KSB Announces 650 Job Cuts in Europe

The KSB Group started the financial year 2004 with a 5.2 percent growth in orders in the first quarter. Sales revenue in the same period was up by 3.6 percent. Growth in the first three months was achieved in particular by the European sales and marketing companies outside Germany and France, as well as companies in the Region Asia / Pacific.

In view of the persistently difficult market situation, the KSB Board of Management only expects the Group to achieve the level of the prior-year figures of € 1193.2 million in order intake and € 1178.1 million in sales revenue. According to Chairman of the Board Josef Gerstner at the financial press conference on 27 April, the Group earnings in 2004 will show the impact of costs for a structural programme.

The KSB Group closed the year 2003 with pre-tax earnings of € 29.8 million (previous year: € 34.3 million). A persistent weakness in demand combined with the unfavourable euro / dollar exchange rate had an adverse impact on business performance.

Furthermore, the sales revenue of subsidiaries outside Europe was down by € 46 million overall after translation into the Group currency of the euro. The consolidated return on sales was down from 2.9 percent in the previous year to 2.5 percent.

The Group's balance sheet total rose by € 67.2 million to € 926.5 million in 2003. This is essentially attributable to the acquisition of new companies and the increase in equity investments.

KSB improved its market position in 2003 with strategic acquisitions. These involved the Dutch specialists in deep-drawn stainless steel pumps DP Industries B.V. and the Spanish pump manufacturer Bombas ITUR, S.A., as well as a few small service companies.

In addition to a growth initiative which is designed to bring KSB more sales by 2010, the Group started its “Structural Programme 2006” in April 2004. With this structural adjustment to the changed market conditions, KSB aims to take a proactive hand in shaping the future, as Josef Gerstner made plain at the press conference.

The programme, he said, is aimed at increasing competitiveness and improving profitability, especially of the European business. A sub-project targeting efficiency enhancement has already been adopted. The associated measures will entail a reduction in staff numbers by around 650 in Europe by the end of 2005. The Chairman of the Board explained that business-related redundancies are intended to be avoided as far as possible.

Another approach currently in preparation, he outlined, is a "site concept" designed to secure profitability in the long term. To this end, the "function and mission of all factories" sites will be reviewed so as to optimize the international division of work in the Group.