businessreport of GFT
Corona wave continues to keep Germany on tenterhooks. The Suez disaster, component shortages and temporary closures of international logistics bases had a significant impact on the supply situation of German industry. Economy shrinks sharply at the turn of the year.
Economic development
The second year of the Corona pandemic is not leaving Germany and the world unscathed - an end hardly seems in sight. From February 2021, the infectious alpha variant of the Corona virus spreads more and more. This does not remain without consequences: After the incidence briefly declined, also as a result of the lockdown, the numbers are suddenly rising again.
Although the real gross domestic product increased by 2.7 percent compared to the previous year, this was not enough to compensate for the pandemic-related slump of 4.6 percent from 2020. In 2021, Corona will also have a massive impact on the many attendance events that are otherwise customary in the industry. For example, the IFA will be cancelled for the second time in a row. Similarly, many of the distributors' in-house trade fairs will either not take place at all or will be moved to the virtual space. Although around two thirds of the population are vaccinated in autumn, the incidence figures have been rising sharply again since November, especially due to the even more infectious delta variant.
Source: Ifo-Institute; Bank Austria; Wifo Austria; Eurostat
Even though politicians officially no longer want to talk about a lockdown, restrictions are imposed in several federal states, especially for unvaccinated people. In some cases, the trade has to close again.
Changes in the ICT landscape
The second half of the year in particular brings some changes for TC and UCC manufacturers. RingCentral is trying to further expand its position in the German market: After the UCaaS provider has already concluded partnerships with the manufacturers Atos (Unify), Alcatel-Lucent Enterprise and Avaya in 2020, the announcement now follows that they also want to cooperate with Mitel. In addition, RingCentral is working with ecotel and 1&1 Versatel - and there are also agreements with Deutsche Telekom and Vodafone. The aim is probably to secure a large piece of the German cloud PBX market as quickly as possible. To what extent this strategy will ultimately bear fruit remains to be seen.
the gross domestic product in Germany rose in 2021 compared to the previous year.
Market development
|
ITC and Security Technology |
2018 |
2019 |
2020 |
2021 |
|
I. Total |
167,7 |
170,7 |
171,7 |
178,4 |
|
II. Telecommunications |
66,8 |
66,7 |
66,0 |
67,4 |
|
Telecom equipement |
11,3 |
11,3 |
11,6 |
11,6 |
|
Telecom infrastructure |
6,9 |
6,9 |
6,8 |
6,7 |
|
Telecommunications services |
48,6 |
48,5 |
47,6 |
48,4 |
|
III. Electronic security technology |
4,4 |
4,6 |
4,7 |
5,0 |
|
Burglar alarm technology |
0,9 |
0,9 |
0,9 |
0,9 |
|
Fire alarm technology |
2,1 |
2,2 |
2,2 |
2,4 |
|
Video security technology |
0,6 |
0,6 |
0,7 |
0,7 |
|
Access controls systems |
0,4 |
0,4 |
0,4 |
0,4 |
|
Voice alarm systems |
0,1 |
0,1 |
0,1 |
0,1 |
|
Smoke alarm systems & other |
0,5 |
0,5 |
0,5 |
0,5 |
|
Total ITC + security technology |
71,2 |
71,3 |
70,7 |
72,4 |
|
Change compared to previous year |
0,1% |
−0,9% |
2,5% |
Source: www.bitkom.org; www.bhe.de; own calculations
According to Bitkom, the German ICT market grew in 2021 and is expected to continue to grow in the coming year. The main driver was the software sector, but hardware is also in strong demand. Turnover and employment will rise in 2021 despite the challenges of pandemics, supply bottlenecks, inflation and a shortage of skilled workers. According to Bitkom calculations, the German market for IT, telecommunications and consumer electronics grew by 3.9 percent to 178.4 billion euros last year. Companies in Germany are expected to create 39,000 additional jobs by the end of 2022. Currently, 1.25 million people are employed in the industry. The business climate is at a similarly high level as before the outbreak of the Corona pandemic at the beginning of 2020.
The Bitkom-ifo Digital Index stood at 24.0 points in December 2021, 17 points higher than the business climate for the economy as a whole. This was announced by the digital association Bitkom at the start of the year in Berlin. "Whether climate, pandemic or location competition - digitalisation is the answer and a decisive part of the solution to the crises and challenges of our time. Business, government and large sections of society want to accelerate digitalisation and are investing in digital infrastructures, devices, software and services," says Bitkom President Achim Berg. "The Corona pandemic has given momentum to digitalisation, and that is stimulating the market."
Status: December 2021
Source: https://www.bitkom.org/Digitalindex
On the economic situation of GFT's installer companies
In addition to the many external challenges of the market, the success of a company essentially depends on its cost and earnings structure. On the basis of the balance sheet data as at 31 December 2020, the GFT compiles an operating comparison that provides our member companies with the comparative figures they need to analyse their company for weaknesses.
Evaluation of ITC and Security Technology of GFT-membership |
Total |
of which: ITC |
of which: Security technology |
|||||
2020 |
2019 |
2020 |
2019 |
2020 |
2019 |
|||
Number of companies |
41 |
41 |
22 |
22 |
19 |
19 |
||
Average turnover, net (in €K) |
14.620 |
15.003 |
18.540 |
17.232 |
10.082 |
11.946 |
||
Change in turnover vs. previous year |
-2,6% |
7,6% |
-15,6% |
|||||
Average number of employees (by headcount) |
97 |
97 |
103 |
102 |
90 |
89 |
||
Total output |
100,0% |
100,0% |
100,0% |
100,0% |
100,0% |
100,0% |
||
Distribution of turnover: |
100,0% |
100,0% |
100,0% |
100,0% |
100,0% |
100,0% |
||
- ITC |
56,3% |
55,4% |
88,2% |
85,3% |
19,4% |
20,1% |
||
- Life Safety + Security technology |
33,1% |
32,3% |
7,2% |
7,8% |
63,2% |
60,1% |
||
- Media + Intercom systems |
2,1% |
4,7% |
1,0% |
1,9% |
3,4% |
8,5% |
||
- Passive networks technology |
6,2% |
6,5% |
2,1% |
4,5% |
11,1% |
9,7% |
||
- Others |
2,1% |
1,0% |
1,5% |
0,5% |
2,9% |
1,6% |
||
./. |
Costs of materials |
43,4% |
44,3% |
45,9% |
47,5% |
37,9% |
41,9% |
|
Costs of purchased merchandise |
27,1% |
29,7% |
25,0% |
35,6% |
31,4% |
33,7% |
||
Cost of purchased services |
16,3% |
14,6% |
20,9% |
11,9% |
6,5% |
8,2% |
||
= |
Gross profit |
56,6% |
55,7% |
54,1% |
52,5% |
62,1% |
58,1% |
|
Other operating income |
2,9% |
2,2% |
3,0% |
3,3% |
2,7% |
2,0% |
||
./. |
Staff costs |
37,8% |
36,3% |
34,3% |
36,3% |
45,1% |
38,2% |
|
of which: Wages and salaries |
31,5% |
30,3% |
28,8% |
30,3% |
37,3% |
31,7% |
||
of which: Social security, pensions and other benefit costs |
6,3% |
6,0% |
5,5% |
6,0% |
7,8% |
6,5% |
||
./. |
Depreciation |
3,1% |
2,8% |
3,8% |
2,2% |
1,5% |
1,0% |
|
./. |
Room expanses |
1,7% |
2,1% |
1,5% |
2,1% |
2,2% |
1,9% |
|
./. |
Insurances, contributions |
0,5% |
0,6% |
0,3% |
0,6% |
0,8% |
0,7% |
|
./. |
Repairs, maintenance |
0,2% |
0,3% |
0,2% |
0,4% |
0,2% |
0,2% |
|
./. |
Vehicle costs |
2,9% |
2,9% |
3,0% |
3,2% |
2,4% |
2,3% |
|
./. |
Advertising & travel costs |
0,7% |
1,0% |
0,6% |
1,1% |
0,8% |
0,7% |
|
./. |
Costs of good distribution |
0,2% |
0,4% |
0,3% |
0,5% |
0,1% |
0,1% |
|
./. |
Various operating expenses |
6,0% |
5,3% |
6,6% |
5,6% |
4,9% |
4,9% |
|
= |
Total costs |
12,2% |
12,6% |
12,5% |
13,5% |
11,4% |
10,8% |
|
= |
Operating result |
6,4% |
6,2% |
6,5% |
3,8% |
6,8% |
10,1% |
|
+ |
Interest and other income |
0,2% |
0,3% |
0,3% |
0,5% |
0,0% |
0,0% |
|
./. |
Interest expense |
0,4% |
0,4% |
0,5% |
0,4% |
0,3% |
0,3% |
|
= |
Financial result |
-0,2% |
-0,1% |
-0,2% |
0,1% |
-0,3% |
-0,3% |
|
= |
Result before taxes |
6,2% |
6,1% |
6,3% |
3,9% |
6,5% |
9,8% |
|
./. |
Tax on profit |
1,3% |
0,7% |
1,4% |
0,6% |
1,1% |
1,5% |
|
./. |
Other taxes |
0,1% |
0,1% |
0,0% |
0,1% |
0,1% |
0,1% |
|
= |
Profit for the financial year |
4,8% |
5,3% |
4,9% |
3,2% |
5,3% |
8,2% |
|
Extract from GFT's internal comparison of operations (as of 02.2022). Basis: Balance Sheet as at 31.12.2020.
For the first time - based on the annual financial statements as of 31.12.2020 - the company comparison was evaluated according to the focus areas of telecommunications and security technology. The companies are assigned to the "ITC" or "Security Technology" class according to their purchasing revenue distribution. With a revenue volume of over € 1.3 billion, the GFT participants in the 2020 company comparison represent over 70 percent of the GFT purchasing volume.
The evaluation shows that the companies belonging to the GFT group of companies are economically well positioned. The breakdown by product focus shows that only the companies with a focus on "ICT" were able to realise revenue growth in 2020. Here, turnover increased by an average of 7.6 percent. An important success factor in company management is a healthy gross profit. The profit situation also improved again in the pandemic year - depending on the product focus - by up to four percentage points. The average gross profit in our sector was 56.6 percent of the total output. The companies that are predominantly active in the field of safety technology increased the gross profit to 62.1 percent of the total output. After deduction of the total costs, a pre-tax profit of 6.2 percent to 6.5 percent of the total output remains, depending on the type of company.
Delivery problems strangled the economy across the board from summer 2021 onwards
In recent months, supply bottlenecks for intermediate products such as semiconductors and materials such as steel, wood and plastics have become a major burden on economic development. In August 2021, 70 percent of companies in the manufacturing sector reported in Ifo company surveys that such bottlenecks were hampering their production. This is a historical record. Although there were always procurement problems in earlier upswings, the share of affected industrial firms has reached a maximum of 20 percent in the last three decades. So the current frictions are much more serious than what we know from the recent past.
The hardest hit is the automotive industry, where 91.5 percent of firms complain about bottlenecks. In mechanical engineering it is more than 80 percent, in the chemical industry 57 percent. Of the manufacturing industries, the beverage industry is the least restricted, but even there it affects almost a third of the companies. Supply bottlenecks also exist outside the manufacturing sector, especially in the construction sector. There, 38 percent of firms reported material shortages in August.
The problems in the supply chain of semiconductors have been discussed for some time. The pandemic-induced digitalisation surge has made the demand for components for computers particularly strong. But the bottlenecks go far beyond that. Supply problems exist for steel, copper and aluminium, for wood, electronic components, plastics, packaging materials and much more.
The ITC industry has not been spared from the supply chain disruption.
The causes are manifold. After the outbreak of the Corona crisis in 2020, many companies drastically reduced investments and cut production capacities. Industrial production in particular then recovered unexpectedly quickly worldwide. In 2021, the combination of extensive government stimulus programmes, curbed purchasing power and increasingly available vaccinations further spurred the recovery of the global economy and fuelled demand for intermediate products and materials much more than expected.
While products could still be assembled and were ready for shipment at the factory in China, the component crisis was exacerbated by the logistics crisis in the middle of the year: for example, in March 2021 more than 200 ships were temporarily jammed in the Suez Canal following the accident of the freighter "Ever Given". After several Chinese container ports had to be closed for weeks in the summer due to Corona outbreaks among staff, the logistics chains finally collapsed. The result was multiple price increases due to the aftermath in the components and logistics sectors.
of GFT purchasing volume represented by GFT company comparison 2020
Average gross profit of GFT member companies
Ships jammed in the Suez Canal by the wrecked ship "Ever Given“