Once again, it was the industrial division – with semifinished products and machined parts based on standard, engineering, and high-performance plastics – that strongly boosted the sales of Röchling (Mannheim, Germany; www.roechling.com). The group, with its three segments, Automotive, Industrial, and Medical Technology, reported revenues of EUR 2.2 bn in 2021. While this corresponds to an increase by 8%, according to chief financial officer Evelyn Thomé, the figures are still not back to the pre-coronavirus level of EUR 2.35 bn in 2019. EBT – the only earnings figure Röchling discloses – improved from what could be called a black zero (EUR 2 mn) in the previous year to now EUR 79 mn. This could also have made a net profit possible again in 2021.

The Industrial division fell just short of taking over the group-wide pole position for the first time: with sales of EUR 1.01 bn, it finished just behind the Automotive segment with sales of EUR 1.02 bn. The remaining EUR 183 mn were generated by Medical Technology, which did good business in Europe.

The outlook for the years up to 2024 predicts opposite trends for the two major segments. From today’s perspective, the automotive forecasts made last year – from EUR 1.1 bn to EUR 1.27 bn to EUR 1.4 bn in the years from 2022 to 2024 – are very unlikely to be achieved. The industrial sector, by contrast, which was only expected to grow to the billion in sales already achieved in 2021 by 2024, will probably develop much more dynamically until then. This is also reflected in the number of employees. Groupwide, the staff increased to 11,245 in 2021 – but here as well, Industrial reported almost 300 more employees while Automotive cut almost as many jobs.

In the meantime, the suppliers’ order books are “extremely full in some cases” – in other words, Röchling is also having difficulties obtaining all the purchased parts it needs to process its orders. Additionally, the pandemic and the distortions it triggered in global logistics have caused additional costs for transport and materials, which also included plastics granulates. The tight supply of materials in particular made it difficult to fully utilise the plants’ capacities, Röchling’s management announced when presenting the business figures. This resulted in more frequent changes in production.

If the Industrial segment has almost reached eye level with Automotive, it’s because of its strong revenue growth of almost 26% while the latter declined by 5%. “We have moved up into the circle of billionaires,” as the head of the Industrial division, Franz Lübbers, put it.

The almost exclusively organic growth of the Industrial segment was distributed fairly evenly across all regions of the world. Asia led the way with a growth of 44%, followed by Europe with 25% and North America with 19%. This is where the division is to grow in the future, the board of directors has also given its green light for possible acquisitions. However, there apparently are no concrete talks about North American acquisitions yet.

A look at the customer industries shows that the two major sectors, mechanical engineering and chemicals, have grown the most in absolute terms. Although at a lower level, applications for mining, healthcare, and electronics developed much more dynamically in percentage terms, with rates of 50-75%. The transport sector, currently in the midfield, is also to be expanded in the near future: in an interview with Plasteurope.com, Lübbers revealed that his company plans to acquire a European processor of glass fibre reinforced plastics (GFRP). However, it can be assumed that the negotiations are not yet complete.

The Automotive division, led by Raphael Wolfram, currently needs a lot more support – besides, he was recently appointed spokesperson of the executive board since there is no longer a group CEO after the departure of Hanns-Peter Knaebel (see Plasteurope.com of 01.09.2021).

In its “crisis year #3” (Wolfram), the automotive sector has so far performed better than hoped. He expects an increasing recovery in the second half of the year, although there will probably continue to be “a lot of volatility” in the carmakers’ volume calls. Therefore, there is still a small chance of achieving the sales target of EUR 1.1 bn for 2022, even if this is “hanging by a thread”.

As a result, Wolfram’s segment is currently spending little money on investments – also because of the lockdown measures in China, which would have caused a “brutal emergency stop” in April. In North America, on the other hand, the market is recovering considerably faster than in the rest of the world. Wolfram still does not see any real improvement until next year – and then some towards the end of it.

Meanwhile, a change is taking place in the automotive parts portfolio: the momentum driven by tanks for selective catalytic reduction (SCR) of diesel passenger cars seems to be waning, even if new orders for vans are still flowing. When it comes to further expansions for this technology, however, Röchling is already cautious and is focusing more on structural lightweight construction and battery components instead. The company has recently registered a strong volume of new orders for the latter in particular.

At the same time, Wolfram warned of a wave of uncalled parts that the automotive industry has been putting off for months. So far, however, this wave has had hardly any consequences, neither for Röchling nor, in Wolfram’s view, for other suppliers. It is clear to all players – customers and contractors alike – that no one will actually be able to produce these quantities in a short time if the automotive economy picks up again.

The high price level of plastics granulates, which has already brought some smaller processors to the brink of ruin, also contributes to the uncertainty. As one of the larger players in the industry, the German group finds itself in a comparatively comfortable position, even though Lübbers admits that inventories have to be built up to a wholly different extent than before, which puts enormous pressure on cash flow.

Largely in line with PIE’s forecasts, the head of the Industrial division expects prices for polyolefins to fall in the next few months: they could return to pre-crisis levels towards the end of the year. Prices for PVC are also expected to decline, albeit much more slowly. For technical grades and ultra-high molecular weight polyethylene (UHMW-PE), on the other hand, Lübbers does not expect quotations to fall in the foreseeable future.

That is one of the reasons why Röchling – like many other processors – is pushing internal recycling. The polyolefin recycling facility established in 2021 in Geeste-Dalum, Germany (see Plasteurope.com of 11.03.2021) has meanwhile been expanded to include compounding, and parts production at the site is to follow. Lübbers plans to invest a further EUR 5 mn in its Lahnstein plant, where engineering thermoplastics recycling, which has so far been carried out internally on a smaller scale, is to be outsourced and expanded in line with the successful Geesten model in the course of 2023.