Dürr optimistic for 2008
After strong earnings growth in the past fiscal year, the mechanical and plant engineering company Dürr expects further improvements in 2008. Presenting the results at the annual press conference in Stuttgart CEO Ralf Dieter said: “We aim to raise the EBIT margin from 3.8% to 5% in 2008. We are profiting here from our high orders on hand and the continued strong demand.” The EBIT margin is to be improved to around 6% by 2010. The basis for this is the “Dürr 2010” strategy.
As announced, Dürr intends to pay a dividend for fiscal 2007 for the first time again in five years. It will be proposed to the Annual Shareholders’ Meeting on May 2 to pay a dividend of 40 cents per share. Overall, the Group achieved its targets in 2007: incoming orders were up 22% to € 1,761.5 million, sales revenues were up 8.5% to € 1,476.6 million, and EBIT was up 68% to € 55.7 million. Cash flow from operating activities improved from € -9.8 million in 2006 to € 85.9 million. Dürr’s CFO Ralph Heuwing commented: “We were cash generative for the first time for some years. This enabled us to reduce our net financial debt substantially by about one third to € 60.7 million. Our stringent liquidity management was a contributing factor.”
The gross margin was improved from 16.2% in 2006 to 16.3% despite the problems in the execution of a large project in India. Benefits were felt from process improvements realized under the completed Group-wide FOCUS program, and the expansion of the services business. As announced, Dürr managed to achieve an earnings turnaround in its US business and cleaning systems (Ecoclean); both businesses made higher earnings contributions than expected.
The increase of 2.8% in selling and administrative expenses was well below the growth in sales revenues. In contrast to the previous years, there were no restructuring costs and impairments. The net interest position came to € -22.9 million, after € -21.0 million in 2006 when the figure had included a special effect of € 1.9 million. Net income was more than doubled to € 21.2 million (2006: € 8.2 million). Earnings per share improved accordingly from € 0.50 to € 1.33.
Cash and cash equivalents increased to € 147.5 million at the end of 2007 (December 31, 2006: € 101.5 million). Dürr reduced its net working capital substantially to € 119.9 million (December 31, 2006: € 154.7 million) despite the larger volume of business. The equity ratio came to 23.9% as of December 31, 2007 (December 31, 2006: 23.6%). As a result of the good order situation Dürr increased its number of employees by 5% to 5,936 as of the end of 2007. Much of this increase was in the growth markets of Asia, Eastern Europe, Brazil and Mexico.
“Dürr 2010” strategy
With its “Dürr 2010” strategy Dürr is aiming to improve its EBIT margin to around 6% by 2010. The return on capital employed is to be raised from currently 15.0% to around 22%. “We want to grow sales revenues at an average rate of 5% a year through 2010, and thus more strongly than automobile production,” Dürr’s CEO Dieter said.
“Dürr 2010” encompasses four core areas: increasing customer benefit, pursuing growth initiatives, improving operational processes, and enhancing company value. A comprehensive package of measures has been defined for each core area. One important step is the realignment of the assembly and conveyor systems activities, which are being divided up between three business units which are focused on mechanical engineering (products for final assembly), plant engineering (assembly and conveyor technology) and aircraft production technology. “Dürr 2010” also provides for a higher innovation budget, the expansion of the painting robot business in Asia and North America, smallish acquisitions and a further reduction of debt.
Dürr expects to grow sales revenues by 5% to 10% in 2008. “We aim to improve earnings substantially again in 2008. Accordingly, we also target a higher dividend,” Ralf Dieter said. As a result of the German tax reform the effective tax rate should not be higher than 30% (2007: 39%), which will additionally benefit earnings. Dürr is aiming to hold cash flow at least at the 2007 level. The company therefore expects further improvements in net financial debt and liquidity.
The Dürr Group is a supplier of plant and equipment that commands leading global market positions in its areas of activity. Business with the automotive industry accounts for about 90% of its sales. Dürr also supplies innovative manufacturing and environmental technologies for the aviation, mechanical engineering, chemical and pharmaceutical industries. The Dürr Group operates in the market through two divisions. The Paint and Assembly Systems division supplies production and painting technologies, mainly for automotive body & chassis manufacturing. The equipment and systems supplied by the Measuring and Process Systems division are used, among other things, for engine and transmission production and for final vehicle assembly. Dürr operates in 47 locations in 21 countries around the world.