KSB: Results better than in 1999

30.01.2001

Report on the Financial Year 2000: Sustained economic activity

The positive developments in the economy worldwide continued into the second half of the year and, despite first signs of weakness, provided a predominantly stable economic framework. With one or two exceptions, Western European markets also experienced good overall growth. In Germany, this was driven largely by exports, however. The construction industry continued to show no sign of recovery.

The global pumps and valves market overall saw an easing of the situation compared with 1999. The increase in demand put a stop to the erosion of prices that had taken place in some market segments over the years.

Marked increase in orders for pumps

The KSB Group increased its order intake by 9 per cent in the year under review. Germany’s KSB Aktiengesellschaft played an important part in this development with a growth of 11.1 per cent. The order intake rose for pumps in all business units, and also for valves and services. The most dynamic growth was seen in the demand for KSB pumps in the water engineering sector and for systems engineering services.

Even stronger growth was shown by KSB companies in the Regions "Americas" and "Asia/Pacific/Africa" when taken as a whole. The increased value of orders in DM, however, was to a significant extent also attributable to the higher dollar exchange rate compared with 1999. The increase in oil prices gave our project business a boost in the Eastern Mediterranean and Middle East regions.

Owing to the large share of project-related orders involved, which will not be invoiced until the current year or later, the order intake in 2000 was not yet fully reflected in the sales figures. The sales posted in the KSB Group were 1.6 per cent up on 1999, while those of KSB AG were 1.7 per cent below the previous year’s level.

Number of employees reduced in Europe and Asia

The total number of employees fell by 4.1 per cent, with most of the cutbacks taking place in Asia. The biggest reduction of the workforce in this region was made by KSB Pumps Limited of India. In Europe, the number of employees fell as a result of the French production facility in Déville-lès-Rouen changing to a service centre and as a result of outsourcing measures taken in Germany’s KSB Armaturen GmbH. On 31 December 2000, there were 12,263 people employed in KSB companies throughout the Group.

Growth in profit despite extra charges

In 2000, KSB AG and the KSB Group again faced project costs of around DM 21 million for the introduction of its new integrated business system using SAP R/3 software. This burden on the result, however, was about eight million DM less than in 1999.

The costs arising in 2000 for the project aimed at the technical and economic realignment of our European production facilities (TWIN) were covered by accruals.

As forecast in the last interim report of 30 September 2000, both the KSB Group and KSB AG will close with a positive result compared with the previous year.

Prospects for further results improvement

We started the current year with a high level of orders in hand. Despite the anticipated weakening of the economy, we expect a good year and a further improvement in our performance. We will profit here from the successful imple-mentation of our restructuring activities.

In the second half of the year, we shall complete the introduction of the SAP R/3 software in Sales and Distribution, Accounts and Materials Management among our companies in Western Europe. In a next step, the production units will be integrated into the new system.

This new business system also provides the basis for building up our e-commerce activities. We see this area as a major focus of our project work in the current year.

The announced increase in the number of members on the Board of Management to four will involve a realignment of responsibilities in the KSB Group. This will entail organizational changes in our Western European companies, which will become effective in the second half of the year. In this way, we aim to achieve greater transparency, minimize interfaces in the Group and focus know-how in pumps and valves engineering.

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