Coronavirus pandemic dents KSB business perfomance
Dr.-Ing. Stephan Timmermann (Image source: KSB SE & Co. KGaA)
Order intake, sales revenue and earnings plummeted in the first half of the year, hampered by government-imposed lockdowns in key KSB production countries, reticence on the part of customers to make new investments and deferred service orders.
Order intake was € 1,113 million, € 194 million (- 14.8 %) lower than in the previous year. In the Pumps segment, order intake contracted in the first half of the year by € 124 million (- 14.3 %) compared with the prior-year period to € 743 million. Order intake in the Valves segment also fell to € 171 million, corresponding to a decline of € 33 million (- 16.0 %). The Service segment recorded orders of € 198 million, down € 37 million (- 15.8 %) on the comparative prior-year period.
Sales revenue dropped by € 93 million (- 8.1 %) to € 1,049 million year on year (previous year: € 1,142 million). As a result, earnings before financial result and income tax (EBIT) shrank from € 45 million to € 15 million (- 66.6 %). This includes negative effects from the sale of four French service companies.
Despite the positive EBIT, KSB recognised a write-down on deferred tax assets in view of the subdued business environment. This was a major contributing factor to the net loss of € 28 million reported for the first half of the year.
By exercising strict working capital management, KSB was able to improve the net financial position by € 55 million to € 219 million compared with the prior-year period.
The sites in Germany continued to operate at good capacity thanks to the longer-term project business. Short-time working has been avoided so far, with a few exceptions in Service.
“We have managed to navigate the company through the economic crisis triggered by the coronavirus pandemic on an operational level. Government-imposed lockdowns in key countries coupled with deferred orders for major service and maintenance work dealt a severe blow to order intake, sales and earnings. But thanks to the high level of orders on hand, our international production network and the early action taken to reduce costs we were able to secure our delivery capability and cushion the impact of the lower operating earnings. We will fine-tune this package of measures in line with the evolving economic situation. We are navigating the company by sight, with prudent judgement, but also with heightened vigilance and consistency,” says Dr Stephan Jörg Timmermann, CEO.
KSB is anticipating positive stimuli from the market-oriented organisation implemented on June 1, through which KSB intends to generate growth in both existing and new business areas.
Source: KSB SE & Co. KGaA