparison with the annual revenue in 2020 (€4.686 billion). The net operating result rose from €97 million in 2020 to €145 million in 2021. By way of comparison, combined sales in 2019 amounted to €5.780 billion and the net result to €156 million. In week 11 of 2022, the order portfolio (excluding the Car Assembly division) stood at €1.734 billion, compared to €1.441 billion in week 11 of 2021. The number of employees rose during the same period by 1,196 to 15,926.

‘Operationally strong recovery’

‘Partly on the basis of our very well-filled order portfolio, we had strong confidence from the start of 2021 that we would recover from the coronavirus dip in 2020,’ says President & CEO Willem van der Leegte. ‘At the same time, there were also challenges and uncertainties due to global trade conflicts and the coronavirus pandemic. The limited availability of materials and price fluctuations meant that we faced unbalanced supply chains. Until the end of the third quarter of 2021, we applied for emergency wage cost subsidies (NOW) in relation to the coronavirus pandemic totalling €70 million, which was used to continue salary payments for employees. Partly as a result of this, no jobs were lost. Our strategy of spreading risks through diversification of activities meant that the first half year of 2021 (combined revenue of €2.5 billion, net result of €69 million) was reasonably good. In the third quarter, deliveries were somewhat delayed and in the fourth quarter, sales were once again reasonable. Below the line, we are certainly not dissatisfied and we are seeing a strong recovery in the operational results, despite the fact that we are not yet back at the level of before the coronavirus crisis. We also faced a cyber-attack in the autumn, as a result of which we had to work offline for almost a month. However, at least 95% of the deliveries were back up to speed before the end of 2021.’

Subcontracting

The sales of the Subcontracting division increased from €1.503 billion in 2020 to €1.851 billion in 2021. This increase of 23% was mainly due to the fact that the companies active in this division prepared positively to facilitate customer growth. The focus on high-quality innovation has further strengthened our position in this sub-market. The Subcontracting division is profitable. The order portfolio rose from €559 million in week 11 of 2021 to €855 million in week 11 of 2022.

Car Assembly

The revenue of the Car Assembly division decreased by 12% from €2.320 billion in 2020 to €2.051 billion in 2021. The year was closed with a positive result. The coronavirus pandemic is still having a substantial impact on the global automotive industry. As a result of a world-wide shortage of electronic components, production at VDL Nedcar was halted for as many as 48 days in 2021. In the first two months of 2022, 18 production days were already lost for the same reason.

We announced in June that VDL Nedcar would build vehicles for the American start-up Canoo. However, together with Canoo, we reported in mid-December that this partnership would not be continued. Canoo and VDL Groep are investigating possibilities for continuation of their cooperation, separately from VDL Nedcar.

At the end of 2021, we informed our VDL Nedcar employees that we are conducting talks with the American company Rivian on cooperation on various fronts. These talks are continuing. In 2021, 105,214 Minis and BMWs were built at VDL Nedcar (production volume in 2020: 125,666 cars). Disruptions in the supply chain resulting from the war in Ukraine halted production in our car manufacturing plant in Born from week 10 of 2022. Preparations were made to resume production on Monday, 28 March.

Buses

The sales of the Buses division increased by 13%, from €339 million in 2020 to €384 million in 2021. This is a loss-making division. The coronavirus pandemic retains a strong grip on the Buses division, and in particular the coach activities. The travel sector has not yet recovered to the pre-pandemic level, as a result of which demand for touring cars is virtually zero. Nevertheless, we announced deliveries of dozens of touring car buses in 2021, which were often used for public and inter-city transport. Because governments, as a contracting authority or as a direct customer, must ensure a structurally covering public transport network and do not want to delay climate goals, public transport companies continue to focus on making the fleet more sustainable by using new zero-emission vehicles. VDL is well positioned as a forerunner in the field of electric mobility. We announced various orders in 2021, including our biggest order for electric urban buses so far, involving 102 electric buses for Oslo.

The path taken towards concentrating production of electric city buses in Valkenswaard and Roeselare is taking shape. In February 2022, we celebrated the start of construction of our new hyper-modern, CO2-neutral factory in Roeselare, from which the first new electric buses produced will drive out in the first quarter of 2023. We are reinforcing our ambitions in this way: we want to continue to pioneer e-mobility in Europe. Even in these difficult times for the Buses division, our view remains focused on the long term and we continue to invest in innovation. Among other things, we are working on further development of our VDL Futura touring car and the new generation of electric city bus VDL Citea. We have reached the milestone of 1,000 electric buses, operating in 11 countries. Together with these buses, we are on the way to 200 million clean, electric kilometres. This is equivalent to 5,000 times around the world. The Buses order portfolio decreased from €510 million in week 11 of 2021 to €421 million in week 11 of 2022.

Finished products

Our companies that make up the Finished Products division jointly generated €669 million in revenue over the past year, compared to €524 million in 2020. This 28% increase can be explained by the fact that reduced market demand as a result of the coronavirus pandemic has recovered. The Finished products division is profitable. The order portfolio increased over a 12-month period from €372 million in week 11 of 2021 to €458 million in week 11 of 2022.

Outlook

The order portfolio of VDL Groep (excluding the Car Assembly division) increased by as much as 30% in 2021 and remains at a high level. Under normal circumstances, this growth would be translated into an increase in revenue, but we continue to face uncertainties as a result of disruptive external factors on the global stage.