CFO focus
activities. It is about making sustainability our ethical foundation.”
Going green drives growth Some companies view a commitment to sustainability as a cost that will inhibit growth. For Vaillant, however, it seems clear that it has become a fundamental principle for this thriving company. In 2021, sales rose again by more than 20% to €3.3bn, with growth across all regions and across its entire product portfolio. Heat pump sales were, once again, up by more than 50% year-on-year, while the company sold a total of 2.5 million central heating units, further expanding its position as a global market leader.
“The main driver in this industry is renovation, which accounts for two-thirds of the market, rather than new builds,” Borchers emphasises. “A lot of CO2
emissions come from homes, so owners are replacing old oil or gas boilers with more efficient appliances or directly with electric heating systems. There are government incentives to push that forward, so there is some tailwind in the HVAC industry, which is benefitting from that trend.” “We need entrepreneurial courage and investment in sales, R&D and capacity,” he continues. “In 2021, to support our growth, we spent €300m primarily on heat pump R&D and digitalisation, and we gained market share as a result. We have a higher market share in a growing market. We were, for example, one of the first companies to introduce a heat pump with a new environmentally-friendly refrigerant – R290 – so that it can also be used for renovation projects.” The company still sells more gas boilers than heat pumps but is supporting the transition to electrified heating through its investments. A clear pillar of its strategy is to make headway in the electric heating market, which requires not only the right product offering, but also commitment from senior management. The company has set up a team from its sales, R&D, production and purchasing divisions to focus on new product development, leading to the development of the new Monoblock heat pump. “We have built a new technology centre next to our production plant here at our headquarters in Remscheid, and we have invested a lot in increasing our R&D staff, especially in the area of heat pumps,” Borchers says. “You need the courage to invest before the sales come.”
Behind any investment in R&D and capacity lies the finance function, which has played a pivotal role in enabling Vaillant to not only ride the rising tide in the HVAC market, but also push ahead through innovation to gain market share. “Conquering a growing market needs alignment among top management – not just the board but
Finance Director Europe /
www.ns-businesshub.com
also the levels just below the board,” Borchers says. “They must be aligned on strategy and everyone must be committed to it. The finance team has to concentrate on the business and deliver on three major functions.”
“The first is business partnering, for example with sales, R&D and production, and close contact with the purchasing and supply chain teams,” he adds. “The second is to act as the economic conscience of the company and safeguard corporate governance when the company is making decisions fast, ensuring we adhere to processes and approval steps. The third is cash flow management and financing.”
“This is not just about meeting our obligations because we are already going beyond that with our investments. It is about making sustainability our ethical foundation.”
A finance function fit for the future As well as providing the funds to invest in growth, the finance function also has to handle risk management, but at Vaillant, the focus is not only on what could go wrong. “Years ago, we established a risk and opportunity management system,” Borchers explains. “Both are important, not just risk. Currently, we have 150 individual risks on our list that are being monitored. They are not only reported, but also assessed and given probabilities, and a mitigation plan is provided.” “The big risks – high geopolitical risk, and disruptions to the global supply chain – affect many industries,” he adds. “More specific to this industry, monitoring local and EU regulations on the heating industry, including initiatives to replace fossil fuels with other technologies, are important, but to me,
Dr Stefan Borchers, managing director of finance and services at Valliant.
€3.3bn
In 2021, the company reported growing sales
revenues of 20% with heat pump sales up more than 50% year- on-year.
Vaillant 43
Vaillant Group
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