In the 2011 financial year, the PALFINGER Group continued the clear upward trend of the previous year. “We look back on an outstanding year: After having increased revenue by approximately 30 per cent in 2010 compared to 2009, we achieved another 30 per cent rise in 2011. We thus clearly outperformed our industry and posted the highest revenue in the history of our Company,” says Herbert Ortner, CEO of PALFINGER AG.
Revenue rose by 29.7 per cent from EUR 651.8 million in 2010 to EUR 845.7 million. Apart from the recovery of the markets, the main factor enabling PALFINGER to generate this increase was the further expansion of both its markets and its sales network. Ortner explains that “the internationalization achieved in recent years has not only contributed to this growth but has made it possible in the first place. In the second half of the year, which was ill-omened due to the global financial policy debate, we observed greater restraint in Europe, while the regions outside Europe continued to show positive performance.” In the AREA UNITS segment, which is comprised of the areas North America, South America, Asia and Pacific, India and CIS, PALFINGER stepped up the contribution to the Group’s revenue for 2011 to 26.5 per cent.
In Europe, business in many core markets continued to grow in nearly all product divisions in 2011, with a distinct recovery being observed particularly in the crane business. In Spain, Greece and Portugal, all of which were hit particularly hard by the crisis, markets were still weak during the period under review.
Of the areas outside Europe, North America in particular recorded increases throughout the year, with the acquisition of ETI in the second quarter of 2010 accounting for around one fourth of the increase in revenue posted in these areas. Revenue in Asia and India was stepped up significantly as well, even though revenue generation in these areas is still low. In the area CIS, another major step in PALFINGER’s internationalization strategy was taken through the acquisition of the leading Russian crane manufacturer INMAN in August 2011, which considerably increased the significance of the Russian market for the Company.
Financial position, cash flows and result of operations
EBIT (including associated companies) for the 2011 financial year came to EUR 67.9 million, after EUR 37.1 million in the previous year, which corresponds to an increase of 82.8 per cent. As a consequence, the EBIT margin rose from 5.7 per cent in 2010 to 8.0 per cent. This achievement was made possible first and foremost by the clear increase in demand in nearly all product divisions across all areas, increased productivity and capacity utilization at the plants, and the enhancement of flexibility in all fields. Substantial improvements in the product division Access Platforms also had a positive effect. In the European business unit Hookloaders, turnaround was achieved in 2011. The net consolidated result for the period rose from EUR 24.2 million in 2010 to EUR 42.0 million.
In line with PALFINGER’s dividend policy which provides that approximately one third of the annual profit is to be distributed to shareholders, the Management Board is going to propose a dividend of EUR 0.38 per share be distributed for 2011 (previous year: EUR 0.22 per share), resulting in an increase of 72.7 per cent in payments made to shareholders.
In the 2011 financial year, cash flows from operating activities amounted to EUR 37.7 million, compared to EUR 49.1 million in the previous year. This change was caused by a clearly positive result, the related higher tax burden and the necessary augmentation of inventories in connection with the expanded business volume. Cash outflows for investing activities came to EUR 34.6 million, which is clearly below the previous year’s figure of EUR 54.1 million. Consequently, free cash flows increased from EUR 4.2 million to EUR 11.7 million.
At 47.7 per cent, the equity ratio remained stable (compared to 47.2 per cent in 2010), following an increase in total assets and a simultaneous rise in equity; the gearing ratio decreased from 50.3 per cent to 47.3 per cent.
The Group’s continued pursuit of its flexibility course has helped to counterbalance increasing market fluctuations. Switching to order-based procurement, manufacturing and assembly has enabled PALFINGER to respond to order fluctuations quickly without the risk of locking up excessive capital by increasing inventories. Following a clear reduction in 2010, PALFINGER succeeded in keeping the ratio of net working capital to revenue constant in the reporting period. The capital released made it possible to make investments without significantly augmenting PALFINGER’s net debt.
In order to be able to take corporate actions facilitating greater flexibility in funding, PALFINGER held an Extraordinary General Meeting on 3 November 2011. The Meeting passed a resolution on an authorized capital in the amount of EUR 10 million and authorized the Management Board to buy back own shares. On 1 December 2011, PALFINGER started a share buyback programme to this end. By 31 December 2011, 40,840 own shares had been bought back under this programme. Together with its own shares from a buyback programme ended in 2003, the Company held 368,840 own shares as at the balance sheet date.
In 2011, PALFINGER took a major strategic step in internationalization: Following the takeover of the leading Russian crane manufacturer INMAN, the Group now generates value locally, sells a recognized product and has set up additional sales channels in the large Russian growth market. In the fourth quarter, PALFINGER also increased its share in Palfinger Crane Rus to 80 per cent to ensure the ideal organization of further growth steps in this area.
In India, the assembly site established in 2010 and the intensified market development have already been fruitful. In Great Britain, the approval of the takeover of the tail lift service business of Ross & Bonnyman in Great Britain provided PALFINGER with access to a considerable customer base. PALFINGER is developing a positioning strategy for China in order to be able to participate in the expected market growth.
In the second half of 2011 uncertainty in the European markets increased due to the re-emergence of economic turmoil, causing the economic mood to take a negative turn. The consistent pursuit of internationalization, especially outside Europe, is thus being continued. In recent years, the strategic decision to grow towards the BRIC countries has already proven its worth: Some of the formerly large European markets still have not recovered from the global economic crisis of 2008/09. In contrast, markets that are still young for PALFINGER are performing very well.
At the moment, the internationalization focus is on Asia and Russia, where, along with economic growth, the market potential of PALFINGER is on the rise as well. In Russia, PALFINGER has already taken a major step with the acquisition of INMAN. In China, another important future market, PALFINGER has been promoting target-oriented strategic development to increase local value creation.
The developments that have been observed in the financial markets in Europe from the second half of 2011 onwards will also have an impact on the real economy and thus on the markets that are of relevance for PALFINGER. Nevertheless, PALFINGER is confident that a decline in performance will not reach the same dimensions as in the crisis year 2009: The optimized cost structure, enhanced processes and above all the reduction of inventories at all value-creation stages – from suppliers to dealers – enable PALFINGER to respond flexibly to changes in market demand.
Against the backdrop of the uncertain development of the economy and demand, the management expects a moderate increase in revenue, especially coming from the areas outside Europe, for the 2012 financial year. In addition, the areas North and South America and the business units Access Platforms and Marine Systems are expected to make even more substantial contributions to earnings.
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