• Contact
• Locations
• German

Dürr presents final figures for 2003

04/29/2004

Despite a continuing difficult market environment and adverse currency influences, the Dürr Group raised incoming orders and earnings in fiscal 2003. Restructuring costs and valuation allowances burdened consolidated earnings, which consequently turned out negative. By launching the SPRINT SQUARE earning enhancement program, Dürr has laid the groundwork for substantial improvement of its profitability. The more than 200 individual measures included in the program are now being systematically implemented.

Incoming orders and sales above last year

The Dürr Group's consolidated incoming orders improved in 2003 by Euro 9.5 million on the previous year to Euro 2,356.2 million. Calculated at the previous year's exchange rates, they would have risen by Euro 236.7 million, or 10%. This very high order intake resulted in the first instance from a major order placed by US automaker General Motors. It is the single largest order in Dürr's history and involves the delivery of three turnkey paint shops.

Consolidated sales rose by 9% to their highest level ever, Euro 2,264.5 million (2002: Euro 2,082.1 million). Adjusted for currency influences, sales would have increased to Euro 2,437.1 million, which would have meant growth of Euro 355 million, or 17% on the previous year. "The high levels of incoming orders and sales document Dürr's strong market position. Particularly in the new manufacturing markets of Asia, we have benefited from the automotive industry's buildup of additional production capacities," said Stephan Rojahn, Chairman of Dürr AG's Board of Management at the financial press conference in Stuttgart.

Restructuring measures and valuation allowances burden consolidated earnings

Earnings before taxes (EBT) turned out negative in fiscal 2003 at Euro -6.9 million (2002: Euro 22.6 million). Besides continuing margin pressure and exchange rate effects, which burdened earnings by Euro 4.1 million, restructuring costs of Euro 25.6 million associated with SPRINT SQUARE were mainly responsible for the decline. Added to that were expenses for no longer needed interest rate swaps and impairment losses on the book value of investments (Euro 11.0 million). At Euro 18.4 million, the biggest restructuring item was closing the premanufacturing plant of the Measuring Systems business unit in Darmstadt. If restructuring costs are excluded, earnings before taxes are positive in the amount of Euro 18.7 million.

Because of a valuation allowance of Euro 23.0 million on deferred tax assets for loss carryforwards, Dürr reports a net loss for fiscal 2003 of Euro 31.3 million (2002: net income of Euro 12.0 million). Since this valuation allowance is expense-neutral, Dürr shows positive cash flow from business operations of Euro 56.4 million. Earnings per share amounted to Euro -2.19 (2002: Euro 0.84). No dividend planned for 2003 Due to the negative earnings, the Board of Management and Supervisory Board of Dürr AG will propose to the annual shareholders' meeting on June 9, 2004 in Stuttgart that no dividend be paid for fiscal 2003.

Overview of business units

As a result of the major order placed by General Motors, total incoming orders in the Paint Systems business unit were, at Euro 1,400.1 million, significantly above the high year-earlier figure (Euro 1,286.8 million). Owing, above all, to strong order intake in the United States in 2002 and 2003, total sales in this business unit also rose on the year-earlier figure (Euro 1,054.3 million) to Euro 1,243.2 million. In the framework of the SPRINT SQUARE program, Paint Systems has intensified product standardization and improved order processing. That contributed to the rise of earnings before taxes to Euro 27.3 million (2002: Euro 23.3 million), though burdened by restructuring expenses of Euro 5.0 million for capacity adjustments in France.

At Euro 405.4 million, total incoming orders in the Final Assembly Systems business unit fell short of the very high year-earlier level (Euro 476.2 million), which was mainly due to large projects in the area of vehicle final assembly. On the other hand, total sales rose to Euro 436.6 million (2002: Euro 404.7 million) as a result of increases in both the final assembly and conveyor technology areas. The business unit's earnings before taxes decreased to Euro 7.4 million (2002: Euro 10.0 million). Expenses associated with further expansion of Polish affiliate Dürrpol and delays in restructuring US company Dürr Production Systems were mainly responsible for that.

The Services business unit was hit particularly hard by the US dollar's devaluation, since it conducts a large part of its business in the United States. Nevertheless, total incoming orders and sales were, at Euro 146.5 million each, slightly above the respective year-earlier levels (Euro 143.1 million and Euro 143.9 million). Earnings, on the other hand, declined slightly to Euro 7.1 million (2002: Euro 7.5 million) due to competitive influences. On a currency-adjusted basis, total incoming orders and sales would each be 19%, and earning before taxes 12%, above the year-earlier levels.

Due to weak demand in the United States, total incoming orders in the Ecoclean business unit fell to Euro 176.9 million (2002: Euro 236.7 million), and total sales to Euro 215.5 million (2002: Euro 221.9 million). Earnings before taxes declined from Euro 10.4 million in 2002 to Euro 6.2 million. One reason for that was the weak US market and resulting heavy price pressure. The result also includes restructuring costs of Euro 1.5 million for capacity adjustments in the United States and Spain.

The Measuring Systems business unit registered unsatisfactory business development in North America and Europe. Against that background, total incoming orders and total sales fell slightly to Euro 369.7 million and Euro 364.9 million, respectively (2002: Euro 381.2 million and Euro 385.9 million). Earnings before taxes declined to Euro -29.0 million (2002: Euro -4.5 million). High restructuring expenses (Euro 19.1 million) aimed at improving the business unit's competitiveness were mainly responsible for that. Also, an unsatisfactory business and earnings trend in the Development Test Systems product line burdened earnings.

Dürr Group's net financial debt reduced considerably

By means of scheduled loan repayments and group-wide working capital management, Dürr managed to reduce net financial debt again on annual average by about Euro 100 million to Euro 221.5 million (2002: Euro 333.2 million). As of December 31, 2003, net financial debt was down to Euro 97.0 million (2002: Euro 123.1 million), thus improving the financial result by Euro 4.7 million to Euro -20.5 million (2002: Euro -25.2 million).

SPRINT SQUARE: Course clearly set to improve earning power

Dürr's earnings development in the past few years has not kept pace with the acquisition-driven growth of sales. The Group is therefore now concentrating on improving operating earning power. It is laying the foundation for more profitability with the SPRINT SQUARE earnings enhancement program adopted in spring 2003. Its four main objectives are cutting costs, lowering risk, reducing net working capital, and streamlining the portfolio of business locations and companies.

In 2003 Dürr defined over 200 measures throughout the Group in connection with the SPRINT SQUARE and set things in motion. The first projects were successfully implemented. They include, for example, product standardization in the Paint Systems business unit, which has allowed production costs to be reduced on average by 9% across all product lines. Other important measures include closing the premanufacturing plant in Darmstadt, which will save about Euro 10 million annually from 2005 onward, and improvements in the global procurement network.

In 2004 Dürr is consistently intensifying implementation of the program's measures. Reducing net working capital is a very important point on the agenda. "By optimizing receivables and inventory management throughout the Group, we will further lower our financing costs and improve our financial ratios," emphasized CFO Kay Bönisch. "We are thus laying the foundation for a substantial increase of earning power," he added.

Necessary job cuts in engineering business units

With a view to sustaining Dürr's competitiveness, 486 jobs in the Americas and Europe were eliminated under the SPRINT SQUARE program in the four engineering business units, Paint Systems, Final Assembly Systems, Ecoclean, and Measuring Systems. In contrast, capacity was expanded in the growth market of Asia by 104 employees. On balance, the number of employees in the engineering business units declined by 4.4% to 8,248 (2002: 8,630). Because of new projects, the number of employees in the Services business unit rose to 4,499 (2002: 4,272). The total number of employees in the Group decreased by 1% as of December 31, 2003 to 12,747 (2002: 12,902), 64% of whom are employed outside Germany.

Squeeze-out at Schenck for Euro 157 per share in cash

At its meeting on April 28, 2004, the Supervisory Board of Dürr AG approved the proposal by that company's Board of Management to fix the cash settlement in the squeeze-out of Carl Schenck AG's minority shareholders at EUR 157 per unit share. Dürr AG already holds 98.7% of Carl Schenck AG's capital stock.

Significantly positive earnings before taxes expected for 2004For 2004 Dürr expects at most a moderate economic recovery. Against that background, it assumes that the automotive industry will continue to exercise capital spending restraint. The Board of Management expects significantly positive earnings before taxes for 2004, after the loss caused by special factors in the past fiscal year. Stephan Rojahn summarizes, "In a continuing difficult economic and industrial environment, our primary goal is clearly defined. We intend to increase Dürr's earning power and profitability significantly in order to improve our market position further in global competition. To that end, we will continue consistently on the course set by the SPRINT SQUARE program, implementing each measure step by step."

*Dividend proposed to the annual shareholders' meeting