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The strong economic growth of the last four to five years is not likely to continue with the same dynamic force in 2008. Indeed, the global business climate rather suggests that we shall see the start of a more cautious approach to investments, which may also have an impact eventually on order intake in the mechanical engineering sector. In the current year, however, we can expect a further increase in demand for pumps, valves and related systems.
| KSB Group | | 01-03/2008 | 01-03/2007 | Change | | Order intake | € million | 578.0 | 556.5 | + 3.9 % | | Sales revenue | € million | 434.5 | 412.0 | + 5.5 % | Employees
(31 March)
| | 14,047 | 13,579 | + 3.4 % |
Order intake and sales revenue development
Order intake in the Group grew by 3.9 percent during the first quarter of 2008 compared with the same period last year. This increase is especially positive in view of the fact that the same quarter in the previous year was favourably influenced by a number of large orders.
From January to March 2008, order intake showed strong growth particularly in the Water segment. Several orders for the equipment of seawater desalination plants placed with KSB through European engineering contractors contributed to this performance.
These orders, together with good business development in Industry, Building Services and Waste Water helped the European KSB companies to achieve order growth slightly above the average for the Group. Double-digit growth rates were posted by the Eastern European and the three Spanish KSB companies.
The companies in the Region Middle East / Africa posted the strongest increase overall in order intake during the first three months, not least because of a large order for the equipment of water pumping stations. The American Group companies also recorded a growth in orders. By contrast, some companies in the Region Asia / Pacific did not achieve the level of the previous year, which was related to a lower volume of power plant orders.
The Group increased its sales revenue by 5.5 percent in the first three months of 2008. The Group companies in the Regions Americas and / Pacific posted double-digit growth of sales revenue. In these regions it was especially the large Group companies in Brazil, the USA, India and China that reported an increase in invoiced orders. In Europe, France’s KSB S.A.S. in particular showed a positive development in the first quarter thanks to a lively valves business; KSB AG increased its sales revenue by 5.0 percent.
Change in number of employees
On the back of the strong order intake during the previous two years, the KSB Group increased its number of employees in Production, Sales and Service during 2007 and at the beginning of 2008. This applies primarily to the companies in Brazil, Germany, India, South Africa and the USA. At the end of March, KSB employed 14,047 people worldwide, up 468 on the previous year.
New production facilities
In the first quarter of 2008, KSB started several construction projects aimed at extending capacity for the production of large pumps in the Energy and Water segments as well as production and logistics facilities for industrial pumps and power plant valves. A total of € 70 million has been budgeted for this. The most important project is the construction of a new factory for the kind of boiler feed pumps needed in the new type of power plants that operate at very high pressures and temperatures. This production plant with associated test field is currently being built at the company’s headquarters in Frankenthal.
Results of operations and financial position
The Group’s results of operations showed a further positive trend. Consolidated earnings in the first quarter of 2008 were above those of the same period last year; KSB AG likewise saw a positive earnings development in the first quarter. The financial position of the Group also showed further improvement.
Outlook
For the current financial year, KSB expects to see a moderate increase in order intake and a marked growth in consolidated sales revenue, which will allow a renewed improvement in earnings. It is therefore the declared objective of the Group to achieve a return on sales above that of last year.
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