Record year 2017: Festo continues strong growth

Strong growth in the 2017 financial year

               

Festo concluded the 2017 financial year on a very successful note. With sales of approx. €3.1 billion, the target of €3 billion was clearly surpassed, despite negative currency effects in the course of the second half-year. Festo thus grew by over 12% against the previous year. As before, the company registered most of its sales in the core market of factory automation.

 

“2017 was a record year for us, with very good results. We are proud of this accomplishment by our employees throughout the world. Aided by an excellent global economic situation, we have grown not only in our domestic market of Europe, but also especially in our strategic growth markets in Asia and America. We have thereby created ideal conditions for further growth in 2018,” enthused Alfred Goll, Spokesman of the Management Board.

 

The core markets, such as automotive and the food industry, contributed to this growth along with the new business fields. The company particularly benefited from the rapidly growing market of the electronics industry. “This shows that we have set the right strategic course for the future. Our greatest opportunities for growth lie here,” explained Alfred Goll. The business sectors Electric Automation, Process Automation, and LifeTech with medical engineering and laboratory automation, also developed very dynamically.

 

With 21%, the region of Asia showed the strongest growth over the previous year’s figure, followed by the Americas with 13% (USA 15%) and Europe with 10%. The company also achieved record sales in the domestic German market (+10%) and was able to further extend its leading market position. China was the most important growth market worldwide, with an increase of 32%; both the electronics industry and the automotive sector were marked by very strong growth in that country. “We will continue to extend our activities in the growth markets, in order to benefit from these very good market developments in future, too,” said Alfred Goll.

 

Festo Didactic further extended its training offer for Industry 4.0 in 2017 and reinforced its key position in this segment worldwide.

 

Last year, Festo invested strongly in the development of its global production and logistics capacities and in digitalisation. Around 8% flowed into the research and development of new products, applications and services, as in the previous years. The company is thereby securing its innovation and technological leadership for the long term.

 

New appointments likewise focused on the growth topics of digitalisation and the establishment of additional capacities at the various plants. An overall workforce of 20,100 (previous year: 18,800) worldwide was employed at the end of 2017, including 8,800 in Germany (previous year 8,500) and 11,300 in the Festo companies abroad (previous year: 10,300).

 

Product and digitalisation strategy: networked with the customers

 

Festo is strategically addressing the topic of digitalisation as part of its LEAD Strategy and created a new area, Digital Business, in 2017. “Digitalisation is a substantial component of our corporate strategy. With digitalisation, we are pursuing four objectives: we want to increase productivity for ourselves and our customers, sell added-value services, secure growth and extend our innovation leadership,” emphasised Alfred Goll.

 

Festo is driving digitalisation forward with its current product range, new digital products and services, new business models, the digital customer journey, the establishment of a digital infrastructure in the company’s own value-added processes and by means of new working environments and qualification 4.0 for its employees and its customers.

 

“Digitalisation, e-mobility, robotics and artificial intelligence are trends that are substantially determining our business and that of our customers. We are not just speaking about IoT-capable products here, but about the entire digital customer journey – from a customer’s very first enquiries, through the engineering, up to commissioning and servicing. By this means we can make our customers’ production processes leaner, faster and more productive,” said Dr. Ansgar Kriwet, Member of the Management Board Sales.

 

The Cloud services and IoT products are an important future topic in this connection. “Not only production plants are now increasingly automated: even the components themselves are becoming more intelligent and are being networked to an increasing extent, thanks to the increased use of software components – in keeping with “Connect and Collaborate”, the motto of this year’s Hannover Messe. For us, this means focusing even more strongly on software development and depicting more and more product functions in the form of software,” explained Dr. Frank Melzer, Member of the Management Board Product and Technology Management.

                               

A prime example of this development is the Festo Motion Terminal, with the fusion of hardware and software to yield the first valve to be controlled by apps. Specifically developed digital platforms such as the IoT automation platform and an IoT gateway give the hardware simple, innovative access to data that can generate new services for customers.

 

Strong development of the supply chain sets the scene for further growth

 

To reach its growth targets, Festo will make further substantial investments in its production, logistics and supply chain excellence, with the emphasis on Asia and the Americas. A significant role is played here by the reorientation towards coherent process organisation (“end-to-end”) and networked global production 4.0 with intelligent manufacturing methods and processes.

 

In November 2017 the cornerstone was laid for the new plant in China, the Global Production Center (GPC) in Suncun. The company is also investing in the establishment of a new logistics centre in China. The Asia hub in Shanghai will supply a large part of the Asian market by 2020. This all serves the objective of securing market supplies for Asia, and particularly Greater China, on location with an entirely autonomous supply chain in future.

 

At the same time, significant investments are being made at the U.S. site in Mason, Ohio, in order to extend both logistics and local manufacturing to supply the local market.

 

Further investments are also scheduled for this year and the coming years in Germany, with the aim of further reinforcing market supplies for Europe; for example, the Customer Service Centre (CSC) at the Rohrbach location in Saarland is being extended.

 

Outlook for 2018: the ideal starting point for the next sprint

 

The company will continue on its course for growth in 2018.

 

New digital products are fuelling this process of growth. The market introduction of the first digital products, such as the Festo Motion Terminal and the Festo App World, has got off to a successful start in 2018. Didactic is continuing to promote qualification 4.0 with the “Digital Education” project. New products are also in the pipeline for electric automation, process automation, the electronics industry and in the key product range of pneumatics, in systems and especially for the Chinese and U.S. markets. To keep pace with the rapid developments in medical technology and laboratory automation, the Technical Engineering Center (TEC) in Boston, at the heart of the life sciences industry, was opened in January 2018.

 

“After the record year 2017 and with a fireworks display of digital products in 2018, this is now the ideal starting point for us to undertake the next sprint. There is still a positive mood in the global economy. We are therefore expecting above-average growth this year too,” said Alfred Goll with an optimistic view of the future.