Operational review

Sustainable, profitable growth and increased free cash flow

We have made good progress with the consistent implementation of our strategy and delivered a good performance. During the year we have driven forward many organic growth and innovation initiatives.

Highlights 2016

  • Revenue +2% to EUR 2,522 million (organic +1.1%)
  • Operating profit (EBITA) +10% to EUR 298 million;
    EBITA-margin 11.8%
  • Net profit before amortisation +12% to EUR 212 million;
    Earnings per share EUR 1.92 (+12%)
  • Cash flow from operations +16% to EUR 383 million;
    Free cash flow +12% to EUR 273 million
  • Return on Capital Employed (ROCE) improved to 14.7% (2015: 14.3%)
  • Many organic growth and innovation initiatives;
    Capex EUR 106 million (2015: EUR 96 million)
  • Bolt-on acquisitions: Ushers, Schroeder, Tri-Went, Shurjoint and as of 2017 Vin Service

Revenue

(in EUR million)

2,522

+2%

ADDED-VALUE

(% of revenue)

62.2

2015: 61.5

EBITA

(in EUR million)

298

+10%

Ebita %

(% of revenue)

11.8

2015: 11.0

NET PROFIT

(in EUR million)

212

+12%

EARNINGS PER SHARE

(in EUR)

1.92

+12%

FREE CASH FLOW

(in EUR million)

273

+12%

RETURN ON CAPITAL EMPLOYED

(in %)

14.7

2015: 14.3


Building Installations manufactures and markets complete connection systems and valves to distribute and control water or gas in heating, cooling, (drinking) water, gas and sprinkler systems in residential, commercial and industrial buildings and industrial installations.
  • Europe & Middle East
    • realised good organic growth and results:
      • higher revenues; operational improvements
      • Focused market approach on technologies with growth potential
    • integrated piping system offering resulted in several longer term agreements with Key Accounts
    • further improved marketing & sales, project tracking, specification
    • improved distribution footprint will be implemented coming years
    • in the Netherlands manufacturing started of new patented connection system in newly built facility
    • plastic multilayer systems activity very successful
  • North America
    • residential and commercial end market performed well
    • Industrial Installations end market faced challenging circumstances
    • investments kept on high level; many ongoing projects
    • improved our offering of connections, valves and plastic systems
    • business expansion with several major Key Accounts
    • acquisition TRI-WENT strengthened cooling applications
    • acquisition SHURJOINT specialised in grooved systems
  • Global innovation roadmap defined and aligned

Revenue

(in EUR million)

1,073.1

-

Capital Expenditure

(in EUR million)

38.7

+5%

Ebita

(in EUR million)

122.4

+9%

Ebita %

(% of revenue)

11.4

2015: 10.5


Climate Control develops and manufactures complete hydronic systems – from source to emitter – for heating and cooling systems. The systems are designed for residential, commercial and industrial buildings, both new build and renovation.
  • lot of progress, especially in realising many ongoing projects
  • most European and North American countries good growth and results
  • France and Spain market circumstances improved
  • several product lines did very well
  • continued to integrate and optimise joint marketing & sales approach based on core technologies
  • several regions sales force strengthened with experienced people
  • optimisation of our portfolio reduced our organic growth
  • started new manufacturing site in Russia
  • transferred & consolidated several manufacturing sites
  • these projects realised before year end, increased costs during the year
  • global innovation roadmap defined to drive further organic growth and prioritise and align many product development and business opportunities

Revenue

(in EUR million)

501.8

-

Capital Expenditure

(in EUR million)

8.4

+11%

Ebita

(in EUR million)

54.0

+5%

Ebita %

(% of revenue)

10.8

2015: 10.3


Industrial Controls develops, engineers and manufactures systems to regulate and control gasses and liquids for specific niche applications. These technology-end market combinations are characterised by an increasing demand for high value and custom made, engineered solutions.
  • engineered valves
    • District Energy, Oil & Gas end market was challenging
    • transferred & strengthened North American operation
    • Denmark investment new patented valve product line
  • fluid power
    • did very well
    • newly formed business management team, executing integration plan and innovation roadmap
    • many opportunities to follow Key Accounts using global footprint
  • dispense technology
    • good year
    • business globally aligned; many supply chain improvements; innovation roadmap was made
    • acquisitions SCHROEDER and VIN SERVICE (2017) further complete offering towards (global) Key Accounts
  • nano technology
    • Semicon & Science end market started slow, improved during the second half
    • aligned Key Account Management, using group strengths
  • precision extrusion
    • excellent year in organic growth and results
    • more focus, business expansion Key Accounts
    • Aerospace strong growth due to unique offering
    • further investments to facilitate growth
  • divestment one non-core activity

Revenue

(in EUR million)

380.8

+4%

Capital Expenditure

(in EUR million)

13.6

-

Ebita

(in EUR million)

57.4

+25%

Ebita %

(% of revenue)

15.1

2015: 12.5


Industrial Services offers a unique combination of advanced material technology know-how, highly specialised manufacturing expertise and a global network of locations with excellent local knowledge and service.
  • heat treatment
    • good year despite lower volumes Machine Build, General Industries
    • Automotive on good level
    • Eastern Europe, Benelux, North America good growth due to new projects with Key Accounts
    • alignment heat treatment organisation and successful rebranding
  • surface treatment
    • good progress ramp up greenfield sites China and Eastern Europe
    • many Operational Excellence projects executed; more costs lowering our profitability
    • Automotive performed at good level
    • more difficult circumstances: Machine Build Europe; Oil & Gas in North America
    • Aerospace end market: realised good growth in the UK; signed long term agreement with major Key Account in France
  • complex precision stamping
    • good developments in Eastern Europe and Asia
    • France we faced more difficult market circumstances
    • started programme to develop more projects, niche applications
  • precision manufacturing, brazing and heat treatment
    • did very well, realised excellent growth
    • invested in additional capacity to facilitate growth Key Accounts
    • market position strengthened with acquisition USHERS enabling us to offer a combination of technologies to Key Accounts
    • Invested in new precision manufacturing plant in South Carolina to facilitate growth

Revenue

(in EUR million)

635.1

+4%

Capital Expenditure

(in EUR million)

44.9

+19%

Ebita

(in EUR million)

79.3

+3%

Ebita %

(% of revenue)

12.5

2015: 12.6

Selective acquisitions

Industrial Services - Ushers

Directly services the OEM in power generation market with several high grade technologies for industrial gas turbines (IGT).

Strengthens position in Power Generation, Aerospace end market

Industrial Services - Ushers
Industrial Services - Schroeder

Known for its strong innovation and patented products like bar dispensers, non-carbonated post-mix and beverage dispensers, carbonators & chillers

Strengthens position in Beverage Dispense end market

Industrial Services - Schroeder
Industrial Services - Tri-went

Leader in fabricated tubular products used in various industrial applications like air-conditioning, refrigeration, heating, electronics, plumbing, marine, ventilation.

Strengthens position in Industrial Installations end market

Industrial Services - Tri-went
Industrial Services - Vinservice

Specialised in the design and manufacturing of dispensing equipment for all kinds of beverages, globally servicing its many key customers.

Strengthens position in Beverage Dispense end market

Industrial Services - Vinservice
Industrial Services - Shurjoint

Innovative leader in the development, manufacturing, sales and distribution of grooved components for mechanical piping systems.

Strengthens position in Building Installations and Industrial Installations end market

Industrial Services - Shurjoint

Responsible business

As a leading manufacturing company, Aalberts Industries is firmly embedded in society and is deeply aware of its responsible role. We endorse the OECD and ILO guidelines concerning responsible business. To integrate our responsibility into day-to-day operations, we have developed a substantive responsible business framework for our group companies providing reference and direction. Ongoing interactions with the group companies enable us to share best practices. Responsible business is also integrated in the annual budget meetings.

Health & Safety

Environment

Integrity

Read more at aalbers.com Download Annual Report

Talent development

Strategic workforce planning as well as individual and organisational development are key drivers for Aalberts Industries’ sustainable performance. Whether we invent new solutions or make existing solutions better; smart and committed people are at the heart of it. Against this background we further improved our talent development strategy. Since we believe it’s all about winning with people, 'The Aalberts Way' has become an integral part of it.

Strategy & Objectives

Aalberts Industries is a technology company

Financial review

Net profit of EUR 212 million, EUR 1.92 per share, an increase of 12%