Macroeconomic and industry-specific conditions

The global economy in 2022: further upswing expected with risks remaining very high

Despite continuing challenges in global supply chains and high energy costs, economic research institutes are forecasting a strong economic upturn in the course of 2022. Assuming that the pandemic situation steadily subsides, supportive stimulus is also expected from catch-up effects in the consumer sector and investment activities. On the fiscal policy side, a stabilizing effect is seen in many countries in 2022 according to current estimates, whereas further tightening is expected for monetary policy in the US due to the interest rate increase announced in January 2022. This will create pressure on countries around the world to support their currencies with interest rate increases, which is likely to affect emerging markets in particular. Due to the current high risks worldwide, the IMF expects global economic growth of 4.4% in 2022, 50 basis points lower than in the fall forecast for 2021. Growth of 3.8% is assumed for the following year. It should also be borne in mind that the further course of the pandemic, continuing material bottlenecks, high inflation and above all the interest rate turnaround could impact the economy more severely than currently assumed and lead to turbulence on the foreign exchange and capital markets. Uncertainties regarding possible escalations in military conflicts are also having a negative impact on the global economy.

In China, monetary and fiscal policy is currently pursuing an expansionary course with the goal of supporting the domestic economy. Accordingly, the central bank there has recently lowered the minimum reserve ratio several times. The IMF therefore expects the Chinese economy to gradually return to a largely flattening expansion path, which was already the trend before the pandemic. With lower infection figures, the ASEAN-5 countries are likely to benefit more from the global demand stimulus and grow strongly (+5.6%). According to the IMF, India will also remain on a very dynamic growth path (+9.0%). By contrast, slight impetus is expected for Brazil and Russia. According to the IMF’s forecasts, the emerging and developing countries – boosted by the high level of energy and raw material costs – will continue their recovery in 2022 by achieving 4.8% growth.

The economic upswing should continue to unfold in the industrialized countries, as well, in 2022 with a gradual overcoming of the pandemic due to steady immunization of the population. Supporting impetus has already been provided by political initiatives to strengthen infrastructure and curb climate change, among other measures. The fact that the US Federal Reserve is planning to adjust the interest rate turnaround in the US with a view to the economy should also have a positive effect. By contrast, according to announcements to date, the ECB will maintain its expansionary monetary policy despite high inflation. In this environment, industrial production should grow at an accelerated pace, despite strained global supply chains, and investment activity should also pick up. The IMF therefore expects the industrialized countries to grow by 3.9% in 2022. A robust upturn is forecast in both the US and Canada. The UK (+4.7%) and Japan (+3.3%) are also expected to continue their economic recovery in 2022.

To contain the spread of the Omicron variant of the coronavirus, Europe had responded in early 2022 with contact bans and extensive restrictions on public life. In addition, the disruptions to global value creation and supply chains resulting from the initial lockdowns at the beginning of the pandemic still exist. Both factors will initially continue to dampen the economic recovery in the first months of 2022. Nevertheless, the eurozone economy should recover noticeably in the further course of the year. In the area of private consumption, spending is expected to rise despite high inflation due to expected catch-up effects and a buoyant labor market. Further growth impetus should come from increased investment activities due to the resumption of postponed projects. The topics of digitalization, the energy and mobility transition, and increased in-sourcing initiatives to eliminate bottlenecks in production processes should also have a positive impact. The IMF therefore forecasts a sustained upturn for the eurozone with growth of 3.9% in 2022. Based on the estimates, the German economy is also expected to move along a clear expansion path at the level of the eurozone as a whole. Nevertheless, according to the ifo Institute and IMF Kiel, the potential escalation of the Russia Ukraine crisis in particular remains a risk factor. The associated risks in terms of higher energy prices and increased uncertainty could weigh on the investment and consumer climate in Germany and thus have a negative impact on the economic upturn.

This macroeconomic outlook forms the basis of NORMA Group’s forecast and outlook for 2022.


in %




World 1








China 3




Euro zone 4




Germany 5




Sources: 1_IMF ; 2_US Department of Commerce; 3_National Bureau of Statistics(NBS); 4_Eurostat; 5_German Federal Statistical Office (Destatis)

Partly significantly improved framework conditions for important customer industries of NORMA Group

Based on the assumption that both the pandemic and the supply chain problems can be gradually overcome and that the global economy will continue its recovery on a regional basis in 2022, it can be assumed that the prospects for important customer industries of NORMA Group should thus also improve further.

Mechanical engineering

In the mechanical engineering sector, significant burdens are still expected in the first months of 2022 due to the ongoing material bottlenecks, which should primarily impact electronic components and metal products. Nevertheless, according to the VDMA industry association, the general order situation is solid. In the German mechanical engineering sector alone, new orders increased by 32% in real terms in 2021, which represents a good starting point. Accordingly, the upswing in the mechanical engineering sector is expected to continue over the full year 2022 thanks to the economic tailwind and the renewed increase in investment activity. This assumption is supported by a rise in investment volumes in the expanding logistics sector, which relates to capacity expansion and automation initiatives. The automotive industry will also need to invest heavily in production facilities in the wake of the technology shift towards electromobility. Further positive impetus for the investment climate should also come from the digitalization and decarbonization of industrial production processes, especially since the pace of structural change will continue to increase in the future as a result of new climate protection legislation. According to the current VDMA forecast, robust growth is thus estimated for the global mechanical engineering sector in 2022 despite ongoing bottlenecks and cost increases. While the VDMA expects a negative development for Brazil (-3%), the development in India (+4%) and Turkey (+3%) is expected to be positive. A growth trend is also emerging in Japan (+5%), Canada (+4%) and Mexico (+3%). Moderate expansion is expected for China, the US and Europe, while both Switzerland (+9%) and the UK (+10%) are forecasting disproportionately strong growth. The association expects strong growth in both sales (+6%) and production (+7%) for the German mechanical engineering sector in 2022.


in %












Euro zone




World (excluding China)




Source: VDMA, 1_Revised date according to VDMA.

Automotive industry

The industry experts at LMC Automotive (LMCA) expect the automotive sector to experience a significant recovery in 2022 following the in part very weak development and slumps in previous years. Nevertheless, the peak values from the years 2016 to 2018 are not expected to be reached for the time being. The main reason for this is the technological upheaval in the industry. For 2022, LMCA anticipates a robust increase in sales volumes, while growth of 12.5% on the production side to a total of 85.6 million is forecast in the light vehicles (LV) segment. LMCA anticipates growth of 7.3% for China. Production in the US is expected to rise by 16.6%. An even stronger increase in production is expected in the European automotive industry in 2022, with growth of 18.6%. Manufacturers in Germany in particular are expected to benefit from this. After two weak years, a noticeable upward trend with an increase of 41.0% is estimated. In this context, there is also an increasing willingness to purchase electric vehicles (EVs) worldwide. In the segment of purely battery-powered vehicles (BEV), demand is also rising much more exponentially than for plug-in hybrids (PHEV). Overall, it can be assumed that the technology breakthrough trend will continue to gain momentum, while at the same time faster expansion of the charging infrastructure will also be required to serve the market in a targeted manner. In terms of EV production volume, LMCA expects an overall increase of 36.6% and a volume of 8.2 million units produced in 2022.

From a general perspective, the commercial vehicle market is expected to show a moderate market trend in 2022, meaning that production figures are also likely to remain stable going forward.



in %




Production of light vehicles




Classic Combustion Engine












Sales of light vehicles




Production of commercial vehicles




Sales of commercial vehicles




Source: LMC Automotive

Construction industry

The construction industry in Asia represents a major pillar of the economy there. Dynamic population and economic growth and urbanization are providing the sector with significant structural impetus. Countries are increasingly investing in infrastructure, water management and environmental protection – and are specifically promoting residential construction to accommodate population growth. Supported by the good overall economic situation, the environment for the construction industry in India and the ASEAN 5 countries is favorable for 2022. Potential risk factors remain the ongoing pandemic and high debt levels with interest rates tending to rise. In China, construction activity will most likely continue to be dampened in 2022 by the measures already introduced to curb debt in the real estate sector (“three red lines”). Current risks from the unresolved liquidity crisis at major real estate financiers will continue to have a negative impact. By contrast, the construction industry in Europe is expected to literally flourish. The Euroconstruct industry network (including the ifo Institute) expects a solid upturn in the medium term. Construction output in 2022 is initially expected to rise relatively strongly by +3.6% due to the good order situation, partly boosted by expected catch-up effects. This will be countered by effects relating to bottlenecks in materials and a lack of skilled personnel, however. In Germany, the construction industry is expected to show a steady upswing due to impetus from lively residential construction. According to the IfW, construction investment will increase by +2.9% in real terms in 2022. The German Institute for Economic Research (DIW) even expects the construction volume to increase by 12.7% in nominal and 2.7% in real terms in 2022. Within this framework, the upturn in 2022 will not only continue in residential construction (+2.4% in real terms), commercial construction (+3.9% in real terms) is also expected to pick up. According to DIW calculations, growth in both new construction and investment in existing buildings will reach double digits in nominal terms.

The upturn in the US construction sector is forecast to continue in 2022, albeit at a slower pace than previously. In private residential construction, the key data at the turn of the year 2021/22 creates the impression of a robust order situation. According to current estimates, the upswing in the US construction sector in particular is expected to continue in 2022 and accelerate further, especially in the private housing sector. In this environment, double-digit growth rates in building permits are expected in most regions of the US. Combined with the high number of housing units already under construction, this should lead to a robust increase in spending on new buildings and building materials. According to current forecasts, housing starts are expected to grow by a further 6% in 2022 (2020: +14%). Similarly, spending on renovations and repairs, a key driver of the NDS business, is also expected to rise sharply. The industry experts at JBREC (John Burns Real Estate Consulting) therefore expect solid market growth of 10% in 2022. An increase of 8% is forecast for the following year. The IfW also expects the US economy to grow again, albeit at a slower pace than before. The interest rate turnaround, material shortages and high inflation in particular could slow the positive trend.



in %




Western Europe




Eastern Europe








Source: Euroconstruct/ifo Institute (19 core markets in total)

Future development of NORMA Group

NORMA Group places a strategic focus on sustainable value creation. Key objectives are sustainable sales growth, profitability above the industry average and the most efficient use of capital possible. In addition, NORMA Group orients itself towards sustainability targets in order to live up to its own claim of a responsible approach to people and the environment. strategy and targets

General statement by the Management Board on probable development
Development of sales growth in 2022

Based on the current assessments of relevant economic research institutes and industry associations, the Management Board expects the positive trend in the economic environment to continue in fiscal year 2022 despite the ongoing global challenges. The management therefore expects a good development in NORMA Group’s key customer industries, albeit with slightly less dynamic growth in some cases due to the high comparative values of the previous year.

In the automotive industry in particular, a significant increase in global passenger car production volumes is expected in fiscal year 2022 on the basis of the uniformly optimistic forecasts of industry experts and automotive associations consulted. With reference to this and additionally supported by NORMA Group’s continued solid order situation, the Management Board forecasts medium to high single-digit organic sales growth for the EJT division (Mobility and New Energy).

For the SJT business, with the associated strategic business units Water Management and Industrial Applications, the Management Board also expects a further increase in demand and organic sales growth in the medium to high single-digit range in fiscal year 2022. Continued strong US water business is expected to be the main growth driver here.

The positive trend forecasts are expected to be reflected in the development of the regional segments in fiscal year 2022 as follows:

For the development in the EMEA region, the Management Board forecasts medium single-digit organic sales growth. This is based on the expectation of a noticeable revival in demand from the European automotive industry. Additional growth impetus is also expected to result from the SJT business.

In the Americas region, the management expects medium to high single-digit organic sales growth. Key assumptions for this forecast are both a continued strong US water business and a good development in the automotive sector (light and heavy vehicles).

For the Asia-Pacific region, the Management Board expects demand to continue to develop positively, resulting in medium to high single-digit organic sales growth.

Against this backdrop, the Management Board of NORMA Group expects medium to high single-digit organic Group sales growth for fiscal year 2022. However, this forecast is made under the assumption that no significant negative effects in connection with the Corona pandemic or other influencing factors occur in the course of 2022 that could lead to a strong weakening of the global economy and to significant pressure on the business development of NORMA Group. Potential influencing factors are, for example, the military activities as well as economic sanction measures in connection with the Russia Ukraine crisis. NORMA Group does not operate any production or sales sites in Ukraine or Russia and the share of business with customers in Russia and Ukraine in NORMA Group's total sales is less than 1%. However, how the Russia Ukraine crisis will affect the global economy and thus NORMA Group in the long term cannot be fully assessed at present.

Development of the cost of materials ratio

In fiscal year 2021, NORMA Group was confronted with a highly strained situation on the global procurement markets due to numerous negative effects from the ongoing pandemic, unforeseen extreme weather events and ongoing material shortages. This resulted in a sharp increase in raw material prices for key material groups of NORMA Group. The Management Board expects the situation on the international raw materials markets to remain tense for the time being in fiscal year 2022. However, the development of purchase prices should be less volatile compared to 2021 at a level that will remain high for the time being. Among other developments, the multi-sourcing strategy of NORMA Group’s purchasing organization, which seeks to constantly minimize negative effects, will have a partially offsetting effect. For this reason, the Management Board expects a stable development of the cost of materials ratio for fiscal year 2022 compared to the previous year.

Development of the personnel cost ratio

Assuming a continued good sales development in all major customer industries of NORMA Group, the Management Board expects a stable personnel cost ratio in fiscal year 2022. Savings from the “Get on track” change program are expected to contribute to this in particular. This includes, most notably, the staff reductions associated with the closure of the Gerbershausen site by the end of 2022.

Research and development expenses

To maintain its innovation and competitiveness in the long term, NORMA Group invests a fixed percentage of its Group sales in research and development activities every year. In fiscal year 2022, the targeted investment ratio in R&D activities is expected to reach a value of around 3% of Group sales.

Adjusted EBIT margin

An important focus of NORMA Group is on maintaining profitability. Accordingly, all business activities are strategically aligned with this. In this context, the profitability of the Group is to be sustainably increased, among other things, through the measures implemented as part of the “Get on track” change program initiated in November 2019. In addition to optimizing site capacities in all regions, these also include systematically revising structures and processes and focusing the product portfolio. The measures implemented are intended to contribute to further improving NORMA Group’s competitiveness and maintaining it in the long term.

Cumulative total costs of around EUR 55 million are expected for the implementation and execution of the “Get on track” program by 2023. Of this amount, costs of around EUR 35 million have already been incurred since its initiation up to and including the end of fiscal year 2021. Additional expenses of around EUR 10 million are expected in fiscal year 2022. As in previous years, the costs of the change program are not presented on an adjusted basis.

Assuming further positive earnings contributions from the measures initiated as part of the change program and in light of the good sales forecast, the management expects an EBIT margin adjusted for acquisition effects of around 11% for fiscal year 2022.

Financial result of up to EUR –10 million expected

The Management Board expects a financial result of up to EUR –10 million for fiscal year 2022. This includes interest charges on the Group’s gross debt, which bears interest at an average rate of approximately 1.5%, as well as further expenses for currency hedges and transaction costs.

Tax rate between 27% and 29%

The Management Board expects a tax rate of between 27% and 29% for fiscal year 2022.

Significant increase in adjusted earnings per share

Based on the assumptions described above, the Management Board expects a significant increase in adjusted earnings per share in fiscal year 2022.

Adjustments to the result

As in previous years, the Management Board expects adjustments from the allocation of purchase prices to depreciable tangible and intangible assets related to acquisitions from previous years. These will amount to around EUR 23 million in total. In the event that new acquisitions are made in fiscal year 2022, however, the Management Board reserves the right to make further adjustments in this regard.

NORMA Value Added (NOVA)

For fiscal year 2022, the Management Board expects NOVA of between EUR 20 million and EUR 40 million.

Investment ratio of between 5% and 6% targeted

The Management Board expects the good performance of the previous year to continue in fiscal year 2022. In this context, investment activity (excluding M&A activities) is expected to remain at the level of the previous year and the investment ratio in fiscal year 2022 will thus be around 5% to 6% of Group sales.

Net operating cash flow

Assuming that sales continue to develop well and at the same time constant optimization measures are implemented in the area of working capital management, the Management Board of NORMA Group expects net operating cash flow of around EUR 100 million in fiscal year 2022.

Sustainable dividend policy

NORMA Group pursues a sustainable dividend policy. This is based on a payout ratio of approximately 30% to a maximum of 35% of the adjusted consolidated net income, provided the future economic situation permits this.

Market penetration and innovation capability

The degree of market penetration is reflected in organic growth in the medium term. Therefore, securing its innovative capability is essential for the future and competitiveness of NORMA Group. NORMA Group records the number of annual invention disclosures as a key figure for measuring and managing the company’s innovative strength. The current target for the Group is more than 20 new invention disclosures per fiscal year.

Carbon dioxide emissions

One key area of NORMA Group’s environmental strategy is aimed at sustainably reducing greenhouse gas emissions at its production sites worldwide. Taking the steady implementation of further CO2 reduction measures into account, the Management Board expects CO2 emissions to fall to a level of below 10,000 tons of CO2 equivalents in fiscal year 2022.

Problem-solving behavior of employees

To ensure quality and maximize customer satisfaction, NORMA Group measures and controls the problem-solving behavior of its workforce based on the number of defective parts per million (PPM) rejected by customers. A value of 5.5 is targeted annually for the PPM performance indicator.


Organic group sales growth

Medium to high single-digit organic Group sales growth


EJT: Medium to high single-digit organic sales growth


SJT: Medium to high single-digit organic sales growth


EMEA: Medium single-digit organic sales growth

Americas: Medium to high single-digit organic sales growth


APAC: Medium to high single-digit organic sales growth

Cost of materials ratio

Stable cost of materials ratio

Personnel cost ratio

Stable personnel cost ratio

R&D investment ratio 1

Around 3% of sales

Adjusted EBIT margin

Around 11%

NORMA Value Added (NOVA)

Between EUR 20 million and EUR 40 million.

Financial result

From up to EUR -10 million

Tax rate

Between 27% and 29%

Adjusted earnings per share

Significant increase in adjusted earnings per share

Investment rate (without acquisitions)

Investment ratio between 5% and 6% of Group sales

Net operating cash flow

Around EUR 100 million

Dividend/pay-out ratio

Approx. 30% to 35% of adjusted Group net income for the year

CO2 emissions

Under 10,000 metric tons of CO2 equivalents

Number of invention applications

More than 20

Number of defective parts (parts per million / PPM)


1_Due to the increasing strategic relevance of the area of water management, NORMA Group includes the R&D expenses in this area in the calculation from the reporting year 2020 onwards and uses total sales as a reference value to determine the R&D ratio (previously 5% of EJT sales).


These contents are part of the Non-financial Group Report and were subject to a separate limited assurance examination.