Strong surge in growth for LAPP

Turnover up 26.1 per cent, earnings 177 per cent better

Stuttgart, 16 February 2022 - LAPP has started the 2020/21 financial year (1 October to 30 September) with with exceptionally strong growth. The turnover of the global market leader for integrated solutions in the field of cable and connection technology rose by 26.1 per cent to 1,423 million euros. The number of employees worldwide increased by 30 per cent as at the reporting date. September 2021 by 7.2 per cent to 4,586 employees and earnings before taxes (EBT) even improved by 177 per cent to 82 million euros.

"We are winners of the digital transformation. During the pandemic, we vigorously advanced our corporate processes in this regard. Thanks to a strong global team and our innovative portfolio, we were in a position to react even more quickly to market demands. We are agile and innovative and set to consistently continue our course towards value creation and sustainable growth, explains Andreas Lapp, Chairman of the Board of Lapp Holding AG, adding: "The fact that we were classified as system-relevant worldwide, and therefore did not have to shut any Lapp Group companies down during the pandemic, was also very helpful to us".

Strongest growth in LAPP's history

The increase in turnover of 295 million euros is by far the strongest increase in the history of LAPP. The average copper price, which increased significantly over the previous year (+38.5%), had a significant impact. Currency rates, dropping 1.4% over the previous year, only had a slight impact. Adjusted for these copper and currency effects, real and yet very strong growth in turnover of around 16.3% emerged. "This significant increase is mainly attributable to the significant market recovery in the industrial environment, combined with gains in market share, and was supported by general catch-up effects along the supply chains", emphasises Jan Ciliax, Member of the Board for Finance at Lapp Holding AG.

Significant growth in all regions

Turnover has developed successfully across all regions of the LAPP Group: In the EMEA (Europe, Middle East and Africa) region turnover grew by 25 per cent over the previous year to EUR 1,045 million. The share of turnover from this region remained unchanged at around 73%. Turnover increased even more sharply in the APAC region (Asia Pacific, including India), reaching 242 million euros at the end of the year, around 37% higher than the previous year. LAPP's regional presence, with production and development capacities in India, China, Korea and Indonesia, was particularly noteworthy here. The Americas region (North, Central and South America) also saw exceptionally strong growth of 16 per cent to 137 million, after sales in the region remained stable in the previous year despite corona.

Stable and robust finances

LAPP’s financial performance is extremely stable and robust. Earnings before interest, tax, depreciation and amortisation (EBITDA) increased significantly by around 51% to 140 million euros. Earnings before taxes (EBT) rose to 82 million euros (+3.2% point return on sales) despite significant cost increases in procurement and in supply chains of EUR 30 million over the previous year. Equity rose significantly to around 390 million euros; the equity ratio remained at a consistently high level of 42.3% (previous year: 45.7%).

Strong surge in investment

Despite the pandemic and the associated cost awareness, the LAPP Group also made considerable investments in both intangible and tangible assets during the past financial year with targeted investments of EUR 26 million. Special emphasis was placed on software and digitisation projects, as well as the expansion and harmonisation of global ERP systems (SAP HANA). Investments in property, plant and equipment focused on the production and logistics sites in Europe and Korea, as well as on an in-house certified development laboratory for Lapp Mobility GmbH.

In addition to the aforementioned investments, the Lapp Group increased its minority stake in the Italian KU/Unika Group to 100 per cent and fully integrated the companies into the Lapp Group as at 1 July 2021.

More employees worldwide

Due to the expansion of capacities, particularly in production and logistics, the number of employees (excluding temporary staff) increased as at the reporting date 30 September 2021 by 7.2 per cent to 4,586 employees worldwide. At 8.5 per cent, the increase in the commercial sector was higher than in the trade sector (+5.6 per cent). In order to ensure profitable and above-average growth in the future, investment was particularly directed towards developing employees’ digital skills. LAPP offers numerous digital formats under the motto "Culture of lifelong learning and trust". "It is particularly important for us to step up emphasis on the ONE LAPP concept. Here, we seek to combine agility and individual customer focus with globally consistent processes and guidelines. This forms the basis for continued successful growth", explains Andreas Lapp.

LAPP addresses the hot industry topics

Industrial communication is at the heart of developing new products and services at LAPP. LAPP managed to grow particularly strongly in this sector in the past financial year with its innovative solutions. Ethernet-based products posted a 32 per cent increase in turnover. In the North America region, turnover in the industrial communication sector increased by as much as 38 per cent. Introduction of the ETHERLINE® GUARD, a "guardian" for predictive maintenance of data cables subject to particular stress, attracted a great deal of market interest. Lapp Mobility GmbH presented its new MOBILITY DOCK at the IAA trade fair. This is a new, space-saving charging device that enables an electric vehicle to be charged from a normal household socket in combination with any type 2 charging cable.

"LAPP is at the forefront of the major industrial trends and is actively and is actively involved in research," says Georg Stawowy, Director of Technology and Innovation at Lapp Holding AG. As Single Pair Ethernet (SPE) is a key technology in the Smart Factory, LAPP is involved in the SPE Industrial Partner Network and with ETHERLINE® T1 offers a suitable portfolio of cables. LAPP also sees great potential in the expansion of DC technology for industrial production facilities. Here the company has already launched its own DC portfolio and is active in the DC-Industry 2 research project, which is supported by the German government. The classic product portfolio has been further expanded across all product areas. This includes a new ÖLFLEX® SERVO FD 7OCS hybrid servo cable for modern drive solutions. LAPP was also the first supplier in the industry to launch a lead-free SKINTOP® brass cable gland. "We strive to influence the entire material cycle and ensure that lead can be banned across the value chain in future," adds Georg Stawowy.

The assembly business under the name ÖLFLEX® CONNECT is also developing very successfully. For example, LAPP also took over the complete assembly of cable sets for an all-electric injection moulding machine for Sumitomo (SHI) Demag Plastics Machinery GmbH in Schwaig near Nuremberg. This enabled the customer to significantly increase its productivity. Another example is HARWI, a Dutch sawing machine manufacturer: with the help of LAPP’s ready-made assemblies, the time to produce a machine was reduced by four hours. "Ultimately, our customer's success is also our success," emphasised Georg Stawowy.

LAPP also benefits from the boom in the photovoltaics industry. For many years, the company has offered a tailored portfolio and has grown by 32 per cent in this sector. One of the largest orders comes from South Korea. For the photovoltaic power plants in the Saemangeum area, LAPP is supplying the cables - 2,700 kilometres to date.

Special application examples

In addition to the aforementioned success stories Sumitomo (SHI) Demag Plastics Machinery GmbH and the company HARWI, LAPP has further expanded its expertise in the field of solar technology and supplied the necessary connection solutions for the largest solar park in the Dominican Republic, built by F&S solar from Euskirchen. On an area of two square kilometres there are 215,000 photovoltaic modules, with an output of 58 megawatts. 1,060 kilometres of string cables to connect the modules, 34 kilometres of DC main cables for the connection to the inverters, 39 kilometres of fibre optic cables for data transmission and 115 kilometres of aluminium cable for the medium-voltage section were supplied by LAPP for this sustainable project.

Another success story comes from Lapp Mobility GmbH, a corporate start-up from LAPP. The company supplies HELIX and spiral charging cables for the car manufacturer Hyundai in Germany. The charging cables are used for the Kona Electric, Ioniq electric and Ioniq plug-in hybrid vehicles. The demand for the charging solutions from LAPP is growing continuously. Since 2022, the charging cables from LAPP have also been available for the new, all-electric IONIQ series and at KIA Germany, a sister company of the Hyundai Group.

Focus on green transformation

Alongside the digital transformation, LAPP is pressing ahead with green transformation. The focus is on environmentally friendly and sustainable management and responsible use of all natural resources.

One of the main goals for the coming years is to reduce the carbon footprint of LAPP products. "We have set ourselves the goal of achieving a 20 per cent CO2 reduction in our products by 2025," says Jan Ciliax, who is responsible for sustainability on the board of Lapp Holding AG. To this end, LAPP is currently determining the CO2 footprint of its products and identifying potential for optimisation. Targeted projects around the world are working on product design, the use of sustainable materials and the use of energy in production processes.

"It is important to look at our product lifecycle in a holistic way, from raw material suppliers through to customer delivery (cradle-to-gate), rather than just concentrating on energy consumption for buildings and production", stresses Jan Ciliax. LAPP is also increasingly directing its portfolio towards customers in sustainable industries and has been offering tailored connection solutions for photovoltaic and wind power plants, as well as electromobility, for several years now.

LAPP has been intensifying its efforts to optimise energy consumption in sales and production buildings over the last few years. Green electricity has been used across Germany since 2019. Thanks to its geothermal heating, a photovoltaic system and roof greening, the European headquarters in Stuttgart has been playing a pioneering role in sustainable construction within the Lapp Group since it was built.

Outlook for the current financial year

As at the reporting date of 30. September 2021, the order books were 130 per cent above the previous year's figure. Despite the noticeable effects of the pandemic, supply shortages and high raw material costs, LAPP also assesses the 2021/22 financial year quite positively and anticipates further moderate growth in turnover in all regions. In order to support this growth digitally, customer-specifically and regionally, LAPP plans to invest heavily with a triple-digit million euro sum over the coming years.