German lubricant and aftermarket additive manufacturer Liqui Moly reported that net sales increased during 2020 but that its profit saw a steep decline that it attributed to extensive investing in marketing measures during the COVID-19 pandemic.
Net sales for 2020 rose 7% to €611 million (U.S. $734 million), up from €569 million in 2019. Profits halved to €25 million, the company noted in its earnings news release, partly because the medium-sized enterprise invested almost €45 million in marketing measures during the crisis and hired more than 100 new employees, bringing the total to 989 by year’s end. Managing director Ernest Prost said the company was in a solid starting position financially, and had sufficient strength to make the necessary investments without taking on burdens of borrowed capital and credit.
According to Prost, the investments have paid off. “Thanks to the course we took, we were able to make good gains by the end of the year,” he said. The company previously reported 26% higher sales in November and 38% higher sales in December 2020, saying aggressive marketing and investments had helped it weather the pandemic and eventually to thrive. In its outlook last month, the company said it plans further investments this year, especially in logistics, to ensure continued growth.
“We fought to set ourselves part from our competitors,” Prost said in the news release, noting it increased its presence in all media. “That fact that we are growing [in net sales] is only the logical consequence of our actions.”
He acknowledged the company could have achieved a much higher year-over-year sales increase but was hindered by the pandemic’s impacts. “We felt the ‘shortage economy’ in all areas, due to coronavirus, lockdown short-time work and working from home at our upstream suppliers,” Prost said. “As a result, we experienced a noticeable decline in raw materials, packaging materials, labels, closures and also in logistics and freight capacities.”
The company said sales of its core business, motor oils, increased by 6.4% in 2020. “The fact that people are of necessity, traveling less and spending more leisure time at home is also reflected in the increase in sales of products for motorcycles, bicycles and boats,” Liqui-Moly stated.