SECO/WARWICK Group Doubles its Profits in 2022
2022 was a difficult year for global geopolitics and the economy. Despite this, SECO/WARWICK, the first choice among manufacturers of metal heat treatment and vacuum metallurgy furnaces, can talk about an excellent year.
The great results of the Group were influenced by several factors: the growth of production activities in China, dynamic market development in America, and the huge number of orders related to the electromobility industry expansion. In the first three quarters of 2022, the company had over 100 % more profit than in the previous year, and sales revenues amounted to PLN 448.87 million in this period (PLN 335.09 million in 2021).
Let the results speak for themselves
The Group’s financial results prove how good this year was for SECO/WARWICK. At a time when the world was plunged into chaos and a deep economic crisis, SECO/WARWICK recorded record profits. The first three quarters of 2022 brought an increase in sales by 34% y/y, with a sales gross margin higher by 1 percentage point (22.9% in the reporting period). The higher sales value reflected the Group’s order book condition. The largest sales increase was recorded by the Vacuum Furnace segment (52%). The segment of furnaces for aluminum heat treatment and brazing - Aluminum Process - showed higher sales by 49% compared to the previous year’s corresponding period, and the segment of melting furnaces was up by +3%. Aftersales (spare parts and service) increased by 36%.
“Our results support current macroeconomic trends which have changed the way customers view supply chains. Primarily in the USA in the titanium processing area. In connection with the pandemic period experience, the war in Ukraine and the tense situation between the USA and China, manufacturers want to secure the acquisition of titanium for the products intended for the aviation market, and this means that we are gaining more and more orders from North America. Such reshoring, in other words, moving production back to Western Europe and the USA, is of great importance to us. Another direction supporting our results is electromobility - the Chinese subsidiary sells equipment for heat exchanger production to markets around the world. Electromobility is a very strong trend, and, despite the crisis, this direction is not changing. Currently, thanks to this trend, a noticeable part of our margin comes from China,” said Sławomir Woźniak, CEO of SECO/WARWICK Group.
Market development in the USA - titanium processing is the key
For SECO/WARWICK, 2023 will be the year of American companies. The SECO/WARWICK Group boasts customers in 70 countries, while the American branch - SECO/VACUUM - serves 125 customers, after only five years of operation! Development also means the need to hire additional engineering and production personnel and the need to increase production capacity, hence the company’s move to a new headquarters with 50% more office space and 300% more hall space. The second American company belonging to the Group - RETECH, which will celebrate its 60th birthday next year, has delivered and commissioned many vacuum metallurgy equipment projects during the last year, mainly VIM, VAR, PAM solutions and furnaces using a consumable electrode. In turn, the third American company focused on the service and sale of products from the atmospheric furnace segment, including aluminum process and CAB, increased sales under the leadership of the new managing director - Marcus Lord. Last month, the company won a significant contract for a furnace renovation at the U.S. Mint, and a key contract for an aluminum melting furnace project.
“Undoubtedly, the VIM furnace, one of the most popular products in the Retech vacuum metallurgy portfolio, has contributed to our success. There is also interest in modern technologies, such as the PAM furnace, of which Retech is the undisputed market leader. The Group’s key step on the American market will be the start of vacuum furnace production and the needs of our partners for titanium melting furnaces. Titanium processing is currently the second most important industry for us,” explains S. Woźniak.
Business expansion in China and India
2022 was a breakthrough year for the SECO/WARWICK Chinese branch. The company has started vacuum furnace production at the Chinese SECO/WARWICK factory. This is the Group’s third product line produced and offered directly from China. By renting another assembly hall, the area was doubled, which significantly improved efficiency and shortened delivery times. In the first half of 2022, orders for SECO/WARWICK furnaces were placed by many companies from this market, including those specializing in heat exchanger production, such as Jiangsu RIDEA.
“We are one of the leading manufacturers of lines for heat exchanger brazing. It is thanks to our furnaces that radiators for passenger cars, vans, agricultural machines, and power generators used by leading automotive concerns are executed. The technology’s unflagging popularity is also evidenced by the fact that the product for this segment has its own brand - EV/CAB, under which we sign solutions dedicated to electric vehicles,” explains Piotr Skarbiński, Vice President of the Aluminum and CAB Products Segment in the SECO/WARWICK Group.
Around the world, the demand for battery coolers is increasing due to the expansion of the electric vehicle market. SECO/WARWICK, a leader in CAB line production, perfectly cooperates with the automotive industry by providing solutions which help to develop electric vehicle technology. Thanks to this technology, we contribute to the trend, and the obligation, to strive to reduce exhaust emissions and care for the natural environment.
SECO/WARWICK plans to develop production in India based on cooperation with local partners. In January 2023, the Indian company was headed by a new Managing Director - Binoy Koshy, who will oversee the entire process.
“We are analyzing the development of assembly in India, and we want to expand the company’s business by implementing a strategy for the local production of vacuum furnaces and aluminum segment equipment. It will not require large investments. It’s more about renting halls and finding subcontractors. Due to the geopolitical situation, we would like to have two possible export locations in Asia, so next to China, the second production zone would be in India. This would also help to optimize the Group’s costs,” sums up the CEO of the SECO/WARWICK Group.
Big brands among SECO/WARWICK customers
In 2022, SECO/WARWICK worked for global brands, recognized manufacturers, leaders in their segments, and companies listed on the major stock exchanges around the world.
In Europe, SECO/WARWICK has supplied tire manufacturer Michelin with a compact vacuum furnace, the Vector®. It will be indispensable in the gas quenching process of tools for the premium segment of tire production. Härtewerk Chemnitz GmbH, similarly to Aalberts Surface Technologies, reached for a SECO/WARWICK brand furnace. The Super IQ is the first vacuum heating furnace by SECO/WARWICK at the German Härtewerk plant in Chemnitz, and the first Super IQ solution (heating in vacuum, cooling in a classic atmospheric oil quench) in Germany.
A breakthrough event on the European market was also the signing of an agreement with the Swedish company GreenIron H2 AB to supply a series of furnaces for processing metals from post-production waste without the use of fossil fuels. It’s a step into the green era.
2022 was the year of deliveries to unique markets including Rafael Advanced Defense Systems, an Israeli pioneer in the field of defense and cyber solutions, who purchased a titanium casting vacuum furnace, which is the first such solution on the Israeli market.
In the USA, the heat treatment of the seventh and the last module of the world’s largest superconducting electromagnet has been successfully completed. A specialized vacuum furnace supplied by SECO/VACUUM, belonging to the SECO/WARWICK Group, was used to implement the project. General Atomics is responsible for the project, being a part of the international ITER program. At the end of the year, the US Mint of Philadelphia selected SECO/WARWICK for the major modernization of their retort furnaces. This project will run for five years.
A leading Asian catalyst manufacturer - Ecocat India, whose mission is to purify the air by delivering innovative catalysts for the automotive sector, has ordered a high-pressure vacuum furnace with gas quenching. Chinese HUBEI RADIATECH joined the customer group by purchasing an innovative EV/CAB solution dedicated to electromobility. Last year, vacuum furnace production began at the Chinese SECO/WARWICK factory, and thanks to the rental of another, twin assembly hall, the production area was doubled, which significantly improved efficiency and shortened the delivery time of project solutions. In the first half of 2022, orders for SECO/WARWICK furnaces were placed by a number of companies on this market, including a global manufacturer, Jiangsu RIDEA specializing in the production of heat exchangers.
Plans for 2023 - development, development, development
2023 will be an American year. Commencement of the vacuum furnace production in the USA by SECO/VACUUM, the 60th anniversary of RETECH and a new chapter in the history of SECO/WARWICK USA under the leadership of the new managing director - Marcus Lord. SECO/WARWICK expects that the order share from the USA in its order book will continue to grow due to businesses remodeling and the manufacturing production transfer to the USA.
In the area of investments, the company does not anticipate large expenditures but analyzes a stronger production diversification with India under the leadership of the new managing director. The SECO/WARWICK Group focuses on promoting ecological solutions, which are not only an opportunity but also an obligation for socially responsible enterprises. SECO/ECO is not just a slogan, but a fact, which the Group will present at the Thermprocess 2023 fair in Dusseldorf.