24-Feb-2011 - Dürr AG

Dürr raises growth targets

New division: Clean Technology Systems

Dürr has raised its sales revenue targets for 2011 against the backdrop of strong demand from the automotive industry. While the Group previously expected growth of 5 to 10%, it now aims to increase sales revenues by over 15%. The high orders on hand with which Dürr started the year, amounting to € 1.36 billion, are the reason for that. Earnings should increase more than proportionately relative to sales revenues. CEO Ralf Dieter has set an EBIT margin of 3.5 to 4% as the target for 2011, after 2.7% was achieved last year. A dividend of € 0.30 per share will be proposed to the Annual General Meeting in May.

“The emerging markets, which contributed 60% of new orders at last count, will remain the most important growth driver for Dürr in 2011. For that reason, we have further increased our strong presence there,” said Dieter. The Group now employs about 27% of its workforce in emerging market countries. Order intake from the emerging markets increased by 63% in 2010. Dürr was able to more than double orders in China, India, and Brazil. After a strong final quarter in 2010, in which incoming orders and sales revenues rose by just under 60%, Dürr made a good start into 2011. According to Dieter, “The automotive industry is further expanding production capacities in the emerging markets. In the industrialized countries, more modernization projects are planned again to optimize existing factories.”

Year 2010 above expectations

Dürr has exceeded all its targets for 2010, in some cases significantly. Incoming orders grew by 38.6% to € 1,642.2 and thus returned to their pre-crisis level. In plant engineering as well as in mechanical engineering business, which registered an order plus of just over 80%, the Group benefited considerably from booming demand in China and other emerging markets.

While sales revenues grew by 17% to € 1,261.4 million, EBIT rose to € 33.7 million from € 5.7 million in the previous year. Selling and general administrative expenses remained nearly constant at € 178.5 million. The financial result declined by € 3.3 million to € ‑21.2 million primarily due to refinancing expenses. Average debt was lower in 2010 than in the preceding year; a net financial status of € +23.6 million was registered at the end of the year. Dürr achieved earnings after tax of € 7.1 million, after a loss in the previous year. CEO Dieter explains the proposed dividend of € 0.30 per share thus: “After omitting the dividend during the crisis, we are proposing a higher than usual payout ratio for 2010. That also expresses our confidence for the coming years. We aim to pay out 30 to 40% again for 2011.”

Operating cash flow was higher than expected at € 55.4 million, but below the previous year’s high level of € 95.4 million. The main contributing factor was that Dürr was not able to reduce net working capital as much as in 2009 due to high business volume. Because of the bond issue last autumn, liquid assets rose to € 252 million as of the balance sheet date in 2010. Equity increased to € 319 million. The equity ratio declined to 26% (previous year: 31%), because the growing business volume and rise of liquid assets significantly elevated the balance sheet total. The cash credit line of € 80 million was completely unused at the end of 2010. Dürr AG’s CFO Ralph Heuwing said, “We are in solid financial shape and thanks to the bond issue are financed through autumn 2015. Since we have refinanced at very favorable terms, we will be able to improve the financial result by € 4 to 5 million in 2011.”

At the end of 2010, there were 5,915 person employed by Dürr worldwide, 4% more than at the same time a year earlier. The number of employees in Germany stood at 2,931 (previous year: 2,969).

New division

Dürr plans to expand the business area of energy efficiency in the coming years. In addition to exhaust air purification systems, that includes processes for utilizing energy recovered from industrial waste heat. At the beginning of the year, Dürr bundled all its energy efficiency activities in the new Clean Technology Systems division. Dürr CEO Ralf Dieter says, “The new division underscores our intention to grow in the area of energy and environmental technology. Dürr now generates sales revenues of about € 70 million in this area, and most of that in exhaust air technology. We intend to more than double that figure in the coming years, also by means of relatively small acquisitions in the technology sector.”

Outlook

Assuming the good economic situation will continue, Dürr expects incoming orders to rise to about € 1.7 billion in 2011. Sales revenues should increase by at least 15% to about € 1.45 billion. The target for the EBIT margin is 3.5 to 4%. Dürr expects a lower tax rate for 2011 and accordingly a more than proportionate increase of after-tax earnings. The workforce in Germany and abroad is to be expanded by about 150 employees. The number of employees will therefore be significantly above 6,000 at year’s end.

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