On global risks and realistic growth

Dr. Kurt Schmalz, Managing Partner of J. Schmalz GmbH.

Dr. Kurt Schmalz, Managing Partner of J. Schmalz GmbH, guides his company safely through turbulent times. The Schmalz Group remains successful worldwide and is driving record sales. How Dr. Schmalz plans to surpass last year's growth, he reveals in the interview.

With an annual turnover of 213.6 million euros, the Schmalz Group achieved a record in 2021. In 2022, you expect an increase to around 270 million euros. What gives you the confidence to withstand global challenges and beat last year's record?

Schmalz continues to be a market leader in automation with vacuum technology as well as ergonomic handling systems. To maintain this position, we invest sustainably and focus on innovation, acquisitions, and international expansion. Innovative approaches can be structural or product-based. For example, we are developing our own camera vision system to enable users to automate bin-picking and order-picking tasks even more efficiently. Digitalization is also very important to us, which we address with smart products. However, innovation does not only mean launching new products but also thinking industry-oriented. To fully understand the market and its needs, we are always on eye level with our customers, focusing on their industry and jointly solving handling tasks. We deliver our usual high quality across all network-based communication channels. Our online shop is a state-of-the-art e-commerce platform that meets customer demands for fast and straightforward ordering.

Above all this, there is an urgent to-do that affects all industries: we must reduce greenhouse gas emissions along the value chain. Here, too, we support our customers with expertise and appropriate products.

The topic of acquisitions is more present than ever – after all, the Schmalz Group has also grown this year through the acquisition of two companies. What does the takeover of Binar Handling and Palamatic mean for Schmalz?

English Palamatic Ltd. has been part of the Schmalz Group since January 2022, and Swedish Binar Handling AB since March 2022. Both companies develop ergonomic lifting and handling solutions. They perfectly complement our portfolio of handling systems. Palamatic is also strongly present in industries where we have been less active so far – such as the chemical and pharmaceutical industries and applications in cleanroom environments. Both subsidiaries will continue to operate as independent brands and can further expand their existing sales networks with our global structures. We also see numerous opportunities for synergy – for example, by adapting Schmalz components in the handling solutions of Binar Handling and Palamatic. Now, it is about synchronizing both companies with the processes and structures of the Schmalz Group.

And that brings us to the third focus you mentioned, international expansion…

Almost. Of course, we hope that through strategic acquisitions, we will gain better access to markets that we do not serve as strongly yet. However, what we understand by international expansion is investing in our subsidiaries. Schmalz China moved into a new million-euro building in March, planned from scratch with initially 7,600 square meters of usable space in Taicang, Shanghai. As always, sustainability plays an important role here as well. The building is, among other things, a 'ZERO CO2' building thanks to geothermal energy and photovoltaic systems. In the USA, we are currently expanding our production and logistics areas by approximately 150% and simultaneously modernizing existing building parts. A suitably dimensioned photovoltaic system is also essential here. The investment costs for both projects are each in the high single-digit million range.

The path is clearly set for growth. What could slow down Schmalz? And how do you address these brakes?

That's correct. The growth curve has continued so far, and due to global events, we have only experienced minor setbacks. We have not been delivering products to Russia and Belarus for some time. Additionally, the lockdown in China has caused significant revenue declines. It is uncertain when the economy there will pick up speed again, as the government remains committed to its zero-Covid strategy. Material issues also pose challenges. Despite high order intake, we are relatively able to deliver compared to competitors, but material shortages and rising material prices are concerns that trouble us. Another stumbling block is inflation. We will especially in Asia not be able to fully offset this driver of personnel costs. On the other hand, the currently very robust economic situation positively impacts our sales and order intake. It is reasonable to assume that this upward trend will not continue permanently, as global risk factors are too pressing. Nevertheless, based on current data, we also expect double-digit percentage growth for 2022. We have the right answers prepared for the coming years, investing sustainably in our locations, employees, and sustainability – for medium-term ongoing success.