Economic crisis hits Freudenberg in Q4

ERJ staff report (RD)

Weinheim, Germany - Freudenberg, a producer of seals and vibration control components for the automotive and other industries, has recorded 2008 sales at Euro 5050 million, a 5.5 percent drop compared to the previous year, the company said 15 May.

Despite business being good in the first three quarters of 2008, there was a marked drop in incoming orders in Q4, Freudenberg said. Profit from operations fell by 26 percent to Euro 285 million, due mainly to restructuring costs, the company added.

The decline is sales, Freudenberg said, was largely due to the disposal of the floor coverings and brake hose business, and the negative exchange rate from sales generated by subsidiaries in the US and UK.

“Given the scale of the financial crisis we had been reckoning with the possibility of a global recession from mid-2008 and therefore took precautionary steps to increase our liquidity as well as commencing far-reaching capacity adjustment measures early in 2008,” said Peter Bettermann of the Freudenberg Management Board. The company has closed four production plants in the US and one in Spain in the last 12 months, and has 1592 fewer employees than the same period in 2007.

Freudenberg is continuing to invest in new technologies in the face of the economic crisis, including developing special sealing products to wind turbine manufacturers to seal rotor blade bearings and mast bearings, and stretchable electronics for the automotive and medical industry. The company also expects the Chinese, Indian and Brazilian markets will develop “significantly better” than the US and European markets.

However, “The automotive industry is our largest customer grouping and remains a prime driver of innovation for us,” said Jörg Sost of the Freudenberg Management Board. The company did not give a breakdown of results by business unit.

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Press release from Freudenberg