Dürr AG — Earnings Release 2005

Aug 11, 2005

News Details

Ad-hoc | 11 August 2005 08:00

Dürr AG:Restructuring program FOCUS: Dürr streamlines core business for profit

Ad hoc announcement §15 WpHG Restructuring program FOCUS: Dürr streamlines core business for profitability Dürr AG:Restructuring program FOCUS: Dürr streamlines core business for profit Ad hoc announcement transmitted by DGAP. The issuer is solely responsible for the content of this announcement. —————————————————————————— Restructuring program FOCUS: Dürr streamlines core business for profitability -Ralf Dieter will become the new CEO -FOCUS: Concentration on the core business and review of peripheral activities -Comprehensive restructuring Ralf Dieter to become new CEO Stuttgart, August 11, 2005 – Stephan Rojahn, CEO, will leave the company as of December 31, 2005, at his own request. The Supervisory Board would like to thank Stephan Rojahn for his dedicated service. The Supervisory Board will propose his election to the Supervisory Board at the 2006 annual shareholders’ meeting. On Wednesday evening, Ralf Dieter, member of the Board of Management of Dürr AG since January 1, 2005 and Chairman of the Board of Management of Carl Schenck AG, was appointed by the Supervisory Board to become CEO for Dürr AG starting January 1, 2006. Dieter is currently the member of the Board of Management of Dürr AG responsible for the Measuring and Process Systems (MPS) division, and since May 2003 he has also been responsible for Carl Schenk AG, which has recently undergone successful restructuring. Additionally, Dieter will assume operating control of the Paint and Assembly Systems (PAS) division beginning September 1, 2005. Martin Hollenhorst, CFO, will continue to be responsible for the Finance, Controlling, Legal, Insurance, Human Resources, Organization and Real Estate departments as well as for Corporate Communications and Investor Relations. Business developments: MPS shows sustainable profitability, PAS below plan, stable incoming orders In the first half of the financial year, continuing operations recorded incoming orders of Euro 856.4 million, which was almost at the level of the previous year of Euro 864.8 million despite difficult conditions. Sales revenues declined more than expected and decreased by Euro 133.1 million, or 15.0%, to Euro 756.8 (889.9) million. The gross margin improved considerably to 19.4% compared to only 16.9% in the same period last year. Still, this did not fully compensate for the significant decline in sales revenues, particularly in the USA. Largely unchanged functional costs for administration and selling expenses of Euro 123.3 (122.4) million and increased interest expenses of Euro 18.5 (11.0) million resulted in a negative earnings before taxes (EBT) of Euro 6.7 million. In the previous year, positive earnings before taxes of Euro 9.0 million were reported. Discontinued operations contained the accumulated share of earnings from the Development Test Systems (DTS) business unit and the Premier Group, as well as the capital gain from the Premier sale in June, which amounted to a total of Euro 13.6 million; this resulted in a half-year Group net income figure of Euro 6.3 (5.2) million. Better second quarter Sales revenues in the second quarter increased by Euro 81.6 million and earnings before taxes of Euro 0.2 million were Euro 7.0 million above the extremely weak first quarter. The book-to-bill ratio (ratio of incoming orders to sales revenues) amounted to 1.15 in the second quarter. At Measuring and Process Systems (MPS), the measures implemented in the previous years began to bear fruit. All of this division’s reported key figures were higher than forecasted. Sales revenues increased by 13.0% to Euro 248.0 (219.4) million. EBITDA more than doubled to Euro 11.9 (4.8) million. Earnings before taxes reached Euro 6.1 million following the loss of the previous year (Euro 0.8 million). The company expects the positive trend in sales revenues and earnings to continue. The difficult market environment in the automotive industry and the current high pressure on margins has caused the business development of Paint and Assembly Systems to be below expectations. This division’s sales revenues in the first half of 2005 declined by Euro 161.6 million to Euro 508.8 (670.4) million, and earnings before taxes decreased from Euro 20.2 million to Euro 5.2 million. Concentration on the core business In paint systems engineering, only 3 of the 5 targeted projects were contracted and other projects were postponed. The lacking earnings contribution and excessively low capacity utilization are particularly affecting the US business. With FOCUS, Dürr AG is thus implementing a comprehensive program to concentrate on its core business. In the future, the Stuttgart-based company will concentrate exclusively on the following fields: – Painting technology with a focus on robot and applications technology, – Final assembly and automation technology, – Environmental and energy technology as well as – Mechanical engineering The main customer areas are the automotive and supplier industries as well as the general industrial sector. The company’s peripheral activities are being put to the test. All strategic options will be considered. The consolidation of the former holding structures of Dürr AG and Carl Schenck AG will enable further synergies. Comprehensive restructuring at Paint and Assembly Systems For the coming year, Dürr expects the weak investment behavior on the part of the automotive industry to continue. A comprehensive restructuring program for the Paint and Assembly Systems division will be initiated in the context of FOCUS, with the goal of considerably lowering the break-even in the individual segments. In the future, the business model will be directed towards the growth potential in modernizing existing plants, in retrofitting and for sophisticated services. Total expenses of Euro 40 to 50 million have been budgeted for the restructuring program in the Paint and Assembly Systems division. In return, Dürr expects annual personnel and structural cost savings to the same extent from 2006. For the Group as a whole, plans are to cutback a total of 800 jobs by the middle of 2006. The reductions will be focused on North America. The number of jobs had already been reduced by 100 by the end of July. Targeted Center of Competence Structure FOCUS not only involves adjusting capacity, but also aims to reorganize business processes. Stuttgart will become the center of competence for the handling of major projects. In this area, Dürr is concentrating all activities in the field of painting technology with a focus on robot and application technologies. The 80 positions at the site in Butzbach, Germany, will be relocated to Stuttgart. Outlook Dürr will not be able to achieve its target for the year of earnings before taxes from continuing operations of more than Euro 18.6 million. The main reasons for this are the sales revenues and earnings of the Paint and Assembly Systems division, which are significantly below expectations, and the planned restructuring charges. Each business unit will be subject to a stringent profitability review. FOCUS also aims to significantly reduce Group debt. The Group’s reorganization should be complete following the end of the 18-month- long FOCUS project, at which time a more streamlined Dürr Group should generate a margin before taxes of at least 4 % and an EBITDA margin of 8 %. Further details of the restructuring program and financing concept will be developed in the upcoming weeks and will be announced by end of September. Contact: Dürr AG, Stephan Haas, Phone: +49 (0)711 136-1785 Dürr AG Otto-Dürr-Strasse 8 70435 Stuttgart – Zuffenhausen Deutschland ISIN: DE0005565204 (SDAX) WKN: 556520 Listed: Amtlicher Markt in Frankfurt (Prime Standard) und Stuttgart; Freiverkehr in Berlin-Bremen, Düsseldorf, Hamburg und Hannover End of ad hoc announcement (c)DGAP 11.08.2005 110800 Aug 05