A Luxembourg-based financial holding company, Compagnie de Développement de l’Eau (CDE), which has been shareholders in Heckler & Koch AG for a number of years, has taken over a majority stake in the company. HK returned to profit in 2019 for the first time in several years, with continued investment they hope to continue this trend and also secure 900 jobs in Oberndorf.
HK certainly have busy order books with the production of various police and military orders underway. It also remains to be seen if the Oberndorf-based company will be selected to produce the Bundeswehr’s replacement for the G36 currently in service.
Below is HK’s announcement in full (machine translated from German):
The Federal Ministry for Economic Affairs and Energy has given the Compagnie de Développement de l’Eau (CDE) approval to acquire a majority stake in H&K AG. New majority shareholder supports economic recovery and thus guarantees long-term stability. CDE stands by locations and the “Green Country Strategy” and wants to expand Heckler & Koch’s technology leadership.
The Federal Ministry for Economic Affairs and Energy (BMWi) granted the shareholder Compagnie de Développement de l’Eau (CDE) SA, Luxembourg, approval to acquire a majority stake in H&K AG on July 15, 2020. The board of H&K AG was informed today that the CDE owns a majority stake in H&K AG.
The CEO of H&K AG, Dr. Jens Bodo Koch says: “We are very interested in clear and stable ownership. With a financially strong, long-term oriented majority owner like CDE, the economic stability of H&K is now sustainably guaranteed. The consolidation course we have taken since 2018 can now be continued consistently. ”
After years of losses, H&K again achieved a profit of EUR 1.6 million in the past year. With a view to the first half of 2020, the Management Board expects a further increase in sales and an improvement in earnings.
900 future-proof and innovative jobs
H&K expressly welcomes the fact that continuity, stability and expansion of the technology leadership of the Oberndorf company enjoy special priority for CDE and that the new majority shareholder supports investments in production and development capacities in Germany in this context. “With CDE’s commitment, a good 900 future-proof and innovative jobs have been secured in Oberndorf,” says CEO Jens Bodo Koch.
CDE has been a H&K shareholder for five years and expressly supports the company’s “Green Country Strategy”. After that, the company only supplies democratic countries, which belong in particular to NATO and / or the EU, and are treated as equal to NATO. It is one of H&K’s corporate principles that weapons belong in the right hands. For H&K, these are soldiers and police officers in democratic countries, who ensure the security and integrity of citizens. They deserve the best equipment for their indispensable and often challenging hard work.
Continuation of the growth and innovation course
With the new majority owner, H&K can continue the growth and innovation course embarked on by the board. The success of this course is already visible. In 2019, the operating profit before taxes (EBITDA) was 30.3 million euros (12.6% of sales), 63 percent higher than in 2018 (18.6 million euros or 8.4% of sales) ). After a successful first half of the year, H&K expects to see profitable growth in 2020 despite the corona pandemic due to its sustainable business policy.
H&K’s return to the profit zone can be attributed on the one hand to a cost reduction program and a significant increase in production efficiency, and on the other to an agreement with the workforce to contribute to the consolidation of the company through additional work while at the same time reducing wages.
The positive development made it possible for H&K to put together an investment package worth 25 million euros, which has been used to modernize production and improve the infrastructure since July 2019 until next year. The company is now operationally profitable enough to manage investments like this from its own cash flow.
The overall outlook for the next few years is also positive. H&K was able to record record orders for the second year in a row. In the current year, the company has started delivering 2,000 medium-range weapons to the Hessian police to protect citizens in the event of terror and amok cases. Also this year, the Bundeswehr special forces will launch the new G95K (HK 416 A7) assault rifle from H&K. This weapon replaces the G36K, which also comes from Oberndorf. H&K’s latest success is the start of delivery of just over 6,000 M110A1 (Squad Designated Marksman Rifle / Rifle Scope / SDMR) precision rifles to the US Army.
We want people to be able to live safely. Our products are designed to protect people in liberal, democratic countries from threats and violence. Heckler & Koch is the leading manufacturer of handguns for the NATO and EU countries and is proud that its assault rifles are standard equipment for many European armed and security forces.