KSB expects second-best consolidated earnings ever
Report on Financial Year 2009
The effects of the global financial crisis on the real economy also affected the sales of pumps, valves and related systems in 2009. Demand in the short-cycle standard business in particular suffered a sharp decline. By contrast, the longer-term engineered products business was less affected by this development. This was particularly true for orders from the energy industry for high-pressure power station pumps and valves.
Key Group figures as per 31 December 2009
|Order intake||€ million||1,934.9||2,179.0||- 11.2 %|
|Sales revenue||€ million||1,891.0||1,991.7||- 5.1 %|
|Employess (31 Dec.)||14,249||14,345||- 0.7 %|
Order intake 11.2 percent lower
The consolidated order intake in the Group was € 244.1 million lower than in 2008. At € 1,934.9 million, it reached the total volume of orders received in financial year 2007.
The development of the order intake at KSB’s European companies overall remained slightly below average, with KSB AG registering a decline of 12.4 percent. A major factor in this context was the weak demand from industrial plant engineering contractors and process engineering customers. Only the European service companies achieved an altogether positive order intake development.
In the Region Asia / Pacific, the level of orders received by the local companies fell only marginally below the previous year’s high level. The growth generated by several smaller companies, for example in Australia, Singapore and Pakistan, made up for some of the declines suffered by the large production companies. In the Region Americas, too, the decrease in order intake was moderate in comparison with that in Europe. The companies in the Region Middle East / Africa were faced with a more marked drop in orders overall.
Consolidated sales revenue down 5.1 percent
Due to weaker demand for standard pumps and valves, the Group’s consolidated sales revenue fell to € 1,891.0 million, down € 100.7 million or 5.1 percent. The fact that the development of sales revenue was stronger than that of order intake is attributable to the very high level of orders in hand from previous years.
Three quarters of the decrease in the sales revenue of the Group is directly related to the business results of the European companies. As one of them, KSB AG suffered a marked sales revenue decline of 6.2 percent.
The sales revenues of the companies in the Regions Americas and Asia / Pacific also fell short of the previous year’s figures. In contrast, the companies in the Region Middle East / Africa jointly achieved double-digit percentage growth in sales revenue thanks to a significant increase in volume in South Africa.
Gratifying earnings development
Although the consolidated earnings before taxes (EBT) will fall short of the record level achieved in 2008 (€ 200.1 million), they are expected to turn out better than estimated in the autumn of 2009. This gratifying development is the result of measures taken to stabilise earnings which have proven more effective than expected.
The earnings before taxes (EBT) of KSB Aktiengesellschaft will also be solidly positive, although the figure will not reach the previous year’s level.
Number of employees in the Group approximately at previous year’s level
The Group companies in Europe and the Americas have slightly reduced their workforce in the previous year, whilst the companies in Asia / Pacific have slightly increased their number of employees in total. In India, in particular, the continuing drought necessitated an increase in the production of water pumps resulting in a short-term addition to the workforce. The Region Middle East / Africa did not post any major changes in staff levels in the past financial year. Totalling 14,249 at the end of 2009 (-0.7%), the number of employees of the Group more or less remained at the previous year’s level.
The market for pumps, valves and related systems is expected to remain difficult in 2010 and probably also in the following years. It will depend on the anticipated economic recovery whether the sales of standard pumps and valves will improve, but it is unlikely that the 2008 volume will be reached again right away. At the same time we expect competition for large orders to continue to intensify. This will lead to dwindling profit margins also where order-specific engineered products are concerned.
For the current year, the KSB Group has set itself the target of achieving an order intake and a sales revenue at 2009 levels. Depending on the speed at which the market regains its strength, a moderate growth in order intake is also possible. Consolidated earnings in 2010 will be affected by higher depreciation and amortisation charges for the investments made in the previous years. Another factor will be the effects of the growing pressure on prices expected as a consequence of the current overcapacities in the market.