Strong growth at LAPP in difficult times
31 per cent more sales, 10 per cent more employees
Stuttgart, 2 March 2023 - Despite the geopolitical and economic challenges, the Lapp Group has successfully completed the past 2021/2022 financial year (1 October to 30 September) was again successfully completed. The turnover of the global market leader for integrated solutions in the field of cable and connection technology climbed by 31 per cent to 1,864 million euros. The number of employees increased by 10.2 per cent to 5,055 employees worldwide as at the reporting date 30 September 2022. Earnings before taxes (EBT) increased to EUR 132.9 million.
"We have opened a new chapter at LAPP and positioned our company to be robust and fit for the future in a difficult environment. The core of our transformation is the continuous strengthening of our innovative power, a special focus on services and a comprehensive cultural change that will make our company even faster, more agile and more sustainable," emphasises Matthias Lapp, CEO of the Lapp Group. Matthias Lapp is realistic for the current financial year (2022/2023). "Together with our customers and partners, last year was a real challenge. We expect this to continue - we are consistently investing in the future."
Sound assets and financial position
LAPP once again exceeded the sales growth from the 2020/21 financial year in the past 2021/2022 financial year. Sales increased by EUR 441 million (+31%) to EUR 1,864 million. The rise in the average copper price and currency developments (+1.9%) contributed around 6.5% to this increase in sales. Adjusted for these copper and currency effects, this still results in significant sales growth of 22.6%. "This growth was mainly due to higher capacities and market share gains in our focus markets in combination with higher market prices. There were also general catch-up effects along the supply chains," explains CFO Jan Ciliax.
The Group made strong gains in all three regions of LAPP. EMEA (Europe, Middle East, Africa), the most important region with around two thirds of Group sales, improved by 29.4% to EUR 1,352 million. In the Americas region (USA, Mexico, Canada, South America), sales soared to EUR 192 million - an increase of 40.2%. And in the APAC region (Asia, Pacific, Oceania), sales climbed by 32.7% to EUR 320 million. As incoming orders at LAPP were +6.5% higher than sales on average over the year, the order level also increased as at 30 September 2022 to EUR 356 million, up significantly on the previous year's reporting date.
Earnings before taxes (EBT) increased to EUR 132.9 million and the return on sales rose by 1.5 percentage points to 7.1%. The significant pressure on margins due to increased material and logistics costs was offset by improved capacity utilisation in the factories and a disproportionately low increase in personnel costs and other expenses. At 44%, the equity ratio was up on the previous year and thus remained at a consistently high level. "The asset and financial position of LAPP remains rock solid and will allow us to continue to implement the strategic measures and investments for the benefit of our customers in the coming years," emphasises Jan Ciliax.
Figures at a glance
| FY 2020/2021 | FY 2021/2022 | Change | |
|---|---|---|---|
| Total turnover in € million | 1,423 | 1,864 | 31 % |
| Earnings before taxes in € million | 82.4 | 132.9 | 61.3 % |
| Employees worldwide | 4,586 | 5,055 | 10.2 % |
| Equity capital ratio in percent | 42.3 | 44.0 | 1.7 % products |
Pillars for change at LAPP
LAPP has changed significantly in recent years. Under the leadership of Matthias Lapp, previously responsible for the EMEA region with the highest sales and CEO of the Lapp Group since 1 October 2022, the course has been set for a successful future in all relevant areas of the company and new, bold developments have been initiated. "In order to continue to grow successfully, our family business needs a breath of fresh air and strong entrepreneurship. We want to be at the forefront of technology and culture. To achieve this, we must constantly put ourselves to the test. In view of the current changes in the economy and society, this is no easy task, but it is all the more important," said Matthias Lapp. The central pillars of change are:
1. High investments in digitalisation
LAPP invested even more heavily in intangible assets and property, plant and equipment in the past financial year, totaling EUR 40.2 million (previous year: EUR 25.8 million). The focus was on software acquisitions and digitalisation projects as well as the further expansion of the ERP system in order to further optimise automation and processes in the areas of finance, HR, production, supply chain, services and procurement. An important milestone in the digital transformation is the go-live of the new online shop and customer portal, the functionalities of which are being continuously expanded and developed. Last but not least, LAPP has driven forward the expansion and further automation of its production plants in France, Germany, India and China.
2. Pioneering role in new technologies and services
LAPP positions itself as an innovative solution provider and technology leader. To this end, the family-owned company has reorganised the global research and development division and the management of laboratory and test centre activities. For example, LAPP has once again succeeded in tackling economic and industrial trends by means of innovations:
- With zeroCM® technology, unwanted interference currents in industrial systems can be prevented.
- With the Health Check Service, LAPP is expanding its range of services for customers. The service helps to prevent and minimise the risk of industrial machinery failures.
- The multi-award-winning MOBILITY DOCK makes it possible to charge an electric car at any household socket with any type 2 charging cable.
"At the same time, we have further expanded our portfolio in our strategically important area of industrial communication. In this area alone, we were able to achieve disproportionately high sales growth compared to the Lapp Group as a whole," adds Georg Stawowy, Chief Innovation and Technology Officer.
3. Challenging markets, strong customer relationships
An important focus is the expansion of digital sales. "In a customer-centric solutions business, we have to pay particular attention to establishing the right processes and offering customers added value," emphasises Dr Christoph Hiller, Chief Sales and Marketing Officer. The core market of LAPP continues to be mechanical and plant engineering. Other important sales markets include infrastructure, the food industry, logistics and, within the energy sector, photovoltaics and mobility in particular. Some examples:
- Developing together with customers
Using fast prototyping, the LAPP Singapore team develops solutions in the field of intralogistics together with a major international customer. Traditionally, elaborate samples are first constructed and tested in the development process. Today, physical samples are created using 3D printing to verify haptics, optics, handling, and assembly in production and at the customer's site. This accelerates the innovation process.
- 700 kilometers of cable for mega airport
In November 2024, Korea's Incheon Airport is expected to be the third largest international airport in the world with a handling capacity of 106 million travelers per year. LAPP's connectivity solutions will guarantee safe and reliable operations at the 60 new passenger boarding bridges and the baggage handling system, which will cover a conveying distance of 184 kilometers when completed. In total, the LAPP Korea team has already supplied 700 kilometers of cable.
- Future markets of alternative energy sources
In addition to connectivity solutions for photovoltaics and wind, demand is increasing worldwide for alternative energy storage systems & energy sources: For the Korean company LG Energy Solution, leading manufacturer of lithium-ion batteries and energy storage systems, LAPP supplied 338 kilometers of cable for 393 energy storage systems.
For the Dutch company Nedstack, leading supplier of high-performance fuel cell solutions, LAPP developed customized "plug and play" assembly solutions for different fuel cell systems. The customer was thus able to reduce its costs and standardize the cabling.
Hydrogen technology is also an exciting future topic for LAPP. For the company Maximator Hydrogen, leading manufacturer of hydrogen filling stations, LAPP supplied customized connectivity solutions that meet the high safety requirements, especially with regard to explosion protection.
4. Employee motivation through culture change
Due to the strong order situation and the ambitious goals of the Strategy 2027, LAPP has significantly increased the number of employees. As of September 30, 2022, LAPP had 5,055 employees worldwide - 10.2 percent more than the previous year. "We want to attract, develop and retain the best talent in our industry for LAPP. This is only possible with a culture of constant adaptation and lifelong learning", says Matthias Lapp. "This is also reflected in the organizational structure with new, global and cross-functional cooperation. Only in this way can we succeed in being even more powerful and faster on the market."
An important building block in the company's change process is the cultural change that LAPP initiated four years ago. And it has been successful: in the mood barometer, for example, the proportion of satisfied employees has risen by 12.8 percent to 87.5 percent. And the most important indicator of employer attractiveness - the likelihood of recommendation - recorded an increase of 10 percent. "I am pleased that our efforts are being recognized and rewarded. But we still have a long way to go. We need to grow closer together globally as a group. Although we started early, we are still at the beginning of the transformation", says Matthias Lapp.
5. The path to sustainability
On the market side, LAPP is positioning itself in the area of sustainability and offers products specifically for the solar and wind energy industry, for rail transport and for the charging infrastructure of electric cars. A central credo is: Start with yourself. All LAPP national companies worldwide are encouraged to operate their buildings or plants as energy-efficiently as possible. Wherever possible, the sites purchase green electricity or operate their own PV systems.
The concept of sustainability also plays an important role in logistics. Decentralized warehouses and delivery partnerships are used to minimize transport routes. For example, truck capacity utilization has been increased from 60% to 80% and transport distances have been reduced by a third. However, LAPP's commitment to sustainability also focuses in particular on the product and the manufacturing process. LAPP is committed to the efficient use of raw materials and the environmentally compatible handling of chemicals and waste.
Outlook for the current fiscal year 2022/2023
Increased inflation rates, continuing uncertainties regarding material availability, and the economic and social impact of geopolitical tensions will continue to shape the current fiscal year. "Despite these challenging conditions, we are encouraged by the continuing good demand situation and a high order backlog", says Matthias Lapp, adding, "The flexibility of our supply chain was a key success factor in the past fiscal year. We will continue to expand this." Added to this are consistent investments in establishing a global sales, procurement, and production network. Just as consistently, LAPP also intends to continue investing in digitalization, innovation, sustainability. "And above all in our employees, who make all the difference", emphasizes Matthias Lapp. For the current fiscal year 2022/2023, the company is currently assuming a further moderate increase in sales.