COMBINED MANAGEMENT REPORT OF MAX AUTOMATION SE FOR THE FINANCIAL YEAR 2019
BASIS OF THE PARENT COMPANY AND THE GROUP
Business Model
MAX Automation SE, based in Düsseldorf, Germany, is an internationally active industrial group which offers solutions for efficient industrial production and networked automation systems. Through its Group companies, the Group develops, produces and sells a broadly diversified portfolio of technologically complex components and process solutions for its customers, both in Germany and internationally. The broad range of products and solutions, which are often developed in close cooperation with customers and are tailored to their needs, serves a balanced spectrum of end markets and is characterized by a high degree of innovation. The Group companies function as full-service providers of machinery and equipment for their customers and offer such supplementary services as consulting (including analyses, tests and feasibility studies), production support and services, repairs and software development. The companies are in the position to serve as a one-stop shop and to offer integrated automation solutions of high technical complexity along with numerous services.
Structure
Since its conversion into a European Company in the 2017 financial year, MAX Automation SE has had a monistic management structure in which the management of the SE is incumbent on a single management body, the Supervisory Board. Operationally, the business is managed by the Managing Directors, who report to the Supervisory Board on the information needed for corporate governance and decision-making. The Managing Directors maintain close personal contact with the Group companies and receive regular financial and progress reports.
As the parent and management company of the MAX Group, MAX Automation SE is responsible for the operational and financial management of the Group. It also determines and monitors suitable strategic measures to ensure that the defined objectives of the segments and the Group are achieved.
In the 2019 financial year, the realignment of the Group that was initiated in 2018 was implemented systematically. The former Industrial Automation and Environmental Technology segments were replaced at the beginning of the 2019 financial year by the Process Technologies, Environmental Technologies and Evolving Technologies business units, which represent the core business areas of the MAX Group. In addition, the Non-Core Business segment bundles companies that are strategically no longer relevant to the Group's future development.
In the Process Technologies segment, the associated Group company bdtronic GmbH and its subsidiaries focus on the development and production of machinery and equipment and related software solutions for high-precision production processes (especially dispensing and impregnation), particularly in the automotive and electronics industries.
In the Environmental Technologies segment, the Group company Vecoplan AG and its subsidiaries develop and install machinery and equipment for the sustainable use of primary and secondary raw materials as well as biomass, especially for the recycling, energy and raw materials industries.
The Evolving Technologies segment combines Group companies in the fields of optical solutions, medical technology solutions, industrial robotics and automation and packaging solutions. The Group companies NSM Magnettechnik GmbH, Mess- und Regeltechnik Jücker GmbH, MA micro Automation GmbH and its subsidiaries, iNDAT Robotics GmbH and AIM Micro Systems GmbH are combined in this segment.
The Non-Core Business segment comprises the companies IWM Automation Bodensee GmbH, IWM Automation Group, MAX Automation (Asia-Pacific) Co., Ltd. in Hong Kong, MAX Automation Shanghai Co., Ltd. and ELWEMA Automotive GmbH. In September 2018, the Supervisory Board of MAX Automation SE decided that the Group would withdraw from the construction of special machines and assembly lines for automotive customers. The disinvestment processes of the specified companies were and still are connected to this decision.
The closure of IWM Automation Bodensee GmbH was completed on 31 December 2019. The planned closure of IWM Automation GmbH in Porta Westfalica should follow no later than the third quarter of 2020. Regarding MAX Automation (Asia-Pacific) Co., Ltd. in Hong Kong, the Supervisory Board of MAX Automation SE had decided in September 2019 to cancel the investment agreement with joint venture partner Roger Li Liujie in China. On 30 December 2019, a request for arbitration against joint venture partner Roger Li Liujie was filed with the Court of Arbitration in Hong Kong. The objective is the complete reversal of the February 2018 transaction that was based on the investment agreement. It was still not possible to complete the process of selling ELWEMA Automotive GmbH in the past financial year, but these efforts are continuing in 2020.
Strategic Positioning
A strategic orientation toward long-term growth industries is the basis of a sustainable growth strategy, making the MAX Group less susceptible to business volatility. The markets in which the MAX Group companies operate are characterized by intensive competition and ongoing technological progress. The Group companies strive to serve as the technology or quality leaders in their respective markets and sectors.
In its core business areas, MAX Automation benefits from long-term growth drivers. This includes such trends as electrification in the automotive area, the growing need for sustainability, as well as trends in demographic development and the related increasing health awareness of the population. Besides digitalization in industrial production and the associated networking of machinery and equipment, other trends involve rapidly growing industrial sectors such as micro-automation and robotics. The early identification of these trends and a corresponding strategic orientation are essential for the long-term business success of the MAX Group. MAX Automation assigns a high priority to the continuous refinement of its technologies as well as the development of innovative solutions in order to secure and expand the market positioning of the individual Group companies. The prerequisite for this is, not least, the active recruitment of talented individuals and top-notch professionals and thereby a corresponding branding of the Group companies.
The ambition of technology and quality leadership does not rest solely on the approach of developing technologically sophisticated automation solutions. The creation of customer-specific added value featuring high-quality solutions is an essential foundation for the strategic positioning of the MAX Group. Another aspect of this is that customers are addressed comprehensively across country and continental boundaries. The MAX Group operates globally in target markets in Europe, North and South America and Asia. The customer solutions are developed and produced primarily in Germany and to a lesser extent also at locations in the USA, Poland and Italy. An international network of sales and service locations, which is partly shared by the Group companies, is the basis for enabling the MAX Group to meet local customer requirements.
Financial performance indicators
MAX Automation SE uses financial control indicators for the control and evaluation of the operative business. These indicators are recorded on the level of the group companies and consolidated at MAX Automation SE.
The primary management of the MAX Group is based on the following key figures
Order Intake/Order Backlog
Revenues
EBITDA/EBITDA margin
Working Capital
The goal is to identify trends at an early stage by analyzing the key financial performance indicators and thereby ensure and increase the long-term profitability of MAX Automation SE. Non-financial key performance indicators are not used for the internal management of the group.
In 2019, the Group recorded the following changes in key indicators
|
2019 |
2018 |
Change |
|---|---|---|---|
Order Intake |
379.9 |
407.6 |
-6.8 |
Order Backlog 1 |
199.5 |
260.3 |
-23.4 |
Working Capital |
72.0 |
67.9 |
5.9 |
Sales |
425.5 |
404.9 |
5.1 |
EBITDA |
-0.9 |
-20.3 |
95.6 |
EBITDA-Margin |
-0.2% |
-5.0% |
1 as of 31. December 2019
In addition, the covenant agreements to the syndicated loan agreement are used to manage the MAX Group. The agreements include the equity ratio, the gearing ratio and the interest coverage ratio of MAX Group. Control is achieved by defining and checking target corridors.
Research and development
The MAX Group serves a wide range of internationally renowned customers from various industries. They require automation solutions tailored to their individual needs based on the latest technologies and processes. The market environment of the Group companies is characterized by rapid technological change and intense competition. Also, political guidelines and regulations, especially in the waste and disposal industry, are drivers for customer-specific development processes.
Against this background, MAX Automation regards research and development (R&D) as an essential prerequisite for future success in its individual markets. As a lead company with a focus on strategy, MAX Automation SE does not conduct its own R&D. Rather the development activities of the Group are decentralized. Some of the Group companies have in-house capacity to this end in certain forms, such as specialist departments or technology centers. Most of their development work is carried out in the context of specific customer projects and is geared to the market situation and the needs of the customers. This also includes offering to do individual feasibility studies in advance. The MAX Group companies do not conduct any fundamental research.
The subsidiaries are continuously expanding their technological expertise in order to fulfill their demand for technological or quality leadership. It stands to reason that they have a comparatively young product portfolio which is characterized by innovations.
Information on the development costs can be found in the Notes under other information on the Consolidated Financial Statement in the section on research and development.
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