Development of the global economy: outlook for 2017
GlobalModerate development
GermanySlight improvement
Euro zoneSlight improvement
USAModerate improvement
Emerging marketsModerate improvement

Revenue growth: outlook 2017
Group3% – 4% up to € 2.4 billion
INDUSTRY SegmentMid-single-digit growth
MOBILITY SegmentMid-single-digit growth
CERTIFICATION SegmentHigh-single-digit growth

EBIT development: forecast 2017
GroupIncrease up to € 210 million
INDUSTRY SegmentSlight increase
MOBILITY SegmentSlight increase
CERTIFICATION SegmentSlight increase

Future development of the TÜV SÜD Group

Please note that actual events in the course of the coming fiscal years could differ from our expectations presented below.
The following statements on the outlook for the development of TÜV SÜD in the coming fiscal year are based on the planning for 2017. This was prepared by the Board of Management and approved by the Supervisory Board on December 7, 2016.

As part of our strategic planning, which comprises the years up to 2020, we regularly use scenario analyses to examine the effects of economic development of our segments. The resulting findings and targets are also taken into account in the 2017 outlook.

We assume that the global economy will continue to see moderate growth of around 3.4% in 2017. The Kiel-based Institut für Weltwirtschaft (ifw) expects growth of 3.6% for 2018.

In Germany, the economy is expected to continue to grow in 2017. The positive situation on the labor market and stable financing conditions are beneficial. The upswing sustained by private consumption will weaken somewhat. Rising energy costs and the persistently low interest rate are reducing the purchasing power of private households. The increase in government spending will also slow down as the immigration of refugees is expected to wane. Commercial investment in Germany, in particular in construction, will in the future support the economic development. Corporate investment in the international environment could be delayed by political uncertainties, such as the Brexit vote and policy change in the USA. In general, these political factors should not have any significant short-term effect on the German economy. For this reason, we expect higher economic activity for 2018, which is borne by the domestic economy.

We expect continued economic recovery for the euro zone with large regional differences. Unresolved structural problems in some countries continue to negatively impact local economic development. In Italy, economic prospects remain subdued following the rejection of constitutional reform. In addition, there are uncertainties about the future orientation of economic policy after parliamentary elections are held in the five largest member countries. In the UK, economic growth should slow down noticeably after the Brexit vote. The US economy is expected to grow moderately in 2017, subject to existing uncertainties about the impact of the economic policy of the newly elected government.

Economic growth in the major emerging economies will be moderate. Significant influencing factors here are rising prices for raw materials, a lower rate of expansion in China and an increase in corporate debt as a result of the appreciation of the US dollar. The Indian economy should see robust development, while the prevailing recession in Brazil will continue.

For 2017, we expect organic revenue growth of approximately 3% to 4%. Consolidated revenues generated with the existing affiliated companies will therefore be between € 2,390 million and € 2,440 million, with over 40% being generated outside Germany. The non-German affiliated companies will continue to increase their share of consolidated revenue in the next two years.

We are concentrating our activities on attractive technologies and industries with long-term growth prospects. The regional focus is mainly on those markets characterized by high economic growth and a reliable business environment. We intend to establish ourselves as one of the top three service providers in our markets by 2020.

We intend to generate growth in the INDUSTRY Segment in the mid-single-digit percentage range in 2017. We currently generate around 45% of consolidated revenue in this segment outside Germany and we expect the share of revenue generated outside Germany to remain at this level in the future.

Our core business steam and pressure will become the main growth driver in the INDUSTRY Segment. We want to expand the market share in the USA and ASIA with our services for inspection and testing according to the ASME standard (American Society of Mechanical Engineers). Products such as IT-assisted preventive prediction models for plant maintenance are also to be brought into focus as part of our digitization strategy. After the stabilization of the oil price and structural measures introduced during the year, we also expect moderate growth as regards services for the chemical and petrochemical industry in the US market. The demand for conventional energy and renewable forms of energy is expected to remain low: in Germany, as a result of the gradual decommissioning of conventional power plants and in the UK, as a result of the collapse of the market for wind energy. International project business in the areas of technical construction supervision and quality management is developing heterogeneously. In Europe, the project business is intensified by offers from the Spanish TÜV SÜD ATISAE Group, whereas we see a decline in ASIA as current projects come to an end. We want to further enhance our global leadership in independent technical risk calculation and analysis.

We intend to continue our growth trajectory in the forecast period with our consulting, testing and certification services for buildings, transport technology and infrastructure, including rail transport. We want to defend our market leadership position in safety-related services for lifts in Germany. We will defend our market share in the international environment, in particular in Spain and also in the United Arab Emirates. In South America, we intend to expand the existing range of services to provide water supply and treatment services, as well as reconstruction and environmental assessments, especially for landfill sites. We expect favorable market entry conditions and growth impulses from close cooperation with local TÜV SÜD ATISAE Group companies. Our comprehensive service portfolio in the area of rail transport continues to set us apart from our competitors. We are focusing in particular on the acquisition of large-scale projects and the expansion of our market presence in ASIA. In the infrastructure sector, on the other hand, we expect revenue to decrease again as the political and economic turbulence in Brazil continues.

The MOBILITY Segment will see growth in the mid-single-digit percentage range in the forecast period. Foreign business should generate more than 10% of revenue in 2017.

Our core business is our offering of roadworthiness tests and exhaust gas analyses for private and business customers in Germany, Turkey and Spain. With substantial investments in the visual and technical modernization of the technical service center network and further development of the IT applications used there, we will offer our customers better service with a high level of technical quality. As a result, we assume an upward trend in development of revenue.

The homologation services and emissions testing will continue its growth trajectory with its international orientation. We are meeting the challenges of autonomous and assisted driving with a comprehensive innovation agenda that includes existing and new business models. Through the targeted acquisition of major customers, we intend to further increase revenue with a new service portfolio for manufacturers, retailers and workshops. We are continuing to push forward with internationalization in the fleet business and intend to generate additional growth through professional key account management.

We plan revenue growth in the upper-single-digit percentage range for the certification Segment in 2017.

Significant international growth areas include our services for consumer and industrial goods as well as food, cosmetics and healthcare products. The focus on selected key clients and international orientation will result in consumer goods growth in the upper single-digit range. We also expect positive impetus from innovative services for wearable technology, smart cities and drones. Our offering in the field of industrial goods benefits in particular from technological innovations such as smart testing and the growing importance of wireless components in almost all products. We will also offer our customers extensive value-creating services for electro­mobility, autonomous driving and renewable energies. The high utilization of our network of state-of-the-art test laboratories enables us to offer new products, such as risk-based chemical tests. At the same time, we are striving for further efficiency improvements in our laboratories through standardized lab management systems. In the area of healthcare and medical products, we will expand our leading position on the world market with new services for in vitro and reusable medical devices. We expect further growth impetus here as a result of legal changes in unannounced audits and the new Medical Products Regulation (MDR) for high-risk products.

Our services for standard certification are pooled in the Management Services Division. The core products, such as ISO 9001, will be supplemented out by innovative certification services in the areas of energy, data security and corporate social responsibility. We want to extend our claim to market leadership by systematically growing our customer base in Germany and China. At the same time, we will leverage our global presence to offer our international customers one-stop certification for global and integrated management systems. In the forecast year, ASIA remains the growth region for certification services. We expect further growth from the conversion of the automotive standard IATF 16949:2016 in all relevant markets around the world. The newly ­created cyber security unit will in the future provide international key accounts with support in improving their IT security. The service portfolio is offered in Germany, and also in the USA, Italy, India and Singapore.


In the development of our business activities, we focus on markets where sustainable profitable growth with target returns between eight and twelve percent can be expected. The development of our earnings depends crucially on our ability to exactly meet our customers’ needs with our services and innovations. Through our international presence, efficient cost and process structures and flexible working models, we offer our customers made-to-measure services from a single source, which are every bit as profitable as they are flexible.

External factors, such as the development of the US dollar, the Singapore dollar and also the ­Turkish lira exchange rate against the euro, impact directly on the earnings of our subsidiaries. At the same time, these exchange rate fluctuations also influence the financial result in particular.

We aim to continually increase earnings and profits in a sustainable way. This is why we are continually analyzing our business processes, implementing measures to improve efficiency and optimizing our structures accordingly. For the forecast year 2017, we anticipate a mid-single-digit increase in EBT.

EBIT will develop similarly to EBT. Here, too, we are forecasting growth in the mid-single-digit percentage range for 2017. As expected, the EBIT margin will therefore remain in the high ­single-digit percentage range.

Our own demand for high quality provides the foundation for sustainable growth, together with the offer of technically sophisticated services and collaboration based on trust as process partners for our customers. We will also positively influence earnings development in the coming ­fiscal year with new innovative services for digitization and new technologies, as well as intensive cooperation with key international customers. We therefore expect EBIT to develop positively in all segments in 2017.

In the INDUSTY Segment, we expect a higher EBIT increase just in the double-digit range. The MOBILITY Segment should show a result in the high single-digit range. We expect growth stimulus from Spain, but also positive effects from the FIT17 project, which continued in fiscal year 2016. We see EBIT growth of a similar level for the certification Segment in 2017. The EBIT margin should be in the high single-digit range for each of the three segments.

We do not expect any significant one-off effects on earnings before taxes in the forecast period.

Various factors, which are largely independent of each other, influence the development of TÜV SÜD’s earnings. The economic development of our markets and the political uncertainty in some countries will set the underlying trend for 2017. Our global presence close to our customers and our expertise in innovative technical services are of far greater economic significance. A corporate innovation fund in a double-digit million euro range is provided to finance pioneering innovation projects. The allocation of this funding cannot be planned and is therefore not included in these statements on the outlook. Consequently, EBIT could be below the expected figure of € 200 million to € 210 million if the innovation budget were to be used in full in the forecast year 2017.

We will streamline our corporate structure systematically in order to achieve a higher level of efficiency and cost savings, and increase our power through lean structures.

Enhancing our internal processes is a key element in achieving our Group’s goals. The focus is on the phased introduction of shared service organizations in individual countries and regions as well as implementation of harmonized software-based commercial processes. In this way, we are creating the requirements for efficiency increases in the commercial and administrative area.

Economic Value Added (EVA) is a key indicator for measuring the company’s success. On the basis of the positive EBIT development described above and increasing average capital employed in line with revenue, we expect EVA of around € 75 million to € 85 million for the forecast year 2017.

It is only thanks to our highly skilled and motivated employees that we are able to implement our growth strategy. In the coming fiscal years, we intend to further increase our headcount by around four percent. We will do this through the targeted recruitment of well-trained and dedicated women and men.

For more than three years, more than half of our employees have been employed abroad. As internationalization gains ground, this percentage will increase continuously in the coming years.

We do not expect to see any significant change in the other non-financial indicators compared to the prior year.