Interim Report as of March 31, 2010
KUKA back on growth track; both divisions report positive EBIT
May 11, 2010
- Orders received up sharply, 23.4 percent higher than at the same time last year
- Sales revenues decline 7.9 percent to EUR 209.1 million
- Free cash flow rises to EUR 4.6 million
- Both divisions' operating result (EBIT) positive Consolidated EBIT only slightly negative at EUR -1.9 million
- Till Reuter named permanent CEO of KUKA
KUKA returned to the growth track in the first quarter of 2010. Orders received were sharply higher than in the prior year's first quarter. KUKA Group's overall orders received rose 23.4 percent, from EUR 213.7 million in the first quarter of 2009 to EUR 263.8 million in the first quarter of 2010. KUKA Group's growth is thus higher than the average for the German Engineering Federation (VDMA), which reported an increase of only 14 percent in orders received during the same period.
Both divisions contributed to this delightful development. The Robotics division posted orders received of EUR 114.7 million, 27.3 percent higher than the EUR 90.1 million reported in the first quarter of 2009. The Systems division's business grew at a similar rate. It was up 24.7 percent to EUR 161.6 million in the first quarter of 2010, from EUR 129.6 million in Q1 2009. Above all, the two divisions benefited from a marked recovery in their automotive business. This was driven by higher spending for capital equipment, which had been postponed during the 2008/2009 crisis.
Sales revenues for the 2010 quarter just ended remained under the results posted during the same quarter last year. KUKA Group's consolidated sales revenues were down 7.9 percent to EUR 209.1 million from the EUR 227.0 million generated in Q1 2009. The Robotics division's sales revenues of EUR 86.2 million were 10.8 percent lower than the EUR 96.6 million generated during the first quarter of 2009. The Systems division's sales revenues reached EUR 136.0 million in Q1 2010, nearly the same level of EUR 138.7 million in Q1 2009. The book-to bill-ratio was higher. In the first quarter 2010, it had reached 1.26.
In line with the business growth during the period under review, the order backlog as of March 31, 2010 was up EUR 67.0 million from the prior year's closing date. The final total of EUR 606.7 million was 12.4 percent higher than the March 31, 2009 figure of EUR 539.7 million. The Robotics division's order backlog jumped 34.6 percent to EUR 126.7 million from the EUR 94.1 million reported on March 31, 2009. The Systems division's orders received were also higher than sales revenues, which pushed order backlog up 8.3 percent to EUR 489.2 million from EUR 451.5 million on March 31, 2009.
Both divisions successfully reduced costs in conjunction with the cost reduction program and generated a positive operating result (EBIT) in Q1 2010: Robotics EUR 0.5 million and Systems EUR 1.9 million. When the costs for the central departments (KUKA AG/others) are included, KUKA Group generated a slight consolidated operating loss (EBIT) of EUR -1.9 million, which compares to EUR 0.2 million in the first quarter of 2009.
The cost reduction program will continue during the current financial year and will be intensified. The target for recurring cost reductions is to rise to EUR 65 to 70 million in total, supported by appropriate measures. In 2010, the program will focus foremost on cutting material costs. The division Systems aims to use more global sources for its procurement and increase productivity by rigorously improving its structural cost base. Robotics' main focus is on cutting the cost of its own product manufacturing. The division is examining all working parts with regard to optimization possibilities. A standardization initiative is looking at ways to further increase the number of common components in all robot types. The sales, design and order administration processes are being further improved. A further initiative aims to generate substantial relief in the area of structural costs by improving the business processes in the indirect departments throughout the Group. In addition, all key KUKA Group core processes are being examined for potential efficiency improvement. All overlapping functions are being analyzed for their potential to generate meaningful synergies if combined.
At KUKA Group's German companies, 425 employees were on reduced work hours as of March 31, which compares to 477 on December 31, 2009.
The 2010 current financial year will be one of transformation for KUKA. The aim is to further improve cost structures and enhance the corporate strategy as a basis for generating sustainable profitable growth.
Both the Robotics division and the Systems division should see moderate sales revenue growth during 2010. KUKA Group’s sales revenues are expected to grow percentage wise in the mid single digits compared to last year.
We currently estimate that KUKA Group's earnings from operating activities (EBIT) for the current financial year should operationally also improve. As a result, we are forecasting a positive operating result for KUKA Group before special items. Restructuring costs in conjunction with the ongoing cost reduction program will be incurred again in 2010, but should be significantly less than last year. We expect both divisions to generate better operating results than in 2009. However, the results will be primarily dependent on the success of the cost reduction program and actual business development.
"KUKA had an excellent start to the current year," emphasized Till Reuter, CEO of KUKA. "We can thus also confirm our targets for 2010."