Bielefeld. The overall economic course for the first quarter 2002 did still not show much sign of vigour. In the first six months of the year, the overall development of the GILDEMEISTER group was subdued. As expected, the high figures of the previous year could not be reached; considering the circumstances, however, we were able to develop comparatively satisfactorily. In the second quarter the intake of new orders improved again by 7% compared with the previous quarter. We see this as the first sign of a gradual revival in demand. Sales, too, rose in the second quarter so that the GILDEMEISTER group achieved a sales volume of 486.2 million Euro in the first six months. Profit on ordinary activities was affected by various factors, in particular the high start-up costs of the numerous new products. The over-capacity of our Japanese competitors together with the under-utilisation of capacity by some of the European manufacturers resulted in substantial pricing pressure and has begun to affect our margins, too. At the end of the first six months, we were able to record a small profit on ordinary activities of 0.3 million Euro. EBIT amounts to Euro 11.1 million (corresponding period of the previous year: 33.4 million Euro).
The group sales for the second quarter exceeded the figures for the first quarter, reaching 486.2 million Euro in the first six months. This is a decline of 5% in comparison with the corresponding period of the previous year (513.9 million Euro). GILDEMEISTER is thus slightly above the trend of the industry, which recorded a deficit of 8%. International sales of 240.2 million Euro almost matched the high figures of the previous year. Domestic sales decreased by 9% to 246.0 million Euro. The export share was 49% (previous year: 48%). Based on our still high level of order backlog and the expected new orders for the current financial year we stick to our forecast that sales in 2002 will again reach around 1 billion Euro.
In the second quarter the intake of new orders improved by 7% compared with the previous quarter. This increase since the last quarter is seen by GILDEMEISTER as the first sign of a gradual recovery in demand. In all, the order intake of the first six months of 486.0 million Euro was 118.2 million Euro or 20% below the extraordinarily high figure of the previous year’s corresponding period (industry – 19%). We do not expect a greater upturn in demand before the fourth quarter. Even though the market has not recovered yet, we expect, from today’s point of view, that our intake of new orders in the financial year will reach 1 billion Euro.
The orders on hand of 381.6 million Euro enable a satisfactory basic capacity utilisation in most of the group’s production companies for the second six months of the year.
The continuing subdued level of economic activity affects the development of GILDEMEISTER, too. Despite the unfavourable global economic setting, GILDEMEISTER was able to record a small profit on ordinary activities of 0.3 million Euro by the end of the first six months (corresponding period of the previous year: 21.9 million Euro). EBIT amounts to 11.1 million Euro (corresponding period of the previous year: 33.4 million Euro), EBITDA to 30.6 million Euro (previous year: 50.6 million Euro). On June 30th, 2002, the results of the year amounted to -7.4 million Euro (corresponding period of the previous year: 10.0 million Euro). Since the tax-loss carry-forward was applied for the last time in 2001, the current financial year sees an increase in the actual tax load. The losses for the first six months, which were primarily suffered by the foreign companies, did not result in reduced taxes at our profitable domestic group companies.
Various factors have contributed to the loss in the first six months: our innovative speed remained at a high level. All together, GILDEMEISTER presented twelve newly developed products in the current financial year. A further seven developments will be premièred to the world at the trade fairs that will take place in autumn. However, the resulting higher start-up costs, particularly costs of material, will prove to be an important investment for the future. Both the over-capacities of our Japanese competitors and under-utilisation of capacity by some of the European manufactures resulted in substantial pricing pressure and have started to affect our margins, too. The introduction of staff adjustment measures will not become fully effective before the end of the current financial year.Considering current circumstances, we expect relatively positive results (EGG) over the whole of the year 2002. A more detailed statement on the profit movement of the current financial year is currently not possible. We are working on maintaining the company’s earning power even under unfavourable global economic conditions.
Considering that the forecasts for the industry have become worse and due to our current course of business, we cannot comment on a distribution of dividends.
On June 30th, 2002, the GILDEMEISTER group employed 5,109 people, 174 of whom were trainees. In comparison with the reporting date, December 31st, 2001, this is a decrease of 103 employees. Further staff adjustment measures are directly related to business development at the individual group companies. In the first six months of the year staff costs amounted to 137.8 million Euro compared with 134.6 million Euro in the corresponding period of the previous year.
The latest: As announced, GILDEMEISTER and ThyssenKrupp Technologies AG, Essen, have begun to look into the pooling of their activities in the cutting machine tools area. In our opinion, the timing for a possible consolidation is right. Organisation and structures can be adjusted and integrated faster during a weak phase of the market. We would benefit jointly from the expected revival of the market as early as the financial year of 2003. The due diligence process has begun and is intended to be completed by the end of the year. The implementation of the plan will then have to be decided on by the committees and the general meeting of the shareholders.
GILDEMEISTER plans for the financial year 2002 with the same cautious optimism. The weakening economic activity of the machine tool building industry has increasingly affected the course of business of the GILDEMEISTER group. For the entire year 2002 we expect to achieve positive results (EGG) and to meet most of our planned business objectives even under difficult market conditions.
The Executive Board