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Dürr optimistic for 2007

Published on 2007-03-30. Author : SpecialChem

Stuttgart -- The Board of Management of Dürr AG presented the annual financial statements for 2006 adopted by the Supervisory Board.

Dürr achieved its target in fiscal 2006 with a strong improvement in earnings. The plant and machinery supplier confirmed its expectation of a further significant earnings improvement in 2007. At the press conference in Stuttgart CEO Ralf Dieter held out the prospect of a dividend payment for fiscal 2007. The positive trend in incoming orders has continued in the first quarter of 2007.

Dürr's Group operating result (EBIT before one-time expenses) rose on slightly lower sales to € 39.1 million in 2006. In 2005 it had amounted to € 3.5 million. Cash flow from operating activities improved by € 137.8 million and was only slightly negative at € -9.8 million. Dürr generated a positive cash flow of € 70.0 million alone in the fourth quarter of 2006. Incoming orders rose more strongly than had been expected in 2006, with an increase of 20% to € 1,459.8 million.

On the Dürr Group's strategic direction CEO Ralf Dieter commented: "We will continue to press ahead with resolve on the path of sustainable earnings improvement in 2007. The Group-wide FOCUS program is being transformed into a continuous improvement process. We want to grow on our own steam and will be taking advantage of the opportunities available to us in the growth markets, in services business and with new customers. A focus will be on new products and developments in the area of energy-saving and resource-conserving systems that take account of environmental aspects."

Dürr improved its gross margin, in other words the difference between sales and the cost of sales expressed as a percentage of sales, to 16.2% (2005: 15.7%) despite the stronger-than-expected downturn in the US market in the second half of 2006. As Dürr has intensified its marketing activities in the growth markets of Asia and Eastern Europe, selling expenses declined only marginally in 2006 to € 94.7 million (2005: € 97.6 million). Administrative expenses fell from € 92.8 million to € 83.1 million as a result of leaner structures and more efficient processes. Other operating income and expenses showed a positive net balance of € 17.8 million (2005: € -5.3 million), with the expenses declining significantly after still containing burdens from the Group's realignment in the previous year.

In addition to the earnings growth at the operating level, improvements in net interest expense also contributed to the better result. The net interest position improved by € 14.2 million versus 2005 to € -21.0 million. Group net income for the year increased to € 7.5 million (2005: € 4.3 million). In 2005 Dürr was only able to report a positive result thanks to high non-recurring income.

At the end of 2006 Dürr had cash and cash equivalents of € 101.5 million (December 31, 2005: € 124.7 million). Net financial debt amounted to € 96.5 million; an increase of € 11.6 million versus December 31, 2005. The cash outflow for restructuring measures in connection with FOCUS amounted to € 21.4 million. Net working capital was reduced significantly to € 154.7 million at the end of 2006 (December 31, 2005: € 171.5 million). This was helped not only by higher prepayments received thanks to the improved order situation but also to positive effects from measures to reduce tied-up capital. The equity ratio rose to 23.6% at December 31, 2006 (December 31, 2005: 20.9%). In absolute terms, shareholders' equity was little changed year on year at € 245.7 million (December 31, 2005: € 248.1 million).

Dürr has completed the capacity adjustments undertaken in connection with the FOCUS program. As announced, a total of 811 jobs have been cut within the Group, 479 of which were in 2006. The focus was on Europe and America. Set against this, new jobs are being created in the growth markets. The number of employees in Asia, for instance, was increased by 21% to 601 (December 31, 2005: 495).

Outlook

Dürr expects new orders within the Group to at least match the high 2006 level in 2007. This is supported by the projects which have been announced or are planned by many automobile manufacturers. Dürr expects a growing volume of incoming orders in the revamp and services business in 2007.

Incoming orders in the first quarter of 2007 should be significantly up both versus the high level in the year-earlier quarter (€ 430.0 million) and versus the level in the fourth quarter of 2006 (€ 299.0 million). As things look at present, sales should come in level with the first quarter of 2006; sales at the business units Cleaning and Filtration Systems and Factory Assembly Systems are still lagging behind.

Dürr CEO Ralf Dieter commented: "For 2007 we expect a substantial earnings improvement which will enable us to pay a dividend." The earnings improvement will be on the back of higher sales, an improved gross margin thanks to the successes of FOCUS and little changed administrative and selling expenses.

Dürr expects the business units Cleaning and Filtration Systems and Factory Assembly Systems, which made losses in 2006, to achieve positive results. This is based on improvements which have been initiated and rising business volumes. Dürr adjusted US capacities to the level of demand in 2006. In all, the earnings improvement potential at Cleaning and Filtration Systems, Factory Assembly Systems and the US business in 2007 is in the low double-digit millions.

Dürr expects cash flow from operating activities to rise appreciably in 2007. The company also plans to achieve a positive free cash flow. This will result in an improvement in net financial debt and liquidity.

The Dürr Group is one of the world's leading suppliers of products, systems, and services for automobile manufacturing. Its range embraces important parts of the vehicle production value chain. As a systems supplier, Dürr designs and builds paint shops and final assembly plants. Dürr also supplies cleaning and filtration systems used in the production of engine and transmission components as well as balancing and diagnostic systems for vehicle components. Approximately 90% of consolidated sales are derived from business with automobile manufacturers and suppliers. Other important customer groups for Dürr are engineering and the chemicals, pharmaceutical, coating and aerospace industries.

Source: The Dürr Group


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