2018 fiscal year: Healthy growth with revenue at EUR 2 billion
TUV Rheinland continued its ongoing healthy growth in fiscal year 2018. Revenues of the global testing service provider increased by EUR 26.2 million, or 1.3%, to EUR 1.998 billion. Earnings (EBIT) reached EUR 137.5 million (up EUR 6.9 million or 5.3% against 2017). The EBIT margin rose from 6.6% to 6.9%. On average, TUV Rheinland employed 20,450 people around the globe in 2018, exceeding the 20,000 mark for the first time. Investments again topped EUR 90 million.
“Safety remains a basic need of humanity, even in today’s digitalized world. Our employees apply their expertise and specialist knowledge to ensure quality and safety. We are continuing to grow, which shows that our business model is proving successful, especially now that we are experiencing increased political, economic and technology uncertainty around the world,” said Dr. Michael Fubi, CEO of TUV Rheinland AG. “We expect demand for our independent tests and certifications to continue to pick up in the next few years. In light of increasing digitalization and networking, the question that always emerges is whether technology is safe and therefore trustworthy, no matter whether we are talking about simple household products, autonomous driving or networked industrial systems and infrastructure.”
TUV Rheinland is preparing specifically for this digital future. For example, the Group invested around EUR 32 million in the three areas of cyber security, wireless technologies and autonomous vehicles in 2018 alone. In the long-term, TUV Rheinland is also strategically gearing its business towards these upcoming developments. “Our aim is to support and ensure technical progress in the long run,” said Michael Fubi.
Significant Growth for Germany, China and Western Europe
Business at TUV Rheinland performed well in 2018, especially in Germany. Revenue in Germany grew by EUR 32 million or 2.9% to currently EUR 1.1 billion, while revenue outside Germany saw a slight 0.6% decline to EUR 889 million, due primarily to exchange rate differences.
On a constant currency basis, TUV Rheinland’s revenue would have totaled EUR 2.037 billion in 2018, representing growth of 3.3%. TUV Rheinland generated 44.5% of its revenue outside Germany. Revenue of EUR 533 million was generated by TUV Rheinland in the Asia region in 2018 (includes Greater China, Asia-Pacific and India, Middle East, Africa), followed by the Europe region (excluding Germany) at EUR 205 million and North and South America at EUR 153 million. China and Western Europe boosted their revenue by an eight-digit figure year on year, making a major contribution to the upturn in revenue.
Positive Development In Business Streams
As previously, TUV Rheinland divided its global testing and certificate business into six business streams. The Industrial Services, Mobility and Product business streams each generate approximately 25% of total revenue, with Product Testing making the largest contribution to revenue in 2018 at EUR 541 million (previous year: EUR 524 million). Continued strong growth in China and the recent return to revenue growth in the solar business field, a sign of the global investment trend towards renewable energy, are both striking here. The second-largest business stream, Mobility, saw its revenue climb considerably, up 4.7% at EUR 532 million (previous year: EUR 508 million). Growth was particularly strong in business with vehicles inspections in Germany and Spain and services relating to vehicle approvals (homologation). The Industrial Services business stream also shored up its revenue again. In this area, TUV Rheinland provides services including global testing of industrial systems, power stations and elevators. All told, Industrial Services improved revenue by 2.1% to EUR 513 million (previous year: EUR 503 million).
TUV Rheinland has combined the certification of management systems such as ISO 9001 and the certification in accordance with sector-specific standards in the Systems business stream. This saw revenue strengthen by 4.5% to EUR 212 million (previous year: EUR 203 million). The rise in revenue in the Academy & Life Care business stream was somewhat more restrained than in previous years. In this area, TUV Rheinland offers services for professional qualifications and corporate health management. Revenue in this business stream picked up slightly, up EUR 0.5 million at EUR 227 million. Seminar business in Germany also performed well. Nonetheless, finding skilled workers such as doctors and social education specialists is increasingly challenging and so the business stream did not grow as much as it would have done if sufficient specialists had been available.
TUV Rheinland refocused its product range in the Digital Transformation & Cyber Security business stream (previously ICT & Business Solutions) in 2018. While cyber security business in Germany fared well, revenue in the United States fell. In total, the business stream saw revenue decline as planned to EUR 122 million due to internal restructuring (previous year: EUR 139 million).
Global Competition for Best Employees
Of a global staff headcount averaging 20,450 in 2018, 8,795 worked in Germany, up almost 300 on the previous year. The number of employees outside Germany rose by 235 to 11,655, representing 57% of all TUV Rheinland staff in 2018. “We would like to hire even more people. But we can see that competition for the best specialist staff has become tougher, both in Germany and in many other countries,” said Ruth Werhahn, member of the Executive Board and Labor Relations Director of TUV Rheinland AG. TUV Rheinland currently has over 500 vacancies in Germany alone, with another 500 openings worldwide. “Anyone looking for technically challenging and varied work in international teams and who shares our passion for quality and safety would be a good fit at our company,” added Ruth Werhahn. “I am confident that we can inspire many more people with this. After all, our vision already reaches over 400,000 followers on social media.”
Financial Position Continues to Strengthen
TUV Rheinland further bolstered its good financial position in the 2018 fiscal year. Equity increased by EUR 53.3 million to EUR 412.2 million, with the equity ratio rising to 22.8% (previous year: 20.1%). Cash flow from operating activities climbed sharply to EUR 183 million, an upturn of EUR 21.2 million or 13.1%. “Our financial position remains very solid. This provides us with the means required to invest in our future under our own steam,” said Michael Fubi.
Investments and Digitalization
TUV Rheinland has invested close to EUR 300 million in the last three years, EUR 91 million of which in 2018 alone. “Substantial investment helps us get our testing and certification business in shape for the years ahead,”
