- Growing importance of foreign subsidiaries
- Less fossil: Westfalen continues to drive green transformation
- In keeping with the 100th anniversary: 2023 highest profit in the history of the company
In the face of a weak market environment and difficult conditions in its core German market, industrial gases producer and fuel and energy supplier Westfalen is intensifying its activities in neighboring European countries. To accelerate the ramp-up of green hydrogen in its own portfolio, the group will now implement its first electrolyzer in France. Outside the German market, the commitment to industrial gases is also increasing – for example, Westfalen will invest in a new filling plant in Austria and almost double the capacity of a plant in Switzerland. The past financial year 2023, which the company closed with the highest profit in its history despite all the current influences, provides a tailwind for the investments.
“This clearly shows that we have the right business model in many areas – especially in view of our green transformation and the gradual phase-out of fossil fuels and our growth into new, sustainable businesses,” said Dr. Thomas Perkmann, at the presentation of the business figures at the company's headquarters in Münster today, Monday (July 1, 2024), showing himself to be very satisfied with the past financial year. “Looking ahead to our Westfalen Vision 2030, business with sustainable products and solutions is becoming increasingly important - and this across all areas: from electricity-based heating, environmentally friendly cylinder gases and e-mobility to hydrogen.”
Framework conditions delay hydrogen ramp-up – medium-sized companies at a disadvantage
“However, the volatile framework conditions – especially in Germany – are now also reflected in the business development,” explains the CEO. In the German core market, for example, many plans for the hydrogen ramp-up, on which the company had relied, are delayed or can no longer be implemented as planned. “The ruling of the Federal Constitutional Court in Karlsruhe on the climate and transformation fund has, of course, left its mark on the entire industry. Funding commitments simply no longer applied from one day to the next. It's hard for a company to plan under such conditions,“ emphasized Perkmann.
”By contrast, we see that neighboring European countries are significantly accelerating their hydrogen efforts. As a company with a European outlook, we cannot afford to be left behind,” said the Westfalen CEO, explaining the current investment decisions, adding that the company's next hydrogen electrolyzer will most likely be built abroad. ”Germany must be careful not to lose its technological advantage and competitiveness in hydrogen.”
Westfalen itself is demonstrating that industry is ready for the hydrogen ramp-up – and it is doing so in cooperation with RWE: the two companies are planning to set up a network of H2 filling stations in Lower Saxony and North Rhine-Westphalia under the name two4H2, for which a joint venture has been established. Perkmann: “This demonstrates that we at Westfalen would actually like to be even more active in Germany.”
The importance of medium-sized companies – the main customers of the group, particularly in the industrial gases business – which could be another important driver of the hydrogen ramp-up, is also underestimated by politicians. “We see that many of our medium-sized customers are interested in hydrogen, either as a product or as process energy. But the high costs compared to conventional energy sources are not yet paying off for many applications, especially for smaller companies,” says the CEO of the family-owned company. “Therefore, some form of government support is certainly needed to help small and medium-sized companies on their way to the green transformation.” The limited financial framework of politics clearly also affects the economic backbone of the German economy.
Solid equity base enables further growth
Last year, Westfalen celebrated its 100th anniversary. And in this special year, the company can celebrate an extraordinary success – despite all the factors at play: in 2023, the company achieved earnings before interest and taxes (EBIT) of 73.5 million euros, the best result in its history. This result was €3.5 million higher than in the previous year, which had already seen a new record. In the 2023 financial year, the Westfalen Group generated total sales of €2.25 billion, compared to €2.3 billion in the previous year.
“The entire organization, all our colleagues, did a very good job last year,” said Westfalen CFO Jesko von Stechow, praising the group's employees. ”We grew in important areas and demonstrated good cost discipline.” The improvement in EBIT in 2023 was achieved despite a slight decline in sales, thanks in particular to ongoing cost and earnings improvement programs. Von Stechow explained the decline in the group's sales primarily with the uncertain economic outlook, which had led customers to act more cautiously than in previous years, especially in the fourth quarter of 2023.
“On top of that, the winter temperatures were again very mild, which, in addition to a decline in margins, also led to lower sales, especially in the energy supply sector. 2023 was the warmest year since weather records began, and we felt the effects of this very clearly,” the Westfalen CFO continued. Due to the lower price level, sales of fuels in the Mobility business unit were also down on the previous year.
“However, this will not slow us down in the development of the company. We want to continue to grow in our relevant business areas – and are aiming for business development at the same level,” emphasized von Stechow at the presentation of the business figures. “To this end, we will continue to spend money.” Westfalen has a good equity base, which will enable it to continue to pursue its planned investments. As announced in its anniversary year 2023, Westfalen intends to invest around half a billion euros in the further development of the company over a period of five years. Von Stechow: ”Only the framework conditions for investments in our core market of Germany could certainly be better.”
2023 an eventful year for Westfalen
In this context, Dr. Meike Schäffler, Chief Technology and Production Officer, emphasized that the industrial gases sector will continue to play a key role in the future development of the Westfalen Group. With a production of well over two million cylinders, Westfalen is one of the leading suppliers of cylinder gases among medium-sized companies and intends to further expand this position. “In the gases business, we are increasingly relying on modern locations - both in Germany and abroad. In 2023, for example, we succeeded in constructing two plants in one year for the first time in our company's history.”
In addition to the construction of a filling plant in Arzal on the Atlantic coast of France and in Lanken, just outside Hamburg in northern Germany, Westfalen also invested in the expansion of its own hydrogen trailer fleet in 2023 to strengthen its gas business. With a major investment in a pilot project to produce environmentally friendly cement, the company is also underlining its ambition to enable sustainable industrial solutions using oxygen. The respiratory homecare business for the supply of oxygen to people with respiratory diseases, which emerged last year from the industrial gases division, is now also developing very positively, Schäffler continued.
In the mobility sector, Westfalen intends to expand not only its shop business but also, in particular, the area of alternative drive systems – among other things, the charging infrastructure for e-mobility is to be significantly expanded. “This year, we want to generate more than two million kWh of charging volume at Westfalen's fast-charging stations for the first time,” Schäffler stated as the target for the sector. To achieve this, a further 32 fast chargers are to be installed this year. The company now has around 420 charging points, an increasing number of which enable fast charging. At the end of the last financial year in 2023, there were 360 charging points.
The electricity-based business of the new heat pump subsidiary NGC.Tec, which is strengthening the energy supply division at Westfalen, is also developing positively. Schäffler: “The heating transition is not only taking place in single-family homes but is also extending to multi-family homes and industrial buildings. Accordingly, NGC.Tec has the necessary experience and expertise to plan heating systems as district solutions, for example. We want to continue to benefit from this.”
