Overall economic environment
Although recent vaccine approvals have raised hopes for a turnaround in the pandemic before the end of 2021, renewed waves as well as mutations of the coronavirus raise concerns for the outlook. Amid the extraordinary uncertainty, the global economy is forecast to grow by 5.5 % in 2021 according to calculations by the International Monetary Fund (IMF). Governmental support measures in major economies and an economic revival in the course of 2021 boosted by comprehensive vaccination programs are expected to offset the slowdown in growth momentum due to rising infections. In the USA and Japan, a full recovery is expected as early as the second half of 2021, and in the eurozone and the United Kingdom from 2022. In the emerging and developing countries, the recovery will also proceed at different speeds. Strong growth is again expected for China (8.1 %) and India (11.5 %) in particular in 2021.
For the eurozone, the economic research institutes of the EUROFRAME group, which includes the Kiel Institute for the World Economy (IfW), expects a strong recovery of 4.9 % in the course of 2021 following a renewed decline in overall economic output at the end of the past fiscal year. However, the economy will continue to suffer the effects of the second wave of COVID-19 throughout the first quarter of 2021. Nevertheless, a significant recovery is likely to start when large parts of the population are vaccinated and the number of new infections declines significantly, so it is assumed that the far-reaching restrictions on social and economic activity will be lifted. According to EUROFRAME, the economy could then pick up speed again and the pent-up purchasing power of the past few months could have an impact on demand.
According to the German government, the German economy will continue to recover in the course of the year provided that the coronavirus situation eases. For 2021, the German government expects price-adjusted gross domestic product to increase by 3.0 % year-on-year. With the coronavirus pandemic flaring up again in the fall of 2020 and the containment measures reintroduced since November, the IfW does expect a delay in the recovery of the German economy. Nevertheless, according to the IfW, the export-oriented German industry in particular will come through the winter half-year largely unscathed thanks to the comparatively robust global economy.
Trends in relevant industries
In 2021, the German Engineering Federation (VDMA) expects the 4 % production growth in light of the decline last year to be only the beginning of the process of catching up from a low level. The slight improvement in economic activity had an impact on the forecast for 2021 with an increase of 2 percentage points. There is considerable confidence among mechanical and plant engineering companies in terms of demand. Three out of four companies expect sales to grow, and around half even consider an increase of up to 10 % to be realistic. Hopes are pinned in particular on the sales markets in China and the USA. Mechanical and plant engineering companies are less positive about developments in the European sales markets. For example, the VDMA notes that the pandemic is not over, and the recurring discussions about lockdowns as well as the tightened travel restrictions continue to be serious burdens and make a sustainable upswing more difficult. A renewed rise in global demand and business activity with as little interruption as possible are key for the further development of the export-oriented mechanical and plant engineering sector.
Following an increase in the production forecast by the VDMA as a result of the improving economy, the VDMA Robotics + Automation Association also expects demand to pick up in 2021. With a 6 % increase in industry sales, the robotics and automation industry will reach 2016 levels in 2021, remaining below the previous record set in 2018. In a volatile situation, further shutdown measures in particular could jeopardize positive developments.
According to the German Association of the Automotive Industry (VDA), the international passenger car markets will slowly improve in Germany, even if the previous year’s declines cannot be fully compensated for in 2021. Despite a low basis for comparison, vehicle sales in the individual markets – with the exception of China – will only slowly approach pre-crisis levels. The second half of 2021 in particular is expected to bring an improvement, when vaccination progress will be advanced enough that the pandemic can be noticeably contained in everyday life. The VDA is forecasting sales growth of 9 % in the global passenger car market and 12 % in Europe in 2021. The Chinese passenger car market will already exceed pre-crisis levels again in 2021 with growth of 8 %.
Current forecasts on the development of the medical technology industry for 2021 were not available from either the industry association Spectaris nor the German Medical Technology Association (BVMed) at the time this report was prepared. Nevertheless, Spectaris and the management consulting company Roland Berger expect fundamental market and competitive changes in the medium to long term as a result of the coronavirus pandemic, which will bring opportunities and challenges in equal measure. Accordingly, it is central for current and future competitiveness to capture new markets and customer contacts through digital excellence as well as automation in production and supporting health care processes while price pressure and regulatory burdens remain high in an environment of increasing market consolidation.
Current forecasts on the development of the recycling and waste disposal industry for 2021 were not available from the Federal Association for Secondary Raw Materials and Waste Disposal (bvse) or the VDMA Waste and Recycling Technology Association at the time this report was prepared. Nevertheless, the industry is cautiously optimistic about 2021. According to a survey conducted by the VDMA among its members, around 78 % of manufacturers of waste and recycling technology machinery and equipment expect a slight recovery in 2021. In the future, the industry as a whole will benefit from a new action plan for the recycling management economy from the EU commission. New products will also be designed with the recycling management economy in mind in the future. One of the plans is to increase the proportion of recycled materials in new products. The VDMA Waste and Recycling Technology Association sees enormous potential in the reuse of plastics in particular.

Prospective development in the financial year 2021

In principle, the business development of the MAX Group is strongly linked to the development of the overall economic environment. The Managing Directors base the forecast for the 2021 fiscal year on expectations and assumptions of the overall economic environment and the development of relevant sectors.
Although the resurgence of the COVID-19 pandemic at the end of 2020 has temporarily slowed the recovery of the overall economy, it is generally believed that the pandemic will not have a lasting impact on the global economy. Assuming a normalization of business and travel activity, an economic recovery in 2021 and robust growth in the global economy are foreseeable. The forecast assumes that there will not be any new far-reaching lockdowns and that there will not be a renewed reluctance to invest as severe as in the first lockdown. The impacts of mutations of the virus were not taken into consideration. Overall, the Managing Directors anticipate that the first two quarters of 2021 will still be subdued, but that rising vaccination numbers will be associated with a significant economic recovery starting in the second half of the year. A pandemic-related impairment of goodwill was not assumed in the forecast of earnings.
If further comprehensive containment measures are necessary as a result of the infection and they therefore have a greater impact on the economic recovery than we had assumed, this development could have a negative impact on our order, sales and earnings position as well as our strategic plans for the MAX Group in the 2021 fiscal year.
Independent of the temporary effects of the pandemic, the Managing Directors expect a positive development of the MAX Group in the 2021 fiscal year and beyond. Based on the current macroeconomic and industry-specific outlooks and the trends in the markets in which the core business Group companies operate, the Board of Directors assumes that demand for the solutions offered by these companies will remain strong. The early identification of trends and a corresponding strategic orientation are essential for the long-term business success of the MAX Group. Currently, the Supervisory Board and the Managing Directors are working on a further development of the Group strategy as well as an associated governance structure that meets the changing operational requirements. The new strategy is expected to be rolled out by mid-2021.
Uniform standards for risk management and managerial accounting as well as clear and binding guidelines for the acquisition of orders and project management play an important role in increasing efficiency in the Group and reducing its risk profile. Substantial investments have been made in appropriate management systems, and this focus will be further developed in line with developments in the current and subsequent fiscal years. For the purpose of stabilization, the ERP systems are being further professionalized. Group-wide cash pooling is being introduced to optimize borrowing.
An important factor in 2021 will be the completion of the last critical projects from IWM Automation GmbH, which ceased operations on 30 September 2020. IWM Automation Poland will cease operations in the course of 2021. The restructuring processes of ELWEMA Automotive GmbH and iNDAT Robotics GmbH will be continued with the aim of achieving a sustainable turnaround of these companies.

Summary statement on the prospective development

In view of the continuing burdens due to the pandemic – it is still unclear how long it will last – as well as further losses from the settlement of the Non-Core Businesses included in the planning, the financial challenges for the MAX Group will continue in the 2021 fiscal year. Irrespective of the aforementioned challenges, however, the MAX Group considers itself to be strategically well positioned with its core business areas. The Managing Directors see the order backlog of mEUR 209.4 at the beginning of 2021 as a good starting point for development in the course of the year. Sales and earnings should increase compared to the challenging previous year.
Provided that the assumptions and expectations for the MAX Group described above prove to be correct and there is therefore no unexpected worsening of the pandemic or significant deterioration in economic development, sales revenues are expected to increase strongly in the 2021 fiscal year, which amounted to mEUR 307.0 in the 2020 fiscal year. For the operating earnings before interest, taxes, depreciation and amortization (EBITDA) of the MAX Group, the Managing Directors predict, based on the current portfolio and the presented expectations for the overall economic developments, a profitable development in the core business segments and a strong increase in EBITDA for the MAX Group above the previous year’s value of mEUR 5.7.
Prospective business development of the SE
The earnings position of MAX Automation SE is heavily dependent on the development of the Group. Based on the expected development of the operating companies, the Managing Directors are anticipating a strong increase in profit transfer and investment income for the financial year of 2021.
Forward-Looking Statements
This report contains forward-looking statements based on the current assumptions and forecasts made by the Managing Directors of MAX Automation SE. Such statements are subject to risks and ambiguities. These and other factors may lead to a situation where the actual results, financial position, developments or capacity of the Company differ substantially from the estimates given here. The Company assumes no liability whatsoever to update these forward-looking statements or to adapt them in the light of future events or developments.
Dusseldorf, 12 March 2021
The Managing Directors
Dr. Christian Diekmann
Werner Berens
Dr. Guido Hild
Patrick Vandenrhijn

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