Annual Report Year 2001: KSB Group again reports improved results

A major contribution to this improvement came from its two core companies KSB AG in Germany and KSB S.A. in France.

KSB AG in Frankenthal increased its profit from € 10.1 mil-lion to € 17.5 million. And KSB S.A. in France, which posted a loss in the previous year, achieved the turnaround in 2001 from – € 2.5 million to + € 2.4 million. The other European KSB companies also showed a substantial improvement in their overall result.

Although KSB companies in the Region Asia / Pacific / Africa managed a positive result, they nevertheless remained below the previous year’s performance. This decline was ex-plained above all by business developments in India and Australia. In its joint venture in China, which developed well during the year under review, KSB managed the turnaround and reported a positive result.

The companies in the Americas, too, failed to match the previous year’s results in 2001, due amongst other factors to the currency exchange turbulence in Latin America. Overall, however, KSB companies in the region reported a markedly positive result. Argentina, Mexico and Venezuela are experiencing deep-seated problems in the market. Here, KSB is planning radical measures for the current year in order to eliminate the loss situation.

Slight growth in orders within the Group

Despite the difficult economic situation, the KSB Group managed to increase its order intake by 2.1 percent to € 1,182 million. Exceptions to this positive development, however, were the two core companies in Germany and France, whose domestic markets were affected by a particularly weak demand for pumps. The volume of orders received in the year under review thus fell by 1.7 percent in KSB AG and by 3.2 percent in KSB S.A. By and large, the European companies outside Germany and France showed double-digit growth in order intake.

The Group companies in the Americas increased their order volume in total by 6.4 percent, a major contributory factor here being the strong demand from the USA for power station and waste water pumps. In the Region Asia / Pacific / Africa, order intake fell overall by 9.5 percent.

Marked increase in Group sales

Thanks to the high level of orders on hand at the beginning of 2001, KSB was able to increase Group sales by 5.9 percent to € 1,162 million. The core companies in Germany and France contributed to this performance with growth rates of 7.9 and 6.5 percent, respectively. The KSB sales organi-zations in Europe also showed double-digit growth in sales overall.

The sales of the companies in the Americas remained almost unchanged, with a slight dip of – 0.9 percent, whereas the companies in the Regions Asia / Pacific / Africa overall posted a sales increase of 2.1 percent.

Development in number of employees

In the year under review, the number of KSB employees in total showed only a slight decrease. At the end of 2001, 12.071 people were employed in Group Companies, 1.2 percent fewer than at the same time a year earlier. This slight decline was mostly accounted for by personnel measures in a few non-European companies.

The number of KSB AG employees decreased by 1.5 percent to 3,254, but overall the staff level in the German companies remained almost unchanged.

Investments in tangible assets increased

The Group increased investments in tangible assets in 2001 from € 22.4 million to € 27.9 million. A particular focus of investment activity was KSB AG, where capital expenditure rose from € 5.9 million to € 9.0 million. By contrast, a marked decrease was reported for investments in intangible assets. The prior-year figure for intangible assets had included the addition of goodwill from the complete acquisition of minority interests in our two Italian companies.

As in previous years, the Group financed all investments from the cash flow.

Stronger equity and net financial position

In 2001, KSB again slightly increased the consolidated percentage equity, which now is 35.4 percent. The reduction of financial liabilities strengthened the net financial position, which at the end of 2001 amounted to + € 38.5 million.

Outlook

The anticipated economic recovery will be reflected with something of a time lag in the Group figures, as is customary in the pumps and valves sector. For the current year, KSB therefore expects order intake, sales and profits to remain at the same level as in 2001. Aiming to offset weaknesses in demand, KSB will be stepping up activities in a number of high-volume European markets outside Germany and France.

For the future, KSB is banking on process and product innovations and aiming to develop new applications for the product range and to launch regional market initiatives. Through an expansion of services in the field of automation and drives, all-in package solutions will be offered right through to the turnkey installation of pumping stations. KSB also sees substantial sales potential in e-commerce, where the company is taking on a pioneering role in the capital goods sector.

To further improve IT structures, KSB aims to switch its production systems throughout Europe to the standard SAP R/3 software over the next three years. This will be accompanied by a reengineering of production processes. In sales and distribution, materials management, finance and accounting, all European companies in the Group have already been working with an SAP R/3-based system since mid-2001.