GILDEMEISTER improved profitability in 2003
Bielefeld. Despite the difficult world-wide conditions, GILDEMEISTER was able to achieve sales of Euro 977.8 million in the financial year 2003 (previous year: Euro 1,032.8 million). The order intake of Euro 981.8 million reached the level of the previous year (Euro 981.0 million). Compared with the rest of the industry (-4%) GILDEMEISTER was able to hold its ground. As announced, we were able to achieve a positive result before tax for the overall year. Based on provisional figures, EBIT currently amount to Euro 34.7 million (previous year: Euro 17.2 million). EBT amount to Euro 10.3 million (previous year: Euro -7.5 million). Subject to audit, GILDEMEISTER still shows a post-tax loss for the year of Euro 3.9 million in the group (previous year: Euro -18.7 million), which is primarily due to a tax back payment, non-deductible goodwill amortisation and items from international subsidiaries that cannot be set off because of tax regulations.
GILDEMEISTER Aktiengesellschaft closed the financial year - again according to provisional figures - with a profit. As previously announced, we will not propose to distribute a dividend for the financial year 2003, but to carry forward the net profit for the year to new account.The orders on hand amounting to Euro 332.8 million (previous year: Euro 328.8 million) form a good starting point for the financial year 2004. Thanks to our innovative products we are well prepared for the generally expected market recovery. In 2003, the world-wide weak demand for machine tools also affected the sales development at GILDEMEISTER. Sales reached Euro 977.8 million, thereby being Euro 55.0 million or 5% below the figures for the previous year. In the fourth quarter sales went up to Euro 276.3 million; however, we did not quite reach our planned target. At Euro 475.7 million, domestic sales dropped slightly by Euro 16.0 million or 3%. International sales reached Euro 502.1 million (Euro -39.0 million or -7%). The export quote was 51% (previous year: 52%). The machine tools business contributed 72% (previous year: 74%) to sales; whilst 28% (previous year: 26%) were attributed to Services .
In the financial year 2003, GILDEMEISTER achieved an order intake of Euro 981.8 million. In contrast to the rest of the industry (-4%) we thereby succeeded in maintaining our overall intake of new orders at the level of the preceding year (Euro 981.0 million). As expected, our intake of new orders of Euro 281.0 million rose in the fourth quarter, as previously announced, when compared with the preceding quarters as well as the corresponding quarter of the preceding year (Euro 243.9 million). The fresh stimulus emanating from the autumn trade fairs had, in part, a belated effect. As a result we did not quite accomplish our target. Only as late as December were we able to achieve a higher order intake. Both our domestic orders of Euro 457.0 million (previous year: Euro 455.6 million) and international orders of Euro 524.8 million (previous year: Euro 525.4 million) remained constant. The foreign share decreased by one percentage point to 53%. Both in the domestic market and in Europe GILDEMEISTER maintained its competitive position despite the continuing weakness of the market. In America the order intake did not quite reach the figures for the preceding year. With the expected improved economic situation we see potential for 2004. The order intake from Asia performed particularly well; particularly in China, but also in Japan and Korea we were able to increase our order intake significantly.
On 31 December 2003 orders on hand amounted to Euro 332.8 million (previous year: Euro 328.8 million); for computing purposes, this represents a production capacity utilisation of approximately three months for the new financial year.
In the fourth quarter, GILDEMEISTER was again able to improve results, as planned. Even with a smaller sales volume we were able to significantly reinforce our profitability thanks to our consistent cost and process management. Based on provisional figures, EBITDA currently amount to Euro 71.1 million (previous year: Euro 54.9 million) and EBIT to Euro 34.7 million (previous year: Euro 17.2 million). EBT amount to Euro 10.3 million (previous year: Euro -7.5 million). We were therefore able to achieve an earnings swing (EBIT and EBT) of approximately Euro 18 million. Subject to audit, GILDEMEISTER still shows a post-tax loss for the year of Euro 3.9 million in the group (previous year: Euro -18.7 million), which is primarily due to a tax back payment, non-deductible goodwill amortisation and items from international subsidiaries that cannot be set off because of tax regulations.
The GILDEMEISTER share price developed well in 2003. Its annual low of Euro 2.91 (12 March 2003) was followed by a steady upward trend. On 1 October the share was quoted at Euro 5.78. By the end of the year the closing price was Euro 8.22 (30 Dec. 2003). Its current price is at Euro 8,87 (9 Feb. 2004). The GILDEMEISTER share benefits from the improved mood in the stock markets and confirms the investors' and analysts positive expectations for the financial year 2004.
At the end of the year, GILDEMEISTER employed 4,823 people (previous year: 4,821) and 205 trainees (previous year:224). In the reporting year, the group's reconstruction along with the further strengthening of the service area and the internationalisation of our production, resulted in a relocation of staff capacity: Whilst the production site in Shanghai and the sales and services companies in Asia, Europe and Germany were specifically reinforced, staff levels at the productions sites at Geretsried, Bielefeld, Bergamo and Seebach were reduced in line with business development. In the promising ultrasonics/lasertec division we increased the number of staff slightly. In the reporting year, spending on wages and salaries, including social insurance contributions, amounted to Euro 270.9 million (previous year: Euro 270.2 million).
Spending on research and development amounted to Euro 43.1 million (previous: Euro 47.5 million). In the year 2003 GILDEMEISTER was able to maintain and selectively expand its innovative lead. In the reporting year, 10 high-tech machines specifically geared towards customer specifications, were re-developed and presented to the trade. Our research and development policy focused on the ultrasonic machining of 'advanced materials' and the development of state-of-the-art software products as well as continuing the integration of technologies and increasing machine dynamics.
According to experts, global economic development will continue to improve throughout the current financial year. A key position is held by the USA, for which experts forecast a revival of economic activity. Latest prognoses for 2004 with regard to mechanical engineering and particularly with regard to machine tools again expect growth. Following a 2% loss in the preceding year the German Mechanical Engineering Association (VDMA) is expecting a 2% increase in sales for 2004. The majority of the VDMA's trade units anticipate a positive development. A trend towards recovery is expected this year with regard to machine tools, following the heavy losses suffered in the preceding years. Forecasts for 2004 with respect to global development in the machine tool sector are not yet published. We expect global consumption to be 3-5% above the level of 2003. The ifo Institute (Economic Research Institute, Munich) and the Association of German Machine Tool Factories (VDW) expect an increase in incoming orders for German manufacturers (at home: more than 2%; abroad: more than 4%) and a 4% increase in production.
For the financial year 2004, GILDEMEISTER expects a steadily increasing recovery of demand. For the first quarter we anticipate an order intake that will exceed the figures for the preceding year. We intend to increase the order intake by more than 5% throughout the year. Our planning is based on new innovative products, the continuing expansion of our world-wide market presence, a steady consumption in Asia, noticeable upward trends in America and first indicators of a revival of the markets in Europe and at home.
As a result of this, and in view of our backlog of orders, we also intend to increase our sales for 2004 by approximately 5%. In the first quarter, sales will develop roughly at the level of the preceding year. As a result of this, and due to increased marketing expenses resulting from the numerous regional Spring trade fairs as well as increased financing costs, we currently expect EBT to be negative in the first quarter. The 'Services' segment continues to be operated at full capacity with regard to personnel. We are planning for a higher performance in our production capacity, after staff levels were selectively adjusted last year. Innovative developments were further intensified to safe-guard our technological lead. Our cost-cutting measures already initiated will continue to be pursued; due to heavy spending on materials and services in the preceding years, investments will be cut back severely. A further increase in efficiency is intended for the reinforcement of the group's profitability. The object of our efforts is to show another significantly improved result for the financial year 2004. At this point in time, we consider a statement on the distribution of dividends to be premature.
During the past years, GILDEMEISTER invested heavily in materials and services for the development of new products and the expansion of its sales and service organisations. Thanks to its user-orientated technologies and comprehensive technical services GILDEMEISTER is the major producer of cutting machine tools world-wide. By safe-guarding our future this way, we are well prepared for the expected recovery of the market.
The Executive Board
Please note: The complete Interim Report for the fourth quarter 2003 can be obtained on request.
Disclaimer, Forward-looking statement
Statements relating to the future:
This press release contains forward-looking statements, which are based on current estimates of the management of future developments. Such statements are based on the management's current expectations and specific assumptions. They are subject to risks, uncertainties and other factors, which could lead to the actual future circumstances, including the assets, liabilities, financial position and profit or loss of GILDEMEISTER, differing materially from or being more negative than those expressly or implicitly assumed or described in these statements. The business activities of GILDEMEISTER are subject to a series of risks and uncertainties, which may result in forward-looking statements, estimates or forecasts becoming inaccurate. Should one of these factors of uncertainty or other unforeseeable event occur, or should the assumptions on which these statements are based prove incorrect, the actual results may differ materially from the results stated, expected, anticipated, intended, planned, aimed at, estimated or projected in these statements. Forward-looking statements must not be understood as a guarantee or assurance of the future developments or events contained therein.