Interim Report to September 30, 2009
KUKA Group's order situation did not change substantially in the third quarter of 2009 in view of the economic crisis
3 November 2009
- Orders received decline stabilizes in the nine months 2009 (down 35 percent compared to last year)
- Order backlog remains high at EUR 565 million
- Operating result (EBIT) at -EUR 28 million; -EUR 10.6 million after adjusting for one-time charges of EUR 17.4 million
- Guidance for 2009 adjusted
Orders received in the first three quarters of 2009 were reported at EUR 673.8 million, down sharply from last year's EUR 1,028.6 million. This 34.5 percent drop in the first nine months is only slightly better than the half-year figure of –36.6 percent. The Robotics division generated new orders in the amount of EUR 227.1 million, down 39.5 percent from the prior year's EUR 375.2 million. This was primarily due to the slump in demand from the automotive sector, which was particularly hard hit with a decline of 54.4 percent. The Systems division was also faced with declines, particularly in Europe (excluding Germany) and in North America. In total, the division reported orders received of EUR 468.8 million for the first nine months of 2009. This represents a drop of 31.6 percent compared to the prior year's comparable period. KUKA thus performed significantly better than the companies belonging to the German Engineering Federation (VDMA), whose orders received in the first nine months were 44 percent below last year's numbers.
The Group received orders totaling EUR 206.9 million during the third quarter of 2009, 29.2 percent less than the EUR 292.1 million generated during last year's comparable quarter. In total, the Robotics division's orders received were down 46.3 percent to EUR 70.5 million. Although July and August continued to be very weak, the business started to pick up again in September. The Systems division's orders received were only down 14.6 percent to EUR 146.3 million thanks to a major order from Russia.
Sales revenues for the first three quarters of 2009 came in at EUR 655.4 million, 29.1 percent below the comparable prior year's EUR 924.0 million. Robotics' sales revenues were down 29.2 percent to EUR 244.0 million and Systems' slid 29.4 percent to EUR 434.4 million. KUKA Group's book to bill ratio came in at 1.03.
Group sales revenues of EUR 217.7 million in the third quarter of 2009 were 36.5 percent less than the EUR 343.1 million generated the year prior. The year over year declines at the two divisions were comparable, with Robotics down 37.8 percent and Systems dropping 35.5 percent.
Order backlog as of September 30, 2009 was EUR 564.9 million, only 13.6 million or 2.4 percent less than the EUR 578.5 million posted at the period end of the first half year. However, the lower orders received produced a drop of EUR 91.3 million or 13.9 percent when compared to the prior year's period-end number of EUR 656.2 million. While Robotics' order backlog plunged 40.7 percent, the Systems division's decline of 7.0 percent was considerably less because of the longer orders-on-hand pipeline and the major orders received in the second and third quarters of 2009. The Group's business activity is currently notionally secured for 5.2 months versus 5.9 months as of September 30, 2008. The Systems division's activity is notionally secured for 6.9 months.
Significantly lower revenues, lower capacity utilization and one-time charges, including special accruals for the restructuring of foreign subsidiaries, primarily in the second quarter of 2009, weighed on the Group's operating result (EBIT). After generating an EBIT of EUR 52.0 million and an EBIT margin of 5.6 percent in the first three quarters of last year, this year the operating result and EBIT margin were negative at EUR -28.0 million and –4.3 percent respectively. Of this total, EUR -6.5 million were attributable to the Robotics division, compared to EUR 30.0 million a year prior. The current results reflect an EBIT margin of –2.7 percent. The Systems division posted a result of EUR –15.1 million compared to EUR 31.8 million a year earlier, which reflects an EBIT margin of –3.5 percent. Special one-time charges totaled at Group level EUR 17.4 million.
KUKA Group reported an EBIT of EUR -5.1 million and an EBIT margin of –2.3 percent for the third quarter of 2009. In the third quarter of 2008, the Group generated an EBIT of EUR 20 million and an EBIT margin of 5.8 percent. The negative result was primarily generated by the Robotics division, which was down EUR 4.5 million, while Systems reported a slightly positive result of EUR 0.3 million for the quarter just ended.
Due to the economic crisis and the resulting decline in capital spending by its customers, KUKA Group launched a cost-cutting program totaling more than EUR 70 million for 2009. Savings of EUR 40 million are targeted for material and equipment costs and EUR 30 million for personnel costs. As a result of this cost reduction program, the company was able to save about EUR 45 million as of September 30, 2009, compared to EUR 23 million at the half-year mark of 2009. The cost-cutting program is being selectively enhanced in order to make cost structures more flexible and the product portfolio more competitive.
For the 2009 financial year as a whole, KUKA is now expecting to achieve an operating result (EBIT) of EUR -10 million to EUR -15 million before the extraordinary restructuring expenses. Given the restructuring costs, KUKA is currently expecting that expenses for the whole of 2009 will total at least EUR 25 million, of which EUR 17.4 million are already included in the first nine months of 2009. The ongoing cost reduction program is continuing to make progress as planned, but the operating loss in the first nine months (EBIT of EUR -10.6 million) will not be made up in the remaining three months of the financial year.
It is expected that free cash flow for the 2009 financial year as a whole will be in the order of EUR -40 million to EUR -50 million. This is largely due to the considerable drop in trade payables in the current financial year (decrease of EUR 73.4 million as of September 30, 2009, from a very high trade payables level of EUR 149.1 million as of December 31, 2008).
Performance in the fourth quarter is still subject to considerable risk. Depending on possible further decisions regarding adjustments to the Group's cost structure, restructuring expenses in particular could increase considerably.