Business model / Strategy
The Dürr Group is one of the world's leading mechanical and plant engineering firms with extensive expertise in automation and digitization/Industry 4.0. We supply the automotive and furniture industries as well as general industry.
Business Model
We achieve around 55% of our sales in the automotive business. We also supply equipment to the woodworking industry (among others furniture industry), the machinery industry, and to the chemical, pharmaceutical and printing industries. About 40% of our activities are in plant engineering, 60% are in the machinery industry. We focuse on technological niche markets and achieve high market shares of 25 to 50% worldwide.
Production depth within the Dürr Group is relatively low. As a result, we can react more flexibly in an economic downturn, and has a smaller business risk than companies with a high production depth. The Dürr Group achieves typically high ROCE margins. Due to its relatively low vertical depth of production and its focus on NWC optimization, we can generate a high level of cash flow and free cash flow. Service business is becoming more and more significant, as it leads to recurrent and steady business.
The Dürr Group depends on the long-term capital spending behavior of the industrial customers. Growth rates of around each 2-3% are expected long-term in the automotive industry and in the furniture industry as well. Growth is driven by the emerging markets; with China in the lead. The share of the emerging markets in Dürr Group's incoming orders of 40-50% is very high.
Mid-term strategy
Our mid-term strategy is the roadmap for profitable growth and for raising earnings to a top level in the international mechanical and plant engineering sector. The new strategy is linked to medium-term targets for four key indicators:
- High profitability: The EBIT margin is to widen gradually to at least 8% by 2023. We consider this level to be appropriate in view of the increased proportion of mechanical engineering business in our portfolio.
- Sales growth: Organic sales growth is expected to average 2 to 3% and thus slightly exceed the expected growth in production and demand in our markets.
- Attractive return on capital: We are aiming for ROCE of at least 25%, underpinned by high EBIT contributions from mechanical engineering and low capital employed in plant engineering.
- Increase in the proportion of service business: Service business with its larger margins is to account for up to 30% of Group sales. Efficient service business safeguards the Group’s earnings and increases customer satisfaction.
In order to achieve our goals and expand our leading position in the world market, we are continuing to push ahead with digitalization (digital@DÜRR) as a central strategic element. In addition, we are positioning ourselves to optimum effect in four strategic fields: global presence, innovation, efficiency, lifecycle services. We have also defined four enablers, i.e. supporting functions that are particularly important for the successful implementation of our strategy: sustainability, mergers & acquisitions, finance organization and people development.
Digitalization
Digitalization is the most important future trend in mechanical and plant engineering. It enables our customers to achieve greater plant availability, reduce costs and automate the production of individualized products. Digitalization is relevant for all four strategic fields in the Dürr Group: It exerts a decisive influence on innovation management and our service offerings. In addition, digital processes and tools are the key to efficient collaboration and global networking within the Group. We are continuously expanding our range of data-based software applications, intelligent products, digital services and corresponding business models. In this way, we are tapping into new sales potential and shielding our business from competitors in the software industry. We have a crucial advantage over them in that we combine digital know-how with expert knowledge of production processes – also known as “shop-floor competence”.
To secure our position as a technology leader in mechanical and plant engineering, we are resolutely driving digitalization. Our smart applications help to make production more economical and sustainable – for carmakers and local carpenters alike.