Russia: Hilti fires and helps – Economy
A central location in Moscow, a second in Samara on the Volga, the rest of the 1300 employees are spread across the whole country. The Hilti Group, which specializes in construction tools and fastening technology, has been doing business in Russia for 30 years. The company with the iconic bright red equipment is represented in almost every one of its market segments. “It’s one of our most successful countries,” says CEO Christoph Loos. No wonder, Russia is a huge country where a lot is being built. Hilti will do everything possible not to give up the location in the long term, says Loos. But who could say at the moment whether this is realistic?
First of all, Hilti is laying off 300 Russian employees in a first batch. Finance and Human Resources Director Matthias Gillner promises that they will be parted with in a socially acceptable and responsible manner. Hilti will help all of its Russian employees “to bridge the difficult time, because we are convinced that it is their inhuman government, not them, that is responsible for the misery that has been caused,” says Heinrich Fischer, Chairman of the Group’s Board of Directors.
Hilti has already severed business relationships with 700 customers in the country who are on various sanctions lists. The Liechtenstein family group no longer delivers machines to Russia; According to international boycott regulations, about 50 percent of Hilti products are no longer allowed to be exported there anyway. Only a small amount of residual business for long-standing customers is still being processed in Russia, says Loos. Hilti has also withdrawn from Belarus and, out of necessity, also closed its business in Ukraine for the time being, where the company employs 100 people. They will continue to be taken care of, promises the head of the board of directors Fischer. Among other things, they were “paid their salary in advance to cover them with liquidity for the time being”.
Those fleeing from the war to neighboring countries receive logistical help. And on site, the power tool manufacturer supports an organization that provides humanitarian emergency aid. In addition, the company Hilti and the foundation of the same name have set up a solidarity fund for the benefit of the organization “Doctors without Borders” with a view to the victims of the war and paid in one million Swiss francs. The construction supplier has called on everyone to donate; Hilti will then double the corresponding amounts.
Hilti expects costs of up to 100 million euros because of the war
CEO Christoph Loos expects the consequences of the war to cost the company between 50 and 100 million euros. A lot of money but nothing, Hilti was shocked. The family company, which not only operates a mailbox in Liechtenstein, but also a veritable headquarters in the municipality of Schaan, employs 31,000 people worldwide, 1,500 more than in the previous year. In 2021, This generated sales of the equivalent of 5.8 billion euros, a good twelve percent more than in the previous year. Net profit increased by 16.3 percent to 821 million euros. 2021 was the best year in the company’s history. Hilti is “still in very good shape,” says Loos. A formidable understatement. For the current year, too, Loos, who was born in Mannheim and will be replacing Fischer at the end of the year, is assuming “clear double-digit growth with a return on sales of over eleven percent”.
At the same time, there is heavy investment. Hilti has invested up to 250 million euros in its German headquarters in Kaufering in the Upper Bavarian district of Landsberg am Lech alone. Two development centers for chemical and electronic products are being built at what CFO Gillner calls “by far the second most important location after Schaan”. More than 500 developers will work there on fire protection issues, among other things.
From a global perspective, the construction industry is one of the largest sectors of the economy, accounting for almost 14 percent of global value creation. Hilti’s customers have full order books, says Chairman of the Board of Directors Fischer, even if in some places, for example in the Gulf region, the enormous construction boom of recent years is noticeably flattening out. The market there is saturated, says Loos, while other countries are growing enormously. Egypt, for example, where about 100 kilometers from the capital, Cairo, “a new Cairo is emerging,” as Loos believes. Hundreds of billions would be invested there. On top of that, the Egyptian government is planning to build the world’s largest nuclear power plant in the country. An ambitious government and regained political stability in the country made this possible, says Loos.
Construction site management is a business field of the future
However, Hilti sees major growth opportunities beyond the pure construction site equipment business. For example in the software sector. With IT offers, Hilti wants to support companies in improving the management of their construction sites and the communication between employees on site and planners and suppliers. They are convinced in Schaan that this is a huge business area for the future. That’s why Hilti took over Fieldwire from San Francisco for almost 300 million euros last November. According to the company, This offers “a leading software platform for construction site management that has already been used on more than a million construction sites worldwide”. It is a “comprehensive, easy-to-use and hardware-independent software solution” for digital construction site management. “The software is used by both general and specialist contractors to improve productivity on construction sites,” it says.
Trend number two on construction sites around the world is the simplest possible, mobile work. Instead of fumbling around with cumbersome cables, having to fill up machines with petrol or needing different batteries for different devices, Hilti has developed a system to be able to use one and obvious mobile battery, from one-handed angle grinders to demolition hammers weighing 20 kilograms. “Nuron” is the name of the product range in which the battery automatically collects data on device usage and transmits it to a cloud. Among other things, the spare parts management should be handled automatically as a result. In one fell swoop, Hilti was the first company in the industry to launch more than 60 machines where one battery fits everywhere. However, Hilti still does not want to get into the DIY business, but only believers in other companies.