Published on: May 12, 2025 / Updated on: May 12, 2025 – Author: Konrad Wolfenstein
Würth in crisis mode: Analysis of the 4 percent profit slump in 2024/2025 – Creative image: Xpert.Digital
Future questions at Würth: Will the crisis year 2024 be a turning point?
Würth share price slump: Forecasts and recovery prospects for 2025
The Würth Group, a globally renowned specialist in fastening and assembly technology, is currently experiencing one of the most challenging economic periods in its history. In fiscal year 2024, the Künzelsau-based company recorded a dramatic drop in profits of over 40 percent, while sales declined slightly. This development stands in stark contrast to previous successful fiscal years and raises questions about the company's future positioning. Despite these challenges, management remains cautiously optimistic for 2025, supported by a solid financial foundation and initial signs of recovery this year.
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The extent of the economic downturn
Drastic decline in profits despite stable sales
The figures for the 2024 financial year reveal a dramatic situation for the screw giant Würth. Net profit plummeted by over 40 percent, falling from €1.14 billion to just €673 million. This development stands in stark contrast to the company's previous success stories, during which double-digit growth was the norm for decades. Operating profit before taxes also fell drastically by more than a third to €940 million, down from €1.455 billion in the previous year.
It is noteworthy that revenue remained relatively stable, declining by only 0.9 percent to €20.21 billion. This suggests that the company's main problems lie less in demand and more in its cost structure and efficiency. The massive drop in return on investment is particularly striking: instead of 7.1 percent in the previous year, only 4.6 percent remained in 2024. This development represents a fundamental turning point for a company that was focused on growth and high margins.
Regional differences in business development
The economic situation shows clear regional differences. The German business was particularly hard hit, with a decline of 3.9 percent to just under 8 billion euros. While Germany remains Würth's most important single market with a 39 percent share of sales, it is a major contributor to the overall negative trend. In contrast, the company recorded slight growth of 1.2 percent abroad.
Of particular note is the positive development in Southern Europe, the Group's second most important market, with growth of 3.8 percent to over €3.1 billion. However, this growth was heavily influenced by the acquisition of the Italian electrical wholesaler IDG 01 SpA and does not necessarily reflect organic growth.
Causes of the economic crisis
External stress factors
The sharp drop in profits at Würth can be attributed to several external factors. Robert Friedmann, spokesperson for the company's management, cites a combination of weak construction activity, declines in the manufacturing sector, and geopolitical tensions as the main causes. The persistently weak economy in the manufacturing industry has had a significantly negative impact on sales.
The drastic cost increases are having a particularly detrimental effect. Raw materials like acetone now cost four times as much as at the end of 2020, nickel prices have doubled, and natural gas has become 150 percent more expensive. These price developments are significantly impacting margins and cannot be fully passed on to customers. Packaging, transport, and personnel costs have also risen considerably.
The geopolitical situation is further exacerbating the problem. Würth management speaks of a "shift to the right" in the country, while at the same time, the arms race in Europe, trade conflicts with the US, and tariffs on Chinese products are putting a strain on business. The US market is hitting Würth particularly hard, as it is the second-largest sales market after Germany and heavily dependent on imports from China.
Internal factors and strategic investments
In addition to external factors, internal decisions also contributed to the decline in profits. Würth made significant investments in fiscal year 2024 – €1.2 billion flowed primarily into IT infrastructure, warehouse capacity, production buildings, and technical equipment. These investments will negatively impact operating profit in the short term due to increased depreciation, but are intended to secure long-term growth.
CEO Friedmann emphasizes the company's counter-cyclical investment strategy: "In 2024, we stuck to our counter-cyclical strategy and invested where others were cutting back." While this strategy may negatively impact earnings in the short term, it could prove advantageous in the long run if the economy recovers.
Impact on business units and company divisions
Different developments in the business areas
The economic crisis is affecting Würth's various business units to varying degrees. In its core business, the Würth line's craft divisions performed relatively satisfactorily, with sales remaining at the previous year's level, with the automotive (+3.3 percent) and wood (+2.0 percent) divisions in particular recording growth.
Among the Allied Companies, the subsidiaries outside the core business, the electrical wholesale business, with an increase of 8.1 percent, and the chemical companies, with an increase of 11.7 percent, contributed significantly to sales growth. This demonstrates that Würth's diversified corporate structure has a stabilizing effect in times of crisis, as not all areas are equally affected by the economic downturn.
Staffing situation and structural adjustments
Despite the economic difficulties, Würth slightly increased its workforce in 2024. At the end of 2024, the group employed around 88,400 people worldwide, representing an increase of 1.5 percent. Of these, approximately 44,900 employees work in sales.
This development shows that Würth is sticking to its long-term personnel strategy despite the profit slump. Friedmann reaffirmed that, despite the negative trend, the company intends to maintain its course and continue hiring. This indicates a high level of confidence in the long-term business development.
Strategic adjustments and future orientation
Digitalization and e-commerce as growth drivers
Würth is increasingly focusing on the digitalization of its business model. The share of e-business in total revenue is growing steadily and now accounts for approximately one-fifth of total sales. The company is investing heavily in expanding its IT infrastructure to drive digital transformation.
The focus is on product availability and delivery capability for the more than four million customers worldwide. Sales activities are being expanded across all three channels: field sales force, branches, and e-business. This multichannel strategy aims to strengthen customer loyalty and open up new markets.
Improving supply chain event management
To optimize delivery performance, Würth implemented a monitoring system from the software provider AEB. This system helps logistics staff analyze delivery performance and identify optimization potential at both a tactical and strategic level. The focus is no longer on individual department productivity, but rather on fulfilling the delivery promise to customers.
This adjustment demonstrates a paradigm shift at Würth: Instead of processing customer orders with a focus on productivity, the emphasis is now on commitment, reliability, and transparency towards the customer. This change in mindset could contribute to stabilizing the business in the long term, as it places customer satisfaction at the forefront.
Economic challenges: How uncertainties affect Würth
Forecasts for the financial year 2025
Despite the current crisis, Würth is cautiously optimistic about the future. The company is targeting mid-single-digit revenue growth for the 2025 fiscal year. This forecast is based on initial positive developments this year. "We grew by almost four percent in the first quarter," said Würth CEO Robert Friedmann.
Companies in the chemical sector are performing particularly well, having built on the previous year's success in the first quarter of 2025. The eiSos Group, one of Europe's largest manufacturers of passive electronic and electromechanical components, is also currently experiencing rising order intake, especially in Asia and North America. As the eiSos Group is one of the early-cycle companies within the Würth Group, this could be an indicator of a broader recovery.
Growth forecasts are declining: How much uncertainty can the economy handle?
Despite cautious optimism, significant challenges remain. Economic forecasts for Germany have recently been revised sharply downwards. According to the Ifo Institute, gross domestic product is now expected to grow by barely more than 0.1 percent. The global economy is also projected to grow considerably slower, at 2.8 percent, according to the International Monetary Fund, compared to the forecast for January 2025.
The tariffs imposed by US President Donald Trump pose a particular challenge. Friedmann emphasizes the difficulty of making reliable forecasts under these circumstances: “Due to the Trump tariffs, it is rather difficult to make a forecast. Nobody currently has an overview of where which tariff will have an effect.” These uncertainties could negatively impact business performance this year.
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Assessment of the company's position
Financial stability despite the crisis
Despite the massive drop in profits, Würth emphasizes the company's fundamental financial stability. With an equity ratio of 48 percent and €9 billion in equity on its balance sheet, the company stands on a solid foundation. In June 2024, the rating agency S&P Global reaffirmed the Würth Group's A/outlook stable rating.
The 89-year-old company patriarch Reinhold Würth, who handed over the chairmanship of the foundation's supervisory board to his grandson Benjamin Würth on January 1, 2025, is not worried about the future of the family business: “The company is very healthy. We have €9 billion in equity on our balance sheet.” This solid capital base enables Würth to weather even prolonged periods of economic downturn.
Long-term perspectives and challenges
In the long term, Würth faces structural challenges that extend beyond the current economic downturn. The closure of a printed circuit board production plant in Schopfheim, affecting 300 jobs, in October 2024 underscores the pressure from international competitors, particularly from China. Würth itself described this as an economic crisis of "historic proportions," especially in the industrial electronics sector, which is under considerable cost pressure.
At the same time, the Group's diverse structure across various industries and regions, along with its established business model, provides the necessary stability to overcome these challenges. Robert Friedmann emphasizes: “Our primary goal is to secure the long-term success of the Würth Group based on healthy and sustainable growth.” With over four million customers worldwide and the backing of the Würth family, the company has a solid foundation for the future.
Profit slump, digitalization and global competition: Würth's fight for stability
The drastic drop in profits at Würth in 2024 marks a significant turning point in the company's history and reflects current economic challenges. The combination of a weak economy, rising costs, and geopolitical tensions has severely tested the business model of this long-established family company. Nevertheless, Würth has proven resilient, thanks to its solid financial foundation, diversified corporate structure, and long-term strategy.
Countercyclical investments in digitalization and logistics, as well as a focus on customer orientation and supply chain management, could pay off in the long run when the economy recovers. The first positive signs in 2025 point to a gradual recovery, although external factors such as trade disputes and geopolitical uncertainties continue to pose risks.
The generational change at the head of the foundation's supervisory board, from Reinhold Würth to his grandson Benjamin Würth, simultaneously marks a transition into a new era in which the company must adapt to changing economic realities. The ability to successfully manage this transformation will be crucial for the group's future positioning in global competition.
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