KSB Group: Growth in order intake with sales revenue stable
Despite continuing economic risks, the global economy showed a clear upward trend in the third quarter of 2010. Companies outside Europe in particular started making investments on a larger scale again which they had put off during the economic crisis. The mechanical engineering sector in Europe, including the pump and valve industry, profited from these investment decisions. The most important driver of exports was demand from the emerging economies in Asia.
Order intake and sales revenue development
Following mid-year figures that fell short of those of the previous year (-2.3 percent), Group order intake grew significantly during the third quarter. A comparison of the first nine months revealed a year-on-year increase in the total order intake volume of 6.5 percent to € 1,564.2 million. This positive development was mainly attributable to order intake in the Regions Asia / Pacific, Americas and Middle East / Africa, which all saw double-digit percentage growth.
All in all, the total value of orders in KSB’s European companies was lower year on year due to the late-cyclical nature of the project business. This shortfall was mainly attributable to the order situation at KSB AG, which was unable to offset the drop in orders in its plant engineering business by gains in the recovering standard business. Accordingly, KSB AG recorded a year-on-year loss of 8.7 percent for the first nine months, which was nevertheless a significant improvement over the half-year figures (-21.9 percent).
By the end of September, Group sales revenue had reached € 1,400.4 million and was thus on a par with the previous year. In line with improved growth in markets outside Europe, the structure of the sales revenue changed, reflecting higher contributions from the companies in the Regions Asia / Pacific, Americas and Middle East / Africa.
Sales revenue development in Europe fell short of the previous year. Growth was reported in the Service business, driven by high pent-up customer demand.
An analysis of the trend in order intake and sales revenue within the Group must also take the first-time consolidation of five smaller companies in Germany, Italy, Canada, Norway and Russia into consideration. By September 2010 these had generated additional order intake worth a total of € 31.0 million, equivalent to 2.0 percent of the total volume, as well as € 22.7 million in additional sales revenue, or 1.6 percent of the consolidated sales revenue.
Change in number of employees
The 402 rise in headcount was mainly attributable to the five companies which were consolidated for the first time and whose number of employees totalled 286 at the end of September. Furthermore, KSB AG significantly increased the number of trainees/apprentices and students on combined study and work schemes in an effort to counteract the anticipated shortage of specialists and engineers at an early stage. New staff also joined KSB Service GmbH.
Results of operations and financial position
As reported, consolidated earnings before taxes (EBT) for the first nine months are lower than in the prior-year period. On the one hand, this came as the consequence of an intensified price war on the market which resulted in lower revenue, particularly for project orders. On the other hand, earnings were impacted by higher depreciation/amortisation charges for major investments made in the previous years and additional staff costs.
The Group’s financial position remains solid and has improved again slightly compared with the end of 2009.
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