Bielefeld. Overall economic development and demand for German machine tools has continued to be subdued during the first six months of 2003. As previously announced, the second quarter went well for GILDEMEISTER. We were able to close the first six months according to plan and, compared with the rest of the industry, have developed relatively well in the face of the current difficult environment. The sales figures for the second quarter exceeded the figures for the first quarter; they reached Euro 470.8 million in the first six months (compared with the last six months of the previous year, this was a fall of 3%). The order intake amounted to Euro 471.7 million (-3%). As announced, at Euro 11.0 million, EBIT (earnings before interest and tax) were positive. At Euro 2.3 million, the result from ordinary activities was also positive in the second quarter, however, a slight loss (Euro 1.5 million) was recorded by the end of the first six months of the year. With Euro 329.7 million, orders on hand continue to represent a satisfactory basic capacity utilisation.
GILDEMEISTER expects a rather restrained course of demand for the current financial year; looking ahead to a moderate revival after the summer months. Should demand pick up over the course of the year, our order intake for the entire year could reach more than Euro 1 billion, and sales, too, could again exceed Euro 1 billion. Based on measures already initiated, we hope to achieve a profit over the year. We will consider the distribution of a dividend, as soon as the group has obtained an adequate net profit for the year.
In the second quarter, group sales (Euro 244.8 million) exceeded the figures of the first quarter (Euro 226.0 million), reaching Euro 470.8 million over the first six months. This represents a 3% decline when compared with the corresponding period of the previous year (Euro 486.2 million). GILDEMEISTER is therefore noticeably above industry trends, which suffered a 13% loss. At Euro 238.0 million international sales were slightly below the figures for the previous year (Euro 240.2 million). Domestic sales dropped by 5% to Euro 232.8 million. The export share was 51% (previous year: 49%).
In the second quarter the order intake of Euro 242.7 million rose by 6% compared with the previous quarter. In all, the intake of new orders of Euro 471.7 million for the first six months was Euro14.3 million or 3% below the benchmark figure for the previous year (industry: -5%). Domestic orders reached Euro 216.3 million. International orders reached Euro 255.4 million. The export share rose to 54% (same period of the preceding year: 51%). The increase in the export share is due to another rise in Asia, particularly the PR of China.
On 30 June, 2003 orders on hand within the group amounted to Euro 329.7 million.
Despite the continuing difficult market conditions, GILDEMEISTER reached the planned business targets in the second quarter. Both EBIT (earnings before interest and taxes) of Euro 8.4 million (previous year: Euro -0.6 million) and EGG (results from ordinary activities) of Euro 2.3 million (previous year: Euro -5.8 million) were positive in the second quarter. By the end of the first six months, EBIT reached Euro 11.0 million; whilst the results from ordinary activities showed a slight loss of Euro 1.5 million. EBITDA amounts to Euro 28.0 million (previous year: Euro 30.6 million). As at 30 June, 2003 the net loss for the year amounts to Euro 5.1 million (previous year: Euro -7.4 Euro million). Performance in the second quarter has substantially improved against the first quarter and has improved against the corresponding quarter of the previous year. The improvement in performance (results from ordinary activities) against the first quarter 2003 amounts to Euro 6.1 million (Euro -3.8 million; Euro +2.3 million), and Euro 8.1 million (Euro -5.8 million; Euro +2.3 million) against the second quarter of the previous year.
In the second quarter, the GILDEMEISTER share recorded an upward trend. On 30 June our security was traded at Euro 4.80, in contrast to 31 March, when it was quoted at Euro 3.35. The current price level of Euro 5.95 (1 August 2003) is therefore significantly higher than in the first quarter.As at 30 June, 2003, GILDEMEISTER employed 5,070 people, 191 of whom were trainees. In comparison with the same time last year this is a decline of 39 employees. Noticeable shifts in staff occurred within the group. Dependent on business development, there was a selective decrease in staff at the Geretsried, Brembate di Sopra, Bielefeld and Seebach sites by 123. This was contrasted with the development of our new production plant in Shanghai. Furthermore, we strengthened our sales and services companies in Asia and Europe as well as our Technical Services area. For the first time, the 22 employees of DMG Microset, Bielefeld, were listed. Despite the collectively agreed increase in salaries and staffing adjustment measures, staff costs of Euro 136.4 million for the first six months were below those for the same period of the preceding year (Euro 137.8 million).
Forecast for the financial year 2003: GILDEMEISTER continues to plan for the financial year with restrained optimism. Thanks to our innovative products and world-wide operating sales and services organisation, we are well prepared for any market recovery.
With respect to the order intake we expect demand for machine tools to improve from September onwards. Due to the holiday season, we expect a moderate order intake for the third quarter, which will be at about the same level as the previous quarters. With an increased number in project enquiries and a gradual revival in demand, we expect a stronger fourth quarter. Provided that demand improves, we expect incoming orders to the value of more than Euro 1 billion over the year. In this respect we expect fresh stimulus from the forthcoming autumn trade fairs, particularly the EMO, and that the beginning upturn in demand for machine tools will have its effect on the order intake as early as this year.
Regarding the group sales we are expecting - as in previous years - lower sales figures for the third quarter than for the second quarter due to the holiday season. In line with industry trends, we anticipate higher figures for the fourth quarter so that sales could again exceed Euro 1 billion over the year.
Further activities for an improved performance have been initiated. The third quarter will close with a positive EBIT and a more or less balanced result from ordinary activities; the fourth quarter will close with a profit. With respect to the entire year 2003 we expect, in all, a profit from ordinary activities. We will consider the distribution of a dividend, as soon as the group has obtained an adequate net profit for the year.
The Executive Board
The ConsolidatedInterim Financial Statements of the GILDEMEISTER Aktiengesellschaft were prepared in accordance with International Financial Reporting Standards (IFRS). This Interim Report has not been audited.Please note: The complete Interim Report for the first six months 2003 can be obtained on request.