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Dürr AG Interim / Quarterly Report 2006
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Interim / Quarterly Report
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Technologies · Systems · Solutions
Interim Report January 1 to March 31, 2006
Contents
- 2 Key figures
- 4 Management report
- 12 Consolidated income statement
- 13 Consolidated balance sheet
- 14 Consolidated statements of changes in shareholders´ equity
- 15 Statement of recognized income and expense in the consolidated financial statements
- 16 Consolidated cash flow statement
- 17 Notes to the consolidated financial statements
- 21 Financial calendar
- 21 Contact
Cover photo:
Our advanced technology final assembly system FAStplant®
Key figures for the Dürr Group (IFRS)
(Continuing operations)
| Jan. 1 - March 31, 2006 |
Jan. 1 - March 31, 2005 |
||
|---|---|---|---|
| Incoming orders | in € m | 429.9 | 323.3 |
| Orders on hand (March 31) | in € m | 840.2 | 918.9 |
| Sales revenue | in € m | 309.3 | 293.3 |
| EBITDA | in € m | 3.4 | 2.7 |
| EBIT | in € m | -1.5 | -2.0 |
| Net loss for the period | in € m | -4.6 | -6.5 |
| Cash flow from operating activities | in € m | -27.8 | -58.7 |
| Cash flow from investing activities | in € m | 19.1 | -4.0 |
| Cash flow from financing activities | in € m | 4.7 | 63.7 |
| Balance sheet total (March 31) | in € m | 1,083.3 | 1,290.4 |
| Equity (excluding minority interests (March 31) |
in € m | 241.6 | 223.1 |
| Net financial debt (March 31) | in € m | 104.1 | 358.0 |
| Net working capital (March 31) | in € m | 166.7 | 156.2 |
| Employees (March 31) | 5,792 | 6,1641) | |
| Dürr stock ISIN: DE0005565204 |
|||
| High2) | € | 20.85 | 17.49 |
| Low2) | € | 17.14 | 13.77 |
| Close2) | € | 20.85 | 15.90 |
| Number of shares (March 31) | k | 15,728 | 14,298 |
| Earnings per share (continuing operations) | € | -0.29 | -0.45 |
Immaterial variances may occur in this report due to roundings in the computation of sums and percentages. The balance sheet for Q1 2006 no longer includes values for the Measuring and Process Technologies business unit, which was sold, but the balance sheet for Q1 2005 does. This complies with a provision of IFRS 5. Accordingly, the values on the balance sheet are comparable only to a limited extent.
1) Continuing operations (without Measuring and Process Technologies).
2) XETRA.
Highlights
- Order intake far higher than previous year •
- Gross margin improved further in the first quarter of 2006 •
- Earnings improved versus a year earlier but still burdened by FOCUS implementation •
- Implementation of Group-wide FOCUS program on track •
Management report
Economic environment
Against the background of rising raw materials prices and higher interest rates, global economic growth remained surprisingly strong in the first quarter of 2006. This is particularly true for the United States and China, but also for Japan, most of the emerging markets, and some Western European economies. Economic research institutes have even raised their growth expectations for Germany slightly for 2006 to 1.8%. Global demand for automobiles was also good overall despite high oil prices. This was due primarily to the stable overall economic situation and the launch of a number of new vehicle models. While automotive sales volumes in the United States, Western Europe, and Japan held steady overall, sales in the markets of Asia increased considerably.
Capital spending by the automotive industry is likely to change little in 2006. Western automobile manufacturers are tending to restrict their capex budgets while Asian manufacturers are expanding their budgets to meet growth expectations. For this reason, there are considerable regional differences, particularly in terms of orders for new plant and equipment. By contrast, demand for modernization work increased across the board as many manufacturers faced with excess production capacities are opting to invest in modernizing their existing plants and making them more flexible.
We have received a growing number of project inquiries since winter 2005/2006, which can also be attributed to customers picking up projects that had been postponed in previous quarters.
FOCUS program
In mid-August 2005, we launched FOCUS as a Group-wide program aimed at improving our profitability and financial structure for the long term. Through it, we are concentrating on our core business as a manufacturer of machinery and industrial equipment for the automotive industry, which will account for some 90% of Group sales revenues in 2006.
With FOCUS, we want to position ourselves better in our sales markets and tap the automotive market's existing growth potential.
As part of FOCUS, we are expanding our modernization and service businesses. Other areas include restructuring the Paint and Assembly Systems division and increasing the efficiency of our operations by improving processes and structures.
FOCUS: Right on schedule
We completed our financial restructuring, substantially reduced financial debt, and improved our financial leverage (net debt to operating earnings) by the end of 2005.
As of March 31, 2006, we have completed 8 of the 30 FOCUS projects. All of the other projects are currently under way. The process improvements are coming along well. For example, we are working to cut project lead times and production throughput times by as much as 30% in some areas. Implementation will take place in the coming quarters.
The number of employees as of March 31, 2006 was down another 219 from the end of 2005 as part of the FOCUS program; 332 jobs were cut in 2005.
Business developments*
Order intake considerably higher than previous year
New orders for the Dürr Group in the first three months of 2006 were up 33% to € 429.9 million (Q1 2005: € 323.3 million). This improvement was driven by growth in the Paint and Assembly Systems division, while Measuring and Process Systems saw a slight decline as expected. Especially noteworthy is the sharp increase in new orders from Asia, which account for nearly 40% of all orders received in the first quarter. In 2005, Asia accounted for just 12.5% of sales. We have received several orders from India and China. Orders intake in the robotics business of Application Technology also developed well.
Sales and orders on hand
Consolidated sales revenues for the first three months of 2006 (€ 309.3 million) were up 5.5% on the previous year (€ 293.3 million). The improved stability of the US dollar over the first quarter of 2005 helped here. The book-to-bill ratio improved in the first three months to 1.4 (previous year: 1.1). As of March 31, 2006, orders on hand stood at € 840.2 million (previous year: € 918.9 million). However, this represents an increase of € 116.7 million compared with orders on hand at the end of 2005.
Gross margin improved
Sale revenues were up 5.5% in the first three months of 2006, and the cost of sales increased less than proportionately by just 4.9%. This resulted in a corresponding improvement of 0.4 percentage points in our gross margin on average for the year to date to 16.6%. The primary forces driving this improvement were increased efficiency and growth in our services business.
*Unless indicated otherwise, all values and statements in this interim report refer to continuing operations of the Dürr Group, that is, the Paint and Assembly Systems and Measuring and Process Systems divisions and the Corporate Center (Dürr AG). Only the balance sheet for Q1 2005 includes the figures from Measuring and Process Technologies, as required by IFRS 5. This interim report was prepared in accordance with the International Financial Reporting Standards (IFRSs).
Selling expenses increased by € 1.6 million in absolute terms, to € 24.6 million (previous year: € 23.0 million). However, in relation to sales revenues, the increase is immaterial at just 0.1 percentage point (from 7.8% to 7.9% of sales revenues). The reason for this was the management's strategic decision to continue to expand the sales organization – particularly in Asia – despite the more difficult market situation overall.
Research and development costs rose € 0.3 million to € 5.1 million. Here, too, our strategic aim is to maintain an appropriate relation between these expenditures and sales revenues and not to reduce them. Other operating income and expenses show a balance of € +0.4 million (previous year: € +0.0 million).
Additional first-quarter expenses related to the FOCUS program are reflected in the € 1.8 million increase in administrative expenses to € 23.5 million. These costs are primarily consulting and residual overheads as well as IT project costs. These additional structural costs were more or less at the same level as the savings achieved in such areas as personnel expenses.
Earnings after taxes improved
EBITDA for the first three months of 2006 was € 3.4 million (Q1 2005: € 2.7 million), and EBIT was € -1.5 million following € -2.0 million in the year-earlier period. The Group generated a net loss of € -4.6 million (Q1 2005: € -6.5 million) and due in large part to a € 2.4 million decline in interest expense compared with the first quarter of 2005 to € 6.4 million thanks to the Group's improved financial position.
Financial position
Cash flow*
Cash flow from operating activities in the first three months of 2006 amounted to € ‑27.8 million, a marked improvement over € -58.7 million in the year-earlier period. Key factors causing the negative cash flow from operating activities in the first quarter of 2006 included outflows for taxes, personnel adjustments, and other structural measures undertaken as part of the FOCUS program as well as the use of provisions. The fact that net working capital remained almost stable despite a € 13.4 million decline in prepayments received to € 105.3 million should be viewed as positive.
*The values for changes to balance sheet items mentioned in the cash flow portion are adjusted for exchange rate effects. For this reason and due to acquisition accounting, they cannot be seen in the balance sheet.
Cash flow from investing activities amounted to € 19.1 million (previous year: € ‑4.0 million). Inflows of € 20 million resulted from the out-of-court settlement of arbitration proceedings related to an acquisition made in an earlier fiscal year. This cash inflow occurred without effect on income. Cash flow from financing activities amounted to € 4.7 million (previous year: € 63.7 million) and is based on incurring short-term liabilities to banks totaling € 13.8 million, after € 78.9 million were incurred in the year-earlier period.
Equity ratio improved considerably*
Cash and cash equivalents decreased only slightly compared with December 31, 2005 by € 4.7 million to € 120.0 million. Net financial debt as of March 31, 2006 totaled € 104.1 million, compared to € 358.0 million a year earlier.
Total assets in continuing operations were down to € 1,083.3 million as of March 31, 2006, compared with € 1,185.3 million as of December 31, 2005. The biggest change on the assets side was a decrease in trade receivables to € 392.2 million (December 31, 2005: € 479.7 million).
On the liabilities side, current liabilities decreased to € 269.1 million (December 31, 2005: € 347.8 million), and other liabilities to € 117.4 million (December 31, 2005: € 138.9 million). The equity ratio rose to 22.4% as of March 31, 2006 (March 31, 2005: 15.5%).
Current and non-current liabilities
| March 31, 2006 | March 31, 2005 | December 31, 2005 |
|
|---|---|---|---|
| Amounts in € m | |||
| Financial liabilities | 43.4 | 191.8 | 30.0 |
| Corporate bond | 188,6 | 186.8 | 187.9 |
| Trade payables | 269.1 | 434.6 | 347.8 |
| of which prepayments received | 105.3 | 191.0 | 118.7 |
| Tax liabilities | 21.4 | 7.0 | 27.8 |
| Other liabilities | 117.4 | 110.9 | 138.9 |
| Total | 639.9 | 931.1 | 732.4 |
R&D and capital expenditures
Direct expenses for research and development (R&D) shown in the income statement for the first three months of 2006 are € 5.1 million (previous year: € 4.8 million). Including expenses for project-related development done on customer orders, the R&D ratio was considerably higher. Capital expenditures for property, plant, and equipment and intangible assets amounted to € 2.5 million (previous year: € 4.0 million). This includes investments in robot technology, conveyor technology, and the development of dryers and software for paint systems.
Capital expenditures*
| Jan. 1 - March 31, 2006 |
Jan. 1 - March 31, 2005 |
|
|---|---|---|
| Amounts in € m | ||
| Paint and Assembly Systems | 2.0 | 3.3 |
| Measuring and Process Systems | 0.5 | 0.5 |
| Corporate Center | 0.0 | 0.2 |
| Total | 2.5 | 4.0 |
* in property, plant, and equipment and intangible assets
Employees
New jobs created in Asia
As of March 31, 2006, Dürr employed 5,792 persons worldwide. That is 372 employees, or 6.0%, fewer than a year ago. The primary reason for the decrease was a capacity reduction in Paint and Assembly Systems (-321 employees). While the number of employees in the growth regions of Asia increased by 38 in 2005 and by another 6 in the first quarter for a total of 521, the workforces in the mature markets of the Americas and Europe were reduced respectively by 150 and 136 in 2005 and by 27 and 170 in the first quarter of 2006.
| March 31, 2006 | March 31, 2005 | December 31, 2005 |
|
|---|---|---|---|
| Employees | |||
| Paint and Assembly Systems | 3,870 | 4,191 | 3,979 |
| Measuring and Process Systems | 1,884 | 1,920 | 1,966 |
| Corporate Center | 38 | 53 | 47 |
| Total | 5,792 | 6,164* | 5,992* |
* Continuing operations (without Measuring and Process Technologies)
At its meeting on August 10, 2005, the Supervisory Board appointed Ralf Dieter as Chairman of Dürr AG's Board of Management effective January 1, 2006. Mr. Dieter has been a regular member of the Board of Management of Dürr AG since January 1, 2005, and is also Chairman of the Board of Management of Carl Schenck AG.
Treasury stock and subscription rights
Dürr AG owns no treasury stock. No subscription rights have been granted to members of its corporate bodies or to employees as part of the Dürr International Stock Option Plan (DISOP).
Overview of the divisions
Paint and Assembly Systems
| Jan. 1 - March 31, 2006 |
Jan. 1 - March 31, 2005 |
|
|---|---|---|
| Amounts in € m | ||
| Incoming orders | 354.3 | 239.7 |
| Sales revenues | 244.2 | 230.3 |
| EBITDA | 5.9 | 5.8 |
| EBIT | 3.3 | 2.6 |
| Employees (March 31) | 3,870 | 4,191 |
Incoming orders in Paint and Assembly Systems increased considerably in the first three months of 2006 to € 354.3 million. Large system orders for painting technology came from India and China. By contrast, the North American automotive industry practiced spending restraint, although we did win a large-scale modernization order. The system orders ensure good capacity utilization in painting technology, application technology, and environmental systems, particularly in Germany and Asia. The operating result (EBIT) is only slightly better than the year-earlier figure due to the costs of implementing the FOCUS program mentioned above.
Measuring and Process Systems
| Jan. 1 - March 31, 2006 |
Jan. 1 - March 31, 2005 |
|
|---|---|---|
| Amounts in € m | ||
| Incoming orders | 75.6 | 83.6 |
| Sales revenues | 65.1 | 63.0 |
| EBITDA | -1.5 | -2.7 |
| EBIT | -2.7 | -3.9 |
| Employees (March 31) | 1,884 | 1,920 |
Incoming orders in Measuring and Process Systems for the first three months were 9.6% below the year-earlier figure. The decline in new orders is attributable to the decision not to accept lower-margin orders in Cleaning and Filtration Systems. Nevertheless, at € 1.2 million, EBIT was also better than in the same period of the previous year. Improved operating processes and optimization of the product mix, particularly in Balancing and Diagnostic Systems, were key here.
Corporate Center
Corporate Center (Dürr AG) EBIT for the first three months of 2006 totaled € -2.0 million, following € -2.3 million for the year-earlier period. Considerable adjustments were made in the Corporate Center in the first quarter, which are reflected in the change in the number of employees, down 15 from the previous year's 38.
Outlook
Due to the positive demand trend in our modernization and services business and in new investment in plant and equipment, we expect new orders to increase in 2006. Sales revenues are unlikely to change significantly due to the smaller order backlog at the end of 2005 both in the Group and in the two divisions. For fiscal 2007, we anticipate a slight increase in incoming orders and sales revenues in the Group and in the divisions.
Our most important task for 2006 will be to resolutely push forward with implementation of the FOCUS program. We expect to see the first results of the program in 2006. The personnel cost savings will only partly take effect in 2006. On this basis, we expect considerable improvement in our operating results for 2006. However, as expected, the implementation of FOCUS is detracting from earnings. Our net interest position will improve over 2005. Overall, we still expect earnings after taxes for 2006 to be slightly positive. The improvements in productivity that we are seeking through the FOCUS program hold great potential for bettering our bottom line in the medium term. We also face stiff price competition. Our target margins are 4% with respect to earnings before taxes and 8% with respect to EBITDA. These margins may still fall short of our targets for 2007 as a whole because the positive effects of the FOCUS program will only fully unfold in the course of the year.
Stuttgart, May 11, 2006
Dürr Aktiengesellschaft
The Board of Management
Consolidated income statement
of Dürr Aktiengesellschaft, Stuttgart, for the period form January 1 to March 31, 2006
| 1st quarter 2006 | 1st quarter 2005 | |
|---|---|---|
| Amounts in € k | ||
| Continuing operations | ||
| Sales revenues | 309,285 | 293,349 |
| Cost of sales | -258,028 | -245,979 |
| Gross profit on sales | 51,257 | 47,370 |
| Selling expenses | -24,579 | -22,973 |
| General and administrative expenses | -23,480 | -21,660 |
| Research and development costs | -5,062 | -4,766 |
| Other operating income and expenses | 369 | 8 |
| Earnings before investment income, other interest and similar | ||
| income, interest and similar expenses and income taxes | -1,495 | -2,021 |
| Result of associates | -94 | 171 |
| Other interest and similar income | 851 | 163 |
| Interest and similar expenses | -6,415 | -8,758 |
| Earnings before taxes of continuing operations | -7,153 | -10,445 |
| Income taxes | 2,553 | 3,896 |
| Earnings of continuing operations | -4,600 | -6,549 |
| Earnings of discontinued operations | 162 | 3,646 |
| Net loss of the Dürr Group | -4,438 | -2,903 |
| Profit/loss share of minority interests, continuing operations | -11 | -31 |
| Profit/loss share of minority interests, discontinued operations | 3 | -61 |
| Profit/loss share of minority interests, Dürr Group | -8 | -92 |
| Profit/loss share of shareholders of Dürr Aktiengesellschaft, | ||
| continuing operations | -4,589 | -6,382 |
| Profit/loss share of shareholders of Dürr Aktiengesellschaft, discontinued operations |
159 | 3,571 |
| Profit/loss share of shareholders of Dürr Aktiengesellschaft, Dürr Group |
-4,430 | -2,811 |
| Earnings per share in € (basic an diluted) | ||
| Continuing operations | -0.29 | -0.45 |
| Discontinued operations | 0.01 | 0.25 |
| Dürr Group | -0.28 | -0.20 |
Consolidated balance sheet
of Dürr Aktiengesellschaft, Stuttgart, as of March 31, 2006
| March 31, 2006 | March 31, 2005 | Dec. 31, 2005 | |
|---|---|---|---|
| Amounts in € k | |||
| Assets | |||
| Non-current assets Goodwill |
266,472 | 311,339 | 267,377 |
| Other intangible assets | 19,860 | 36,954 | 20,777 |
| Property, plant and equipment | 120,605 | 131,023 | 121,671 |
| Investment property | 11,494 | 18,435 | 13,068 |
| Investment in associates | 12,610 | 16,126 | 12,892 |
| Other financial assets | 5,506 | 5,556 | 4,950 |
| Income tax receivables | 0 | 127 | 0 |
| Deferred taxes | 47,518 | 48,689 | 43,170 |
| Prepaid expenses | 176 | 436 | 960 |
| 484,241 | 568,685 | 484,865 | |
| Current assets Inventories and prepayments |
49,233 | 65,803 | 43,716 |
| Trade receivables | 392,173 | 545,552 | 479,705 |
| Income tax receivables | 7,684 | 5,413 | 6,158 |
| Other receivables and other assets | 24,913 | 59,444 | 43,171 |
| Cash and cash equivalents | 120,004 | 41,824 | 124,658 |
| Prepaid expenses | 5,045 | 3,647 | 3,010 |
| 599,052 | 721,683 | 700,418 | |
| For information purposes: Total assets of continuing operations | 1,083,293 | 1,290,368 | 1,185,283 |
| Assets of a disposal group classified as held for sale (discontinued operations) | 0 | 159,799 | 3,832 |
| 599,052 | 881,482 | 704,250 | |
| Total assets Dürr Group | 1,083,293 | 1,450,167 | 1,189,115 |
| Equity and liabilities | |||
| Subscribed capital | 40,264 | 36,603 | 40,264 |
| Capital reserve | 160,459 | 159,000 | 160,459 |
| Revenue reserves | 61,537 | 42,126 | 65,967 |
| Other comprehensive income | -20,663 | -14,666 | -20,140 |
| Equity without minority interests | 241,597 | 223,063 | 246,550 |
| Minority interests | 1,283 | 1,725 | 1,517 |
| Equity with minority interests | 242,880 | 224,788 | 248,067 |
| Non-current liabilities Provisions for pension obligations |
68,253 | 54,603 | 67,818 |
| Other provisions | 9,832 | 22,173 | 9,753 |
| Bonds | 188,630 | 186,808 | 187,901 |
| Other financial liabilities | 12,080 | 95,873 | 12,602 |
| Income tax liabilities | 454 | 315 | 443 |
| Deferred taxes | 46,757 | 49,390 | 44,408 |
| Deferred income | 1,569 | 1,794 | 1,632 |
| 327,575 | 410,956 | 324,557 | |
| Current liabilities | |||
| Other provisions | 73,042 | 93,611 | 81,979 |
| Trade payables | 269,097 | 434,602 | 347,833 |
| Financial liabilities | 31,348 | 95,947 | 17,410 |
| Income tax liabilities | 20,962 | 6,685 | 27,332 |
| Other liabilities | 117,415 | 110,940 | 138,896 |
| Deferred income | 974 | 822 | 1,241 |
| 512,838 | 742,607 | 614,691 | |
| For information purposes: Total equity and liabilities of continuing operations | 1,083,293 | 1,378,351 | 1,187,315 |
| Liabilities in direct connection with assets classified as held for sale (discontinued operations) | 0 | 71,816 | 1,800 |
| 512,838 | 814,423 | 616,491 | |
| Total equity and liabilities Dürr Group | 1,083,293 | 1,450,167 | 1,189,115 |
Consolidated statement of changes in shareholders´ equity
of Dürr Aktiengesellschaft, Stuttgart, for the period from January 1 to March 31, 2006
| Sub- scribed capital |
Capital reserve |
Revenue reserves |
Other compre hensive income |
Equity without minority interests |
Minority interests |
Equity with minority interests |
|
|---|---|---|---|---|---|---|---|
| Amounts in € k | |||||||
| January 1, 2005 | 36,603 | 159,000 | 44,937 | -19,670 | 220,870 | 1,875 | 222,745 |
| Profit/loss from continuing operations |
- | - | -6,382 | - | -6,382 | -31 | -6,413 |
| Profit/loss from discontinued operations |
- | - | 3,571 | - | 3,571 | -61 | 3,510 |
| Other comprehensive income |
- | - | - | 5,004 | 5,004 | -58 | 4,946 |
| March 31, 2005 | 36,603 | 159,000 | 42,126 | -14,666 | 223,063 | 1,725 | 224,788 |
| January 1, 2006 | 40,264 | 160,459 | 65,967 | -20,140 | 246,550 | 1,517 | 248,067 |
| Profit/loss from continuing operations |
- | - | -4,589 | - | -4,589 | -11 | -4,600 |
| Profit/loss from discontinued operations |
- | - | 159 | - | 159 | 3 | 162 |
| Other comprehensive income |
- | - | - | -523 | -523 | -3 | -526 |
| Other changes | - | - | - | - | - | -223 | -223 |
| March 31, 2006 | 40,264 | 160,459 | 61,537 | -20,663 | 241,597 | 1,283 | 242,880 |
14
Statement of recognized income and expense in the consolidated financial statements
of Dürr Aktiengesellschaft, Stuttgart, as of March 31, 2006
| 2006 | 2005 | |
|---|---|---|
| Amounts in € k | ||
| Change in the fair value recorded in equity of financial instruments used for hedging purposes |
998 | 1,211 |
| Adjustment item for currency translation of foreign subsidiaries | -1,277 | 4,200 |
| Actuarial gains/losses from defined benefit obligations and similar obligations | 150 | 0 |
| Deferred taxes on revaluations recognized directly in equity | -397 | -465 |
| Revaluations recognized directly in equity | -526 | 4,946 |
| Profit after tax | -4,438 | -2,903 |
| Total profit for the period and revaluations recognized directly in equity in the period |
-4,964 | 2,043 |
Consolidated cash flow statement
of Dürr Aktiengesellschaft, Stuttgart, for the period from January 1 to March 31, 2006
| 1st quarter 2006 | 1st quarter 2005 | |
|---|---|---|
| Amounts in € k | ||
| Cash flow from operating activities of continuing operations Earnings before interest and taxes (EBIT) |
-1,589 | -1,850 |
| Income tax paid | -6,908 | -87 |
| Results of associates | 94 | -171 |
| Amortization and depreciation of non-current assets | 4,867 | 5,057 |
| Net gain on the disposal of property, plant and equipment | -542 | -66 |
| Non-cash expenses and income | -703 | -1,356 |
| Changes in operating assets and liabilities | ||
| Change in inventories | -5,924 | -8,739 |
| Change in trade receivables | 84,106 | 28,836 |
| Change in other receivables and assets | 1,206 | -8,078 |
| Change in provisions | -7,880 | -9,790 |
| Change in trade payables | -77,761 | -57,058 |
| Change in other liabilities (other than bank) | -15,870 | -3,225 |
| Change in other assets and liabilities | -883 | -2,173 |
| -27,787 | -58,700 | |
| Cash flow from operating activities of continuing operations | 1,379 | -1,368 |
| Cash flow from operating activities | -26,408 | -60,068 |
| Cash flow from investing activities of continuing operations Purchase of intangible assets |
-911 | -1,652 |
| Purchase of property, plant and equipment | -1,547 | -2,368 |
| Purchase of other financial assets | -534 | 0 |
| Proceeds from the disposal of non-current assets | 234 | 23 |
| Alstom purchase price refund | 20,000 | 0 |
| Disposal of discontinued operations, net of cash disposed of | 1,878 | 0 |
| 19,120 | -3,997 | |
| Cash flow from investing activities of discontinued operations | -3 | -1,331 |
| Cash flow from investing activities | 19,117 | -5,328 |
| Cash flow from financing activities of continuing operations Change in current bank liabilities |
13,819 | 78,938 |
| Payment of finance lease liabilities | -238 | -228 |
| Change in financial liabilities to associates | -53 | -1,083 |
| Internal financing | 1,226 | -33 |
| Interest received | 604 | 669 |
| Interest paid | -10,656 | -14,605 |
| 4,702 | 63,658 | |
| Cash flow from financing activities of discontinued operations | -1,243 | 371 |
| Cash flow from financing activities | 3,459 | 64,029 |
| Effects of exchange rate changes | -1,021 | -2,436 |
| Change in cash and cash equivalents | -4,853 | -3,803 |
| Cash and cash equivalents Cash and cash equivalents at the beginning of the period |
124,857 | 51,471 |
| Cash and cash equivalents at the end of the period | 120,004 | 47,668 |
| Cash and cash equivalents of continuing operations | 120,004 | 34,722 |
| Cash and cash equivalents of discontinued operations | 0 | 12,946 |
| Cash and cash equivalents of the Dürr Group | 120,004 | 47,668 |
Notes to the consolidated financial statements January 1 to March 31, 2006
1. Summary of significant accounting policies
The Company
Dürr Aktiengesellschaft ("Dürr AG" or the "Company") is headquartered at Otto-Dürr-Strasse 8 in 70435 Stuttgart. Dürr AG and its subsidiaries ("Dürr" or the "Group") are a worldwide leading supplier of plants, systems and services for automobile production. The offering covers all the main production and assembly stages of a vehicle. As a system supplier, Dürr designs and constructs paint shops and final assembly plants. Dürr also supplies cleaning systems, filtration systems and balancing machines for the manufacture of engines, transmission and vehicle components. Dürr´s main customers are the major companies in the automobile industry worldwide.
The consolidated financial statements are prepared in accordance with IFRSs as adopted by the EU, and the additional requirements of German commercial law pursuant to Sec. 315a (1) HGB ("Handelsgesetzbuch": German Commercial Code). The consolidated financial statements are in line with all IFRSs that have to be adopted by the balance sheet date.
The accounting policies used generally correspond to the methods applied in the consolidated financial statements of December 31, 2005; we refer the reader to our 2005 annual report.
In 2005, Dürr decided to apply IAS 19 (revised) to measure pension commitments. According to this standard, actuarial gains and losses are recorded without effect on income directly in equity. Comparability with the prior-year figures is ensured by adjusting the balance sheet positions concerned. The effects in terms of amount can be seen from the statement of changes in Group equity as of January 1, 2004 and December 31, 2004 (adjusted); we refer the reader to the 2005 annual report.
Income that is recorded during the reporting period for seasonal reasons, due to cyclical developments, or only occasionally is not cut off in the consolidated interim financial statements. Expenses that are incurred irregularly during the reporting period have been cut off in those cases where they would also be cut off at yearend.
The income taxes were determined on the basis of an estimated average annual effective income tax rate.
The consolidated financial statements are prepared in thousands of euros (€ k), unless stated otherwise.
2. Consolidated group
Besides Dürr AG, the consolidated financial statements as of March 31, 2006, contain all domestic and foreign entities which Dürr AG can control, directly or indirectly (control relationship). The entities are included in the consolidated financial statements from the date when the possibility of control was obtained.
Besides Dürr AG as parent company, the consolidated group contains the following entities:
| March 31, 2006 | March 31, 2005 | |
|---|---|---|
| Number of fully consolidated entities | ||
| Germany | 17 | 25 |
| Other countries | 44 | 80 |
| 61 | 105 |
| March 31, 2006 | March 31, 2005 | |
|---|---|---|
| Number of entities accounted for at equity | ||
| Germany | 1 | 1 |
| Other countries | 5 | 6 |
| 6 | 7 |
The consolidated financial statements contain one entity (March 31, 2005: nine) in which minority shareholders hold interests.
In the reporting period, two companies were deconsolidated.
3. Discontinued operations
Effective March 10, 2006, SRH Systems Ltd., Worcester, Great Britain - which was part of the Development Test Systems (DTS) business unit - was sold to Horiba, Japan.
Furthermore, subsequent effects of the divestments made in 2005 of the DTS, Services, and Measuring and Process Technologies (MPT) business units are included.
4. Earnings per share
Earnings per share are determined pursuant to IAS 33 (Earnings per Share).
If there are dilutive effects present, two different ratios for earnings per share must be disclosed. The ratio "earnings per share" does not take account of dilutive effects; the earnings share of the shareholders of Dürr Aktiengesellschaft is divided by the weighted average number of shares outstanding. The ratio "earnings per share (diluted)" accounts not only for the shares outstanding, but also for shares potentially available on the basis of options.
The calculation is presented below (all amounts in thousands of euros or thousands of shares, except earnings per share). Basic and diluted earnings per share are the same in the periods to March 31, 2006 and in 2005, as no new option rights were issued and all existing option rights have expired.
| 1st quarter 2006 | 1st quarter 2005 | ||
|---|---|---|---|
| Profit/loss allocable to shareholders of Dürr Aktiengesellschaft |
in € k | -4,430 | -2,811 |
| of which continuing operations | in € k | -4,589 | -6,382 |
| of which discontinued operations | in € k | 159 | 3,571 |
| Number of shares outstanding (weighted average) |
15,728.0 | 14,298.2 | |
| Earnings per share (basic and diluted) |
in € | -0.28 | -0.20 |
| of which continuing operations | in € | -0.29 | -0.45 |
| of which discontinued operations | in € | 0.01 | 0.25 |
5. Liabilities from restructuring measures
Liabilities from restructuring measures have decreased in comparison with December 31, 2005 by € 3,693 thousand to € 31,964 thousand. The decrease is mainly due to utilization with effect on income of liabilities formed in prior periods.
6. Segment reporting
The primary reporting is based on the divisions of the Group. The Dürr Group is comprised of a management holding and two divisions differentiated by product and performance spectrum that each have global responsibility for their products and results.
The Corporate Center mainly consists of Dürr AG.
| 1st quarter 2006 | Paint and Assembly Systems |
Measu ring and Process Systems |
Corporate Center |
Consoli dation |
Continu ing opera tions |
Dis continued opera tions |
Total divisions |
|---|---|---|---|---|---|---|---|
| Amounts in € k | |||||||
| Sales revenues with external customers | 244,160 | 65,125 | 0 | 0 | 309,285 | 143 | 309,428 |
| Sales revenues with other divisions | 90 | 309 | 0 | -399 | 0 | 0 | 0 |
| Total sales revenues | 244,250 | 65,434 | 0 | -399 | 309,285 | 143 | 309,428 |
| EBIT | 3,277 | -2,711 | -1,977 | -84 | -1,495 | -227 | -1,722 |
| Employees (as of March 31, 2006) | 3,870 | 1,884 | 38 | 0 | 5,792 | 0 | 5,792 |
| 1st quarter 2005 | Paint and Assembly Systems |
Measu ring and Process Systems |
Corporate Center |
Consoli dation |
Continu ing opera tions |
Dis continued opera tions |
Total divisions |
|---|---|---|---|---|---|---|---|
| Amounts in € k | |||||||
| Sales revenues with external customers | 230,307 | 63,042 | 0 | 0 | 293,349 | 107,427 | 400,776 |
| Sales revenues with other divisions | 443 | 668 | 0 | -1,111 | 0 | 0 | 0 |
| Total sales revenues | 230,750 | 63,710 | 0 | -1,111 | 293,349 | 107,427 | 400,776 |
| EBIT | 2,626 | -3,934 | -2,324 | 1,611 | -2,021 | 5,227 | 3,206 |
| Employees (as of March 31, 2005) | 4,191 | 2,977 | 53 | 0 | 7,221 | 6,211 | 13,432 |
Financial calendar
| May 11, 2006 | Interim report first quarter 2006 |
|---|---|
| May 24, 2006 | Annual shareholders´ meeting, Stuttgart |
| August 10, 2006 | Interim report first half 2006 |
| November 14, 2006 | Interim report on first nine months of 2006 |
Contact
Please contact us for Dürr AG further information: Günter Dielmann
Corporate Communications & Investor Relations Otto-Dürr-Straße 8 70435 Stuttgart Phone: +49-711-136-1785 Fax: +49-711-136-1034 [email protected] [email protected]
www.durr.com
This interim report is the English translation of the German original.
This interim report includes forward-looking statements about future developments. As is the case for any business activity conducted in a global environment, such forward-looking statements are always subject to uncertainty. Our information is based on the conviction and assumptions of the Board of Management of Dürr AG, as developed from the information currently available. However, the following factors may affect the success of our strategic and operating measures: geopolitical risks, changes in general economic conditions (especially a prolonged recession in Europe or North America), exchange rate fluctuations and changes in interest rates, new products launched by competitors, and a lack of customer acceptance for new Dürr products or services, including growing competitive pressure. Should any of these factors or other imponderable circumstances arise, or should the assumptions underlying the forward-looking statements prove incorrect, actual results may differ from those projected. Dürr AG undertakes no obligation to provide continuous updates of forward-looking statements and information. Such statements and information are based upon the circumstances as of the date of their publication.
