Business News
Report for the 3rd quarter of 2008
Wednesday 21. January 2009 - Krones growth continues strong in the first three quarters of 2008
During the first nine months of 2008 Krones remained on course for growth, despite the cyclical downturn. On a like-for-like basis, sales rose by 12.5 % to reach Euro 1,765.9 m. During the period under review, the company benefited from the increasing number of clients looking for all-inclusive job packages. Another growth driver during the years first three quarters was the groups Plastics Technology Division. Krones is the worlds leading vendor of machines and lines for producing bottles from PET and other plastics, and for bottling beverages in plastic containers. With annual increases of almost 5 %, plastic has the highest growth rates of all the materials used in beverage packaging.
Order bookings at a high level
Order bookings were up by 6.1 % during the first three quarters of 2008 compared to the preceding year, to reach Euro 1,870.4 m. On a regional breakdown, a rather hesitant level of demand from the USA, Western and Central Europe is being offset by buoyant ordering from Africa and Asia, the Near East and the Russia/CIS region. The order backlog, at Euro 996.3 m, was 6.0 % higher on 30 September 2008 than the preceding years equivalent figure.
Krones even more profitable
Earnings before taxes (EBT), at Euro 126.8 m, rose by 20.8 % in the years first nine months on a like-for-like basis. The EBT margin, meaning earnings before taxes in relation to sales, improved from 6.7 % to 7.2 %.
This renewed rise in profitability is attributable not least to improved internal processes. One example here is the Krones WORK programme (World market leader, Optimisation, Rationalisation, Key complexity reduction). The objective of this programme is to design Krones entire value creation chain so as to ensure that all production sequences can be run even more cost-efficiently. With the aid of WORK, the company aims to safeguard its profitable growth on a long-term basis and prevent its earnings from dipping in times of cyclical difficulty.
Since due to the reform of German corporation tax the taxation ratio fell to 31.5 % (preceding year: 37.0 %) in the first nine months of 2008, earnings after taxes rose more substantially than EBT, up by 31.3 % to reach 86.8 m euros, while earnings per share rose from 2.10 to 2.75 euros.
Outlook
Krones long term goal is to increase its revenues by 5 to 10 % each year. In view of the groups good performance during the years first three quarters, the Executive Board expects that the growth in sales for 2008 will lie at the upper end of the forecast corridor, and that profits will exceed the Euro 2.3 bn mark. Earnings before taxes (the EBT margin) are set to improve still further in 2008 (preceding year: 7.1 %). Since the company is benefiting from the reform of German corporation tax, earnings after taxes will increase more substantially than pretax profits. Krones is thus well on course to achieve the ninth record year in succession in terms of both sales and profits.
Whether 2009 will prove to be a tenth record year is difficult to assess at present. The worldwide financial crisis is hitting the global economy hard. In view of the uncertainty surrounding the markets future performance, it would be irresponsible at present to make anything more than a tentative prognosis for the 2009 business year. In its internal planning, however, Krones is proceeding on the assumption that following a possible dip in the first half of 2009 modest growth can again be anticipated in the years second half.