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Interim Report 3rd Quarter 2008 GILDEMEISTER intends to close 2008 with record figures

Bielefeld. Worldwide demand for machine tools remained steady in the first six months of the year. In the third quarter, the market responded with increasing uncertainty to developments in the international banking and financial crisis. The effects of the events that have occurred in recent weeks on the market for machine tools cannot be analysed in detail at the present time. 

As at 30 September 2008, GILDEMEISTER has a good business development overall. In the third quarter we were able to increase sales revenues and earnings as scheduled. Order intake in the primary “Machine Tools” and “Services” business was about 5% below the comparable high previous year’s level, which was influenced by the EMO effect and major “SunCarrier” orders. 

As at 30 September 2008, order intake has risen to Euro 1,592.8 million (+13%); sales revenues have increased to Euro 1,363.2 million (+27%). Profitability continued to develop positively as announced: EBITDA reached Euro 137.2 million (previous year: Euro 93.9 million), EBIT amounted to Euro 114.8 million (previous year: Euro 71.1 million). EBT rose to Euro 91.6 million (previous year: Euro 48.5 million). The group annual profit doubled as at 30 September 2008 to Euro 57.6 million (previous year: Euro 27.2 million). 

Boosts came from the important autumn trade fairs in Germany and in the USA: with an order volume of Euro 82.4 million and 329 machines sold, the September trade fairs – the AMB in Stuttgart and the IMTS in Chicago – ensured our planned order intake in the third quarter. 

Despite the dramatic financial crisis and the resulting complete change in the worldwide economic environment, for the financial year 2008 we continue to expect record figures, which, however, have become more ambitious and fraught with risk. Order intake will remain above previous year’s level. Sales revenues should now rise to more than Euro 1.85 billion. For EBT and the annual profit we are expecting an increase of more than 50% compared to the previous year. We will consider the amount of the dividend for the financial year 2008 taking into account the change in the market environment. 

In the third quarter sales revenues of Euro 511.7 million (+40%) exceeded the previous year’s figure (Euro 365.7 million) as planned. In the first nine months sales revenues reached Euro 1,363.2 million and were thus 27% higher than the previous year (Euro 1,074.9 million). In the “Machine Tools” segment, an increase in sales revenues of Euro 97.7 million (+13%) was achieved by 30 September. The “Services” segment contributed Euro 190.6 million to the increase in sales revenues; of this, Euro 140.9 million were attributable to the “SunCarrier” division. In the fourth quarter we also intend to achieve a considerable contribution to the sales revenues and results from the solar business. Domestic sales revenues rose by 22% to 601.6 million, international sales revenues grew 31% to 761.6 million. The export share amounted to 56% (previous year’s period: 54%).

Order intake in the third quarter reached Euro 459.4 million and, in line with expectations, was below the level of the previous year (Euro 545.9 million) which was influenced by the EMO effect and the major “SunCarrier” orders (Euro 63.5 million). The primary “Machine Tools” and “Services” business in the third quarter at Euro 456.8 million (-5%) developed comparatively satisfying, despite the difficult market environment (previous year: Euro 482.4 million). The “SunCarrier” division reported order intake as planned in the third quarter of Euro 2.6 million (previous year’s quarter: Euro 63.5 million). Overall in the first nine months, order intake achieved Euro 1,592.8 million and thus was 13% or Euro 189.1 million higher than the previous year (Euro 1,403.7 million). In the reporting period order intake rose both domestically and internationally: domestic orders increased by 14% to Euro 718.4 million (previous year: Euro 628.1 million). International orders rose 13% to Euro 874.4 million (previous year’s quarter: Euro 775.6 million). International orders accounted for 55% of orders (previous year: 55%). 

Despite the financial crisis, we were able to achieve our order intake targets on the whole. We were able to gain additional market shares. At a value of Euro 82.4 million and with 329 machines sold, the September trade fairs – the AMB in Stuttgart and the IMTS in Chicago – ensured our planned order intake in the third quarter.

As at 30 September 2008 the order backlog for the group amounted to Euro 979.0 million (+26%). The “SunCarrier” division of a+f GmbH accounted for Euro 77.8 million or 8%.

The profitability of the GILDEMEISTER group continued to develop positively and improved according to plan against the previous year’s comparative figures. In the third quarter EBITDA reached Euro 52.6 million (previous year: Euro 33.5 million); EBIT amounted to Euro 44.8 million (Euro 25.4 million). EBT rose to Euro 37.3 million (previous year: Euro 18.1 million). The group reports an annual profit of Euro 23.8 million (previous year: Euro 10.5 million).

As at 30 September EBITDA reached Euro 137.2 million (previous year: Euro 93.9 million); EBIT amounted to Euro 114.8 million (previous year: Euro 71.1 million). EBT rose to Euro 91.6 million (previous year: Euro 48.5 million). The group annual profit doubled to Euro 57.6 million (previous year: Euro 27.2 million). 

Against the background of the international financial market crisis, and growing economic risks the GILDEMEISTER share did not develop consistently. Following a share price of Euro 17.65 on 1 July, the share closed the reporting period at Euro 11.85 (30 Sep. 2008). The financial crisis triggered the negative share price development at the end of the third quarter on the stock indices and also that of the GILDEMEISTER share. This resulted in a loss of confidence in the global financial system, share price collapses and panic sales on the international stock exchanges. In view of these difficult conditions, the GILDEMEISTER share is most recently quoted at Euro 8.56 (05 Nov. 2008). 

As of 30 September 2008 GILDEMEISTER had 6,423 employees, of whom 251 were trainees (31 Dec. 2007: 5,998). In comparison with year-end 2007, the number of employees has risen by 425. At the start of the new training year GILDEMEISTER took on 66 trainees in the third quarter. In the “Services” segment staff numbers were increased at the newly-founded DMG Spare Parts GmbH. Moreover, our sales and service capacity in Asia and Europe – in particular eastern Europe – was further enlarged. In the “Machine Tools”, new employees were taken on, in particular, at our production locations in Shanghai, Bielefeld and Pleszew, as well as at DMG Electronics. At the end of the third quarter, 3,820 employees (59%) worked for the national companies and 2,603 employees (41%) for the international companies. Personnel costs amounted to Euro 297.4 million (previous year’s period: Euro 267.2 million). The personnel ratio decreased to 20.0% (previous year’s period: 23.9%). 

Forecast:

At the current moment in time it is not possible to analyse in any detail to what extent the international financial crisis will affect business development at GILDEMEISTER in the fourth quarter. With our global presence and innovative products, we are prepared for the change in the global machine tool market. 

Despite the complete change in the worldwide economic environment, for the financial year 2008 GILDEMEISTER continues to expect record figures, which, however, have become more ambitious and fraught with risk. Order intake will remain above previous year’s level. Sales revenues should now rise to more than Euro 1.85 billion. The operating results continued to develop positively in the financial year 2008: for EBT and the annual profit we are expecting an increase of more than 50% compared to the previous year. We will consider the amount of the dividend for the financial year 2008 taking into account the change in the market environment. This may still allow the current financial year to be the best so far in the company’s 138-year history – despite the serious financial crisis. 

We are not yet able to issue any valid forecasts for the financial year 2009 due to current events. We expect demand to develop much more restrained and will position the company accordingly.

We are faced with a year of major challenges. GILDEMEISTER is prepared to hold its position successfully even under difficult market conditions. A high degree of flexibility allows us to respond appropriately to a changed market environment. We are counteracting the growing pressure on profitability with a comprehensive programme of measures for the financial year 2009. We have already started implementing this in order to achieve cost-savings and to increase our cost-effectiveness. We are expecting a decline for the “Machine Tools” segment, whereas the “Services” segment will prove to be almost stable and for the division of regenerative energies even an expansion of business could take place. A more far-reaching statement on the coming financial year is not possible at the present time due to current events. It cannot yet be foreseen how the global market for machine tools will develop.

GILDEMEISTER Aktiengesellschaft
The Executive Board

Consolidated Financial Statements of GILDEMEISTER Aktiengesellschaft were prepared in accordance with the International Financial Reporting Standards (IFRS), as applicable within the European Union. The Interim Financial Statements have not been audited.

Note: We will be pleased to provide you with the complete Interim Report for the 3rd quarter 2008 upon request.

Disclaimer, Forward-looking statement

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.

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