Continuous Growth at Grundfos
The pump group Grundfos has a positive sales growth, but exchange rates and strain on the contribution ratio drags down the result. A revised group strategy will create additional growth and higher profit.
First half year of 2014 shows a turnover of 11.1 billion Danish kroner and a growth of eight per cent in domestic currency. This is equivalent to a growth of two per cent in Danish kroner. The result before taxes amounts to 301 million Danish kroner, which is less than the year before. Solidity has increased from 67 per cent to 69 per cent.
"Looking at the global pump market, we have a strong position. At the moment, we experience a positive growth in China of 18 per cent. At the important North American market, we are moving in the right direction with a growth of 12 per cent. But in other countries, things are standing still. This for example applies to certain places in Europe, where the situation in Russia and the Ukraine also affects the result. Put together, we are not satisfied with the result. First of all, our profit is not good enough, says Grundfos new Group President", Mads Nipper.
The half-year results is especially being dragged down by some key currencies that have taken a negative turn compared to first half-year of 2013. This means, that sales, measured in Danish kroner, have increased with only two per cent during last year. Excluding this, growth would amount to eight per cent.
"Furthermore, we experience a strain on our profit. This is caused by a combination of several things, among others pressure on pricing, product mix and geographical differences. We are definitely not satisfied with this, so we need to secure a cost reduction while at the same time having increased focus on the customers throughout the organisation", Mads Nipper underlines.
Since the turn of the year, Grundfos has been working on an analytical process in preparation for a revised group strategy which is to create both a heightened growth and profit. Mads Nipper expects this work to be finished around the turn of the year.
"I am convinced that Grundfos has a huge potential despite the challenges we meet in the market. We have a solid basis with a strong market position and an organisation of dedicated and capable employees. Together we have to be even more focused and determined in our way of prioritizing, in order for us to strengthen our core business the right places with our energy efficient top quality products and unique technologies for the benefit of the customers and the environment", the Group President explains.
Grundfos expectations for the rest of the year are a modest growth in sales and a total result just below the result in 2013.
Source: Grundfos Holding A/S
