E/D/E Verbund seizes opportunities and achieves growth

In the 2022 financial year, the E/D/E Group increased its trading volume by around 2.1 billion euros to 9.68 billion euros in a market environment that remains challenging. This is the result of a triad of robust merchandise business, growth in international business and the highly dynamic development of ETRIS BANK in the S-Group business and factoring.

“2022 was a challenging year for PVH – characterized by the effects of the war in Ukraine and the resulting, partly overlapping, parallel crisis factors. Together as a group, we made use of our synergies and were able to further expand our business,” says Dr. Andreas Trautwein, Chairman of the E/D/E Management Board, summarizing the past year.

Trading volume records strong increase

The member companies of E/D/E and the entire PVH faced a very different market situation in Europe overall and were confronted with disruptions in the supply chains, limited availability of goods in some cases, price increases and uncertainty regarding the energy supply. “As a group, we were able to react with agility. Together, we were able to guarantee reliable and continuous availability of goods for our members and cooperation partners in Germany as well as for our international partners. As a result, and due to an overall high level of demand, growth was generated in many sectors,” says Dr. Trautwein.

The course of the year in the goods business was characterized by varying volumes and price effects. 2022 began with strong growth rates before experiencing a completely different world from June onwards, with market momentum flattening out due to difficult conditions. As a result, PVH had to incur significantly higher expenses from the second half of the year in order to ensure growth. As a result, the trading volume in the core area of goods in Germany and Europe grew at a rate of around 4% in each case. International business generated around EUR 2 billion in 2022, or 20% of the total trading volume. The Netherlands, Austria, Spain and Poland accounted for the majority of international growth.

ETRIS BANK also continued its expansion course and exceeded the ambitious targets set for 2022. The business volume was expanded both in central payment for buying associations and in factoring. This success is further proof of the bank’s strategic focus and the expansion course it has embarked on.

At around EUR 188 million, reimbursements to members were above the 2021 level and have a tangible impact on the annual financial statements of the member companies.

Well positioned for investments in the digitalization of PVH Consolidated net profit grew by one million to 21.7 million euros compared to the previous year. By retaining a large part, equity grew to 456.2 million euros. This means that Verbund is well positioned to invest in the further development of the medium-sized PVH – particularly in the area of digitalization.

EVOLUTION: Shaping a sustainable future together

Digitalization is one of the central aspects of the strategic and organisational development process EVOLUTION, which has been driving change at E/D/E for many years. The E/D/E Group continued to develop steadily in 2022. Specifically, major steps were taken in the design of the hybrid E/D/E working environment. This creates space for more flexibility and efficiency in internal collaboration as well as in cooperation with members, cooperation partners and contract suppliers.

The clever use of technology and the transfer of innovative approaches to services for the core business will increasingly make the difference in the market in future. Digitalization is a central aspect of E/D/E’s strategy, always taking an end-to-end perspective to ensure practical benefits in projects and daily operations. The aim is to further optimize, automate and digitalize core business processes and to further develop the service portfolio in line with the market and the future.

Sustainability with a system

The organizational anchoring of the topic of sustainability is another sign of the future. On January 1, 2023, the Sustainability department was established and directly linked to the area of responsibility of the Chairman of the Managing Director. The aim of this is to take a holistic view of sustainability, bundle and coordinate topics and ensure that they are processed in a coordinated manner with a common understanding.

E/D/E sees the association group business as inherently sustainable. This is because a central infrastructure, such as that offered by E/D/E to its members, creates economic economies of scale and organizational advantages for the individual, generates synergies throughout the entire process chain and pools resources. Sustainability has always been rooted in the SME sector and is characterized by thinking and acting across generations, continuity, regionality and social responsibility, especially in the home regions. The topic of sustainability is also of central importance to E/D/E members, which is reflected in E/D/E’s services. One example of this is the new analysis and consulting service ECO-Consulting.

Services for members: successfully tackling future issues

Processes in the production connection trade are changing rapidly, and with them the demands on the association and distribution. E/D/E continues to strengthen the performance of its members by investing heavily in central logistics and next-generation eDC data management. With the ongoing modernization of data management, the association is optimizing the service elements in an end-to-end perspective from the supplier to the end customer.

With sales of around 356 million euros, the warehouse business was also expanded once again. With over 115,000 items in stock, the eLC remains a reliable partner and relieves the burden on E/D/E members in terms of processes and costs. Our new shipping software, which connects new carriers quickly and flexibly, also contributes to this. The newly introduced CO2-neutral shipping in cooperation with UPS also contributes to sustainability.

The digital platforms and services were also successfully developed further in 2022. The online marketplace Toolineo was able to further expand its market position as “the first port of call for craft supplies”. The number of distributors represented there – now more than 50 – increased in 2022, as did the order value generated via Toolineo. The trading volume of E/D/E members’ multi-shops has also been developing positively for years, with an increase of almost 20 percent in 2022. In particular, strategic procurement via interfaces to platforms such as Ariba and Coupa is becoming increasingly important in B2B.

Successful e-commerce is based on strong digital processes. Effective data management – up-to-date, quickly available and structured – has long since become a strategic success factor for companies. The demand for solutions such as ERPCloud360 is high. The cloud-based nextPIM system has also been successfully launched. This system enables distributors to efficiently optimize their product data management and has interfaces to store systems. The goal of comprehensively maintaining PVH product ranges in an eDC structure also took shape in 2022. With the new E/D/E data portal as a “Data as a Service” offering, PVH will have cloud-based, simple and intuitive access to all relevant data in future, which will be processed using artificial intelligence (AI) and prepared in a uniformly high quality in accordance with eDC classification standards.

We have been giving the digital transformation in the industrial B2B/industrial B2B sector a further boost since 2018 with the PVH FUTURE LAB. As an innovation lab, it is now the established digital company for PVH. The mission: to make future technologies relating to digitalization and artificial intelligence (AI) accessible to distributors in a simple way. The flixxstore is at the heart of the product range. The platform’s diverse solutions help distributors to increase their efficiency in sales and process organization. Three new tools were added to the flixxstore portfolio in 2022: workflixx Eye Assist, workflixx Document Reader and sellflixx Sales Potentials.

ETRIS BANK

With a comprehensive range of services, ETRIS BANK is now in its eleventh year of supporting the association as a reliable and competent partner in finances and goods. The credit institution with a full banking license was able to significantly increase its business volume in 2022, particularly in two strategic areas, and even exceeded its ambitious growth targets: Central payments for buying associations and factoring. With the appointment of Uwe Müller as

Chairman of the Management Board as of October 1, 2022, the Supervisory Board is strengthening the bank’s strategic direction and expansion course. The solid and future-oriented business model of ETRIS BANK was once again recognized by the renowned rating agency GBB-Rating with the credit rating “A+ stable”.

Close dialog that connects

The basis of the strong network between E/D/E and its partners is regular and direct exchange. In 2022, personal meetings at home and abroad have taken on a new significance, while the association continues to utilize the added value of hybrid cooperation. Numerous events such as the total industry get-together, the building components forum, the personal protective equipment and technical trade sales forum and various qualification measures have succeeded in combining the best of both worlds.

Employees are the foundation of E/D/E’s performance and success. 1158 people from over 26 nations were employed in the E/D/E Group at the end of 2022, including 19 trainees and eleven dual students in six training occupations and four dual study courses. The company training and further education program aims to recruit and promote young talent in order to tackle the important future tasks for the PVH with qualified specialists and managers. In 2022, the recruiting processes were further digitalized and adapted to the dynamic requirements of the labour market. Social media activities – including an Instagram channel run by the trainees – are a key channel for presenting E/D/E as an attractive employer to potential candidates.

Outlook for 2023 with caution and confidence

The outlook for the German economy in the coming year has recently brightened somewhat. Slight economic growth is forecast for 2023. Nevertheless, the current financial year remains characterized by influences that are difficult to predict. The order situation in the skilled trades and industry is likely to stagnate. For the construction sector, the E/D/E Group expects impetus from public construction and, in particular, energy-related renovation and refurbishment measures, while development in residential and commercial construction is expected to decline.

The E/D/E Group assumes that the issues of goods availability and supply chain difficulties will continue to affect business in production connection trade this year. On the other hand, investments in energy efficiency measures will become more important and the area of energy renovation offers participation opportunities for medium-sized PVH. Overall, according to the E/D/E market barometer, the PVH expects a slowdown in turnover development for 2023.

The E/D/E Group believes that the association is well positioned for sustainable growth, also thanks to new partnerships, and currently expects the trading volume to increase to € 10.3 billion in 2023. ETRIS BANK continues to expect strong business in the cooperative group as well as an increasing business volume in factoring. ETRIS BANK will thus remain a driving force behind the successful development of the entire E/D/E Group on the basis of stable commodities business. In 2023, E/D/E will continue to develop its service portfolio in line with the market and further optimize, digitalise and automate its core processes in order to achieve noticeable improvements for its partners.

The E/D/E Managing Director is looking to the future with the necessary caution and confidence: “We are and will remain a reliable partner and are working consistently to make the medium-sized PVH simpler, more digital and more resilient, which is also expressed by the 2023 leitmotif of our strategic and organisational development process EVOLUTION: growing sustainably together and driving digitalization forward,” summarizes Dr Trautwein.