HERMA / Fiscal year 2022 - Outlook for 2023

Fiscal year 2022 and outlook for 2023: On course for further growth

For HERMA, fiscal 2022 was shaped by a further dramatic upturn in raw material prices and a persistently strained procurement situation. In Europe the average increase in the price of pulp, for example, which is a primary material for paper production, was between 30 and 40 percent. “For our part, we had to pass on the elevated expenditure to customers by raising the prices of various products, in some cases several times in the course of the year,” explained Sven Schneller and Dr. Guido Spachtholz, the two managing directors of the product and package labelling specialist. As a consequence of the spiralling prices, revenue also rose much more sharply than anticipated: it increased by 19.2 percent year on year, from 428.4 to 510.6 million euros. According to the directors, “The inflationary price pattern concealed another cause of the extremely challenging business pattern.” Because of a strike lasting several months at one of the largest paper producers worldwide, the availability of this crucial commodity was subject to enormous delays on some occasions. “We were compelled repeatedly to engage in price negotiations with our customers and sometimes to discuss delivery dates that were beyond our control. Each of these factors therefore weighed heavily on individual customer relations in 2022. We can nonetheless take pride in our teams for overcoming a raft of uncertainties through their tremendous personal commitment, and in maintaining our ability to supply self-adhesive materials, labels and labelling machines, even though some delays were unavoidable. Within our sector, this was not something that could be taken for granted. We were able to demonstrate that HERMA stands for reliability even in difficult times.” Against the backdrop of an inhospitable climate, they said, there were grounds for satisfaction with the earnings situation. The two directors are cautiously optimistic about the company’s outlook. Although precautionary stockkeeping by customers significantly curbed their demand in the first quarter of 2023, HERMA’s directors anticipate moderate single-figure sales growth in the current fiscal year as a whole. “We have to make a return to driving this growth mainly by way of sales volumes.” As in 2022, all three divisions are expected to contribute to the growth this fiscal year. The number of employees remained practically unchanged, closing the year at 1,126 (1,124 at the end of 2021). The share of exports increased year on year, from 62.5 to 64.0 percent.

Sights set on capacity expansion and new markets

Sven Schneller and Dr. Guido Spachtholz are confident that the company will generate further growth in the medium and long term as well. From their perspective, the course has already been set. In the context of the HERMA 2030 strategy that was adopted last year, the company intends, for example, to increase production capacity in the company’s Self-adhesive Materials division in the next few years, in Europe or in overseas markets as well. As regards labels for industrial customers, HERMA has identified bright prospects for innovative labelling solutions which, in some cases, are to be pursued with collaborators known as system partners. For professional and private label users, a greater emphasis is to be placed on digital solutions. The Labelling Machines division intends to unlock fresh growth potential in North America and Asia in particular. “German machine building continues to enjoy an outstanding reputation in these markets, especially when coupled with a strong focus on customer service,” comments Dr. Spachtholz. With a view to completing the portfolio as an end-to-end solutions provider, he says that scope also exists for acquisitions in this sector. Across the company as whole, HERMA sees sustainability, alongside innovation and digitalisation, as both a key driver of growth and a competitive advantage. According to the directors’ statement, “To an increasing extent, demand is growing worldwide for solution providers that demonstrate their sustainable manufacturing credentials. Setting ambitious targets and striving tirelessly to achieve them is good, both for the climate and from a business perspective.” HERMA is seeking to report net zero emissions of greenhouse gases by 2040.