Dürr achieves positive after-tax result in the third quarter
Strong recovery in machinery business
The third quarter was by far the strongest part of the year so far for the Dürr Group. At € 336.6 million, sales revenues were up 17% on the second quarter of 2010 and up 39% on the third quarter of 2009. Earnings before interest and taxes (EBIT) rose more than proportionally to € 13.2 million in the third quarter (Q3/2009: € 1.5 million); with earnings after tax of € 3.4 million, the group’s bottom line was back into positive terrain again, too (Q3/2009: € -7.9 million). Incoming orders in the first nine months of 2010 were worth € 1.1 billion, an increase of 30% on the same period last year. The strong recovery in balancing and cleaning equipment business on the machinery side also contributed to this. Here, Dürr almost doubled its order intake versus the first nine months of 2009. In light of the strong demand in the automobile industry, Dürr expects the positive trend to continue in the fourth quarter.
Ralf Dieter, Dürr AG’s CEO, commented: “Dürr’s sales revenues and earnings have gathered pace as predicted, and we are fully on track. Over 90% of EBIT for the first nine months was realized alone in the third quarter. We will continue to gain momentum in the fourth quarter and achieve our targets for the year. After the plant engineering side, the machinery and service businesses have now picked up strongly, too. The service business alone grew 37% in the first three quarters and accounted for 30% of our sales revenues”.
Orders on hand were up € 330.1 million year over year at € 1,257.3 million as of September 30, 2010. That is equivalent to about one year’s worth of sales.
China continues to be by far the largest single market for Dürr. Since the beginning of the year the machinery and plant engineering group has booked orders worth € 376 million there; that is over one-third of its total order intake. The order situation also developed nicely in Brazil and India. Altogether, over 60% of the new orders come from the emerging markets of Asia, Eastern Europe and Latin America.
Dürr is responding to the demand boom by building up its workforce in the emerging markets; they meanwhile account for 27% of the total headcount. 130 additional employees have been recruited since the beginning of the year alone in China, where the group employs over 800 people. The total number of employees in the group has increased for the first time since the outbreak of the economic crisis, rising to 5,825 at the end of the third quarter. In Germany, where the group currently has 2,940 employees, new hirings are being undertaken again on a moderate scale.
Owing to the strong growth in business there was an increase in net working capital as of September 30, 2010. Cash flow from operating activities therefore fell to € -33.4 million in the first three quarters (9M/2009: € 1.3 million). Against this backdrop, net financial status decreased to € -57.5 million (December 31, 2009: € +3.0 million). Dürr expects a slight increase in financial debt from the operating business in the coming quarters. The management of net working capital remains a top priority.
If the redemption of the old bond from 2004 at the end of October is also taken into account, the equity ratio was about 28% as of September 30, 2010; a year earlier it had been 32%.
Dürr plans to reopen the new bond it placed in September 2010 and issue a second tranche of € 50 to 75 million already in the fourth quarter. The issue price of the additional tranche will be adjusted to the prevailing capital market conditions; apart from this, the same terms and conditions will apply as for the original issue in September. It is intended to use the proceeds from the second tranche mainly for expanding the environmental and energy techno-logy business. Dürr is currently reviewing various acquisition possibilities in this area. Dürr’s CFO Ralph Heuwing commented on the planned reopening of the bond: “The placement in September was a complete success. With the second tranche we want to capitalize on that and finance our growth in forward-looking and lucrative business areas”.
Dürr expects the fourth quarter of 2010 to continue on seamlessly from the positive development in the third quarter. Growth of 15% to 20% in incoming orders is forecast for the full year 2010; the group aims to increase sales revenues by 9% to 12%. The company’s previous guidance had been for growth rates of at least 15% in new orders and at least 7% in sales revenues. Earnings after tax should be slightly positive.
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