Dear business partners,
For more than a year now, we as a company and all our employees have been successfully battling the pandemic and its impacts. Our business operations continue to be severely restricted, and the effects of last year’s sharp market contraction will continue to be felt in the years to come.
That is why I am especially grateful not only to all our employees, but also to the families who have lived with the considerable strain of home office, countless restrictions in their daily lives, and perhaps even direct exposure to the virus. We all have a powerful, collective experience of what it means to stand together, to be fully engaged and to seek unconventional solutions in a spirit of cooperation.
Under these circumstances, SMS group has fought bravely. Admittedly, the shortfall in order intake and the necessary adjustment to the new environment have placed a heavy financial burden on us. Nevertheless, our earnings situation has developed better than we expected in mid-2020, thanks to our rigorous management of liquidity and costs. This is clearly reflected in our positive cash flow and lower than expected provisions.
While these developments were taking place on the operational side, the management took this phase as an opportunity to reorganize the entire structure and processes of SMS group. The regional structure that has now been introduced brings our products even closer to the market by placing a clear focus on our customers and their needs. In addition, transferring responsibility for results to the projects enables each unit to concentrate on its core competencies. The most crucial requirement to make our realignment a success is an open, cooperative corporate culture that intelligently combines a range of competencies for the benefit of our customers’ projects.
On this basis, we will continue to develop the strategic activities of our group with clear purpose. Our service business shall carry the greatest responsibility for sustainable and profitable growth. Alongside technological developments in plant construction and mechanical engineering, enhanced by the latest digital capabilities, we are increasingly offering integrated solutions that enable our customers to boost their operating profitability.
The market appears to have bottomed out around the start of 2021. Having strengthened our liquidity, we have ensured our ongoing independence. The majority of the extensive restructuring measures we have defined will be in place by the end of this year. By acquiring all shares in the operating business of Paul Wurth in Luxembourg and making other targeted acquisitions, we have further expanded our technological expertise.
Most fundamentally of all, it is our global positioning and the outstanding expertise of our employees that will enable us to turn this crisis into an opportunity. We are all looking forward to the time when we can leave the pandemic behind us. Nevertheless, besides causing us significant stress and strain, this period has also taught us that we can move forward with new, creative solutions by making smart use of digital tools and adopting a pragmatic, entrepreneurial approach.
The groundbreaking ceremony for our future headquarters in Mönchengladbach is not the only sign that we are entering a new chapter in our 150-year company history. Personally, I see the determined efforts of every individual and the search for new avenues to success as the greatest proof that our SMS group has what it takes to expand its position as a leading solutions provider for the materials industry.
Chairman of the Supervisory Board, SMS group GmbH