• Revenue and EBIT slightly higher than in 2012
• European markets remained weak
• Regions outside Europe and the Marine business area compensated declines
• Management still expects moderate increase for the 2013 financial year
In the first half of the 2013 financial year, the PALFINGER Group managed to further expand its business despite the difficult economic environment, especially in Europe. With a moderate plus in revenue, PALFINGER performed exceedingly well in comparison with other market players and managed to solidify its leading market position. This was based on the constantly positive development of the areas outside Europe as well as the strong performance of the Marine business area. Earnings also rose slightly above the satisfactory level recorded in 2012.
“We are very pleased with the results recorded in the first six months. They were made possible by the internationalization course we have pursued in recent years. The declines in revenue experienced in the European core markets were compensated by increases outside Europe. Especially in the Marine business area we scored huge successes, which is reflected in the large-scale orders obtained in February,” commented Herbert Ortner, CEO of PALFINGER AG, upon the publication of the results.
In the first half of 2013, PALFINGER’s revenue achieved a new record value of EUR 475.1 million, which is 2.2 per cent above the revenue of EUR 465.1 million reported for the first half of 2012. In the first six months of 2013, EBIT amounted to EUR 39.1 million. In comparison with the operating result recorded in the first half of 2012, EUR 37.2 million, this represents a 5.2 per cent increase. In addition to the significant growth in earnings in the AREA UNITS segment and the Marine business area, the acquisition of a larger interest in one of the subsidiaries had a positive one-time effect. Consistent management of fixed costs and capital employed as well as an increase in flexibility have also contributed to these stable results. Thus, the EBIT margin was raised from 8.0 per cent to 8.2 per cent. At EUR 24.7 million, the consolidated net result for the period under review was slightly above the previous year’s level of EUR 23.9 million.
The performance over the individual quarters shows the modest but continuous growth of the PALFINGER Group (revenue Q1: EUR 225.8 million, Q2: EUR 249.3 million; EBIT Q1: EUR 18.1 million, Q2: EUR 21.1 million).
Overall, business in the European core markets was slower in the first half of 2013 than in 2012. In North and South America, demand has been increasing over several quarters; in Russia, the high level already achieved was maintained. Business performance in Asia was positive as well. After the successful dealer conference held in Ningxiang, PALFINGER managed to sell the first cranes in the context of its Chinese joint venture with Sany.
Financial Position, Cash Flows and Result of Operations
At 43.4 per cent, the equity ratio was still at a high level at the end of the first half of 2013. The main reasons for the rise in net debt were the acquisition of Dreggen and the early payment of the earn-out obligation arising from the acquisition of Palfinger Marine in the fourth quarter of 2012, capacity investments in the area units, and the payment of dividends for 2012. These investments were financed through the issue of a promissory note loan in October 2012 and the refinancing of maturing loans. As a consequence, net debt increased in comparison with 2012, and the gearing ratio rose from EUR 53.9 per cent to 63.8 per cent year on year.
The average net working capital increased primarily in connection with the necessity of building up inventories in the growth markets and also as a result of the acquisitions made. The average capital employed rose by EUR 57.4 million to EUR 599.6 million, and is being optimized further.
Cash flows from operating activities increased from EUR 11.8 million in the first half of 2012 to EUR 23.8 million in the first half of 2013. This was caused primarily by the fact that net working capital increased less than in the previous year. Free cash flows were EUR 9.5 million, highlighting PALFINGER’s ongoing financing power.
The changes in market environment that have been going on since the beginning of the global economic crisis have confirmed the importance of the three strategic pillars of the PALFINGER Group – internationalization, innovation and flexibility. Without the consistent implementation of this strategy, the growth recorded by the Group would not have been possible. PALFINGER will therefore continue to pursue its long-term Group strategy in order to generate sustainable, profitable growth in the future as well. The next steps towards growth will most likely be taken primarily in Brazil and Russia and also in the Marine business area. The establishment of the joint venture in China is also expected to bear first fruit in the course of 2013.
The Group’s flexibility will be continuously developed in all fields. Moreover, PALFINGER expects that the Group’s major competitive advantage – its global organization – will be enhanced thanks to its Group-wide value-creation project.
The visibility of PALFINGER’s business continues to be limited due to prevailing market uncertainty. However, even though the economic outlook at mid-year is less optimistic and Europe does not seem to be recovering to the extent expected, PALFINGER’s trend monitoring still suggests ongoing positive development. As a consequence, the management still expects a moderate increase in revenue, coming primarily from the areas outside Europe and the Marine business area, for the 2013 financial year. In addition, it is estimated that these areas will make even more substantial contributions to earnings.
PALFINGER sees the potential to double consolidated annual revenue to approx. EUR 1.8 billion by 2017. The Company intends to reach this goal primarily by boosting the introduction of the entire product portfolio in the BRIC markets. The Marine business area harbours great potential as well. The management plans to reach this long-term revenue target through organic as well as inorganic growth.
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