Nachhaltigkeit und unternehmerischer Erfolg – ein beispielhafter Ansatz der Dürr AG

Yes, I am happy to be here and to actually present the company and what we are moving and doing in this area. I will jump right in. I would like to structure my presentation into sections: first, an introduction to the Dürr Group; then how over years and decades, if we are honest, we have developed and taken up the topic of sustainability; economic success and sustainability – are they two sides of the same coin or different medals? Then I will give a bit of insight into what we are doing ourselves in terms of our own sustainability, but also what we can offer our customers in that regard, and of course at the end a brief summary, and then I will be happy to answer questions. First, perhaps to the question: who is the company Dürr? Dürr is very often associated with paint application systems, and that is very correct. That is our core business, developed over many decades. Last year we achieved total sales of about 4.7 billion euros, so we are already a large company. But we not only do paint systems; we currently run our business in four divisions. The largest area is indeed paint application systems. Here we design the manufacturing processes for our customers. We achieved a bit over 2 billion euros in sales last year. We essentially take over the car bodies when they come from the raw body, take over the entire painting, accompany our customers in the final assembly process through to the test lines at the end of the line, until the vehicle is finished and ready to hand over to the customer. The second area, which we have built up in the last 5 years through things we already had in the group but also through acquisitions, is the area of Industrial Automation. This is about production automation for different customer groups: tier-1 automotive suppliers, medical technology products, but also consumer products for daily use, which are produced on our systems that we sell to our customers. The third area, also a large one, is woodworking. Here we focus on furniture manufacturing, furniture production, but also the modern production of wooden houses, and beyond the classic idea of a wooden house, essentially the production of living space in modular construction.

The fourth area we currently pursue is environmental technology. We have put this business up for sale after a strategic review; we are in the sales process. And you might ask: how does Mr. Heinrich want to tell us about sustainability and profitability if Dürr is separating from the area that is very closely connected with it, namely environmental technology? The reason is very simple. We have been doing this business very successfully for many years, but in the focus we are driving for the Dürr Group, we want to concentrate above all on our customers' value creation processes. And with environmental technology, we are in the secondary process. We do exhaust air purification, meaning that bad odors from production, dangerous substances, do not reach the environment, and that noise generated in manufacturing does not spread outside. And that has little to do with the core we want to focus on, namely automation, so we want to separate from this business.

We are a globally active company. We have around 20,000 employees, and you can see that our employees are working for us worldwide. In North and South America, about 3,000 employees. The focus of our activities is here in Germany and Europe. That is our core. We stand by that; it is the basis from which we have developed and continue to steer our worldwide activities, but we are also active in Asia and China, broadly speaking Asia including China, with a high proportion of employees. We have followed our customers everywhere, opening up those markets. We do not use Asia as a cheaper workshop for our products; rather, we are where our customers are. And you can see that from our sales, as shown in this chart or the small inset on the upper left. Last year we made 45% of our sales here in Europe, 31% in North and South America, and the remaining 24% in China and the rest of Asia outside China. We have a very clear focus; we also operate in niche markets with very high market shares. In effect, you can say today that every second paint application system built today is built by Dürr. In woodworking technology, we are also a strong market leader, and in the area of Industrial Automation, production automation, we are among the top players worldwide.

How has Dürr developed the topic of sustainability for itself over the past years and decades? It is quite exciting. The first environmental department in the company was founded back in the 1960s by Heinz Dürr, who led the company for many years and decades. Then we further developed it strongly in the last 5 years. My colleague Jochen Weyrauch took over responsibility for sustainability in the company in 2019, and a holistic approach was developed across five fields of action. And we heard earlier about the topic of sustainability and financing and what significance it has. In 2019, we issued the first ESG-linked Schuldschein loan, placing a new instrument not only for us but actually for the market. When we talk about sustainability, we do so holistically, as I said. We have five fields of action. Let me briefly go through them. Not only at the center, but the starting point of my explanation is actually the topic of employees: personnel development, training for employees. It is important to us to be an attractive, fair, and responsible employer. And with that, it is also important to have the topic of sustainability in the focus of our own activities. But we also look at what our engagement and activities mean for society. How can we contribute by supporting our employees' activities, and through social engagement, participation in events, and through donations and sponsorship. We see sustainability, as I think comes across, as a strong part of how we manage and lead the company. We want to grow profitably, but we also want to do that in harmony with our sustainability strategy, aligned with a focus on future-oriented, future-proof business fields. This then relates to what we can offer our customers, the products and services we offer, from which our customers ultimately derive benefit, and with which we also achieve benefit. We will see examples of that later. The topic of innovation, further development, bringing in new technologies plays a very, very big role. Only with that have we ultimately achieved what I highlighted earlier: that we have taken a leading role, a leading position in our segments worldwide. But it also relates to how we ourselves deal with resources in our own value creation, in our own supply chain, in collaboration with our suppliers, ensuring that sustainability plays a major role, not only in fulfilling reporting obligations but really as a basis for our own actions.

I would like to illustrate this with the topic of climate strategy. We set up our first climate strategy in 2019, at that time with a strong focus on Scope 1 and 2 reductions, and we achieved a significant reduction of 55%. But if you look at the chart closely and look at Scope 1 and 2, you will notice that in terms of our own CO2 emissions, that is not where the music is playing. The music is playing in the operation of our systems at our customers' sites and the technology we bring in, so that the systems can be operated CO2-free or low-CO2. That is why for the future, with the new climate strategy we adopted last year, we have focused on Scope 3, downstream but also upstream with customers, to achieve significant improvements, while still making progress on Scope 1 and 2, but ultimately with the goal of making our contribution to transforming the economy towards climate-neutral economic activity and providing our customers with the basis to be successful in the future through the corresponding operation of their production facilities. And how that looks in detail, I would like to present in the next section.

On the one hand, if you look at what trends are driving our business, there are three important trends that matter. And you can see that two of these developments are specifically related to the topic of sustainability. Foremost, as I already mentioned, the topic of sustainable production, energy and resource efficiency, which play a major role, and picking up on Professor Kotzo's statement earlier, that not only contributes to sustainability, but also increasingly to cost awareness, cost reduction, because ultimately energy waste, resource waste becomes more expensive, and so we as a company do ourselves a big favor when we pay attention to reducing such waste, using optimization potential, and thus significantly reducing energy and resource consumption. The second aspect that we clearly see as a demand driver is the topic of a CO2-free society. That means that with our systems, products can be manufactured, such as for electromobility, electric vehicles, but also building with wood, facilities for the production of alternative energies, so that in operation, the products offer the possibility for each individual to make their contribution, and thus indeed contribute to the challenges we see in the world, which we want to confront with a focus on climate neutrality. And the third trend also plays a major role for us, it probably contributes a bit less to sustainability, but the topic of automation is gaining more and more importance, because we have the situation that we need to bring production back to the respective end market more strongly, as supply chains have become more unstable. We are seeing that now in the last few days with the things that have come up again, what challenges may come our way. But we also see that ultimately, the way people approach work is changing. The idea of working in three-shift operation six days a week in the factory is less attractive today. People want to work differently, and we can only address that and achieve it by automating more and more, reducing burdensome work activities, and, say, standing at the assembly line in the night shift at 2, 3, 4 in the morning is certainly very burdensome, but also heavy forces to be managed, products to be lifted, all through automation ultimately makes it better for people. With the next chart, I would like to first, and I suggest we let it sink in, show what technology we are bringing to the paint application system, and then I would also like to explain what you see here.

So, you see various things that are important in the paint application system, and I would like to start in the middle. Then go a bit to the right side of the chart. You see two painting robots applying paint. But you also see that the efficiency of the paint application differs between the two spray methods. On the left side, there is still relatively much so-called overspray. That means a larger proportion of the paint does not land on the car body, goes into the air. The air then has to be conditioned and treated. You have paint loss, you have energy loss for the treatment. You still get a good painting result, but ultimately not a really efficient one. And on the right side, you can see that the painting bell applies much more precisely, and hardly any paint is lost to the ambient air. With the new technology, we achieve a transfer efficiency of over 90%. On the other side, on the right top or right in the middle, you see examples of new paint application methods. Here the paint is not sprayed. It is a thick paint that is printed on, like in an inkjet printer. You can see it nicely with the blue stripe in the middle. You can paint entire roofs that way. No paint is lost anymore. Every drop of paint ends up on the car body, and we achieve a completely different efficiency. We can also use it differently, whether it's a complete roof that is painted or design elements, sporty elements. And we are currently developing this print head further, high-resolution. Then you can represent real design objects, up to painting my own fingerprint on the hood. Whether that is really needed can certainly be debated, but these are entirely new technologies that allow us to meet the desire for individualization of products that people use daily, and to offer manufacturers, our customers, this possibility. On the left side, to round off, we have new drying processes where the vehicle body is dried from the inside, thus using significantly less energy. Now we have let that sink in, and now I would like to show why it matters. Firstly, we see today that about 60% of all paint application systems worldwide are older than 15 to 20 years. The operation of these paint systems is characterized by high energy consumption. Per vehicle body, between 1000 and 1500 kilowatt-hours. That is about one-third of the annual electricity consumption of a single-family home or household. So a very high proportion. We have a high proportion of fossil fuels that provide this energy. And we see that with this high energy consumption, the painting shop accounts for about 43% of the total energy consumption of vehicle production. That means our systems and the way they are operated have a great significance for how our customers can achieve sustainable production. And with the technologies we can offer today as state of the art, the benefits we achieve are shown on the right side. Energy consumption can now be reduced to below 400 kilowatt-hours. Two years ago, we concluded a strategic cooperation with a vehicle manufacturer here from Stuttgart, who wants to open up these possibilities at its plant south of Stuttgart to consume significantly less energy. Water consumption in the paint system has been reduced by more than two-thirds. Paint consumption has been reduced by more than one-third with the technologies, and also the volatile organic solvents used have been significantly reduced. That means, with the operation of a state-of-the-art system, our customer can achieve a much more climate-neutral and sustainable operation.

Also in the other fields of action or business areas we have defined, for example when it comes to electromobility, where we offer our customers the possibility to produce systems that can be operated CO2-free, or also in wooden house construction. Here we see on the right side a house built in modular construction. Industrially manufactured, not on the construction site, but in factories with a high degree of automation. Then it is assembled on the construction site within a few days. There is a hotel in Ludwigsburg with about 55 rooms that was built in such a construction method within three weeks. Every day, module upon module was placed, connected. It can be prefabricated with electricity, heat connections, everything already made in the factory, and then assembled on site within three weeks and is more or less ready for operation. The whole topic of electromobility also has great significance for us. Last year, more than half of our order intake in the automotive sector, with a volume of 1.2 billion euros out of over 2 billion, was related to electromobility. That means you can see that we are experiencing this transformation on a daily basis with what we do for our customers, and that sustainability continues to play a major role despite all the discussions, as we heard earlier and will certainly discuss later. In conclusion, we only have one Earth on which we can and want to live. So we have to do a lot to preserve it. How do we combine all that with our economic success? You saw the demand drivers. We want to grow by 5 to 6 percent annually over the next 5 years. We want to achieve a size of more than 6 billion euros in sales. We want to be sustainably profitable and also achieve a high return on capital employed, which is important for us and our investors, as we are a listed company. Let me briefly summarize the main aspects of my presentation. We are a global market leader in plant and mechanical engineering. We have a clear focus on automation solutions for the benefit of our customers. We are anchored not only in automotive but also in woodworking, and also in aspects such as medical technology and consumer goods. In that regard, we have achieved a certain breadth, but the core of our activity revolves around the topic of automation. Sustainable, profitable growth, precisely because we provide our customers with production processes for a CO2-free society and for a production that is increasingly driven by automation. Innovation, I have now shown through the products in the paint system, is of great importance to us. Ultimately, the challenges we see today in the combination of sustainability and climate neutrality can only be solved through technology. Eight billion people in the world will not be able to return to living in caves and preparing food and warming themselves with wood fires. It can only be done through technology, and we provide the prerequisites. That is how we see sustainability, despite all the reporting requirements we are subject to. Last year, we voluntarily reported according to CSRD because the European law had not been implemented in Germany. We still said we would do it. Firstly, because we were far advanced, and secondly, because I am aware that we will need it going forward. And then we had a dry run that we hadn't planned, but we still see it as an opportunity. That is all from my side.

Yes, well, in ecological terms, we have defined the corresponding performance indicators for ourselves. The topic of how much CO2, how are the energy consumptions, what proportion of energy consumption comes from fossil sources. Yes. We still use gas today, see it as a bridge technology. That means we measure it ultimately by these factors. And economically, a small insight: how high is the importance of electromobility on order intake by now, and finally, we measure ourselves by profitability and also by return on capital employed.

Yes, we do feel the pressure that our customers come to us with corresponding requirements, whether in the woodworking area, one of the large Scandinavian furniture manufacturers that comes to audit at our plant and clearly defines how our contribution is from our own activities, but also regarding the systems they are interested in buying from us. We see it, not yet with intensive audits, but fundamentally the topic is there: documentation, reporting. That is also why we have the sustainability report, which is quite extensive. I know or we are aware, there were more extensive representations, but we provide a lot of information that our customers can then take with them and ultimately measure whether we are really working on the topic of sustainability. I mentioned earlier that we have a holistic sustainability strategy with the five defined fields of action. So I think we are already well on the way.

It was, I think, already mentioned earlier. In the current situation, it has been somewhat deprioritized, taken back by the corresponding investors and banks. But I come back to my point: we only have this one world, and we can postpone things, but is it ultimately decisive whether we achieve the 1.5-degree target by 2050 or not? No, in relation to 2050 it is not decisive, but ultimately the overall development must work in the direction of reducing the burden on the Earth. There is no way around that.

Yes, the finance department naturally looks at its own investments. Last year, we had around 65 million euros in EU taxonomy-compliant investments. That was about a third of our investments, which were two new plant buildings. Then you naturally look at it. Well, the payback periods are relatively long. It could be faster; can we take a shortcut? Then sometimes you have to consider and say, yes, you accept somewhat longer payback periods, but you get the benefit. We have invested a lot in recent years in PV systems. In the meantime, we only produce, in quotation marks, 7% of our electricity from our own systems. Still, it is good progress. You always have to look at each case, and you have to, well, the finance department doesn't like to hear it, also think strategically. Strategic often means less driven by profitability, but I think we can combine it well.

Yes, we actually work strongly with industry benchmarks. The data behind them, with the energy sources in the respective countries where we source raw materials. That means it is heavily schematized. It is not really based on individual data because we simply do not have it in breadth. But it is a good approach and helps to set the direction and shape it.