2023: Year of Extremes for VDL Groep

Estimated reading time: 5 minutes

The year 2023 showed us two sides, with highs and lows. Low points were the passing of Wim van der Leegte in November, the reduction in the number of employees at VDL Nedcar and headwind in the Buses & Coaches division. Due to incidental costs in the Car Assembly and operational headwinds at the Buses division, the results of the industrial family business with head office in Eindhoven fell. Highlights were the record turnover in the year that VDL Groep celebrated its 70th anniversary and the implementation of the ambitious investment programme facilitating clients in the growth markets of VDL.

Our combined annual turnover amounted to €6.354 billion in 2023, an increase of 10% compared with the annual turnover in 2022 (€5.752 billion). The net result fell from €298 million to €82 million in 2023, mainly due to one-off expenses in 2023. The normalised result, excluding extraordinary income and expenses, fell by €29 million to €147 million. The order portfolio (excluding the Car Assembly division) in week 13 of 2024 totalled €1.857 billion, compared with €2.038 billion in week 13 of 2023. This represents a decrease of 9%. The number of employees has fallen by 272 since the start of 2024, to 14,973 employees (a decline of 1.8%).

‘Record high turnover; results under pressure’

President and CEO Willem van der Leegte: “Because so much went well in 2023, we achieved a record high turnover. The situation in the Car Assembly and Buses & Coaches divisions has taken a heavy toll on our results, due to the costs of the social plan at VDL Nedcar and challenges at the Buses & Coaches division. We are therefore pulling out all the stops to maintain the level of investments requested by our clients in other activities. Our organic turnover growth in 2023 confirms that our years of heavy investment in innovation (total 2023 investment programme: €229 million in premises and other assets and an additional €181 million in research & development) have clearly had an effect. We are well positioned in our five growth markets, Hightech, Mobility, Energy, Infratech and Foodtech, to continue offering our clients added value.”

Subcontracting

The turnover of the Subcontracting division increased from €2,411 billion in 2022 to €2,733 billion in 2023, an increase of 13%. The drive to achieve advanced innovation and digitisation, as well as long-term and stable relationships with clients and other partners, further strengthened our position. The VDL subcontracting companies are increasingly able to supply clients with mechanical engineering, electronics and software. Because these operating companies are based in three continents, they can supply our clients worldwide, so that we experience less impact from geopolitical developments. The Subcontracting division has been profitable. The order portfolio of the Subcontracting division was worth €927 million in week 13 of 2023 and €920 million in week 13 of 2024.

Car Assembly

The turnover of the Car Assembly division rose from €2.085 billion in 2022 to €2.489 billion in 2023, an increase of 19%. With the approaching end of the production for BMW Group, as a result of work reduction due to volume decline, VDL Nedcar switched to a one shift operation on 1 November 2023. The total number of employees therefore fell from around 4,000 (start of 2023) to around 2,500 (end of 2023) and to around 450 colleagues (today). Because many employees received training in recent years - many obtained a diploma at VDL Nedcar - a large group of employees who have sadly had to leave the company in the past months have found a new job. The labour market shortage and high demand for technically trained staff also contributed to this. Former employees who do not yet have a new job can visit the so-called Work Centre and, in accordance with the social plan, make use of an individual outplacement programme.

The total production volume of VDL Nedcar in 2023 was 120,235 vehicles (2022: 101,672). VDL Nedcar is loss-making. Due to the continued lack of concrete new vehicle projects and after producing nearly 1.2 million cars in Born since 2014, the independent manufacturing of cars at VDL Nedcar is coming to an end.

We are currently talking to around 450 colleagues from VDL Nedcar about the extent to which they are suited for the broadening of our activities in Born, from the assembly of passenger cars to becoming a broad partner in sustainable mobility. The initial activities of VDL Special Vehicles and the Mobility Innovation Centre (MIC) - the building and conversion of special vehicles and the assembly of battery packs - are the first contours of our drive to achieve more independence from market and geopolitical developments on the one hand, and towards a stronger revenue model on the other. The MIC aligns with VDL Groep's broad mobility strategy in the areas of design, electrification, connectivity, autonomous driving, and systems. The planological and permit possibilities of the Born site offer spatial flexibility to accommodate new initiatives. With the broadening of activities, we are working towards increasing employment in Born again in the coming years.

Buses & Coaches

In 2023, the turnover of the Buses & Coaches division fell by 33% from €454 million in 2022 to €304 million. The main reason for this is delays in deliveries due to material shortages for the new generation VDL Citea, the electric city bus taken into series production in 2023. The demolition of the former production location and the startup of the new production location in Roeselare (Belgium) also posed challenges. The Buses & Coaches division is loss-making.

Based on the order portfolio, an increase in turnover is expected for the Public Transport sector in 2024. Upscaling of production for the new generation VDL Citea will boost deliveries to numerous public transport customers in 2024. Consequently, the new electric city bus will become a much more common sight on European roads. In 2023, the order portfolio of the new generation of VDL Citea was totally filled for 2024. The same applies to the production of the complete range of coaches. To safeguard sustainability and continuity in the long term, substantial investments will be made in research and development, among others in a new coach platform. With a team of software engineers, developers and testers, VDL Bus & Coach is also focusing on ‘smart’ mobility issues, such as connectivity, energy management, autonomous driving, mobility as a service and battery as a service with which clients are supported and the transport of the future made more sustainable. The order portfolio of Buses & Coaches expanded over the past 12-month period from €490 million in week 13 of 2023 to €453 million in week 13 of 2024.

Finished Products

The VDL companies that make up the Finished Products division jointly generated €828 million in revenue over the past year, compared to €802 million in 2022. This 3% increase can be explained by the fact that our companies in this division are well positioned across the board. The Finished Products division is profitable. The order portfolio decreased over the past 12-month period from €620 million in week 13 of 2023 to €499 million in week 13 of 2024.

Outlook

The turnover of VDL Groep will fall in 2024 compared to the record turnover of 2023, particularly due to the loss of turnover at VDL Nedcar. Excluding the Car Assembly division, organic turnover growth is foreseen of between 5 and 10%. Earnings are expected to recover slightly. The forecast investments, around a billion euros for the coming three years, are vital to continue facilitating clients in the growth markets of VDL Groep. To maintain liquidity, difficult choices will be made. The slightly reduced order portfolio of VDL Groep due to the declining demand from the market is still at a high level.

Certainly in the home base of VDL Groep, Brainport Region Eindhoven, the high-quality manufacturing industry is about to experience a huge growth spurt. At the same time, we are experiencing shortages, whether this concerns talent, space, housing or power. These will need to be resolved with combined forces. It is a positive sign that the outgoing cabinet is honouring its recently communicated financial commitment. How the Brainport Region needs to manage that scale leap is something that all the partners in the region must continue to discuss and share responsibility for. Based on our strength through cooperation, VDL Groep is convinced that together we will succeed.