TOGETHER - The Lenze Annual Report 2018/2019

Letter from the Lenze Executive Board

Ladies and Gentlemen,

The world is changing. The digital transformation is influencing all areas of our lives, introducing new business models and forms of work. At the same time, deteriorating framework conditions for trade policy – triggered by trade conflicts, local crises and increasing protectionism – are creating a persistently volatile environment and uncertainty worldwide.

In order to remain successful as a company in the long term in this equally dynamic and promising environment, we rely on foresight and above all partnerships: We think and act long term, with the future in mind and together as one big team – be this in association with our global customers and partners or within the company. This year, therefore, we are presenting our Annual Report under the motto, TOGETHER.

Sales targets exceeded again despite a deteriorating market environment and record level investments

Lenze once again posted record sales figures for the 2018/2019 financial year, despite the worsening macroeconomic conditions. Group revenue increased by 6.3 % to € 787.6 million, thereby slightly surpassing original expectations. Lenze continues to be financially robust: Our high equity ratio ensures our independence as a family business, assuring our continued entrepreneurial freedom of action. This sound financial footing is also a prerequisite for continuing to drive change in our industry and investing internationally in the expansion of our business as well as innovative solutions and products.

In Germany, for example, we are implementing a mechatronics reference project at our Extertal site with our smart factory, the Mechatronic Competence Campus (MCC), that demonstrates what future production will look like. And at major international manufacturing locations such as in China or Poland, we have also invested in modernisation and production expansion, consistently consolidating our leading position as experts in global factory automation.

Under the heading, Intuitive Automation, we successfully presented ourselves at around 80 trade fairs worldwide during the last financial year. Additionally, in 2018/2019 we again invested significantly in the development and expansion of our employees’ skills, because they are the foundation for further sustainable growth and the driving force behind our success – now and in the future.

Investments as part of our adopted growth strategy were also reflected in our earnings performance during the 2018/2019 financial year. Compared to the previous year, Lenze recorded a decline in earnings before interest and taxes (EBIT) to € 52.4 million, which was additionally affected by one-off effects.

The current 2019/2020 financial year will be no less challenging for Lenze. For example, the macroeconomic outlook remains subdued, due to the persistently worsening economy. We are therefore implementing extensive measures across all regions and functions to improve our profitability, thereby taking a proactive approach to making our company more resilient and strengthening it from within. We deliberately initiated important strategic investments during our firm’s record years under largely stable framework conditions. This allowed us to further consolidate our excellent starting position. It is also now helping us to continue to generate sustainable growth in this volatile environment and vigorously maintain our strategic direction.

Consultant and compass: We successfully support our customers during the digital transformation of their business

Progressive digitalisation is a great opportunity for Lenze and thus firmly embedded in our Strategy 2020+. It has a considerable impact on all facets of our business and that of our customers. To actively participate in shaping this megatrend, we have invested heavily in research and development. We have also bundled our digital expertise in Bremen, along with that of our encoway and logicline subsidiaries, and launched the new Lenze.Digital business unit. Thus, we are taking our digital business to a new level, allowing us to develop innovative digital services, as well as solutions that now cover the entire product lifecycle of components, machines and plant, providing our customers with even more power.

The future of production is the smart factory and the intelligent networking of men, machines and industrial processes using state-of-the-art information and communication technologies. Adding value by taking advantage of and supporting the ensuing new opportunities at all levels is one of our primary objectives. Our groundbreaking Industry 4.0 concepts demonstrate how we support mechanical engineering during digital transformation. For example, our software and engineering tools already allow us to implement the entire engineering process, from system design to machine integration in a virtual, intuitive world – known as the “digital twin”. This creates huge opportunities for our customers, due to shorter development cycles with lower staff costs and faster time-to-market. In short: Our digital engineering expertise is in greater demand among our customers than ever before and an important element of our future corporate strategy.

#OneLenze: A solid basis for continuing to drive change in our industry

Ladies and Gentlemen, we live in turbulent times and Lenze aims to actively, flexibly and, above all, proactively participate in shaping them also in the future. The facts and figures of the last financial year also show that our strategy is working, even though the challenges are not diminishing, primarily as a result of the uncertain economic and political environment, as well as progressive digitalisation. But we cannot and will not be satisfied with our previous performance. On the contrary, now more than ever we must make every effort to drive progressive digitalisation from within, paving the way into the future for our customers and partners.

We are extremely confident that Lenze will succeed in this. It will be ensured by around 3,900 Lenzians worldwide, who work for the company and our customers every day with a great deal of expertise and commitment. It is thanks to them, in particular, that we have made substantial progress on central future themes and can thus adopt a positive future outlook.

As a Management Team, we would therefore like to thank all our staff members. We would also like to take this opportunity to thank our customers and partners for the trust and support they have shown in us during the past financial year.

Sincerely,

Christian Wendler (Chairman of the Executive Board), Dr. Achim Degner, Jochen Heier, Frank Maier

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