Würth Finance Group
Annual Report 2021
With continuity
into the future
Short overview of the
Würth Finance Group
Profit before taxes
62.5
million EUR
Total operating income
96.6
million EUR
Balance sheet total
3.46
billion EUR
Number of employees
118
employees
Key Events 2021
Core business records impressive market share gains: the Würth Group increased sales by 18.5% to EUR 17,100 million, simultaneously increasing its market share. At EUR 1,200 million, the operating result surged to a significantly higher level of profitability (based on preliminary figures).
Robust performance towards the Würth Finance Group’s corporate goals: the growth in business volumes and income, as well as the adherence to cost budgets, are testament to the ability of the Management and all employees to adapt rapidly to the sometimes sharp changes in client requirements and in the financial and insurance markets. In financial terms, this resulted in a record-high adjusted pre-tax profit of EUR 55.5 million.
Successful implementation of forward-looking digital projects: there is a high level of satisfaction with and acceptance of the new systems and digital services in Inhouse Banking among both clients and employees. The potential of these initiatives is far from exhausted and offers promising prospects for the future.
Capabilities again proven in second pandemic year: with the premium volume up 6%, Würth Financial Services AG clearly exceeded expectations in the still difficult market environment.
Significantly improved economic efficiency: the digitalisation and centralisation of administrative processes enabled Würth Financial Services AG to significantly improve back-office productivity.
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 2021.
Report of the Management
The Würth Finance Group’s adjusted operating income significantly exceeded the target in 2021, despite the COVID-19 pandemic and a lower income from Group Financing. Solid progress was made in the important area of digitalisation. With an adjusted pre-tax profit of EUR 55.5 million, the Würth Finance Group achieved a record-high result.
Continuity and far-sightedness characterise the way we do business and the services through which we assist our clients and partners. These characteristics are discernible in various aspects: in the personal attention we give to long-standing and close client relationships, in the ongoing development of our services and products, and in the high quality standards that guide our day-to-day work.
The foundation for all this was laid by Adolf Würth in 1945 when he established a wholesale business for screws in Künzelsau, Germany. In 1954 his son Reinhold took over the reins. In 1978 Prof. Dr. h.c. mult. Reinhold Würth established Reca Union Finanz AG (since 1994 Würth Finance International B.V.) for the purpose of obtaining additional financial resources to fund further international growth for the Würth Group. This company developed into the finance and treasury competence centre of the Würth Group and, with the establishment of Würth Financial Services AG in 2003, became the parent company of a solidly based financial services group – the Würth Finance Group. We consistently continue with what has been successful, while seizing the new with energy and purpose – now and in the future.
In this Annual Report we illustrate the theme of continuity through the specific services provided by the Würth Finance Group. The bold visuals for this are the work of Swiss illustrator Nino Christen. He has created a many-faceted set of images that give artistic expression to essential aspects of our day-to-day work.
Foreign currency management
“Through our foreign currency management services, we make an important contribution to safeguarding the gross profit of the Würth Group companies.”
Payment Factory
“Fraud risk management is essential to sustainable success and to protecting our reputation.”
Report Inhouse Banking
Inhouse Banking reported an adjusted pre-tax operating result of EUR 54.8 million in the 2021 financial year, exceeding the previous record result of 2019. 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 surpassed expectations by a wide margin in 2021. Despite the limited sales opportunities and thanks to encouraging new business, the premium volume in 2021 increased by 6% to CHF 345 million. Revenue also rose by almost 5% year on year.
Development of premium volume
Insurance and risk management
“With our family business culture, we have an enduring foundation for the future.”
E-payment services
“Irrespective of the sales channel, every payment must be simple, secure and fast.”
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 | 2017 | 2018 | 2019 | 2020 | 2021 |
|---|---|---|---|---|---|
| Net interest income | 4,416 | 9,730 | 14,284 | 13,789 | 14,170 |
| Income from factoring activities | 14,755 | 16,018 | 16,419 | 16,275 | 16,234 |
| Income from commission and service fee activities | 32,983 | 35,272 | 35,897 | 37,668 | 43,725 |
| Income from trading activities and financial instruments | 9,553 | 7,320 | 14,713 | 12,376 | 14,789 |
| Other ordinary income | 3,959 | 3,292 | 2,870 | 1,709 | 797 |
| Expected credit loss (expenses) / recovery | 0 | -3,698 | 1,005 | –7,886 | 6,846 |
| Total operating income | 65,666 | 67,934 | 85,189 | 73,931 | 96,561 |
| Total operating expenses | -28,920 | -29,418 | -32,397 | -31,519 | -34,031 |
| Profit before taxes | 36,746 | 38,516 | 52,792 | 42,412 | 62,530 |
Operating income adjustments Inhouse Banking
| 2017 | 2018 | 2019 | 2020 | 2021 | |
|---|---|---|---|---|---|
| Hedge accounting effect management accounting | 4,353 | 3,742 | 2,993 | 1,492 | -548 |
| Impairment for credit loss | 0 | 3,698 | -739 | 8,558 | -6,450 |
| Total operating income (adjusted) | 70,019 | 75,374 | 87,443 | 83,981 | 89,563 |
| Profit before taxes (adjusted) | 41,099 | 45,956 | 55,046 | 52,462 | 55,532 |