Würth Finance Group
Annual Report 2020
”Building for the Future”
Short overview of the Würth Finance Group
Profit before taxes
42.4
million EUR
Total operating income
73.9
million EUR
Balance sheet total
3.35
billion EUR
Number of employees
123
employees
Key Events 2020
COVID-19 pandemic defied: the Würth Group generated a record result with sales of EUR 14,410 million and a preliminary operating profit of EUR 770 million.
Expectations more than met: supported by its robust business model, the adaptability of the organisation and effective risk management, the Würth Finance Group achieved the second-best result in its history with adjusted pre-tax profit of EUR 52.5 million.
Successful raising of funds on the capital market in the midst of the pandemic: in May, Würth Finance International B.V. successfully placed the largest bond in the company’s history on the Euromarket with a volume of EUR 750 million.
Growth course maintained: despite the difficult situation due to the pandemic, Würth Financial Services AG achieved an increase in both sales and its operating profit in 2020.
Successful completion of the acquisition project: the integration of Optima Versicherungsbroker AG into Würth Financial Services AG was a priority in 2020 and was successfully completed.
Report of the Board of Directors
The Supervisory Board supported the Management in an advisory capacity, closely monitoring in particular the company’s development and the effectiveness of risk management. The Board of Directors approves the Financial Statements and would like to thank the Management, the employees and the clients of the Würth Finance Group for their commitment and trust in the challenging financial year 2020.
Report of the Management
The COVID-19 pandemic had hardly any negative effect on the financial results of the Würth Finance Group in 2020. With adjusted profit before taxes of EUR 52.5 million (previous year: EUR 55.0 million), the Würth Finance Group achieved the second-best result in its corporate history.
Using the example of our current construction project in ’s-Hertogenbosch (NL), this Annual Report illustrates how we at the Würth Finance Group are building for the future: by investing in our locations and infrastructure, in our jobs and therefore also in our employees. The special situation caused by the COVID-19 pandemic meant that a photo shoot involving lots of people would not be the right choice for the year under review. Instead, we decided to translate and illustrate the theme of “Building for the Future” in a different way. The drawings of English illustrator Dave Merrell therefore also represent a willingness to always find opportunities for renewal amid the crisis. This is just as important for sustainable growth as a sound risk and investment culture, prudent financial planning and cooperation based on trust – aspects illustrated by the pictures in our report.
Play it safe
”The golden rule for construction sites also applies to payment transactions: safety is top priority. We ensure this through professional risk management, clearly defined processes and extensive expertise in dealing with potential hazards.”
Andrea Lütolf and Joep Gertzen Payment Factory, Würth Finance International B.V., ’s-Hertogenbosch
Keeping an eye on the big picture
”Würth Omnichannel Payment Gateway provides electronic payment solutions for the Würth Group’s sales shops, call centres, e-commerce and m-commerce. We help our clients find the right channel for them to enable global payments.”
Shyam Sreenivasan Würth Omnichannel Payment Gateway, Würth Finance International B.V., ‘s-Hertogenbosch
Report Inhouse Banking
Inhouse Banking reported an adjusted pre-tax operating result of EUR 51.9 million in the 2020 financial year, just shy of the record amount in 2019 (EUR 54.5 million). Inhouse Banking provided close support to the parent company and Group companies, in particular for financial and liquidity management.
Trading/securities investments: income development
Report External Financial Services
Würth Financial Services AG in 2020 increased its revenue and operating result despite a pandemic-related difficult starting position. The above-average revenue growth, which was due in part to the takeover of Optima Versicherungsbroker AG, reached nearly 13% (net of acquisitions: growth of 3%). This positive development was also reflected in the number of clients and the volume of insurance premiums.
Development of premium volume
Shining a light
”Our insurance services illuminate every corner of our clients’ individual construction projects. Many unforeseen events can occur during such projects. Construction insurance protects our clients from legal and financial damages resulting from construction accidents or liability claims.”
Maurizio Gilardi, Head of Sales, Würth Financial Services AG, Lugano and Brian Bickel, Account Manager, Würth Financial Services AG, Zurich
Building on a solid foundation
”All business relationships with Würth Finance International B.V. are founded on accounts with solid authorisation management for the settlement of all transactions. As a service centre, we are the point of contact for Würth Group companies. We aim to provide a high-quality service. This requires personal commitment, international understanding as well as a high level of professionalism.”
Stan van Lokven and Bas van Poppel Account Management, Würth Finance International B.V., ‘s-Hertogenbosch
Risk Management and Control
Basic principles of our risk management system:
The Management bears the responsibility for all risks incurred as a result of the company’s business activities and seeks to achieve a healthy balance between risk and returns.
An independent control process forms an integral part of the corporate structure.
Employees are familiar with and alert to the principal risks specific to their area of activity. A central element of risk control is the comprehensive, transparent and objective disclosure of risks to the Group and company management, owners, supervisory authorities and other stakeholders.
Revenue is protected on the basis of risk tolerance – i.e. the maximum risk that the Würth Finance Group can bear given its financial and earning power.
Ultimately, the Würth Finance Group’s reputation depends on effective risk management and control.
Key Figures
The primary objective of the Management of the Würth Finance Group is to create continuous value added for the Würth Group. The Management is responsible for generating adequate risk-adjusted returns. In order to be successful in the long term, the Würth Finance Group needs to generate an overall return that is higher than the risk-adjusted cost of capital.
Key figures from the consolidated income statement
| in TEUR | 2016 | 2017 | 2018 | 2019 | 2020 |
|---|---|---|---|---|---|
| Interest income | 4,521 | 4,416 | 9,730 | 14,284 | 13,789 |
| Income from factoring activities | 12,899 | 14,755 | 16,018 | 16,419 | 16,275 |
| Income from commission and service fee activities | 29,880 | 32,983 | 35,272 | 35,897 | 37,668 |
| Income from trading activities and financial instruments | 8,837 | 9,553 | 7,320 | 14,713 | 12,376 |
| Other ordinary income | 4,858 | 3,959 | 3,292 | 2,870 | 1,709 |
| Credit loss (expenses) / recovery | 0 | 0 | -3,698 | 1,005 | –7,886 |
| Total operating income | 60,995 | 65,666 | 67,934 | 85,189 | 73,931 |
| Total operating expenses | -29,183 | -28,920 | -29,418 | -32,397 | –31,519 |
| Profit before taxes | 31,812 | 36,746 | 38,516 | 52,792 | 42,412 |
Operating income adjustments Inhouse Banking
| 2016 | 2017 | 2018 | 2019 | 2020 | |
|---|---|---|---|---|---|
| Hedge accounting effect management accounting | 4.297 | 4.353 | 3.742 | 2.993 | 1.492 |
| Impairment for credit loss | 0 | 0 | 3.698 | -739 | 8.558 |
| Total operating income (adjusted) | 65.292 | 70.019 | 75.374 | 87.443 | 83.981 |
| Profit before taxes (adjusted) | 36.109 | 41.099 | 45.956 | 55.046 | 52.462 |