Grundfos strengthens its market position, but profitability must be improved

The world's leading pump manufacturer, Grundfos, is being challenged by intensified competition, low growth in the European markets and unfavourable currency exchange rates in 2014. High growth in for instance the United States and China strengthens the global market position, but there is a continued decline in profitability. A new strategy is to reverse this trend.

In 2014, the Group experienced a growth in turnover of 5.7 per cent, measured in local currency. This has strengthened Grundfos' global market share. Compared to 2013, the year was characterised by negative impacts of currency movements, which was particularly evident during the first six months of the year. Overall, the effects of currency movements have reduced net turnover by 4.1 per cent, which means that sales growth in DKK amounted to 1.6 per cent, resulting in a total turnover of DKK 23.6 bn.

"The overall growth is satisfactory, given that a number of markets were characterised by low growth. We have maintained and probably improved our global market position, even though competition has intensified, especially in Asia. But the growth and profitability of the group measured in Danish kroner is disappointing", says Group President Mads Nipper.

More than half of the turnover comes from Europe, and is therefore considerably influenced by the European market trends. A generally low growth in the European economies resulted in modest growth rates for Grundfos.

"Our important and largest market, Germany, showed a positive growth during the first six months, but took a negative turn during the second half. For the year as a whole, it meant a negative growth, for instance because the market for circulators still does not show the expected sales growth. Besides this, our sales and profitability have been negatively influenced by the development in Russia, which is also one of our main markets. Here, several years of impressive growth has been replaced by deterioration. Despite this, our organisation in Russia has pulled through very well. The economy in Southern Europe is still weak, which has resulted in low or no growth in these countries. But fortunately there are also bright spots, where we have managed to deliver a solid growth. This goes for, for instance, France, Great Britain, Poland, Hungary and Denmark", explains Mads Nipper.