In a wide-ranging investment program, TÜV SÜD is researching the effects of digitization on its business. The goal: To continue offering its customers added value in terms of safety, security and efficiency in the digital age.
An interview with TÜV SÜD's Board of Management
TÜV SÜD can look back on a successful fiscal year 2014. Business is going well. Why is now the right time to lay a foundation for the future with the Digital Service program?
Dr Axel Stepken: Because digitization is already transforming our entire society. As a result of Industry 4.0, the Internet of Things, many industries are changing at a breath taking pace. At the same time, new technologies such as autonomous driving, smart homes or networked systems are presenting major challenges for our customers. Many are unsure when it comes to issues such as data security. Demand for services relating to digital issues is very high – and TÜV SÜD has to be in a position to support its customers with the level of expertise they are accustomed to.
Karsten Xander: And we are offering this support – for example, in the field of networked factories. With our Digital Service program, we will continue to systematically develop know-how in this area during the coming years, just as we’ve done with every innovation over our almost 150-year history. This also accords with our founding philosophy of safeguarding people, the environment and property against the effects of technology.
What is the total level of investment we’re talking about?
Dr Matthias J. Rapp: I can give you the total investment, in other words, every thing we spent on future-proofing measures in 2014. That came to more than € 60 million in direct investments. Among other things, we established new test and inspection laboratories in India, China and Germany, and purchased companies that are a good strategic fit for us. In addition, a multi-million sum went into various projects also devoted to shaping up for the future.
Which areas are you focusing on?
Dr Axel Stepken: We’re concentrating on the areas which are most pressing for our existing customers and where we already have outstanding expertise that we can leverage in the future in conjunction with new technologies: Big data – in other words, gathering, analyzing and utilizing large volumes of data – is a key area, as is real-time monitoring, which involves analyzing and optimizing systems, or IT security. In addition, we are focusing on the functionality, interoperability and security of individual hardware and software components.
TÜV SÜD is in a good position to tackle these projects. The figures for the fiscal year 2014 were very positive.
Dr Matthias J. Rapp: That’s right. Revenue and EBIT again rose significantly compared to the prior year. The adjusted EBIT margin stands at over 9%. We are debt-free and have an adequate financing volume. We are an extremely healthy company, which gives us the scope to invest in the future today.
Klemens Schmiederer: As member of the Board of Management who has been with the company for just a few months, I was immediately impressed by the enthusiasm and openness with which new issues are addressed at TÜV SÜD. With the Digital Service program, the company is now laying a foundation that will enable it to remain an indispensable partner for its customers in the digital age.
In what areas was TÜV SÜD particularly successful in the past year?
Karsten Xander: Almost all segments and regions performed well. Our traditional industry business with inspections in energy generation and process plants continues to be a cornerstone of our business. Our new and free-market services in the real estate and infrastructure sector are also a real success story. And, following a difficult period, the indicators in North and South America have been pointing to continued healthy growth for a number of years.
… and that also applies to our comprehensive mobility services.
Horst Schneider: In Germany, the market for vehicle roadworthy tests is dwindling due to demographic factors. Nevertheless, we are able to successfully assert ourselves in this area thanks to highly efficient processes. There are two other success factors that shape the MOBILITY Segment: In 2014, we continued to offer services in the free-market segment and are now Europe’s largest independent service provider for vehicle fleets, for example. And we’re transferring traditional services such as vehicle inspections abroad – and are ensuring safe mobility, for example, in Turkey.
How were things in the CERTIFICATION Segment?
Dirk Eilers: Here we are feeling the effects of the slower economic growth in China. This notwithstanding, we have continued our growth story. In the past five years, our revenue from product testing has almost doubled. Our services for consumer goods, especially food and textiles, are the main growth drivers in this area. Demand is also rising for our certification services for management systems.
This success is refl ected in the number of people working at TÜV SÜD: At the end of 2014, the company employed more than 22,000 people.
Dr Axel Stepken: We have almost 9% more employees in comparison to the prior year. As we intend to maintain our profitable growth trajectory sustainably in the future, we will continue to take on new hires in the coming years. It is therefore extremely gratifying that we have been recognized as a highly attractive employer in employer rankings for many years. We’re very proud of this and regard it as an important competitive advantage in the fiercely contested market for the best employees.
Dirk Eilers: Incidentally, 2014 was the first year in which more employees worked in our international regions than in Germany – a ratio that underscores the increasing significance of our international business. We are now well established as a global player.
Technologies change – TÜV SÜD continues to guarantee safety?
Dr Axel Stepken: Our almost 150-year history shows that companies like TÜV SÜD are always needed – perhaps even more so today than in the past. That’s why I’m more than confident that TÜV SÜD will keep contributing to society’s trust in innovative products, systems and services in the future. You could say that this role has been cut out for us since our company was founded.