KSB Group Improves Sales Revenue and Profits

20.04.2006

At its financial press conference in Frankenthal on 20 April 2006, KSB not only reported good first-quarter figures, but also presented two new members of the Board of Management (Chairman Heinz-Jürgen Otto and Dr. Wolfgang Schmitt responsible for Finance) to the public.

For the first three months of the current business year, the pumps and valves manufacturer reported a consolidated growth of 23.9 percent in order intake and 20.0 percent in sales revenue. On this basis, the Board of Management assumes that 2006 will see KSB exceed the very good performance of the previous year.

According to Chairman of the Board Heinz-Jürgen Otto, KSB also expects to see an improvement in the Group performance in the current year. However, he added, consolidated earnings will still be impacted by restructuring costs, which affect Germany's KSB AG in particular.

For 2005, too, KSB reported strong consolidated growth in order intake (up 13.4 percent to € 1,467.5 million) and sales revenue (up 9.8 percent to € 1,390.3 million). In this context, the first-time consolidation of seven KSB companies must be taken into account for comparison with the 2004 figures. Major contributors to the positive business development were the energy and industry segments. Our business with slurry pumps for the mining sector and pumps for the water industry also expanded substantially in 2005.

The KSB Group earnings before taxes increased from € 22.1 million in 2004 to € 32.4 million. However, the pre-tax earnings of the parent company KSB AG remained negative as a result of the high restructuring costs. For this reason, the dividend proposal to the Annual General Meeting is confined to the payment of a dividend for preference shares as provided for under the Articles of Association.

At the end of March 2006, there were 12,843 people employed in the Group, almost as many as at the same time last year (-9). In Germany, the number of employees compared with the previous year fell by 174 to 4,280, of whom 3,680 were employed in KSB AG. This decrease is largely the result of a partial retirement scheme, under which numerous employees entered the "release phase" at the beginning of the year.

For the current year, KSB has set itself the goal of using its good market position in important sectors for further growth. To this end, the group last year strengthened its global positioning especially in the valves sector. By 2010, an ongoing growth and innovation programme should be tapping into additional sales revenue potential, thanks to the development of new products and services, amongst other things.

To improve competitiveness and profitability, KSB is continuing its European "Efficiency Enhancement Programme". By the end of 2006, this will be yielding savings of around € 100 million compared with 2003.

Increased competitiveness will also come from a new production system, the rollout of which was started last year at four KSB sites in Germany and France. At the heart of this system is a concept of just-in-time production logistics with synchronized handling processes, which makes temporary storage largely unnecessary. In 2006, further production areas will be switched to this new system.

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