Annual Report 2018
2018 was a very good year for Eppendorf. The company increased its Group sales by 8.2% (in local currencies) compared with the previous year. Eppendorf experienced broad-based growth, with improved results in all divisions and all market regions. North America, in particular, contributed to our above-average growth compared with the rest of the market. Overall, we even outperformed our dynamic industry as well: 2018 was probably one of the best years in the life science market by far.
In fiscal year 2018, we also continued to invest heavily in our company, particularly in research and development and additional human resources. EBIT at the Eppendorf Group climbed 5.6% above the level generated in the previous year while the EBIT margin remained unchanged at 21.1%.
The ability of Eppendorf to once again accelerate growth in comparison with the previous robust year of 2017 is a remarkable achievement. This is especially the case as we not only made great financial strides, but also rapidly accelerated the transformation of our company that had begun in 2017. We intend to draw on the initiatives launched under the be
Eppendorf 2021 program to position our company for continued successful development over the long term. Our main goal is to achieve organic growth well above the market average over the coming years. In practical terms, we have defined three strategic subject areas to address: sales, (product) innovation and our corporate culture. We succeeded in taking important steps forward in all three areas during 2018: Within the framework of the “Goingto-Market” initiative, we continued to work on our sales and marketing organization to strengthen our market presence and customer proximity. Under the “innovation” initiative, we accelerated our product development by introducing the agile methodology, which is also geared toward meeting current customer needs. And as part of the third initiative, we have continued to further enhance our already very good corporate culture to create a dynamic and flexible work environment. In 2018, we also started worldwide efforts to optimize the way we cooperate within the company. The new approach draws on our vision, mission and values, which we have presented to all employees worldwide. Feedback, critical self-reflection, and improved measurability of the goals we set ourselves are key elements we intend to use to measure our performance in the future.
New organization successfully established
On January 1, 2018, we implemented more new organizational structures. The two newly created Management Board mandates, Commercial Organization (sales, service, and marketing) and Business Portfolio (business divisions), successfully realized a large number of projects during the reporting year. Our geographical realignment was a particularly important step in setting the course for Sales. Today, Eppendorf has four equal market regions: Europe, Americas, China, and Asia/Pacific/Africa. This structure allows us to boost our customer orientation and efficiency in each of these markets. The remarkable acceleration in growth during the reporting year is due, in part, to the realignment of Sales and Marketing and their new, innovative approach to work. This change includes close collaboration between the newly created global key account management teams and Regional Sales, particularly for customers in the pharmaceutical and biotech industry. Another involves the continuous international harmonization of approaches to customers that are being designed more effectively and efficiently as well. This also includes the use of new e-commerce channels and inside sales.
In the area of Business Portfolio, we drafted and defined our strategies for the individual product groups and began implementing them over the course of 2018. Emerging Business Opportunities and Global Business Intelligence and Development were established as two new business units to support the Business Portfolio product divisions in developing new product ideas and successfully bringing them to market.
In connection with this, the first-ever Key Opinion Leader Panel will take place in 2019. The panel will comprise a changing set of Eppendorf Group management team members who will exchange information on new trends and technologies with important interdisciplinary life science stakeholders from both industry and science. Our new Key Opinion Leader Panel replaces, among other things, the Scientific Advisory Committee, whose members we would like to sincerely thank for their many years of service.
Innovative products and processes
As part of our innovation initiative, agile product development took significant steps forward in 2018. After having carried out approximately ten pilot projects, we implemented the agile development process as standard in January this year. We have, as a result, created a framework that enables us to prepare products for the market faster and more flexibly. One example of a successfully launched product that was developed entirely with agile methods is the epMotion® 5075 NGS solution workstation for gene sequencing. Other product launches in market segments that are very important to us include the Innova® S44i shaker, the universal centrifuge 5910 R and the microcentrifuge 5425. In addition, we brought the freezer CryoCube® F740hi and the CO2 incubator CellXpert® C170i to the market. And in the area of consumables, there was strong demand for Eppendorf pipette tips for highly viscous liquids; the ViscoTip®.
Digitalization and networking are future-oriented topics that are growing more and more important to the success of our products as their use in everyday lab work is increasing. We therefore also worked intensively on these two topics in 2018.
Initiatives for quality assurance and more extensive market communication
During the reporting year, we commissioned external specialists to conduct a broad-based worldwide customer survey. The survey indicated our customers very much appreciate our long-lasting, high-quality laboratory instruments and the good advising services provided by our account managers. But we also received feedback showing we could improve how we address our customers’ needs in certain areas. As a result, in 2019 we will restructure our complaint management and launch various initiatives to enhance our communication within the market.
Outlook for 2019
We will continue to drive our innovation initiatives forward in 2019. For the first half of the year, numerous product launches are planned that will contribute to the further positive development of our sales. In general, we expect the fundamental economic confidence in our industry to remain intact, particularly in the United States. Our achievements in 2018 and the investments made to strengthen our performance do, however, leave us confident that we will be able to continue to grow sustainably.
We will continue to invest strongly during 2019 in line with our strategic objectives and thereby lay the groundwork for further profitable and sustainable growth. In view of the higher costs planned for this, we estimate that our operating profit adjusted for currency effects will remain at the same level as the year before.
The implementation of our new organizational structure, the promotion of agile development, and the large number of successfully implemented projects have, along with our day-to-day business, demanded a great deal of commitment and flexibility from our employees around the world. We would like to thank them all for their great dedication, their readiness to embrace new ideas and their willingness to change. And we would also like to thank our customers, in particular for their loyalty to our products, for their valuable suggestions, and for the positive, trusting cooperation.