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Editorial by the Executive Board

EDITORIAL BY THE EXECUTIVE BOARD

President & CEO of the Wilo Group President & CEO of the Wilo Group

Oliver Hermes, President & CEO of the Wilo Group

Dear Readers,

We are looking back on another turbulent year. The coronavirus pandemic continues to dominate the world and impede the smooth international flow of goods and people alike.

At the time this report on 2021 and this editorial were being written, there was more than enough tension in the world. However, we could not have imagined that a conflict could reach a level of escalation like that seen in Ukraine in 2022. The violence and suffering that is being endured by people in the heart of Europe is shocking and deserves all the compassion and aid we can give. As a company that is represented in both Ukraine and Russia, we have a responsibility to do everything in our power to protect and support our employees and their families. All employees who have fled the war are being offered employment at Wilo subsidiaries in other companies in order to safeguard their income and their successful social integration.
The Wilo Foundation is also making a donation to support the humanitarian aid that SOS Children’s Villages, Habitat, Fundacja Happy Kids and Save the Children are providing to children, young people and families. However, our concern also extends to the Wilo subsidiary and our employees in Russia. They, too, are part of the Wilo family.

Supply chain bottlenecks have driven energy and commodity prices to unimaginable heights, and important precursors are only available to a limited extent. Coercive economic measures are increasingly being employed as a foreign policy tool. At the same time, Europe is finding itself sandwiched between the world powers of the USA and China to an ever greater degree. All in all, the brutal violence at the heart of Europe and the pandemic that has now been in progress for 2.5 years have reinforced the global trend towards isolationism and a focus on national solutions. Many people are talking in terms of the egoism of nation states, and an increasing number of German and European companies are caught between the fronts of geopolitical disputes.

“The Wilo Group increased its net sales to EUR 1.7 billion – a new record.”

In this adverse environment, we succeeded in recording substantial growth and continuing to satisfy customer requirements in 2021. The Wilo Group increased its net sales by 13.8 percent to around EUR 1.7 billion – a new record. We also recorded an all-time high in terms of our operating earnings (EBITDA), which exceeded EUR 181 million, while consolidated net income almost doubled year-on-year to EUR 49 million. Wilo still has a strong internal financing capacity, with net cash from operating activities remaining high at EUR 127 million. These encouraging results speak for themselves: The Wilo Group is excellently positioned to generate sustainably profitable growth even in difficult times and in unfavourable economic conditions.

Wilo takes responsibility

“We firmly believe that the economy has a part to play in counteracting the process of decoupling.“

Unfortunately, parts of the world economy will continue to be shaped in particular by protectionism and efforts to become self-sufficient. We are experiencing “Globalisation 2.0”, a turning point that will be characterised by the more pronounced regionalisation of value chains in the three major economic centres of North America, the EU and Asia.

Decoupling, i.e. the – politically motivated – separation of global developments, will lead to a further reduction in multinational cooperation, crumbling alliances, and the tearing down of economic bridges between nations, and hence between different political systems. Wars, trade sanctions, extraterritorial sanctions, technology embargoes and supply chain decoupling instigated at a political level will have devastating consequences for the hyper-globalised world economy.

Companies like the Wilo Group are now having to prepare for this rampant decoupling in its various forms and opposing it through foresighted entrepreneurship, especially with a view to our societal and social responsibility to our global workforce of around 8,200 employees. We firmly believe that the economy has a part to play in counteracting the process of decoupling. The economy cannot replace politics, but it can use its specific channels for dialogue. After all, economic dependency and interconnectivity can encourage de-escalation and make parties more willing to compromise, especially in geopolitical conflict situations.

With its global network of more than 80 production and sales companies, Wilo has a worldwide presence and helps to turn reliable market partners into friends. Through our work every day, we lay the foundations for trust and mutual recognition across national boundaries and at all levels – from management positions to the employees in our plants and offices. This is the long-standing, hard-won basis for peaceful and successful cooperation in the future. After all, trust is built by people, not governments.

Systematic implementation of the “region-for-region” approach

“A wide range of high-quality products made in the USA.”

The reason we were able to achieve such a successful financial year in 2021 was because we laid the right strategic groundwork many years ago. Under our long-established region-for-region approach, we meet regional and local customer requirements with products that are manufactured regionally or locally. For example, we opened an additional production site for the Southeast Asia region in Kuala Lumpur (Malaysia) in the past year, while 2022 will see the inauguration of a newly constructed production site in Cedarburg (USA) and the further strengthening of our presence in the Middle East.

North America has become one of our most important sales markets in recent years. With the acquisition of Weil and Scot in 2017 and American-Marsh Pumps in 2019, the Wilo Group has expanded its application expertise and strengthened its US activities in the Building Services Commercial, Industry and OEM market segments. The additional production capacities will allow us to serve customer requirements on the US market quickly and accurately and offer a wider range of high-quality products made in the USA. The acquisition of the operating business of QuantumFlo, Inc., a specialist for pressure-boosting systems and intelligent pump systems, in the past financial year will strengthen our market position even further. The company, which is based in Sanford, Florida/USA, offers high-quality products and innovative, user-friendly software solutions for the design and control of pressure-boosting systems.

Reflecting the geopolitical importance of the USA and the outstanding business development of our own US activities, we will establish an additional regional headquarters in Chicago/Cedarburg in the medium term. As the integration of the acquired US companies continues, this will also allow us to offer selected US products in other markets and regions served by Wilo.

As previously, we also see considerable growth potential in Asia. Accordingly, Wilo will open a third headquarters in Beijing for our Emerging Markets sales region in 2023, as well as construct additional production sites in China and India.

Accordingly, our organisation is designed to allow as much decentralisation as possible and as little centralisation as necessary. At the same time, we want to make greater use of global standards and products. All these measures will make the Wilo Group even more flexible and resilient, thereby delivering even greater security for our market partners and increased proximity to our customers.

From a hidden champion to a visible and connected champion

The 2021 financial year saw the conclusion of a number of new and intensified strategic partnerships as well as other highlights.

Having already won the German Sustainability Award in 2021, our efforts in the field of climate protection gained external recognition when the Handelsblatt newspaper crowned us as a “climate pioneer”. There is absolutely no doubt that climate change is and remains a major issue of our times. Wilo can make a hugely positive contribution with its highly efficient and sustainable products and solutions. As an innovation leader in the industry, Wilo has always been a pioneer when it comes to energy efficiency. Our goal is to contribute 50 million tonnes in CO2 savings towards emissions reductions by 2025 and to facilitate better access to clean water for 100 million people.

Wilo is actively driving the energy transition

“As an innovation leader in the industry, Wilo was and still is a pioneer when it comes to energy efficiency.”

From industry to transport and buildings, our society needs climate-neutral energy in all areas of life. Enabling this requires a solution that is CO2-free and that can be stored and transported: hydrogen. As the energy source of the future, it has huge potential with a view to the megatrend of energy shortage in particular.

Wilo is a pioneer in the development of products, systems and solutions for the hydrogen age. We have set up a hydrogen team with the aim of turning Wilo into a global player for the generation, storage, distribution and use of climate-neutral hydrogen. Green hydrogen in particular will be a fundamental technology of the future if the Paris climate targets are to be achieved.

Together with our industrial partners, we will shortly be constructing a safe, compact and sustainable energy system of the future in the shape of our “H2 Powerplant” at the Wilopark in Dortmund. By doing this, Wilo is laying the foundations for a self-sufficient, decentralised and renewable power grid and demonstrating how industrial companies can use pioneering, technology-neutral solutions to make an essential contribution to climate protection and sustainability.

My own personal highlight was the digital opening ceremony for the Wilopark, which saw the participation of more than 1,500 high-ranking international guests from the world of business, science and politics as well as our global Wilo workforce. I would like to reiterate my gratitude to our main guest speaker, then German Chancellor Dr. Angela Merkel.

We also welcomed international guests at our industry conference in September 2021. Participants at the event, which was held under the motto “Decoupling – Rethink Value Chains”, included Sigmar Gabriel, former German Vice-Chancellor and current Chairman of Atlantik-Brücke e.V. Following the positive response and demand, we will organize another industry conference this year.

Thanks and acknowledgements

Looking back, we are full of respect for what was achieved in 2021, a year in which we again met our social commitment of being systemically relevant and serving critical infrastructures. In particular, this was demonstrated in the flood-hit German regions of North Rhine-Westphalia and Rhineland-Palatinate as well as in China, where it was extremely important for Wilo to support the affected regions with pump technology. On behalf of the entire Executive Board, we would like to thank our dedicated employees around the world, without whom we would have been unable to master all of these challenges. You all deserve the highest degree of recognition for your commitment in times that are demanding not only flexibility, but also mental strength from each and every one of us.

150 years of Wilo

“In future, we will continue to make an important global contribution to shaping the rapid process of urbanisation, counteracting energy and water shortages, and slowing the pace of climate change.”

We are entering the new year with great concern, but also with a sense of optimism. 2022 is the year in which we will celebrate 150 years of the Wilo Group. The locally focused “Kupfer- und Messingwarenfabrik Louis Opländer” in the south of Dortmund has long become a world-leading premium supplier of pumps, systems and solutions. Tradition and innovation have always shaped the way we think and act. All of you – our market partners and our more than 8,200 employees worldwide – play a big part in this, and we would like to thank you sincerely.

We are proud of having continuously embodied the entrepreneurial values and inventiveness of the founding family in the 150 years of the company’s history to date. We have developed solutions for the new technological and social challenges of our time, supplied millions of people around the world with clean water, and helped to intelligently equip the buildings of tomorrow. In future, we will continue to make an important global contribution to shaping the rapid process of urbanisation, counteracting energy and water shortages, and slowing the pace of climate change. Always with the aim of making people’s lives easier and better.

We look forward to continuing the success story we have written together and celebrating our 150th anniversary with you.