The Grundfos Group not only gained considerable market shares, it also succeeded in reaching its goals of DKK 15 billion turnover one year before expected. Whereas 2 percent of the growth derives from acquired companies, the organic growth in turnover was 13% against 7% the previous year.
Profit before tax reached almost DKK 1.5 billion, which is 9.6% of turnover. This is 18% more than the previous year and considerably better than budget.
The record in profit is primarily to be explained by the fact that growth in turnover as well as capacity utilisation were bigger than expected, and in addition the Group succeeded in limiting costs despite the high level of activity. On the other hand, the result of the financial year was once more influenced negatively by considerable price increases in the most common raw materials such as copper, aluminium, stainless steel and cast iron.
Despite work pressure there was time for intensifying focus on the company’s social responsibility and 2006 became the year in which the Grundfos Group published its first Sustainability Report aiming to inform the society about the company’s efforts in the context of social responsibility and the environment.
After the launch of the first A-labelled circulator pump in 2005, Grundfos is pleased to note that these pumps in 2006 gained widespread success in the European markets. In Denmark every second circulator sold today is a low-energy pump and in Germany the number is rapidly growing, whereas there is a growing trend in several other countries. The number of low-energy pumps sold in 2006 resulted in energy reduction corresponding to the total energy consumption of 118,000 West European households.
Continuous focus on innovation
The Group’s development costs in 2006 were DKK 680m, which is 4.4% of turnover. The aim of investing 4 or 5% of the Group’s total turnover in R&D is maintained, and innovation is still a crucial issue throughout the Group.
”In 2006 we focused particularly on innovation and we succeeded making it clear to all parts of the organisation that we shall naturally continue to develop innovative pumps, but also that we must all be innovative in the ways we think and act in other connections,” said Group President, Mr Carsten Bjerg, mentioning the Group’s New Business activities as an obvious example:
”In the New Business organisation we develop a number of new business areas into commercialisation and in the long term they may have considerable business potentials and in addition satisfy some of the world’s most urgent requests for water, water purification and low-energy solutions.”
DKK 20 billion in 2010
The Board as well as Group Management expect to maintain the growth of turnover in 2007, although on a somewhat lower level. The organic growth is budgeted at about 8%. Also the high levels of profit in recent years are expected to be maintained with profit before tax budgeted at a little more than DKK 1.4 billion.
The scheduled investments in 2007 of app. DKK 1.5 billion are the highest ever and reflect the Group’s priority of investing in long-term growth. In addition to expansion of the product range the investments will primarily be in continuous globalisation. For instance, this year new factories will be opened in Mexico and Hungary. In addition, the Group’s R&D activities are going through a thorough globalisation process – outside Denmark development units have been established in Hungary, India, China, Finland and the USA.
After reaching its financial goals one year in advance, Grundfos has set a new goal – reaching a DKK 20 billion turnover with 10% profit in 2010.
”We feel well prepared to realise this new goal and in addition Group Management will focus even more on the Group’s strategic possibilities in the long term,” said Mr Bjerg.
Facts about Grundfos
The Grundfos Group develops, sells and manufactures pumps. With some 15,000 staff members the Group is represented by sales and production companies in 41 countries. In 2006 Grundfos’ turnover was DKK 15.4 billion.