KUKA Financial Results Press Conference for Financial 2008
Despite the worldwide economic slump, the KUKA Group was able to report orders received totaling EUR 1,279.9 million in fiscal 2008, just 4.8 percent less than the EUR 1,343.8 million posted in 2007
May 12, 2008
- Orders received and sales revenues slightly lower than last year; adjusted for non-operative effects at last year's level
- Operating result (EBIT) down from EUR 70.4 million last year to EUR 52.0 million due to a one-time fourth-quarter charge previously announced
- Order backlog (+2.6 percent) higher at the end of the period than last year; securing capacity utilization for about five months
- Net income at EUR 30.6 million (last year EUR 117.9 million because of the sale of the Packaging division)
- No dividend payment because of negative impact on free cash flow
Despite the worldwide economic slump, the KUKA Group was able to report orders received totaling EUR 1,279.9 million in fiscal 2008, just 4.8 percent less than the EUR 1,343.8 million posted in 2007. However, adjusted for non-operative effects, such as the changes in input material purchasing by US subsidiary KTPO – KUKA Toledo Production Operations – (EUR 35.0 million), the revised posting related to redemption of the financing for this company (EUR 10.1 million) and the changed EUR/USD exchange rate (EUR 19.6 million), orders received at the Group level were the same as last year.
KUKA Group sales revenues for the financial year just ended came in at EUR 1,266.1 million, down 1.6 percent from last year’s EUR 1,286.4 million. However, adjusted for non-operative effects at KTPO and the changed EUR/USD exchange rate impact on sales revenues (EUR 18.8 million), Group-level sales revenues were actually 3.6 percent higher than the year prior.
The KUKA Group’s order backlog was up 2.6 percent, from EUR 528.8 million on December 31, 2007 to EUR 542.3 million on December 31, 2008. The company’s current level of activity is thus notionally secured for 5.1 months of the current fiscal year.
Because of a one-time charge related to the cancellation of a major systems order from a North American automotive subsupplier, the Group's operating result (EBIT) was down sharply, from EUR 70.4 million in 2007 to EUR 52.0 million. Excluding this one-time charge of EUR 20.8 million, the operating result (EBIT) would have been EUR 72.8 million, higher than last year. The adjusted EBIT margin was 5.7 percent, which compares to last year's 5.5 percent. The 5.5 percent earnings target for the current financial year would therefore have been exceeded. Overall, KUKA Group's earnings for the 2008 financial year were satisfactory.
Net income for the year 2008 came in at EUR 30.6 million, while last year EUR 117.9 million were reported, mainly because of the sale of the Packaging division (earnings from discontinued operations were EUR 69.1 million).
The Robotics division’s orders received climbed 6.8 percent, from EUR 434.9 million in 2007 to EUR 464.4 million as of the end of 2008. The division was particularly successful in expanding its general industry and service businesses, reporting double-digit growth of 24.4 percent and 23.6 percent respectively year-over-year. In total, general industry orders received for 2008 came in at EUR 194.3 million versus EUR 156.2 million the year prior, and service went from EUR 81.4 million in 2007 to EUR 100.6 million in 2008. On the other hand, automotive sector orders received were down, particularly in the fourth quarter of 2008. Overall, they dropped 14.1 percent to EUR 169.5 million from EUR 197.3 million in 2007.
In 2008, the Systems division’s orders received came in at EUR 854.9 million, down 8.8 percent from EUR 937.7 million in 2007. However, adjusted for the KTPO effects and the changed EUR/USD exchange rate (EUR 17.4 million), comparable orders received were down only 2.3 percent from last year.
Net liquidity/debt went from EUR 163.6 million at the end of 2007 to EUR -53.6 million at the end of 2008. The reasons were the redemption of the financing for the KTPO pay-on-production contract in the United States totaling EUR 77.1 million, the share buyback program amounting to EUR 27.9 million, the EUR 26.1 million dividend distribution, and taxes including interest of EUR 30.3 million.
Capital employed during the year rose from EUR 169.4 million in 2007 to EUR 242.3 million in 2008. This EUR 72.9 million increase was mainly due to the redemption of the financing for the KTPO pay-on-production contract and the project-related increase of long-term manufacturing orders in the Systems division.
The higher level of capital employed and a lower operating result (EBIT) led to an overall decline in ROCE. It went from 41.6 percent in 2007 to 21.5 percent in 2008. KUKA Group’s return on capital employed (before taxes) for 2008 thus remains at a satisfactory level.
Despite the economic crisis, the Group was able to increase employment in 2008. The workforce expanded by 439 and reached 6,171 persons as of the period end. The Robotics division added 238 employees. Some were contract workers. As of December 31, 2008, the division’s workforce totaled 2,261 persons. The Systems division added 199 persons. Overall, the division had 3,781 employees at year end.
Although the current economic environment is highly uncertain, KUKA has reported solid key figures for 2008 and has an excellent order backlog. Furthermore, the Group has secured credit lines to the end of 2010. Nevertheless, the economic crisis will make things more difficult for the Group. Orders received will decline and impact cash flow. KUKA has therefore implemented a comprehensive cost-cutting program and is focusing on effectively managing cash flow and actively reducing risk.