Interview with the board of directors

Markus Huemer (CEO/CFO), Peter Bernscher (CCO) and Heiko Gabbert (COO) talk about success despite great challenges, resilience, record order levels, sustainability, adaptability, technological diversity and innovation.


Mr Huemer, contrary to expectations, the year 2022 did not bring a continuation of the economic upturn after corona, but significant new upheavals. How did the POLYTEC GROUP fare in this environment?

​​​​​​​Markus Huemer: Not as well as we had originally hoped – but not too badly either. After the outbreak of the war in Ukraine, the year was marked by continuous firefighting in all business segments. However, we successfully managed the balancing act between material and energy price increases, personnel shortages and ongoing volatile call-offs on the one hand, and securing our future business on the other. Although the results for 2022 are not satisfactory, we can be proud of the performance of the organisation overall. The fundamental transformation of our company in the past years once again proved its value in this situation.


The war in Ukraine has given rise to new challenges, but also aggravated existing difficulties. How did that affect you?  


Markus Huemer: We have actually been confronted with considerable upheavals for a while, not just since the war in Ukraine. Basically, our industry has not really seen a calm period ever since the diesel scandal. Since 2017, this scandal hit several product groups hard – and consequently also some of our locations – and even led to plant closures. Then corona followed in 2020 with all the known effects, which we were able to manage relatively well by downsizing our costs, workforce and investments.

In 2022, we saw a certain recovery in the second half of the year, although the pre-crisis level has by far not been reached yet. After the substantial ­adjustments made in the last few years, we are now faced with the challenge to take our structures back up to a higher performance level. Returning from ­crisis mode to a normal operating mode doesn’t happen over night, but takes time and we will still be busy working on it in the first half of 2023. At least volatility is steadily decreasing, which makes our business more predictable.

Heiko Gabbert: We have high expenses to be able to meet the increase in call-offs, some of which take place at very short notice. Making things worse, we are now also affected by the ­general shortage of chips, as urgently needed new equipment is not available. However, the situation is improving steadily, not least because volatility is declining as just mentioned. On top of that, there is also severe shortage of employees – not only specialists, but also workers. This is especially true for leased personnel. We are dealing with the problem that the irregular call-offs also caused a high turnover in leased personnel, which did not exactly have a positive effect on performance. How­ever, a sustained stabilisation of call-offs should provide relief also in this area. In contrast, material was generally readily available in 2022, though often at significantly higher prices than in the past.

Peter Bernscher: Passing the massive cost increases on to our customers is an issue that we constantly deal with and that keeps challenging us. Fortunately we have been quite successful in this regard. But it takes continuous efforts to actually achieve the implementation of agreements made and – in view of further cost increases – keep making new agreements. We always have to be careful to maintain a balance between enforcing justified demands on the one hand and ensuring a good climate for new business on the other. But the record order intake in 2022 shows that we were apparently quite successful in this regard.

What do the figures for 2022 look like?


Markus Huemer: Overall, however, our revenue developed within the planned range, strongly driven by the successful pass-through of cost increases, with a few negative outliers among individual customers. Consolidated revenue amounted to just over EUR 600 million. But, as I said before, I am not satisfied with our economic success. Aside from the general environment, volume shortfalls and substantial additional costs for the SAP roll-out at our plants in Lohne, Wolmirstedt and Thannhausen have certainly had a negative impact. Towards the end of the year, the previously mentioned capacity bottlenecks also caused additional costs in some areas. But we identified the problem areas and defined the right measures. Now we also have to implement them. In any case, the good order level of last year and the new product launches lined up for 2023 allow an optimistic outlook.


So after corona, you also did well in 2022. Why is POLYTEC better at overcoming crises than other companies?


Markus Huemer: It would bold to claim that we are doing significantly better financially than others. But we are proud to say that the transformation of the POLYTEC GROUP is taking effect. On the one hand, this is true for our internal structures and processes, which prove their value with the ONE ­POLYTEC concept even in the most difficult environment imaginable. At the same time, our realignment in market development through the POLYTEC SOLUTION FORCE is bearing fruit, with a high order intake, both in the past year and right now. In business terms, this is reflected in our equity ratio, which is still very strong at 43 percent.

The other side of the coin, however, is significant pressure on our liquidity and earnings. Nevertheless, we succeeded in generating adequate free cash flow through intensive working capital management in 2022. But it is also a fact that automotive manufacturers are very hesitant to compensate us for cost increases as long as our equity position is so strong.

Overall we are confident though, and every step towards a normalisation of the market should have a positive effect on our earnings in the course of 2023 thanks to our good position. We will actively contribute our share through consistent optimisation, active market development and further diversification into the non-automotive segment.


Your strategy is obviously successful. Did you have to make any adjustments recently, especially in view of the various crises?


Markus Huemer: Certainly, we had to make minor evolutionary adjustments to details, but continuous change and adaptation are a constant in everyday business. Overall, however, very little change was required. The three cornerstones of our strategy – market position, innovation and customer benefits – continue to lead our way to the future. The massive change beforehand, specifically the repositioning as ONE ­POLYTEC, was a Herculean task, but we’ve done that and it has proven successful. Even if some readjustments are naturally still necessary here and there.


In the past, times of crisis held the potential of acquisitions for ­POLYTEC. Are there any developments worth mentioning in this regard?


Markus Huemer: The past years, and all the manifold difficulties they brought, would suggest that more opportunities would arise. We monitor the situation very closely and hold talks every so often. But currently there are few insolvencies in our industry. Given the development of our liquidity and despite our comfortable equity position, we would only consider companies experiencing economic difficulties and therefore coming on the market for a good price. At present, there are no specific targets in this context.


And why are there currently no insolvencies?


Markus Huemer: Because many companies are kept alive artificially. On the one hand, the public sector provided a lot of liquidity through subsidies during the corona pandemic; on the other hand, the practices in our industry offer ample space for liquidity support by customers to ensure companies’ ability to supply. This enables businesses that would otherwise be insolvent to keep going. Some media use the catchy term of zombie companies – and they are not entirely wrong. After all, this is not an economically sustainable model, as these companies can no longer invest in innovation. Thanks to our solid equity position, we are in a substantially better situation.

Mr Bernscher, in the 2022 financial year the POLYTEC GROUP recorded the highest order intake in company history. What is behind this success?


Peter Bernscher: We owe this success to consistently pursuing the path of the POLYTEC SOLUTION FORCE and concentrating on those product fields that promise potential and where we can best leverage our expertise. The close interconnection of sales and engineering in the POLYTEC SOLUTION FORCE provides an ideal platform for that. We no longer sell technologies, but solutions, structured by application-oriented product lines. That’s something our customers also acknowledge, and we see it quite obviously in the exciting new contracts we won in 2022.

E-mobility has now become a central focus and we are confident that it will even help us to overcompensate for the decline in our products for conventionally powered vehicles in a few years. Genuinely new contracts are nearly ­always related to e-mobility these days, while contracts for combustion engine vehicles are mostly about updates of existing platforms. In electric vehicles, our focus areas are the underbody including protection of the battery module, media management – meaning oil, water, cooling and sound insulation – and the growth area of our new Battery Applications Product Line, i.e., components for batteries, for example the upper and lower casing as well as cell separators.

But we are also not neglecting other fields of expertise. With Painted Exteriors for example, we have occupied an attractive niche for the high-end segment and produce add-on components for many premium customers. Especially in England, where we operate two paint shops, we are successful with that and aim to expand this business even further. The fact that Jaguar is currently in the process of reinventing itself and launching a number of new electric vehicles is helpful for us. But we are also planning to invest in the expansion of this product line in Hörsching.


And what about the targeted ­portfolio expansion to include ­other applications and product segments? Your plan for the ­medium term was to reduce dependence on the automotive industry, wasn’t it?

Peter Bernscher: We are also well on track in this regard. In addition to our known automotive products, we also focus on other forms of mobility such as people movers; we will, for example, produce the entire cabin for the air taxi of FlyNow, a start-up from Salzburg. We generally see highly interesting potential applications for plastic in the new mobility concepts, which result from the growth of ever larger mega­cities.

But we also develop and manufacture products aside from mobility in the Smart Plastic Applications Product Line, such as sustainable transport boxes, as well as plant trays in the future. As they can be recycled, these multi-use solutions, which are made of thermo­plastics, put the concept of circular economy into effect, thus supporting a topic which we are also working on intensively in our other products under the title “life cycle assessment”. In addition, we are currently addressing charging infrastructure, for ­example innovative solutions for wireless charging.



You talked about capacity bottlenecks in some areas after plant closures in 2019 and 2020. What investments are required to be able to manage the new contracts?


Heiko Gabbert: We have to fill the gaps created by Dieselgate and corona again. However, this does not by any means affect all locations, and the basic capacity is there in any case. Investments are only necessary in individual cases and for specific products, also for new technologies; but they are delayed due to long delivery times. We only invest in existing locations. No new plants are planned. There are resources which can still be used and only have to be partially adapted.

Generally speaking, capacity deficits of some locations have been balanced out through transfers from the closed plants. This would not even have been possible without ONE POLYTEC – and consequently the technological independence of individual plants.


What about the situation outside of Europe? Is there an upturn after the corona measures were ­recently eased in China? And what effect does all the turbulence surrounding Brexit have on your plants in England?


Heiko Gabbert: Our plant in China was hardly affected by the turbulence, and production was astoundingly stable; the figures roughly correspond to the level of 2019. What makes a positive impact here is that the plant is relatively small and manufactures components which the nearby customer needs continuously. So we are very pleased with the plant. And in England, Brexit has actually proven to be an advantage for us – there we will generate encouraging, high revenues with several platforms in the premium segment. Peter Bernscher already mentioned the current development at Jaguar, which will have an additional positive effect …

In 2022, you adopted a comprehensive sustainability strategy with the goal to make production completely carbon-neutral by 2035. What is your approach to meeting this goal and what is the status quo?​​​​​​​

Heiko Gabbert: After establishing sustainability management as a separate management function at the end of 2021, we started implementing it full of energy in 2022. The focus was on concretising our sustainability goals, preparing a decarbonisation roadmap and defining eight fields of action based on which we now aim to implement our sustainability strategy. We see great interest and increasing demands on the part of our customers, but also our employees, which makes it relevant for employer branding.

Currently we are working on a comprehensive energy saving programme – because of the massive cost increases alone – which ranges from minor measures such as temperature control for heating systems to extensive control measures. Process heat in particular is an important issue for us. Always keeping in mind where we could make savings without affecting our processes, we are working on a wide range of reduction and optimisation measures. In parallel, we are also dealing with ­further investments in renewable energies.



The topic of employer branding just came up. Companies everywhere complain about shortages of skilled labour and labour in general. Which measures are you taking to attract and retain qualified employees for POLYTEC?


Markus Huemer: We offer a dynamic environment, which is characterised by change and offers great creative leeway. In addition, we have launched an initiative under the title “Good Place to Work” based on which we are implementing a whole bundle of measures to become even more attractive for the labour market. This includes training programmes as well as comprehensive opportunities for our employees to contribute, and much more. Committed and engaged employees with a vision have really good career opportunities, as proven by many impressive careers of our employees. We actively communicate that.

Nevertheless it is always a great challenge to find the required number of suitable employees. As mentioned before, this applies to the industrial personnel in particular, also in view of the generally increasing demands regarding the workplace and working conditions. It is all the more important to create a motivating environment. Overall, our industry is still attractive and many people still have a passion for the automotive industry.


Highly qualified staff is also the basis for POLYTEC’s technological diversity and innovative strength. Which initiatives in particular are you currently pursuing?


Heiko Gabbert: One important focus is our digitalisation initiative, which is moving us a big step closer to the Smart Factory. It forms the basis for a number of innovations and optimisations, including smart automation and process data monitoring as well as automated logistics systems. Our overarching goal is to secure the competitiveness of our Western European locations by optimising the cost structures.

Peter Bernscher: In terms of innovation we generally pursue the strategy to bundle existing know-how for concentrated use on the one hand, and to enrich it and add to it through partner organisations on the other hand. On this basis, we are developing products for which, in our opinion, there will be demand in the future as part of specific engineering streams, and thus make provisions for the various new mobility concepts that we will encounter in ­everyday life in a few years. In this ­context, the focus topics include functional integration, sustainability, operating fluid management in e-mobility and highly innovative underbody systems. The Smart Plastic Applications Product Line benefits from countless spin-offs of our previous and current developments and competences.



The transformation of mobility towards electric drives is rapidly progressing. Can you transfer your knowledge of traditional powertrain systems to e-mobility and how much potential do you see in this development for the POLYTEC GROUP?


Peter Bernscher: As mentioned before, we assume that we will more than offset market-related losses in combustion engine vehicles through new orders and revenues in the field of e-mobility. We have already been able to transfer our knowledge to this new segment and the same is largely also true for our equipment. Since we cover the entire spectrum of plastic processing, this should also be possible in the future. In some areas we also specifically build new know-how when e-mobility requires new elements or we see additional market potential.

In particular, I would like to point out the Battery Applications Product Line, which was newly introduced last year. We do not consider ourselves a developer of entire battery modules, but an innovator for a variety of components for these modules. I don’t want to reveal just yet which renowned OEMs we are working with in development partnerships. But we will have success to show for it by the end of 2023.


The POLYTEC GROUP currently has refinancing of approximately EUR 70 million coming up. What can you tell us about that?


Markus Huemer: After repeatedly repaying financing from operating cash flow in recent years, or in some cases using asset-based financing for new investments, we now have to use borrowings again for this significantly larger tranche. We are currently in very constructive negotiations with several banks and our potential financing partners show great interest.

This is driven by our good market ­position, our future-proof product portfolio, our good order development, our success in passing on cost increases to our customers, and our solid eco­nomic situation. Of course, the terms and conditions look different today than only a few years ago, as both interest rates and premiums have substantially increased. But the refinancing is secure, which also reassures us in our strategic orientation.

In 2022 your share price dropped continuously and is now barely above the level of the 2020 crisis year. When can your shareholders expect an increase in the value of their investment in the POLYTEC GROUP again?


Markus Huemer: A legitimate question, unfortunately. In 2022 our share not only performed worse than the Vienna stock market as a whole, but also than our peer group on the EURO STOXX Auto & Parts – even if it outperformed the ATX until the autumn. I certainly understand that our industry is difficult to assess and investors consequently feel uncertain. On the other hand, we also have many loyal shareholders, who believe in our industry in the long term.

The price of the POLYTEC sharet has now been stable at around EUR 5 for several months. In view of our solid equity position and the fact that we own all our properties, this valuation is rather conservative. Looking at our earnings development, things look different though. Ultimately it is a matter of subjective evaluation. Those who believe in the viability of our industry and, like our customers and financing partners, consider POLYTEC’s positioning to be good, are likely to see quite some potential. ­Given the current environment, however, it will take some patience. In any case, we are in a good position to benefit from a positive turnaround.

Can your shareholders expect a dividend for 2022?


Markus Huemer: Yes, as in the previous year, we intend to propose a modest dividend of 10 cents per share to the Annual General Meeting. Even if our earnings are not what we envisaged, many things still went very well last year. The trend goes in the right direction, and we would like to give our loyal shareholders the opportunity to participate in this development. In the light of our solid future prospects, we consider this appropriate even when the net result is negative.

In closing, what is your outlook for 2023 and beyond?


Markus Huemer: On the premise of a market recovery, a tentative normalisation of call-offs, a number of new production start-ups and a stabilisation of the supply chains, I definitely look at 2023 with a certain level of optimism. To be specific, we expect revenues in the range of EUR 650 to 700 million from the current perspective, and it looks like new business will also go very well again.

Conversely, we will still face burdens caused by external influences such as the ongoing high inflation as well as increased personnel, energy and material costs, but also internal tasks such as coping with the aforementioned capacity bottlenecks. As a result, we will once again be confronted with special challenges in 2023. We have formulated the answers to these challenges – now we have to consistently implement them. In any case, we have the right products and the market position to benefit from stabilising markets – we are in the starting blocks and ready to go.