TÜV Rheinland set a new revenue record and grew worldwide in the 2015 fiscal year: The revenues of the international testing service provider for quality and safety increased by 8.7% to €1.88 billion (2014: €1.73 billion). The growth was therefore sharper than in the previous year. Globally, the number of employees in the Group rose by 310, reaching a new high of 19,630. Net income for the year (EBIT) was €101.4 million in the past fiscal year after €110 million in 2014. Last year, the return on sales was 5.4% (2014: 6.4).
“We are looking back on a successful 2015 fiscal year. Above all, we strategically advanced our tradition-steeped company while increasing revenues across all business streams and driving forward our focus on international markets. We established new testing procedures on the market. And we again increased the number of people who work at TÜV Rheinland,” said Dr. Michael Fübi, CEO of TÜV Rheinland AG, during the presentation of the annual accounts.
Positive Development of Global Business
As in the previous years, TÜV Rheinland again grew almost entirely organically and without major acquisitions in 2015. In Germany, the company generated revenues of over €900 million for the first time in 2014 at €929 million. This equates to growth of €41 million or 4.6% even though the competitive environment in Germany is still challenging. The domestic share constitutes 49.6% of total revenues.
Outside the German home market, TÜV Rheinland generated revenues of €952 million after €843 million a year before. This represents a 12.9% increase, whereby the business developed very differently in different regions of the world. The economy of Brazil, where TÜV Rheinland is traditionally very highly committed to industrial and infrastructure projects, shrank by 3.8% in 2015 – the toughest recession of the last hundred years. TÜV Rheinland is directly affected there with 1,850 employees by the slump in crude oil prices and the collapse of the ore market. Revenues in Brazil therefore fell by 40%. With this exception market slump, TÜV Rheinland’s revenues and earnings in 2015 would have been much higher.
TÜV Rheinland’s business in the India, Middle East, Africa region developed very positively with an increase of a good 46%. TÜV Rheinland has founded two new companies in the Gulf States. Business here centers on quality audits, industrial services, and traffic and infrastructure projects. TÜV Rheinland also expanded its testing activities in China, Hong Kong and Taiwan (plus 12.1%), North America (plus 10.2%) and Asia Pacific with Japan (plus 10.1%). In Western Europe outside of Germany, TÜV Rheinland generated growth of 8.2%; the testing service provider grew by a moderate 2.9% in Central and Eastern Europe.
Overall, Asia remains TÜV Rheinland’s largest market outside Germany. The company now employees almost 6,000 people there, of which – focusing on product testing – nearly 2,500 in China and now over 900 in India.
Growth across All Sectors and Service Areas
Since it was founded in 1872, TÜV Rheinland’s work has kept in step with the development of new technologies and global industrialization. Today, the testing service provider is engaged in nearly every sector. The business is organized into six areas: Industrial Services, Mobility, Products, Academy & Life Care, Systems and ICT & Business Solutions (ICT = Information and Communication Technology). The three major business areas of industrial testing, mobility and product testing make up three quarters of total revenues.
Although Industrial Services is particularly affected by the weakness of the Brazilian market, TÜV Rheinland still grew by 1.3% to €543 million in this traditional core business. The second largest business area – and the most international – is product testing, in which TÜV Rheinland increased its revenues by 20% to €485 million. Electrical product testing has very high potential. This field will see a dramatic rise in product diversity, technical applications, networking and communicability, which will pave the way for new testing requirements.
TÜV Rheinland generated €471 million (up 8.8%) with services in the mobility sector, including conventional vehicle testing and railway engineering. Growth areas here also include independent reports and car services and, in the future, increasing interconnection, autonomous driving and the reliability of intelligent transport systems. Around the world, TÜV Rheinland now performs 8.6 million vehicle inspections a year, nearly two thirds of which outside Germany. The most important markets are France, Spain and Chile.
The young business area Academy & Life Care, with services for people in their working environments, generated growth of 6.8% and revenues of €205 million. TÜV Rheinland grew by a hefty 19.1% in the Systems division, generating €162 million. The strong revenue growth in the auditing and certification of management systems shows that such testing services throughout global value chains will become increasingly more important. The ICT & Business Solutions business area encompasses the divisions IT Services, Cyber Security, Business Consulting and Telco Solutions, which comprises telecommunications infrastructure services. TÜV Rheinland generated €133 million (up 8.1%) here in 2015 with the focal areas of the business in the USA, the United Kingdom and Germany.
TÜV Rheinland’s equity increased considerably from €295.2 million to €337.9 million in 2015. The equity ratio of TÜV Rheinland showed a positive improvement from 16.8% to 18.5%. Net cash from operating activities also went up from €103.8 million to €155 million.
Growth Creates New Jobs
TÜV Rheinland’s growth was reflected in the positive development in the number of jobs in 2015. Globally, TÜV Rheinland employed an annual average of 19,630 staff, 310 more than in 2014. The majority of the new jobs were created in Germany, where TÜV Rheinland increased the number of employees from 7,774 to 8,043 – growth of 269. The number of employees outside of Germany rose slightly to a current figure of 11,587 (plus 41).
TÜV Rheinland’s high level of attractiveness as an employer remains important for obtaining new employees. Other important issues are internationalization and the increase in the proportion of women managers. Currently 36% of the overall workforce is female, but only about 10% of management positions are held by women.
Broad Program of Investment
TÜV Rheinland’s investments amounted to €90.1 million in the last fiscal year. They were therefore below 2014’s record (€150 million), which was due to important acquisitions and the significant expansion of the Group headquarters in Cologne. In spring 2017, around 750 employees will move into the 113-meter-tall TÜV Rheinland Tower, which will have been completely renovated in a two-year construction phase.
In the next five years, TÜV Rheinland is planning a broad-based program of around €500 million of investment. TÜV Rheinland is setting three innovation and investment priorities for the years to come:
- Digitalization: IT security, Industry 4.0 and intelligent transport systems are three issues that will continue to grow in significance. The networking of systems, facilities and products right through to people’s everyday lives is a major growth area. Here, the focus is on reliability of systems as well as on security.
- Supply chain services: This term is used to describe the growing demand for quality assurance throughout global supply chains and goods flows. Certification of management systems, supplier audits, product testing and monitoring of manufacturing facilities constitute the core competencies of TÜV Rheinland.
- Energy and infrastructure: In addition to the growing railway engineering business, the energy market and wind energy, the asset integrity management (AIM) segment will also expand. AIM is a technical consulting service aimed at the extensive management and monitoring of complex technical systems. These kinds of systems are currently used primarily for facilities in the oil and gas industry, the chemical production sector and power plants. Here, the focus is on optimum safety as well as on maintaining the functionality and maximum availability of systems.
CEO Dr. Michael Fübi: “We want to be the best sustainable and independent company in our industry. In our eyes, the best company means in tangible terms that our brand stands for the utmost integrity and respectability, and that we supply our customers with the highest quality with excellent services. It means that we create innovations and continue to increase our margins.” As a specific example, TÜV Rheinland is planning a margin of more than 9% coupled with revenues of €2.5 billion in 2020. “Our mission has stayed the same since 1872: as a driving force of a modern company, as a guarantor of technical innovation and as a testing service provider aiming to contribute to a better quality of life for many people. With this in mind, we see our business and our responsibility as follows: we at TÜV Rheinland stand for quality and safety for people, technology and the environment. With our knowledge, our competence and our solutions.”