Press Release Annual General Meeting
15.05.2009

Speech delivered at the 107th Annual General Meeting of GILDEMEISTER Aktiengesellschaft on 15 May 2009

Check against delivery

Ladies and Gentlemen, dear shareholders,

on behalf of the Executive Board I would also like to welcome you to our 107th annual general meeting in Bielefeld.

The financial year 2008 was the best year for GILDEMEISTER in the company’s 138-year history. We have achieved our targets in all the key financial ratios. We have further strengthened our position as a worldwide leading manufacturer of cutting machine tools. Below is an overview of the key figures: Order intake of Euro 1,882.0 million was above the previous year’s level. Sales revenues rose by 22% to Euro 1,904.0 million. It was important to us to grow profitably – this, too, we have managed to achieve: The group annual profit grew 62% to Euro 81.1 million. EBITDA reached Euro 188.9 million and EBT rose by 52% to Euro 126.7 million. Earnings per share rose by 61% to Euro 1.87. Thus under agenda item 2, the executive board and the supervisory board are proposing to today’s annual meeting of shareholders that a dividend of Euro 0.40 per share be distributed for the financial year 2008. 

International Development of the Machine Tool Industry in 2008

Overall worldwide demand for machine tools still rose slightly by 5% to Euro 54.5 billion. China was once again the largest sales market at Euro 12.2 billion (22%). Germany was in second place at Euro 6.8 billion (13%). Third place was taken by Japan at Euro 5.5 billion (10%), followed by the USA at Euro 4.6 billion (8%) and Italy (7%). These five industrial nations represent 60% of global machine tool consumption. 

Global production likewise rose by 5% to Euro 54.5 billion. Japan defended its leading position worldwide at Euro 10.8 billion (20%). This was followed very closely by Germany practically at the same level at Euro 10.7 billion (20%). China took third place at Euro 8.5 billion (16%). 

German Machine Tool Industry 2008

Order intake at the German machine tool industry of Euro 14.2 billion or 11% remained below the level of the previous year (Euro 16.0 billion). Domestic demand fell by 14% (previous year: +33%). Demand from abroad shrank by 9% (previous year: +26%). Thus orders fell for the first time in five years. Production still rose by 13% to Euro 14.3 billion and once again exceeded the record figure of the previous year (Euro 12.6 billion). 

Reliable statements on the profitability of the German machine tool industry are not readily available as only a few companies publish the corresponding figures. However, it can be determined that, despite the worldwide financial crisis in 2008, profitability within the industry was still satisfactory. 

Report on the financial year 2008 of the GILDEMEISTER group

GILDEMEISTER was once again impressive in the financial year 2008 for its trend-setting innovations. Our vast technological know-how sets us apart from most competitors; as a result, we are less dependent on individual sectors and markets. In addition to our core areas of expertise of “turning“ and “milling“, as well as “ultrasonics“ and “lasers“, we offer automation and software solutions for machine tools. This is supported by the continuously growing service business. The “solar technology“ division, with the successful “SunCarrier“ product, achieved a breakthrough in the financial year 2008. The "SunCarrier" – a sun-tracking system with photovoltaic modules – is completely in line with the latest trends. We were primarily successful in Spain but also recorded success in Germany, Korea and Greece. We have also won orders in Italy for the first time.

Order intake

In the financial year 2008, order intake reached Euro 1,882.0 million. It was thus some Euro 17.2 million or 1% above the previous year’s level (Euro 1,864.8 million). Despite the increasingly difficult market environment – due to the financial crisis – order intake in the first three quarters still developed satisfactorily. In the fourth quarter, we, too, had to suffer losses due to the start of the international economic crisis. Over the whole year, the Machine Tools business amounted to Euro 1,160.8 million. Services rose to Euro 721.0 million; solar technology doubled to contribute Euro 162.1 million of this. Domestic order intake grew by 6% to Euro 843.4 million. International orders amounted to Euro 1,038.6 million (-3%). In Germany we have increased order intake. In Europe the business remained nearly constant. In Asia orders declined. In America order intake development was positive for us. 

Sales revenues

Sales revenues of Euro 1,904.0 million once again surpassed the record figure of the previous year (Euro 1,562.1 million). This corresponds to an increase of 22% or Euro 341.9 million. In the reporting period, the Machine Tools segment achieved an increase of Euro 109.6 million (+10%); the Services segment contributed Euro 232.4 million (+49%) to the increase in sales revenues; of this, the solar technology division contributed a share of Euro 199.5 million. Domestic sales revenues rose by 14% to Euro 829.9 million; international sales revenues grew by 29% to Euro 1,074.1 million. The export share amounted to 56% (previous year: 53%). 

Segmental Reporting

The GILDEMEISTER business activities include the segments comprising Machine Tools with a proportion of sales revenues of 63%, the Service business with about 37%, as well as Corporate Services with less than 1%. The Machine Tools segment includes the new machines business. Sales revenues rose by 10% to Euro 1,192.3 million. The milling technology of DECKEL MAHO had a share of 41%. The turning technology share of GILDEMEISTER amounted to 20%. Ultrasonic and laser technologies contributed 2%. The positive development in the Services segment made a significant contribution to the good business development. Sales revenues rose by 49% to Euro 711.5 million. The solar technology division – which belongs to the Services segment – contributed in particular to this with Euro 199.5 million. The original services business recorded a rise of 7% in comparison with the previous year.

Order backlog

The order backlog amounted at year-end to Euro 727.4 million; it was thus slightly (3%) below the previous year’s level (Euro 749.4 million). 

Profitability 2008

Profitability of the GILDEMEISTER group developed positively in the financial year 2008: The annual profit in the group grew by 62% to Euro 81.1 million (previous year: Euro 50.1 million). EBIT amounted to Euro 158.2 million. EBT rose by 52% to Euro 126.7 million (previous year: Euro 83.4 million). The tax load ratio continued to improve as planned and was 36.0% (previous year: 39.9%). Earnings per share rose by 61% to Euro 1.87 (previous year: Euro 1.16). We were able to improve the results both in the Machine Tools segment and in the Services segment.

GILDEMEISTER Aktiengesellschaft

GILDEMEISTER Aktiengesellschaft has management and holding function tasks. Its results were primarily determined in the financial year 2008 by income from financial assets, comprising profit transfers from domestic subsidiaries (Euro 117.2 million; previous year: Euro 88.2 million). GILDEMEISTER Aktiengesellschaft closed the reporting period with annual profit of Euro 44.0 million (previous year: Euro 21.5 million), of which Euro 22.0 million were placed in retained earnings. Taking into account the profit carry forward from the previous year (Euro 3.5 million), this results in a net profit of Euro 25.5 million (plus Euro 6.8 million; previous year: Euro 18.7 million). 

The Executive Board and the Supervisory Board propose to today’s 107th Annual General Meeting of Shareholders, pursuant to agenda item 2, to distribute the net profit as follows: 


  • Distribution to the shareholders of Euro 17,321,001.20 by the payment of a dividend in an amount of Euro 0.40 per share for the financial year 2008.
  • Furthermore, to carry forward the remaining net profit of Euro 8,195,405.88 to new account.


In the following some explanations of the annual report 2008 of the GILDEMEISTER group:

The balance sheet total amounted to Euro 1,390.4 million (previous year: Euro 1,150.1 million). This increase results from a higher amount of funds tied up in inventories (Euro +64.8 million) as well as an increase in liquidity (Euro +162.4 million) from nearly drawing completely on the credit line in the fourth quarter of 2008. Against the background of the continuing financial crisis and the state rescue packages for banks, we have accepted a balance sheet extension. On the assets side, fixed assets rose to Euro 301.3 million (Euro +16.0 million). Trade receivables fell alongside an increase in sales performance by Euro 6.5 million to Euro 286.0 million. This resulted from a consistent optimisation of our claims management. 

Under equity and liabilities the annual profit led to an increase in equity of 15.2% to Euro 379.7 million (previous year: Euro 329.5 million). The equity ratio decreased due to the balance sheet extension to 27.3% (previous year: 28.7%). Without a rise in liquidity, the equity ratio would amount to 29.8%.

With a positive development in profitability, we were able to reduce net indebtedness further by Euro 44.6 million to Euro 120.4 million (previous year: Euro 165.0 million). Gearing (proportion of net indebtedness to equity) reached 31.7% (previous year: 50.0%). 

Cash flow from current operations (cash received) was positive at Euro 108.6 million (previous year: Euro 128.2 million). The free cash flow amounted to Euro 60.1 million (previous year: Euro 84.8 million). We have primarily used the free cash flow to reduce net financial liabilities and for the distribution of the dividend. 

With the re-financing of the bond in July 2008, we have created a long-term financial framework. As planned, we redeemed the high yield bond prematurely and replaced this by two market standard borrowers’ notes. Through this re-financing, we will be able to achieve an interest advantage of Euro 5 million per year in the future.

Investments amounted to Euro 50.2 million (previous year: Euro 53.1 million). Of these, tangible assets accounted for Euro 41.9 million (previous year: Euro 37.9 million) and intangible assets for Euro 1.4 million (previous year: Euro 2.3 million). Capitalised development costs accounted for Euro 6.9 million (previous year: Euro 7.4 million). Depreciation amounted to Euro 30.7 million (previous year: Euro 32.3 million). 

GILDEMEISTER once again was able to increase the performance capability and quality of its products. In the financial year 2008 we presented 17 new developments at a total of 70 trade fairs and exhibitions. Expenditure on research and development amounted to Euro 57.3 million; this is 16% more than in the previous year (Euro 49.5 million). One of the highlights on the occasion of our traditional in-house exhibition in Pfronten was the opening of the “Center of Excellence Aerospace“, where we develop innovative production solutions for the aerospace industry. The “New Design“ has been adapted for all machine types. Numerous awards confirm its success. Our customers are convinced of the advantages and consider the new design to be a purchasing criterion when choosing a machine. Furthermore, in the area of entry level machines, we have successfully further expanded our ECOLINE range. These machines are now targeted at all world markets and offer proven technology at favourable terms. 471 employees are working on the development of our products. (13% of the staff of the plants; previous year: 467 employees). They underline the significance of innovations at GILDEMEISTER.

As at 31 December 2008, 6,451 employees, of whom 260 were trainees, were employed at GILDEMEISTER (previous year: 5,998). The number of employees rose by 453 until the start of the international financial crisis and the incipient economic crisis. In the Services segment, hirings (235) took place at DMG Spare Parts, at a+f and also in Asia and Europe – in particular eastern Europe – in order to better meet the increased demands of our customers. In the Machine Tools segment, the number of employees was strengthened in particular at the Shanghai, Bielefeld and Pleszew sites due to the higher sales revenues performance. Employee expenses amounted to Euro 405.5 million (previous year: Euro 366.4 million); the personnel quota fell to 20.7% (previous year: 22.9%). 

At this point the Executive Board would like to thank all our employees for their commitment and loyalty to the company. Through their personal efforts, we have managed to achieve our goals despite a difficult market environment. The foundations of our performance are our employees’ high qualifications, motivation and identification with the company.

The GILDEMEISTER share

The GILDEMEISTER share exhibited a volatile trend in 2008: The share commenced the stock market year at a quoted price of Euro 18.61 (2 Jan. 2008) and reached its highest value of the year of Euro 23.38 on 22 May 2008. In the best business year in the company’s 138-year history, market capitalisation fell by 58% (Euro 461.2 million) to Euro 339.9 million (previous year: Euro 801.1 million). The international financial crisis and the ensuing economic crisis influenced the capital markets in the second half of the year and thus also the performance of the GILDEMEISTER share. The lowest value of the year was Euro 4.79 (21 Nov. 2008). The share closed on 30 December 2008 at Euro 7.85. At the start of 2009, the GILDEMEISTER share recorded an inconsistent performance in the first two months. In March, the cooperation with the Japanese machine tool manufacturer, Mori Seiki, had a positive impact on the share’s performance. Starting from a quoted price at the start of the year of Euro 7.49 (2 Jan. 2009), the share closed the first quarter at Euro 5.84 (31 Mar. 2009). The fall of 22% in the quoted price from the start of the year was in line with the general trend of the MDAX, which lost 23%. At the current time the share is quoted at Euro 6.66 (14 May 2009). 

Ladies and gentlemen, under agenda item 6 of this annual general meeting, we kindly request you to approve the resolution on the authority to purchase own shares. This serves primarily to place GILDEMEISTER in a position to grant its own shares as consideration for the acquisition of companies or participations in companies or to dispose of shares in the most economic manner possible for the company at an optimum price. More detailed information on item 6 can be found in the Executive Board’s report, which is available to view at today’s annual general meeting. This authorisation concerns a precautionary resolution; there are no specific intentions to exercise this authority at the present time. We kindly request you to approve the resolution under agenda item 7 – resolution on the authority to issue options and/or convertible bonds and to exclude option rights together with the creation of authorised capital as well as the corresponding amendment to the articles of association. The proposed authorisation should offer GILDEMEISTER various additional financing possibilities. The Executive Board thus has an opportunity, with the approval of the Supervisory Board, to arrange financing that is in the interests of the company when favourable capital market conditions occur. This authority gives GILDEMEISTER the necessary security to be able to use additional financial reserves flexibly and at any time. More detailed information on agenda item 7 can be found in the Executive Board’s report, which is available to view at today’s annual general meeting. This authorisation likewise involves a precautionary resolution; there are no specific intentions to exercise this authority at the present time.

1st Quarter and Forecast for the financial year 2009

Ladies and gentlemen, 

I would now like to address the financial year 2009 and inform you of current developments. The worldwide market for machine tools will decline sharply in 2009. The German Machine Tool Builders’ Association (VDW) and the British economic research institute, Oxford Economics, are expecting a decrease in worldwide demand of 29% to Euro 37.0 billion. The German machine tool market will develop more weakly than the global market and fall by some 42%. Order intake at German machine tool producers was in extreme decline at the start of the year (-70%). For cutting machines, which correspond to our product line, the industry recorded a loss of 73%. In the first quarter 2009 orders shrank both domestically (-73%) and internationally (-72 %).

Over the course of the financial year 2009, even GILDEMEISTER will have to accept losses. We have responded in good time with cost-saving measures amounting to Euro 100 million. During the crisis, however, also opportunities are taken advantage of. We will benefit from our proven business model and our clear corporate strategy. Our diverse mix of customers and industries, as well as our increasingly international presence, make us more resistant. Furthermore, with our solar technology, we have a successfully-developing addition to our core areas of expertise.

On 23 January 2009, at a grand opening, a+f GmbH presented its trend-setting solar center of excellence and thereby took account of the dynamic development taking place at the Würzburg site. On the occasion of the grand opening, the “SkyCarrier“ – an innovative solar tracking system for equatorial countries – was presented for the first time. With the “SkyCarrier“, GILDEMEISTER plans to extend its activities in the fast-growing business area of renewable energy sources.

On 24 March, we opened the new “DMG Experience Center Turn & Mill“ at the Bielefeld site. Together with partners, in the future we will carry out programming and live demonstrations for our customers on their specific workpieces free of charge. Within the scope of supporting applications and offering advice, customer requirements will thus be timely resolved by our specialists.

1st Quarter 2009

Now to the figures for the 1st quarter 2009 and the forecast 2009: 

Order intake of Euro 236.8 million (-60%) in the first quarter was clearly below the record level of the previous year’s quarter (Euro 591.9 million). The Solar Technology division achieved order intake of Euro 28.0 million (previous year: Euro 112.8 million). Order intake suffered a severe setback both domestically and internationally: Domestic orders shrank by 62% to Euro 90.3 million (previous year: Euro 236.7 million). International orders decreased by 59% to Euro 146.5 million (previous year’s quarter: Euro 355.2 million). International orders accounted for 62% of orders (previous year: 60%). As a result of the international economic crisis, order intake showed a strong decline compared to the same period in the previous year. We are hoping that, despite the difficult market environment, our intensified marketing activities will provide a boost in the coming months. 

In the first quarter, sales revenues reached Euro 327.7 million and were thus 16% below the previous year’s level (Euro 392.0 million). The solar technology division contributed Euro 21.8 million to sales revenues in the first quarter. The export share amounted to 54% (previous year: 51%). As a consequence of the international economic crisis, over the further course of the year GILDEMEISTER will also more strongly feel the effects of a reticence to purchase on the part of both domestic and international consumers. This will have a noticeable effect on our sales revenue development. Due to the difficult market situation, we cannot make any valid sales revenue forecasts for the current financial year at the present time. 

As at 31 March 2009, the order backlog in the group amounted to Euro 636.5 million (-33%); this represents production capacity utilisation for machine tools of an average of about four months still. 

Profitability still developed positively in the first quarter 2009: EBIT amounted to Euro 15.5 million (previous year: Euro 25.9 million). EBT of Euro 10.2 million was positive (previous year: Euro 18.1 million). As at 31 March 2009, the group reports annual profit of Euro 6.5 million (previous year: Euro 11.2 million). A more detailed statement for the entire year is not yet possible at the current time due to the economic environment. 

Ladies and gentlemen, meeting and overcoming the challenges of the international economic crisis demands strong alliances. One opportunity is the cooperation with the Japanese machine tool manufacturer, Mori Seiki. GILDEMEISTER entered into a cooperation agreement on 23 March 2009. Together we will realise synergies and, in the interests of our customers, concentrate our resources in order to achieve efficiency advantages. The collaboration includes production, purchasing, the research and development, sales and services in selected markets, as well as the worldwide availability of customer financing. Through this strategic partnership, both companies extend their portfolio of services. We benefit both in the short- and long-term from mutual advantages. The aim of this "win-win" partnership for both sides is to achieve synergies of about Euro 15 million per year. To strengthen the alliance, a cross-shareholding has been agreed. A shareholding of 5% each of shares underscores the long-term character of the cooperation. 

As at 23 March, GILDEMEISTER had purchased 2.3% of the shares of Mori Seiki and plans to increase this up to 5%. Mori Seiki has purchased 2,279,500 (5%) GILDEMEISTER shares, as a result of an increase in equity authorised by you. This authority was granted by the annual general meeting on 20 May 2005. We decided against a capital increase with subscription right, as by this means your company would have received considerably less liquidity. Mori Seiki subscribed to the GILDEMEISTER shares at Euro 7.93 per share. The pricing took place at 23 March 2009 and was based on the volume-weighted six-months’ average course. We would not have been able to realise this issue price by a capital increase with subscription right. The capital increase was registered on 7 April 2009 in the Commercial Register of the Local Court of Bielefeld. Through the issue of 2,279,500 new no-par shares, the total number of shares increased from 43,302,503 to 45,582,003 shares; the authorised capital of GILDEMEISTER Aktiengesellschaft rose from Euro 112,586,507.80 to its current Euro 118,513,207.80. 

Mori Seiki is now the largest individual shareholder in GILDEMEISTER with 5%. The GILDEMEISTER management welcomes the cooperation with Mori Seiki in order to utilise joint opportunities. Ladies and gentlemen, I am delighted today to be able to welcome the president of Mori Seiki, Dr. Masahiko Mori, personally to our annual general meeting and would like to ask him to introduce himself within the scope of the concluding general debate.

Forecast 2009

At the beginning of April, the most important machine tool trade fair in Asia, the CIMT in Beijing, was a success with orders worth Euro 22.5 million and 138 machines sold. The highlights were our industry-specific solutions for automotive and vehicle technology, the aerospace industry and also for medical and energy technologies. Overall the Chinese market showed a positive trend. The state economic development programme especially for industry appears to be taking hold in China. China is the only market for machine tools worldwide where there is still movement and which is performing well despite the economic crisis. A further industry event taking place from 5 to 10 October is the EMO in Milan, where GILDEMEISTER will present 40 exhibits, five of which are world innovations.

Ladies and gentlemen, 

"Exploiting Opportunities. Showing Strengths" – our motto for the year of the economic crisis - shows how we intend to further develop in the future. We have prepared our company for the expected developments and are consistently realigning ourselves with the requirements resulting out of the economic crisis. With our innovative products and our global presence, we are well-equipped to deal with the coming change in the machine tools business. 

For the financial year 2009 we are expecting order intake to be markedly below that of the previous year; as a result, there will be a clear decline in the development of sales revenues and profit. More detailed statements are not possible at present due to the complete change in the world economic environment. The extent of the worldwide economic crisis, its duration and effects on GILDEMEISTER cannot be planned for with sufficient certainty at the moment for the financial year 2009. 

The machine tool business will decline in 2009, the service business will also develop more weakly than was first anticipated at the start of the year. In the solar business, we expect positive development given the precondition of secured project financing. A high degree of flexibility allows GILDEMEISTER to respond appropriately to changing market conditions. GILDEMEISTER remains well-positioned in the important markets and, with consistently initiated measures, we are convinced that we will overcome the crisis.

Ladies and gentlemen, we ask you: continue to trust us. Continue to give us and the company your loyalty and support in the future. We will do everything in our power to ensure that your company emerges a winner from the difficult year 2009 and remains a long-term attractive investment for you! I would like to thank you for your attention. 

Dr. Rüdiger Kapitza
Chairman of the Executive Board
15 May 2009

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.

DMG MORI uses cookies to ensure you the best experience on our website. When you browse the website you agree to our use of cookies. More information on data protection and  revocationImprintExlusion of liability