Family-owned Freudenberg and Co reported sales are up 14.3% to €4.4 billion in 2004, and record profits of €171 million.
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Freudenberg is a global market leader in the automotive seals and gaskets market and also has significant consumer and other industrial businesses. 37% of group turnover is directly with the automotive industry – mostly in seals, vibration control components, filters, automotive carpeting reinforcements, engine compartment installation and headliners and lubricants.
Topline growth was boosted by acquisitions such as seal specialist Burgmann in 2004.
Burgmann at sales of €315 million in 2004, and includes a fast-growing automotive business.
Without the effect of the acquisitions sales grew about 5%.
Profits of €93 million in 2003 had been burdened by costs of those acquisitions.
Freudenberg is the lead partner in the Freudenberg-NOK general partnership in the seals and vibration control business in the USA.
Freudenberg holders share of 22% in NOK and the two companies form a “virtual” global company, according to Freudenberg.
The company is “very cautiously optimistic” on the outlook for 2005.
Peter Bettermann, chairman of the management board of Freudenberg, expects that results in 2005 will be similar to 2004.
Sales to the automotive sector will be boosted by the consolidation of partly-owned joint ventures such as Vibracoustic (which Freudenberg previously managed in partnership with Phoenix, now acquired by Continental).
Vibracoustic had sales of €413 million in 2004, and is looking to start production in Russia and Iran in 2005.
In addition, Freudenberg acquired Phoenix AG’s production facility for commercial vehicle air springs in Hungary.
Freudenberg expects to grow faster than the vehicle market, but Betterman said that the problems of customers such as Visteon and Collins and Aikman were a cause for concern.
Betterman said that the company had also faced “dramatically increased material and energy costs” in the first quarter of 2005, and “the trend continues”.
Like other automotive suppliers that have been producing exceptional results in the last few months – such as Continental, Bosch or Denso – Freudenberg sees itself as a technology driven company. In 2004 Freudenberg raised its expenditure on research and development to €173 million, compared with €130 million in 2003.
Management stressed that the company’s strategy to beat off low-cost emerging market competition was to redouble efforts to widen the quality gap over its price driven competitors. It also reiterated its commitment to Germany at its annual press conference, while demanding more flexibility.
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