KRONES AG — Earnings Release 2003

May 7, 2003

News Details

Corporate | 7 May 2003 11:00

Krones AG english

KRONES continues on its path of growth in 2003 – Report for the first quarter of Corporate-news announcement sent by DGAP. The sender is solely responsible for the contents of this announcement. ——————————————————————————– Global economic weaknesses, stagnating markets, a fragile geopolitical situation, all of this combined with unsuccessful domestic economic policies, presented new challenges for KRONES, the global leader for beverage bottling and packaging lines. KRONES will have to exert itself even more in 2003 than in the previous year if its exposed position is to be affirmed and, being fully aware of this, KRONES has firmly adapted itself to this situation. In 2003, the company is remaining on its path of growth. The results achieved in the first quarter show that KRONES can also reach its targets in the current year – targets which are ambitious considering the fundamentally difficult situation overall. High level of orders received Despite a general reluctance to invest and other obstacles (such as Basel II, the imposition of deposits on beverage cans) and despite a fragile macro- economic situation, KRONES succeeded in increasing its level of total of orders received by + 9 % to 376 million Euro (previous year: 346.5 million euro). The continuingly keen demand for KRONES products in the first quarter indicates that its customers obviously regard its goods and services as the »right” ones. Orders on hand remain at a constant level On 31.03.2003, the KRONES Group’s orders on hand amounted to 623 million Euro, which corresponds to a full working capacity for the duration of 5.5 months. This figure shows that KRONES’ procedures and improved processes and methodology make it possible for it, as a systems manufacturer, to handle relatively short lead times. The number of orders on hand remained relatively constant compared to the previous years. Another increase in Group sales When compared to the previous year, KRONES Group sales showed a renewed increase of +6 %, reaching 367 million Euro, and this despite a generally difficult situational environment (previous year: 344.8 million euro). This figure includes the Kosme group for the first time, with approximately 13 million Euro; as a comparison, sales growth amounts to around 3 % without Kosme. KRONES’ plans anticipate that Group sales should amount to around 1.4 billion Euro for 2003. In view of the sales already achieved and the slightly overproportional number of orders received in the first quarter, KRONES is well on its way to achieving its budgeted figures. Profit development progressing as planned KRONES’ profits after tax have fallen in the first quarter from 16.9 to 15.9 million Euro compared to last year. However, this profit figure takes into account that, due to the »tax relief dismantling law” which came into force on 11.04.2003 (i.e., after completion of the 2002 audit), corporate income tax charges for 2002 have to be taken into consideration. Corporation tax credits are reduced by one sixth of the profit distribution, and in KRONES’ case this corresponds to around 1.8 million Euro, which should really be added on to the previous year. It should also be noted that, with a plus of 32 %, profits were extraordinarily high when compared to the first quarter of 2002. With the profits achieved in the first quarter of this year, KRONES is once again completely in line with its calculations, which predict a renewed improvement in its profit for the year (2002: 57.3 million euros). Thanks to introduction of a restrictive personnel policy and purposeful cost budgeting (especially with regard to other operating expenses), KRONES expects significant cost reductions in the second half of 2003 and these should result in corresponding contributions to results. KRONES share value shows potential for increase Despite buy recommendations from various analysts, the KRONES share dropped slightly in value when compared with the previous year. The standard share reached a peak of 44.50 Euro at the end of March (previous year: 50.00 Euro) while the preference share was quoted at its highest value in January at 49.00 Euro (previous year 58.50 Euro). The roadshows and investor discussions held by KRONES reinforce its confidence that it will be able to forecast a significant increase in share values during the current business year. Investments exceed depreciation In 2003, KRONES will continue with its investment strategy for expanding capacities, improving processes, optimising the facilities and modernising all areas of the company. With 2002 having been a record year for investment (in 2002, 88.3 million Euro were invested in the Group – and in the same period depreciation amounted to 38.0 million), investments planned for 2003 will be significantly lower, but will still exceed the level of depreciation. In the first quarter of 2003, the KRONES Group invested 12.6 million Euro. This is 4.5 % less than the previous year (previous year: 13.2 million Euro). Employees – restrictive personnel policy The restrictive personnel policy which became necessary due to the challenges anticipated over next few years, and due to the introduction of measures for improving processes and increasing productivity, leads KRONES to expect that the number of employees in the current Group worldwide will fall by approximately 300 by the end of 2003, compared to its level at the end of 2002. However, due to the integration of Kosme, the number of people employed in the Group will firstly rise again to reach the 2002 year-end level. On 31.03.2003, 8,707 people were employed in the KRONES group worldwide, including the 301 employees gained due to the consolidation with Kosme (previous year: 8,428). Despite the payroll rightsizing required under the framework of its cost reduction programme, the company will endeavour to be proactive and show its presence in the labour market, in order to meet its demand for junior staff from the fields of engineering and industrial engineering , business management, computer science, microbiology and physics. Outlook KRONES anticipates a growth in Group sales within the target range of between 5 and 10 %, which was established as part of its impetus programme. With the inclusion of the Kosme group for the first time, Group sales should grow to around 1.4 billion Euro. In all probability, the Group net income after tax should exceed the good level achieved last year. KRONES is opening up a wide range of additional areas of growth. In addition to its »non-beverage” division, the company would like to draw special attention to its service segment. With clear concepts and pioneering technologies, KRONES has ensured that it will retain and extend its market position and its competitive status both this year and in the years to come. KRONES will continue along its path of growth in 2003. end of message, (c)DGAP 07.05.2003 ——————————————————————————– WKN: 633500; ISIN: DE0006335003; Index: MDAX Listed: Amtlicher Markt in Frankfurt (Prime Standard) und München; Freiverkehr in Berlin-Bremen, Düsseldorf, Hamburg und Stuttgart 071100 Mai 03