Wresting opportunity from the crisis
Financially robust, Zeppelin is investing in the future – despite declining markets and very modest expectations for the current fiscal year
Friedrichshafen/Garching near Munich, May 14, 2008 (zep/AD).
Defying the global financial and economic crisis, the Zeppelin Group is again making substantial investments in expansion. At the press conference to present the 2008 consolidated accounts, Zeppelin Group Chairman Ernst Susanek outlined the cornerstones of the Group’s strategy for 2009 and beyond, with its focus on growth and development of market opportunities. Despite increasing market risks since mid 2008, Zeppelin succeeded again in posting record sales and the highest cash flow in the history of the company. Taking a forceful stance, Susanek presented the consolidated accounts for 2008 and the forecast for 2009: “Over its 100 year history, Zeppelin has time and again survived extremely adverse conditions. This time will be no different: we’re going to emerge from this crisis stronger than ever.”
Sales record despite difficult fourth quarter 2008
ZEPPELIN GmbH, Friedrichshafen (headquartered in Garching, near Munich), achieved a consolidated sales volume of €2.447 billion in fiscal 2008, 8.4 percent up on the previous year (2007: €2.257 billion), although the global economic downturn clearly shows through in the results for individual quarters. Non-domestic revenues continued to grow as a percentage of overall earnings, increasing from 45 percent in fiscal 2007 to almost 50 percent in 2008.
Overall, the companies in the Zeppelin Trading division were able to achieve slight sales growth owing to the extremely positive development of companies outside Germany in the first half of 2008. With a consolidated sales volume of €2.208 billion, this was a year-on-year increase of 6.1 percent (2007: €2.080 billion). The Trading division therefore achieved 90 percent of group earnings, with unit sales or first rentals of 19,054 (2007: 19,487) new and used construction machines, engines, lift trucks and other machines and attachments. This is just 2 percent less than 2007.
Owing to a high order volume and order intake which remained above the long-term average, the Zeppelin Industry division was for much of the year able to continue its sales growth of recent years. Despite a distinct slowdown in the fourth quarter of 2008 and visible tendencies among plastics producers to postpone handover and commissioning of plants into 2009 and in some cases even into 2010, the sales volume of the Industry division was up 36 percent on 2007, from €176.1 million to €238.7 million. Accordingly, the Industry division was able to make an over-average contribution to raising the performance of the entire Zeppelin Group.
Number of employees again up in international companies
The continued growth of the Zeppelin Group, above all of the trading companies outside Germany and of the industrial division, was reflected in employee numbers. The number of employees in the Group rose by 15 percent compared to 2007 to a total of 6,177 (2007: 5,359). 46 percent of this increase was in the companies of Zeppelin International AG. The reason so many new people were taken on was the rapid expansion of this business until fall 2008, notably in Russia and Ukraine, although the sharp contraction of the market toward the end of 2008 and expectations for 2009 already indicate that headcount in these companies cannot be maintained at present levels. The percentage of the workforce employed outside Germany continued to increase, and now totals 47 percent (2007: 42 percent). The number of trainees across the Group rose by 31 percent to 361 (2007: 275), giving the group a trainee quota of 5.8 percent.
Currency risks put pressure on profits
Explaining the key ratios in the Zeppelin Group’s financial results, CEO Ernst Susanek stated: “The global economic turbulence on our markets, particularly the currency crisis in the non-EU countries of Eastern Europe, is showing through in the development of our profits in 2008.” Pre-tax earnings fell by 16 percent to €98.7 million (2007: €117.6 million). ROS was 4.0 percent in 2008 (2007: 5.2 percent). With €170 million (2007: €148.0 million) overall, however, Zeppelin managed to achieve the highest net cash flow in the history of the company. “In 2008, the Zeppelin Group was successful in strategic, operational and financial terms and has a robust financial basis to get through the crisis successfully,” stated Susanek. This view was also supported by rating agency Creditreform Rating AG, which for the fourth year in succession awarded the Zeppelin Group an A+ rating. “This is a superb value for us, testifying to our top performance and excellent credit rating.”
Further growth through acquisitions
Regarding the current fiscal year, Susanek was reserved in his forecast. The impact of the financial market and economic crisis is also manifest on the markets served by the Zeppelin Group, forcing Zeppelin in recent weeks to revise its 2009 planning downwards. “There is huge uncertainty all round – among our business partners, our customers and not least among our employees,” continued Susanek. During the first three months of 2009, the German construction machine market, the core market of the Zeppelin Trading division, contracted by 57 percent compared to 2008. The crisis has now also taken a grip on the markets served by the Industrial division. With customers in the plastics, rubber and tire industry all experiencing the effects, many projects have been postponed until 2010. “One thing is certain: we’re having to contend with an extremely difficult year, and are bracing ourselves for a decline in sales volume and profits in nearly every company.” Susanek is therefore expecting an overall sales volume for the Group of no more than €2.1 billion. That would be a year-on-year decrease of 14 percent (2008: €2,477 billion). “However, there is considerable uncertainty about these figures.”
Profits also look set to be substantially lower than 2008. Concerning personnel, the Zeppelin Group headcount will be approximately 300 down compared to 2008 (6,177). As things now stand, it looks as if the reductions will take place exclusively in the countries of Eastern Europe, because it is in these countries that Zeppelin will have to contend with massively contracting demand which cannot be compensated in any other way. In the German companies, on the other hand, no redundancies are planned. “We will do everything we can keep the core team. This is top priority for us,” emphasized Susanek at the press conference.
Despite the somewhat gloomy outlook, Zeppelin is taking advantage of opportunities which present themselves. Once again, the Group is investing heavily in expansion “to be equipped earlier than the competition for the recovery when it comes.” To manage the crisis, the company is placing emphasis on a three-fold strategy which CEO Susanek summarized as follows:
To strengthen the group’s market position through an innovation drive
To grow through further acquisitions
To optimize processes and costs and strengthen liquidity
Two acquisitions announced only recently testify to Zeppelin’s commitment to driving this growth strategy. A few weeks ago, the Trading division, Zeppelin Baumaschinen GmbH, acquired a majority shareholding in the company HWS-Süd, Dülmen, which became part of the newly founded HWS Zeppelin GmbH. Specializing in road construction machines, HWS is the leading rental organization in Germany and also has strong used machine business with international orientation.
And, just a few days ago, the Zeppelin Industry division acquired the company Reimelt Henschel GmbH in Rödermark, near Frankfurt. The company is a leader in its segment the processing of bulk solids for the food and pharmaceuticals industries, and also ideally complements the main business segments of the Zeppelin Industrial division. “These two acquisitions open up new markets for us and create new growth perspectives for the future,” concluded Susanek. “Professional crisis management “made by Zeppelin” is a balanced mix of interventions – all about managing challenges successfully and at the same time taking advantage of opportunities.”
Presenting the consolidated accounts for 2008, the CEO of the Zeppelin Group reports on a successful financial year.
(from left to right)
Michael Heidemann, Managing Director of ZEPPELIN GmbH and Chairman of the Management Board of Zeppelin Baumaschinen GmbH,
Ernst Susanek, Chairman of the Management Board of ZEPPELIN GmbH ,
Alexander Bautzmann, Managing Director of ZEPPELIN GmbH,
Peter Gerstmann, Managing Director of ZEPPELIN GmbH and Chairman of the Management Board of Zeppelin Silos und Systems GmbH
85748 Garching bei München
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