KUKA financial results press conference for fiscal 2009

At KUKA Group's financial results press conference held in Munich on March 16, 2010, KUKA Aktiengesellschaft's Executive Board gave an account of the programs that have been introduced and implemented to further develop the Group

16 March 2010

Setting the Group's strategic direction will include bundling all KUKA initiatives relating to the future in the "Advanced Robotics" section. The Executive Board was able to report on the first successful industrial application of the lightweight robot. KUKA also installed an efficient management organization in recent months. The divisions have been reorganized, and sales and technology activities will be bundled throughout the Group. The Executive Board reported that the Group's financing has been extended and that the cost cutting program continues.

The key 2009 business numbers are as follows

As a result of the global economic crisis, KUKA Group's orders received plummeted in the first quarter of 2009 and stabilized at a low level over the course of the year. The situation is primarily due to declining investments by the automotive industry and tighter credit in the general industry sector accompanied by corresponding pressure on supplier prices. Overall, the difficult general economic conditions had a negative impact on KUKA Group's business performance in fiscal 2009.

However, KUKA's orders received were better than those of the other players in this market. Orders received declined 29.4 percent year-over-year, going from EUR 1,279.9 million in 2008 to EUR 903.3 million in 2009.

The Robotics division's orders received came in at EUR 324.3 million in 2009, a drop of 30.2 percent compared to the year prior. The business with automotive sector customers was particularly hard hit. The general industry and service sectors were down by a lesser amount. The Systems division's orders received declined 28.0 percent year-over-year, going from EUR 854.9 million in 2008 to EUR 615.4 million in 2009.

KUKA Group's consolidated sales revenues for 2009 came in at EUR 902.1 million, down 28.7 percent from 2008's EUR 1,266.1 million. Here too, the two divisions were similarly affected. The Robotics division's sales revenues declined 30.3 percent: from EUR 474.4 million in 2008 to EUR 330.5 million in 2009. The Systems division's sales revenues went from EUR 837.5 million in 2008 to EUR 605.5 million in 2009, a drop of 27.7 percent. The Group's book to bill ratio (orders received versus sales revenues) was thus 1.0.

Order backlog was EUR 543.5 million as of December 31, 2009, nearly the same as at the end of 2008. KUKA Group's capacity utilization thus remains stable and continues to be notionally secured for five months.

The lower business volume and subsequent restructuring costs, together with other one-time charges, drove the operating result (EBIT) down from EUR 52.0 million in 2008 to EUR -52.9 million in 2009. Adjusted for special expenditures, KUKA Group's operating result (EBIT) came in at EUR -14.3 million, within the revised guidance range of EUR -10 million to EUR -15 million. Overall, the earnings situation in fiscal 2009 was unsatisfactory as a result of the difficult market situation.

In total, the loss for the year in 2009 (earnings after taxes) was EUR -75.8 million, which compares to last year's EUR 30.6 million. Earnings per share dropped from EUR 1.18 in 2008 to EUR -2.95 in 2009.

However, a diligent inventory reduction initiative lead to improved cash flow. Cash flow from operating activities went from EUR -61.2 million in 2008 to EUR 4.8 million. After deducting EUR 27.0 million for spending on investments, free cash flow was EUR -22.2 million compared to EUR -166.9 million the previous year.

KUKA Group's consolidated net debt went from EUR -53.6 million at the December 31, 2008 period end to EUR -48.5 million on December 31, 2009, down EUR 5.1 million.

The cash inflow of EUR 27.4 million from the capital increase had a positive impact on equity. However, the loss for the year was EUR 75.8 million. Overall, equity was down EUR 52.7 million to EUR 160.8 million as of December 31, 2009. Equity went from 24.7 percent as of December 31, 2008 to 22.1 percent on December 31, 2009, down 2.6 percent.

Because of the negative results, the return on capital employed (ROCE) was also negative in fiscal 2009. Over the past two years, the development of return on capital employed was strongly impacted by the Systems division's KTPO pay-on-production contract, for which financing totaling EUR 77.1 million was redeemed in 2008. Among other things, this caused KUKA Group's capital employed to rise EUR 184.1 million, from EUR 150.7 million at the end of 2007 to EUR 334.8 million on December 31, 2008. At the end of 2009, KUKA Group's capital employed was back down to EUR 300.1 million.

KUKA Group's work force shrank by 427 persons, going from 6,171 on December 31, 2008 to 5,744 as of December 31, 2009, which represents a year-over-year decline of 6.9 percent. The Robotics division had 252 fewer employees, with the total falling from 2,261 on December 31, 2008 to 2,009 as of December 31, 2009. The Systems division reported a drop of 247, the total count going from 3,781 on December 31, 2008 to 3,534 as of December 31, 2009. Due to the transfer of central functions to the shared service center, KUKA AG had 72 more employees. Furthermore, the number of temporary workers went from 1,008 as of December 31, 2008 to 584 on December 31, 2009, a year-over-year drop of 42.1 percent. The remaining temporary workers are mainly based at KUKA's US subsidiaries. In total, personnel capacity declined 11.9 percent during the course of fiscal 2009.

Efforts to predict the overall economic environment continue to be marked by uncertainty. At the same time, the current financial year 2010 will be one of transformation for KUKA. Further cost structure improvement and an enhanced corporate strategy will be the basis for generating sustainable profitable growth.

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