PALFINGER recorded excellent growth outside Europe

Nov 11, 2012 Warehousing Ireland Materials Handling 0

---

Consolidated net result for the first three quarters of 2012 rose to EUR 688.2 million
Revenue in non-European areas increased by 43 per cent
Stable result despite decline in demand in European core markets
Continued growth expected due to substantial expansion of business in Asia and acquisition in the Marine Systems business area
EUR million    Q1-Q3 2012    %    Q1-Q3 2011    Q1-Q3 2010

Revenue    688.2    + 10.3 %    624.0    464.9
EBITDA    74.4    + 1.2 %    73.5    40.3
EBIT     52.0    (0.9 %)    52.4    23.7
EBIT margin    7.5 %    –    8.4 %    5.1 %

In the first three quarters of 2012, the performance of the PALFINGER Group was highly satisfactory, given the difficult economic framework. Its internationalization – primarily outside Europe – enabled the Group to continue on its growth path despite the increasing weakness of Europe’s economy, and hence to consolidate its global leading position.

These results confirm the course pursued by PALFINGER AG, comments CEO Herbert Ortner: “Our strategy has proven its worth, and this shows on all levels. Without having pursued our internationalization strategy for many years, not only in America but also towards the BRIC countries, the present growth achieved by PALFINGER would not have been possible. Our increased flexibility and our focus on fixed costs and capital employed have been major factors in generating stable results despite the weakness of markets in Europe.”

The revenue generated in the first three quarters of 2012 came to EUR 688.2 million, which is 10.3 per cent above the revenue of EUR 624.0 million reported for the first three quarters of 2011. Organic growth was achieved in the business areas North America and South America and in the globally operating business area Marine Systems. The acquisitions made in the CIS business area in 2011 accounted for more than one third of the increase in revenue.

At EUR 52.0 million, EBIT for the first three quarters of 2012 was kept at a steady level, comparable to the outstanding figure of EUR 52.4 million recorded for the same period in 2011. The restructuring of the previously weak business units had a positive effect on the development of earnings, and the increasingly difficult situation in Europe was compensated by extraordinarily high increases in earnings in the AREA UNITS segment. Despite the necessity of stepping up resources in connection with the strong growth achieved in the business areas outside Europe, the average EBIT margin for the period remained at a high level, amounting to 7.5 per cent. At EUR 31.7 million, the consolidated net result was generally of the same magnitude as in the previous year, when it came to EUR 32.7 million.

Overall, business in Europe in the first three quarters of 2012 was slightly weaker than in the previous year, and uncertainty in the markets continued to rise throughout the third quarter. This was also reflected in a lower capacity utilization of the European production plants.

On a highly positive note, the satisfactory development of demand in North America and South America and also in Russia remained constant. Consequently, revenue generated by the AREA UNITS segment rose by 43.0 per cent to EUR 225.3 million in the first three quarters, and the segment’s share in the consolidated revenue increased to 32.7 per cent. On this basis, PALFINGER also posted a positive EBIT in the areas still being developed.

In the third quarter of 2012, the Group’s two joint ventures with the Chinese Sany Group were approved by the authorities and immediately started operations. This marked an important step towards further growth, particularly in China. The first crane models have already been sold.

In September, PALFINGER agreed to take over the Brazilian company Tercek Usinagem de Precisão Ltda., thereby strengthening PALFINGER’s market presence in South America. Tercek develops electric-powered bus lifts under the brand name Líbero. The company was looking for a strong partner so as to be able to fund market penetration and expected growth.

Financial Position, Cash Flows and Result of Operations
As at 30 September 2012, the equity ratio was still at a high level, namely 46.4 per cent. Due to the investments made, the gearing ratio rose from the previous year’s level of 50.0 per cent to 51.2 per cent, but has decreased again compared to the first half of 2012.

The average net working capital increased compared to 30 September 2011, rising from EUR 117.8 million to EUR 149.4 million as at 30 September 2012 – primarily in connection with the expansion of business operations. As the earnings situation was satisfactory, cash flows from operating activities were kept at the previous year’s level, amounting to EUR 31.0 million, despite the necessary build-up of inventories in the areas outside Europe. As a consequence of the investments made, free cash flows were EUR 0.0 million in the reporting period.

In October 2012, PALFINGER successfully issued promissory note loans payable in several tranches with a view to optimizing its financing structure. The issue, with a total volume of EUR 77.5 million, has increased the diversification of financing partners, at the same time leveraging on the historically favourable interest rates.

Outlook
In the period under review, PALFINGER implemented the largest project since its IPO in 1999, namely two joint ventures with Sany Heavy Industry, one of China’s industrial giants. Operations were launched in the third quarter of 2012 and will have a positive effect in the future. The foundation for a successful entry into the Chinese market has thus been laid in time to celebrate the 80th anniversary of the PALFINGER Group in 2012, and it is assumed that the Group’s leading position worldwide has been sustainably safeguarded through this step.

PALFINGER’s consistent strategy of internationalization, especially outside Europe, is therefore being continued. At the end of October, PALFINGER achieved another milestone for its globally operating business area Marine Systems. The acquisition of the Norwegian Bergen Group Dreggen AS (Dreggen), a renowned manufacturer of marine and offshore cranes, is a major step towards growth and will open up additional opportunities and new markets to the PALFINGER Group in these areas.

PALFINGER regards its strong brand as a major factor for success, alongside the development and manufacture of its premium products – particularly in view of the increasing uncertainty of the global economic situation. For this reason, suitable brand architecture for all product areas of the PALFINGER Group has been developed with a view to guaranteeing the brand’s value position for the future. This architecture will be gradually implemented in the months to come and will be described in detail in the Annual Report 2012.

Despite the uncertain development of the economy and of demand, particularly in Europe, the management expects a moderate increase in revenue for the 2012 financial year as a whole, resulting from the satisfactory performance in the business areas outside Europe. In addition, it is estimated that the non-European business areas will make higher contributions to earnings.

---