Preliminary Report on Financial Year 2014
Marked growth in orders at KSB
Economic environment
According to preliminary data from the German Engineering Federation (VDMA), in 2014, global mechanical engineering sales revenue grew by 5 %, outpacing the growth in the world economy as a whole (+ 3.3 %). In contrast, growth within the pump and valve industry was significantly more subdued. In Germany, the sales revenue volumes of liquid pump and industrial valve manufacturers were lower than in the previous year.
According to preliminary data from the German Engineering Federation (VDMA), in 2014, global mechanical engineering sales revenue grew by 5 %, outpacing the growth in the world economy as a whole (+ 3.3 %). In contrast, growth within the pump and valve industry was significantly more subdued. In Germany, the sales revenue volumes of liquid pump and industrial valve manufacturers were lower than in the previous year.
In some Regions there was positive business momentum from a revival in project activity in the energy industry and in the water and waste water sector. The equipment needs of the liquefied gas industry and of the tankers needed for transport resulted in an increased demand for special valves.
Key Group figures as per 31 December 2014 (provisional figures)
KSB Group | 01-12/2014 | 01-12/2013 | Change | |
Order intake | € million | 2.322,6 | 2.241,2 | + 3,6 % |
Sales revenue | € million | 2.184,8 | 2.247,3 | - 2,8 % |
Employees (31.12.) | 16.322 | 16.546 | - 1,4 % |
Order intake in the Group increases by 3.6%
Group order intake rose by € 81.4 million to € 2,322.6 million, representing a growth rate of 3.6 %. Without negative currency exchange effects, this increase would have been around € 53 million higher. The Pumps and Valves product groups recorded significant increases, helped by several large contracts. Order intake for Service business fell short of the prior-year level. The main reason for this was the continued decline in demand from European energy suppliers, especially in Germany.
Group order intake rose by € 81.4 million to € 2,322.6 million, representing a growth rate of 3.6 %. Without negative currency exchange effects, this increase would have been around € 53 million higher. The Pumps and Valves product groups recorded significant increases, helped by several large contracts. Order intake for Service business fell short of the prior-year level. The main reason for this was the continued decline in demand from European energy suppliers, especially in Germany.
Overall, the European Group companies succeeded in noticeably increasing their order intake. At KSB AG, the value of orders received rose by 5.6 % to € 850.9 million. The order situation of the companies in Asia and the Americas remained virtually unchanged, while growth in the Region Middle East / Africa was weaker than in the previous year.
Sales revenue once again negatively impacted by exchange rates
In 2014, consolidated sales revenue was 2.8 % down on the previous year and reached a volume of € 2,184.8 million. The decrease of € 62.5 million was mainly due to negative currency exchange effects (- € 53 million); in addition, sales revenue performance was affected by the sluggish order intake in the project business over the last two years.
In 2014, consolidated sales revenue was 2.8 % down on the previous year and reached a volume of € 2,184.8 million. The decrease of € 62.5 million was mainly due to negative currency exchange effects (- € 53 million); in addition, sales revenue performance was affected by the sluggish order intake in the project business over the last two years.
The Pumps and Service product groups saw downturns in sales revenue while Valves sales revenue rose slightly due to positive growth in the demand for cryogenic valves for shutting off liquefied gas flows.
In 2014, sales revenue fell in the Regions Asia and Americas / Oceania, as well as in Europe. Here, primarily KSB AG and KSB’s Russian subsidiary posted declines in sales revenue. At € 814.9 million, KSB AG’s sales revenue was 4.8 % lower year on year. In the Region Middle East / Africa, however, the Group companies succeeded in continuing to grow their sales revenue despite negative currency exchange effects.
Consolidated earnings considerably lower
The decline in sales revenue and the continued poor profit quality in the power plant business weighed heavily on 2014 consolidated earnings before taxes (EBT). Costs incurred for restructuring measures added to the burden. Already at mid-year, therefore, the earnings forecast was corrected to between € 60 and € 85 million. Consolidated earnings before taxes (EBT) are expected to be in the middle of this range.
The decline in sales revenue and the continued poor profit quality in the power plant business weighed heavily on 2014 consolidated earnings before taxes (EBT). Costs incurred for restructuring measures added to the burden. Already at mid-year, therefore, the earnings forecast was corrected to between € 60 and € 85 million. Consolidated earnings before taxes (EBT) are expected to be in the middle of this range.
Employee numbers fell slightly
At the end of the reporting year, 16,322 people were employed in the KSB Group, 224 fewer than in 2013. KSB AG and KSB Service GmbH (Frankenthal) recorded significant decreases, with the total workforce reduced by 177 employees at year end. These personnel cuts are part of the measures implemented by KSB to adapt to new market conditions and increase its competitiveness.
At the end of the reporting year, 16,322 people were employed in the KSB Group, 224 fewer than in 2013. KSB AG and KSB Service GmbH (Frankenthal) recorded significant decreases, with the total workforce reduced by 177 employees at year end. These personnel cuts are part of the measures implemented by KSB to adapt to new market conditions and increase its competitiveness.
Outlook
In 2015, the KSB Group expects order intake and sales revenue to grow. A revival in project business involving power plant orders from China and India is expected to contribute to this growth. In addition, the new sales structure will strengthen the general business with standard products and the business with spare parts and services.
In 2015, the KSB Group expects order intake and sales revenue to grow. A revival in project business involving power plant orders from China and India is expected to contribute to this growth. In addition, the new sales structure will strengthen the general business with standard products and the business with spare parts and services.
Further growth areas will arise from the current strategy review.
KSB also considers the improvement of its cost structure to be a primary task, and restructuring measures introduced in 2014 will contribute to this. They are expected to have a positive impact already on this year’s earnings. Consolidated earnings before taxes (EBT) are expected to increase significantly again in 2015.