Earnings Release • May 12, 2011
Earnings Release
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Ireland | 12 May 2011 07:52
KHD Humboldt Wedag International AG: Publishing of the interim announcement for the 1st quarter 2011
KHD Humboldt Wedag International AG / Release of an announcement according to Article 37x of the WpHG [the German Securities Trading Act]
12.05.2011 07:52
Interim report according to Article 37x of the WpHG, transmitted by
DGAP - a company of EquityStory AG.
The issuer is solely responsible for the content of this announcement.
Key figures in overview
legal Proforma\*)
in EUR 31.03. 31.03. Variance 31.03. 31.03. Variance
million 2011 2010 in % 2011 2010 in %
Order Intake 36.0 32.2 11.8 36.0 71.4 -49.6
Order
Backlog 280.9 301.5 -6.8 280.9 321.7 -12.7
Revenue 58.7 53.4 9.9 58.7 74.4 -21.1
Gross Profit 11.4 11.6 -1.7 11.4 15.8 -27.8
EBIT 2.9 7.5 -61.3 2.9 9.2 -68.5
EBT 4.5 7.6 -40.8 4.5 9.6 -53.1
net result 2.9 2.1 38.1 2.9 3.2 -9.4
EPS in EURO,
Cent 0.06 0.06 0.0 0.06 0.1 -40.0
Cash 349.2 191.0 82.8 349.2 224.6 55.5
*) extended group
Operating business development
KHD Humboldt Wedag International AG (KHD or the Group), one of the world's
leading provider of equipment and services to the cement industry, has
reported a muted start to the new 2011 business year. KHD generated
revenues of EUR 58.7 million in the first quarter of 2011. In comparison to
prior year gross profit went from EUR 15.8 million (pro forma) to EUR 11.4
million, particularly due to the lower revenue base. This reflects a 19.4%
gross profit margin. EBIT of EUR 2.9 million as of 31 March 2011 is within
the expected range, and corresponds to a 4.9% margin. When making a
year-on-year comparison, it should be noted that the first quarter of the
previous year was significantly positively affected by one-time effects,
such as the release of provisions for cancelled orders.
Selling and distribution costs rose only slightly compared with the first
quarter of 2010 (pro forma). The total of general & administrative expenses
and other expenses decreased compared with the previous-year quarter (pro
forma). While comparing the two quarters, it should be noted that the costs
of the holding functions that had meanwhile been transferred from Terra
Nova Royalty Corp., Vancouver, Canada, were not yet completely included in
the first quarter of 2010 (pro forma).
Net finance result was markedly positive at EUR 1.6 million (previous year:
EUR 0.1 million), which particularly reflected interest income due to the
continued good liquidity position, and gains from forward currency
transactions. KHD consequently achieved earnings before tax (EBT) of EUR
4.5 million in the first quarter of 2011. The income tax expense amounted
to EUR 1.6 million (previous year: EUR 5.5 million), allowing the Group to
achieve net income of EUR 2.9 million as of the end of the first quarter of
2011 (previous year: EUR 2.1 million). As a consequence, both diluted and
basic earnings per share amounted to EUR 0.06 (previous year: EUR 0.06).
The Group's business development in the first quarter of 2011 was below its
expected revenue and earnings targets. This also applies to the order
intake of EUR 36.0 million for the first quarter of 2011 (pro forma
comparison: EUR 71.4 million). While KHD's business with roller presses
reported a positive trend, the project business reported a comparatively
low level of new order intake, which was predominantly caused by customers
postponing the awarding of orders.
Total assets increased from EUR 413.3 million to EUR 482.4 million compared
with 31 December 2010. Above all, there was a significant increase in
equity, from EUR 148.6 million to EUR 224.9 million, as a result of the
capital increase that was implemented in the first quarter of 2011. This
represents a 46.6% equity ratio, and underscores the Group's sound capital
structure. At EUR 49.7 million, there was hardly any change in non-current
liabilities compared with 31 December 2010 (EUR 49.2 million). While
deferred tax liabilities reduced from EUR 9.7 million to EUR 5.8 million,
non-current provisions increased from EUR 10.8 million to EUR 14.3 million.
Both changes were attributable to a major order that was invoiced in the
first quarter of 2011. Current liabilities fell from EUR 215.6 million to
EUR 207.8 million. The greater proportion of the tax liabilities that this
item contains are due within the following quarter.
On the assets side of the balance sheet, non-current assets rose from EUR
9.3 million to EUR 22.7 million. The increase results from a major order
that was invoiced. Current assets rose from EUR 404.0 million to EUR 459.6
million. This increase is primarily due to the increase in liquid funds
from EUR 293.1 million to EUR 349.2 million. Of this amount, EUR 14.6
million comprises restricted cash deposited for bank guarantees. The prime
contributor to the increase in cash were the net proceeds from the capital
increase of EUR 74.7 million. This was partially offset by operating cash
flow of EUR -17.4 million (previous year: EUR 50.5 million), which
primarily reflects a decline in down payments received.
Capital increase and cooperation with AVIC (formerly CATIC)
On 16 February 2011, KHD successfully concluded the capital increase that
it had announced on 21 December 2010. This transaction was the prerequisite
for the effectiveness of an agreement with Beijing-based AVIC International
Beijing Company Limited (AVIC) concerning the strategic partnership between
the two companies. As part of this transaction, KHD's share capital
increased by EUR 16,561,021, from EUR 33,142,552 to EUR 49,703,573. The
16,561,021 new ordinary bearer shares, each with a notional amount of EUR
1.00 per share, were issued at a price of EUR 4.53 per share. They carry
dividend entitlement from 1 January 2010. The gross issue proceeds from the
transaction amounted to EUR 75,021,425.13. As a result, AVIC, via its Hong
Kong-based subsidiary Max Glory Industries Ltd. (MGI), now holds 20% of
KHD's share capital. The new shares were included in trading on 21 February
2011. KHD and AVIC aim to strengthen their position as a market leader in
the cement plant engineering area by jointly tendering for a large number
of projects, particularly for turnkey plants. KHD has not participated in
such tenders in the past. The cooperation will allow KHD and AVIC to enjoy
better access to orders for leading cement manufacturers in the future. The
cooperation also comprises the procurement area, as well as the opportunity
for KHD and AVIC to jointly invest in an engineering company in China. KHD
anticipates that the cooperation will strengthen its presence and business
development in the world's largest cement market, China, as well as in
other countries and regions.
Market environment
In overall terms, the market environment continued to develop positively
for the Group over recent months. As the world rebounded from the economic
crisis, global cement production recovered by 7.2% in 2010. Annual
production is expected to continue to rise by an average 4% per year,
increasing to 3,447 million tonnes by 2013, according to the 'Global Cement
Report'. The IMF is forecasting that emerging economies will continue to
experience a strong uptrend. For the future, market experts are
anticipating the highest growth potential particularly in the BRIC nations,
where KHD is already well positioned in India and Russia. Factors such as
urbanisation, demographic trends and infrastructure requirements should
feed through to higher construction activity levels in the emerging
markets. The Chinese market, to which around one half of global cement
consumption was attributable in 2009, should gain increasing significance
for KHD as a consequence of the cooperation with AVIC. Due to the global
business activities with AVIC, KHD also anticipates additional orders from
regions such as the USA, Africa and India.
Nevertheless, day-to-day political events and economic trends in individual
markets are not without significance for KHD. The consequences of the
continued violent disturbances in North Africa and the Middle East are also
having tangible impacts on the cement business. In its ninth edition, the
'Global Cement Report', a specialist publication, identifies great
uncertainty for the entire region. There are delays to projects, and to the
project execution, within this region. KHD identifies margin pressure
trends on the Indian market due to a more intense competitive situation,
although growth prospects remain good. According to the 'Global Cement
Report', such sustained positive trend is underpinned by the infrastructure
sector, whose growth in January 2011 was around 7% ahead of expectations.
The Russian market also continues to report positive trends. Here, KHD
anticipates significant growth in its business and new orders. In the
assessment of the 'Global Cement Report', the expected economic growth of
more than 4% for 2011/12 should be accompanied by further essential
infrastructure and residential construction projects. As a consequence, the
prospects remain positive for KHD as a globally leading equipment supplier
for cement plants.
Outlook
Despite a restrained start to the new business year, the Management Board
is assuming that it can still achieve its full-year targets. The positive
economic trend accompanied by higher cement consumption, particularly in
the BRIC states that are important for the Group, provide a good basis for
this. At the same time, the successful development in the joint marketing
of roller presses with Weir Group PLC, Glasgow, Great Britain, is
delivering new impulses for further growth. As a consequence, the KHD
Management Board anticipates that order intake and revenues in the current
financial year will be at approximately the previous year's level. Further
delays in order intake along the timeline will nevertheless make it
increasingly difficult for the 2011 revenue target to be attained. In 2011,
continuing price pressure following the economic and financial crisis will
be reflected in a lower EBIT margin compared with 2010. Further economic
recovery, and especially the first positive effects of the cooperation with
AVIC, provide the opportunity to deliver revenue and earnings growth from
2012 onwards.
Cologne, 12 May 2011
The Management Board
12.05.2011 DGAP's Distribution Services include Regulatory Announcements,
Financial/Corporate News and Press Releases.
Media archive at www.dgap-medientreff.de and www.dgap.de
Language: English
Company: KHD Humboldt Wedag International AG
Colonia Allee 3
51067 Köln
Deutschland
Internet: www.khd.com
End of Announcement DGAP News-Service
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