Zeppelin may have to exit Russia and Ukraine
By Murray Pollok25 March 2022
Zeppelin Group said it expects a significant decline in its 2022 business because of the war in Ukraine and that it may well have to exit both Russia and Ukraine.
The Munich-based Caterpillar dealer told Construction Europe that the worst case was that it would exit the two countries; “Depending on the duration of the war, we are currently able to maintain business in parts of Ukraine and in Russia, at least to a limited extent.
“But the more likely scenario for Zeppelin is that we will be forced to exit: either there will be nationalisation or an inability to do business.” Zeppelin said its net assets in Russia, Ukraine and Belarus were in the “low three-digit million range and are to be regarded as risky.”
The company generates around 20% of its €3.7 billion annual sales in Russia and Ukraine.
Christian Dummler, Zeppelin’s CFO and Managing Director, said it expected the war and its consequences to lead to “a significant decline in business volume and earnings before taxes in 2022 and beyond.”
In addition to the direct impact in Ukraine, sanctions imposed against Russia will also have consequences; “The 2021 order backlog included significant orders for Russia and Ukraine.
“If their processing cannot be guaranteed, which in part is already foreseeable today, this will significantly impact the expected sales and earnings for 2022”.
The company has taken actions to protect its 400 employees in Ukraine. Andreas Brand, Chairman of Zeppelin’s supervisory board, said it had reacted very quickly by “setting up crisis management teams and introducing measures to ensure the safety of employees on the ground, as well as supporting them in their evacuation.”
Peter Gerstmann, Chairman of the management board, said the safety of its employees and their families on the ground was taking priority; “We are helping them to evacuate and be received in other countries.
“I am particularly proud of our workforce, which especially at this time is so united and full of solidarity for our colleagues and all the people in Ukraine.”
Zeppelin - which represents Cat in Germany, Austria, Denmark, Sweden, Ukraine, western Russia and Belarus - generated sales of €411 million in Russia in 2021 and €152 million in Ukraine, as well as €30 million in Belarus.
The crisi in Ukraine follows what was a successful 2021 for Zeppelin with sales of €3.7 billion up 13% on 2020. EBITDA profits rose by 13% to €444 million. Zeppelin said the business had recovered from Covid more quickly than expected.
Sales in central Europe grew by 9% to €1.5 billion and in Eurasia – including Russia/Ukraine/Belarus - rose by 30% to €642 million.
The equipment rental business, Zeppelin Rental, saw revenues increase by 7% to €437 million. Rental now represents 12% of Zeppelin group sales.
Zeppelin said; “The Rental [business unit] was able to consolidate its strong market position and increase sales due to the good market conditions in the construction industry, but also thanks to the strong demand for temporary infrastructure and traffic guidance solutions.”
It added; “The rental business is very important for Zeppelin Group; it is the second-largest contributor to the Group’s overall revenues.
“Zeppelin is continuing to grow both organically and externally in this business area and invests further. Our main focus is on Sweden and Denmark for the moment.”