Engel posts higher sales despite troubling signs of auto slowdown

Austrian injection molding machinery maker Engel Holding GmbH has seen its sales rise 6 percent year-over-year to 1.6 billion euros ($1.8 billion), for the fiscal year that ended March 31, but it warned of a global slowdown in its biggest end market.

In a May 23 news release, the company said it had noticed a "worldwide decline" in production since last summer.

"It is difficult to gauge the impacts of punitive tariffs and sanctions, Brexit and the debate around regulatory limits and bans on diesel, which has resulted globally in feelings of uncertainty and a reluctance to buy," Engel said in a May 23 news release.

In China, the automotive slowdown accounted for "a significant share of the decrease" in economic growth, according to Gero Willmeroth, president for East Asia and Oceania at Engel.

"Overall, we're expecting a sideways movement for Asia for the current fiscal year," Willmeroth added.

Europe remains Engel's largest overall sales region, accounting for 54 percent of sales. Asia accounted for 21 percent and the Americas another 24 percent.

"Asia and the German-speaking countries in Europe have been the primary factors behind our new sales growth," said Christoph Steger, chief sales officer of the Schwertberg-based machinery maker during the Chinaplas trade show in Guangzhou, China.

Despite the decline, the automotive sector still represents some important drivers of growth such as electric mobility, the company added.

Particularly in Asia, the market share held by electric vehicles is continuing to increase substantially, the machinery maker noted. With its own center for lightweight composite technologies, Engel has seen increasing demand for its lightweight structures globally, and in China. This includes a growing number of "organomelt projects" with Chinese firms, according to Willmeroth.

The Engel organomelt process makes it possible to form fiber-reinforced, semi-finished products with a thermoplastic matrix in an integrated and fully automated process, as well as functionalizing these products through injection molding.

According to Engel, demand for the process has been growing heavily since large-scale application began last year, thanks to its high processing efficiency and a "consistent thermoplastic approach," which make the composite components easier to recycle at the end of their lives.

In addition to composite technologies, Engel is pursuing solutions to replace glass with polymer materials to reduce weight, for instance in glazing.

The company has also witnessed growth in the lighting sector, wtih liquid silicone rubber increasingly being used as a lens material. At Chinaplas, Engel is displaying the technology to manufacture LED headlight lenses from LSR in an automated process that requires no reworking.

In terms of markets, Engel can see "burgeoning demand" in Vietnam, driven by the automotive sector.

For the current fiscal year, the company expects further growth in the medical, packaging and telecommunications and electronics (teletronics) markets in Asia, the latter bolstered by rising demand for camera lenses and LSR processing for smartphone seals.

The company claims that its all-electric and tie-barless e-motion TL injection molding machines, developed for the teletronics segment, have had "great success" in establishing themselves in Asia.

Having introduced a new business unit structure in Asia last year, Engel says it was able to attract new customers in the medical and packaging sectors during the fiscal year just closed.

"We've been able to build up our specialist knowledge on the local level here in Asia, especially in industries with highly specific needs and extremely rigorous standards," Willmeroth added.

In the fall of 2018, Engel grouped its 30 subsidiaries and more than 60 representative offices in seven regions around the world, run by regional presidents. At that time, the company appointed Gero Willmeroth as the president for East Asia and Oceania.

Steger said the new structure has accelerated decision-making processes.

"The regional presidents take full responsibility for sales in their region and act as the local contacts for the subsidiaries and representative offices, which prevents delays caused by time differences," he said.

Engel also announced that it had "almost completed" its 2020 investment program, which involved pumping an 375 million euros ($416.9 million) into capacity expansions and upgrades across all its sites.

As part of this, the plastics machinery maker recently completed the expansion of its headquarters facilities in Schwertberg.

The project involved expanding the assembly area, adding a new customer center and building a large technology center.

The expansion is intended to increase Engel's competitiveness and meet the increasing demand by customers for consulting services, particularly in the context of "the digital revolution," Steger said.

Engel is also enlarging the technology center at its production plant in St Valentin, Austria, where it manufactures large-scale machinery.

Construction work at the plant will be completed next year.