KUKA financial results press conference for financial 2007
The KUKA Group completed its restructuring in financial 2007 and entered the planned profitable growth phase
March 19, 2008
- Both divisions report profitable growth
- Solid financial structure and balance sheet – equity ratio reaches 26.3 percent
- Proposed dividend of EUR 1.00 per share
- Share buyback program announced
- Medium-term plan to 2010 foresees increase in EBIT margin to 7.0 percent
In 2007, the Group was able to a reestablish an economically sound business foundation faster than expected by focusing the business on the Robotics and Systems divisions and centrally pooling the company's forces at the Augsburg location. Orders received and sales revenues in 2007 financial year were up 13.3 percent and 10.5 percent respectively, both significantly higher than a year prior. EBIT had more than quadrupled, soaring from EUR 16.7 million in 2006 to EUR 70.4 million last business year. EBIT margin climbed from 1.4 percent in 2006 to 5.5 percent (4.9 percent from operations). The company's debt was reduced over the course of 2007 and KUKA now enjoys a healthy liquidity position.
Gerhard Wiedemann, CEO and chairman of KUKA AG, had this to say at the Group's financial results press conference in Munich: "KUKA's restructuring and focusing efforts have started to bite. With an equity ratio of 26 percent, the KUKA Group is back on a solid financial and balance sheet footing and has established an excellent position from which to continuously and sustainably improve shareholder value in the coming years."
As a visible indicator of KUKA AG's financial strength, the Executive Board will propose to the annual general meeting on May 15, 2008 that a dividend of EUR 1.00 per share be distributed to shareholders and that a share buyback program that will see up to 10 percent of outstanding shares acquired be initiated. Both measures underscore the capital market orientation of the company.
Robotics: strong market position further reinforced
Both divisions contributed to the KUKA Group's positive business developments in 2007. Both Robotics and Systems posted double-digit growth in orders received in 2007. KUKA Robotics was able to once again significantly improve its already strong market position among the major European carmakers in 2007. Orders received came in at EUR 434.9 million, 13.8 higher than the prior year's EUR 382.3 million. Furthermore, orders received from customers in the general industry segment also rose substantially and were up 10.2 percent to EUR 156.2 million.
Systems: successful business performance from the ktpo pay-on-production project
KUKA Systems, the manufacturing automation technology partner, was also able to report double-digit growth in orders received. Orders received climbed 10.6 percent from EUR 847.8 million in 2006 to EUR 937.7 million for the year just ended. KTPO's new pay-on-production contract for manufacturing the Jeep Wrangler in Toledo, Ohio, USA, was particularly successful. Last year, KUKA employed about 250 persons and 240 KUKA robots to build car bodies for Chrysler in the United States. Even in the first year of operation, the pay-on-production contract's output was ahead of plan. The supply contract with Chrysler extends to the year 2020.
As of the period end, the Group's order backlog was EUR 528.8 million, which compares with EUR 496.5 million a year earlier. Group revenues rose 10.5 percent, to EUR 1,286.4 million from EUR 1,164.6 million in 2006. KUKA Robotics' sales revenues rose 10.6 percent to EUR 412.9 million and KUKA Systems reported sales revenues of EUR 900 million, an increase of 8.1 percent over the prior year's EUR 832.8 million.
North America is now KUKA's second most important market, right behind Germany. Last year, 36 percent of sales revenues came from Germany, 32 percent from North America, 20 percent from other European countries and 12 percent from other parts of the world. A year earlier, their respective shares had been 41 percent, 27 percent, 23 percent and 9 percent.
Total gross profit from sales rose from EUR 218.0 million in 2006 to EUR 258.2 million. Gross margin improved from 18.7 percent in 2006 to 20.1 percent.
Earnings from operating activities as of the 2007 period end came in at EUR 70.4 million. EBIT margin rose substantially, from 1.4 percent in 2006 to 5.5 percent in 2007. This includes one-time effects from the sale of properties totaling about EUR 7 million. The adjusted EBIT margin came in at 4.9 percent. The target margin, which over the course of the 2007 financial year had already been raised from 4.2 percent in May to 4.6 percent in August, was thus again surpassed.
The result from discontinued operations in financial 2007 was EUR 69.1 million compared to EUR -62.7 million the year prior. Net income for 2007 was therefore EUR 117.9 million, following a loss of EUR -64.8 million for 2006.
The Group's debt reported in 2006 was completely retired during 2007. As of the period end, December 31, 2007, the company was instead able to report a net liquidity of EUR 163.6 million. The Group's liquidity position was therefore turned around by EUR 247.5 million over the course of only one year. Due to the prepayment of the financing for the Jeep Wrangler car body production facility in North America, the net liquidity has in the meantime declined by EUR 85 million.
Average capital employed in 2007 was EUR 169.4 million. Comparing this to the EBIT of EUR 70.4 million, the KUKA Group's return on capital employed, or ROCE, is 41.6 percent. The Robotics division achieved a ROCE of 34.6 percent, substantially higher than the prior year's 24.3 percent. Thanks to high down payments from customers and a low level of bound capital, KUKA Systems' result went from 9.9 percent in 2006 to 51.0 percent.
Major opportunities in trendsetting markets
Building on its recognized innovation and technology leadership position, KUKA is systematically penetrating new trendsetting markets and expanding its customer base around the world, while maintaining its core strategy of profitable growth. The business focus, in addition to carmaking, is above all on general industry markets such as the aircraft, solar and medical technology industries.
The company is continually entering new business sectors, particularly in the healthcare industry. There is significant sustainable growth potential for robots in the diagnostics and operating areas, as well as a rising demand for service robots that assist patients and handicapped persons and/or provide other healthcare needs.
At the same time, KUKA AG is continuously expanding its sales network in Asia and North America. Overseas, the company is increasingly penetrating the metals processing and electrical industries, the plastics sector, foundries, healthcare, food and logistics industries.
As a result of the growing demand for automation solutions made by KUKA, the Group was able to boost employment in 2007. The workforce expanded by 152 and reached 5,732 persons as of the period end. Last year, the company employed 195 apprentices.
The Executive Board is forecasting that the profitable growth strategy will be even more successful in the coming year.
KUKA Robotics is planning annual growth of 10 percent for the medium term, 2009 to 2010, supported in particular by the excellent growth and profit opportunities in general industry. EBIT margin is expected to rise at the same time, from 8.1 percent in 2007 to 10.5 percent in 2010.
KUKA Systems is planning to improve sales revenues by five percent annually from 2009 to 2010, with systems orders from the automotive sector, as well as the aircraft and solar industries. The EBIT margin of 4.1 percent in 2007 is forecast to rise to 5.5 percent in 2010.
For the group as a whole, the medium-term plan to 2010 calls for an improvement in EBIT margin to 7.0 percent. The Group's primary objective is to grow organically, but it will also explore acquisition opportunities if they make good business sense.
Capital spending by the automotive industry in new manufacturing systems and by general industry on automating its manufacturing processes is primarily geared toward improving the purchasers' competitive productivity, and is therefore less subject to the effects of short-term economic factors.