Wurth USA Company News

The Würth Group successfully closes the business year 2010

• Signs are pointing to growth: Annual sales 2010 increase by 14.8 percent to EUR 8.6 billion.

• Above plan: Operating result goes up by 63.8 percent to EUR 385 million.

• More sales reps: Number of employees rises by 5,565 to 64,140 (as of 31 March 2011).

• Ambitious goals: Segmented sales organization supposed to be driving force behind growth in 2011 as well.

• High investments: In 2011, EUR 635 million for growth, infrastructure and logistics.

• Successes in the first quarter of 2011: Sales increased considerably by 18.6 percent.

“An enterprising spirit drives us. The ability to identify the most important growth drivers and to consistently and intensively focus on them is the key to our successful long-term development.” With these words, the Chairman of the Central Managing Board of the Würth Group, Robert Friedmann, summarized the successful business year of 2010 at the press conference on the Würth Group’s annual financial statement in Schwäbisch Hall on 6 May 2011. The growth engine in 2010 was once again the Group’s sophisticated sales system. “We will concentrate on our core competence, selling, to win further market share in 2011 as well.” The Group started dynamically into the first quarter of 2011 with a sales increase of 18.6 percent.

Segmented sales channels lead to success

The sales organization has always been the heart of the Würth Group’s successful concept. However, the decisive aspect was to develop this core competence further depending on the market conditions and the customers’ needs. “2010 was marked by worldwide growth. It has therefore been our goal to grow quickly and disproportionately to win market share. In case worldwide economic growth slows down, we will be able to further improve this market position thanks to our strength”, Friedmann explained.

In order to be able to realize this disproportionate growth, Würth relied above all on tailor-made services for the individual customer segments in addition to innovative products. Thus, the Würth Group is growing with its craft as well as its industry customers. Thanks to a specific segmentation of the sales organization, the company meets the different requirements of these customer groups – a model which is also going to be the company’s recipe for success in the future. “With more than 30,000 employees in the sales force, we remain the world’s biggest employer of permanently employed sales staff. Here, we are growing through further multiplication. Next to the increase in the sales force, the further expansion of the branch office network will be another important lever in 2011. With more than 1,000 branch offices worldwide, we offer Würth customers places to go to cover their immediate demand of consumables and hand tools”, Friedmann continued.

All regions on growth course

With growth of 14.8 percent, the Würth Group generated sales of EUR 8.6 billion in the business year 2010. Germany has shown the biggest growth: The sales volume increased by 17.6 percent (EUR 3,881 million). With 12.6 percent (EUR 4,752 million), the Group also reported double-digit growth at international level.

In its core business, the trade in assembly and fastening material for the craft and industry sector, the Würth Group grew by 11.5 percent in 2010. In adjacent business units, the Würth Elektronik Group (+63.6 percent) and the production business unit (+18.7 percent) were the main companies driving sales growth.

Würth Group continues to be well-financed

“The good development of the operating result, which was higher than expected, is also the result of pooled forces in sales”, Friedmann explained. In 2010, the operating result of the Würth Group increased considerably by 63.8 percent on the previous year totaling EUR 385 million (2009: EUR 235 million). Thus, the equity ratio also increased to 42.0 percent (2009: 41.3 percent). In total, the equity capital of the Würth Group amounts to EUR 2.9 billion (2009: EUR 2.6 billion).

The financial power of the Würth Group is confirmed by the positive credit rating of the rating agencies: In 2010, Standard & Poor‘s again awarded an A rating, Fitch Ratings renewed its A- rating. Both agencies acknowledged the positive development of the Würth Group by changing the outlook to stable. “High liquidity is our focus. We can thus

react very flexibly and quickly to market opportunities opening up”, said Friedmann. Before long, the Group will seize the favorable situation on the capital market to issue corporate bonds.

Strong increase in the number of employees

On account of the good business development, the Würth Group stepped up the total number of employees by 7.9 percent to 62,433 (as of 31 December 2010) over the previous year. In Germany, 1,525 new employees were hired (+9.4 percent). Outside Germany, the Group recruited 3,026 new employees (+7.3 percent). Personnel recruitment also focused on the expansion of the sales force.

Globally, the Würth Group has 30,410 sales representatives on its payroll (+6.3 percent). The 78 German companies made particularly strong investments in the sales force. In 2010, 5,323 permanently employed sales reps worked at the German Group companies (+7.5percent).

This trend continued in the first quarter of 2011: In the first three months of the year, 1,707 new employees were hired worldwide, 424 of them in Germany. In total, the Würth Group hired 5,565 additional employees in the past 12 months.

Investments to safeguard future growth – Vision “2020-20?

With EUR 283 million in 2010, the Würth Group had already intensified its investment activities as compared to the previous year (2009: EUR 261 million). Capital expenditure was focused on expanding warehouse capacities and the branch-office network as well as on production sites and plant and machinery for manufacturing companies of the Group.

For 2011, the Group intends to considerably step up its investmentvolume to around EUR 635 million. Among other things, the location in Künzelsau-Gaisbach as well as the logistics of Adolf Würth GmbH & Co. KG and Würth Industrie Service GmbH & Co. KG will be expanded. In addition to that, a conference and training center in Rorschach (Switzerland) will be built until 2013. At the same time, Würth continuously invests in the expansion of the worldwide sales organization.

“I am optimistic for 2011, although growth will certainly not come about by itself. Nonetheless, we are well prepared”, Friedmann said. The Würth Group aims at achieving double-digit growth and an operating result of approximately EUR 550 million. The number of employees is to be stepped up by around seven percent to safeguard future growth. The Group plans to hire about 3,000 sales representatives.

With regard to its long-term planning Friedmann once again referred to the Würth Group’s vision for the year 2020. Within nine years, the company plans to generate sales of EUR 20 billion worldwide with around 100,000 employees.