GILDEMEISTER plans for the financial year 2002 with caution
Bielefeld. In the third quarter of 2002, world-wide demand for machine tools continued to develop with little vigour. The course of business at GILDEMEISTER was also subdued during this quarter. Sales amounted to Euro 225.9 million, and, at Euro 712.1 million during the first nine months, was 10% less than in the comparable period of the previous year. In the third quarter we were able to achieve another small increase in the intake of new orders to Euro 251.1 million. As of September 30, 2002, new orders totalled Euro 737.1 million. As previously announced, profitability suffered particularly in the third quarter, which was due primarily to smaller sales figures during the holiday months of July and August as well as innovation-related higher costs of material and the impact of tax. As of September 30, loss on ordinary activities amounted to Euro -17.5 million, whilst earnings before interest and tax (EBIT) were Euro 0.5 million. Thanks to the increase in orders on hand of Euro 406.8 million, a satisfactory basic capacity utilisation will be possible at most of our production companies during the next few months.
Demand in the third quarter showed new - if small - signs of recovery. In comparison with the previous quarter, we intend to close the fourth quarter with yet another increase in orders. Despite the weak global demand in machine tools we expect to achieve an intake of new orders of Euro 1 billion. Sales will again be above Euro 1 billion. If business in the last three months of the year develops according to plan, it is still possible to achieve a profit on ordinary activities for the overall year 2002. It must be assumed that, in all, the group will show an annual deficit, taking into account tax on earnings. From today’s point of view we can therefore not expect distribution of a dividend for the financial year 2002.
As of the end of September the group’s sales of 712.1 million (previous year: Euro 787.6 million) were 10% below the figure for the previous year’s corresponding period. GILDEMEISTER is therefore slightly above industry trends, which suffered a 13% decline. International sales dropped by 10%, domestic sales by 9% against the previous year so that the export share of 50% remained almost at a consistent level.
The intake of orders for the third quarter improved even further and now amounts to Euro 251.1 million. We see these constant increases from quarter to quarter as a sign of a gradual recovery in demand. In all, the order intake for the first three quarters of Euro 737.1 million was Euro 131.5 million or 15% below the extraordinarily high corresponding figures for the previous year. In the cutting field of machine tools, the industry received 16% fewer orders compared with the corresponding period for the previous year. Business activities in Asia developed well and both the national and international autumn trade fairs were also successful. Thanks to these positive international activities, the export share rose from 49% to 53% in the reporting period.
In the first nine months, the group recorded a loss on ordinary activities of Euro -17.5 million. EBIT amounted to Euro 0.5 million, EBITDA to Euro 29.0 million. The results for the year as of September 30, 2002 amount to Euro -23.6 million. In the current financial year, the group’s profitability has been affected by various factors. In the first nine months of the year, GILDEMEISTER maintained its innovative speed at a high level. 20 of 22 developments that were planned for the financial year 2002 had been presented before the major autumn trade fairs took place. The high number of product innovations resulted in increased start-up costs, which were particularly reflected in costs of material and staff costs. These innovations, however, secure our strong technological position and will prove to be an investment for the future, giving access to further growth in the global markets. In all, business development continues to be dominated by increased pricing pressure imposed by Japanese and European competitors, which in turn leads to losses in our margins. Preproduction costs of material and higher marketing expenses due to trade fairs along with clearly fewer sales have also affected the result for the third quarter.
The losses for the reporting period, which were primarily suffered by the foreign companies, did not result in reduced taxes at our domestic group companies, which, considered together, are profitable. Since the tax-loss carry-forward was applied for the last time in 2001, the results for the current financial year were affected by the increased tax expenditure of the group.
To improve the group’s profitability various cost-cutting and efficiency increasing measures were introduced, which will not come into full effect before the next financial year. Whilst the holiday months of July and August continued to show deficits, profits were recorded as early as September. The fourth quarter will close with a positive result.
On September 30, 2002, the GILDEMEISTER group had 4,868 employees (June 30, 2002: 4,935) and 220 trainees (June 2002: 174). Further staff adjustment measures are directly related to business development at the individual group companies. The beginning of the new season of vocational training that falls in the reporting period is reflected by the increase of 46 trainees. Staff costs amounted to Euro 201.7 million in the first nine months compared to Euro 204.1 million in the corresponding period for the previous year.
The latest: On July 12, 2002 GILDEMEISTER and ThyssenKrupp Technologies AG, Essen, announced that they are looking into the pooling of their activities in the cutting machine tools area.
The due diligence process is carried out according to plan and will be completed in December. Both parties expect ThyssenKrupp to become GILDEMEISTER’s largest individual shareholder following the transaction, whereas ThyssenKrupp does not intend to control the company. The implementation of the plan will then have to be decided on by the committees and by the general meeting of the shareholders.
Like others, our course of business is increasingly affected by the declining economic trends in the machine tool building industry. GILDEMEISTER plans for the financial year 2002 with caution. However, this year’s results have been affected by our extensive investment activities in the development of new products and in the expansion of our own marketing and service organisation. These safeguarding measures for the future prepare us well for the expected revival of the market during the financial year 2003.
GILDEMEISTER Aktiengesellschaft
The Executive Board
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.