Ralf W. Dieter, CEO of Dürr AG: “As previously announced, 2015 will be a year of transition in terms of earnings due to the typical acquisition-related extraordinary effects following the takeover of HOMAG. At the operating level, we are fully on course. At this stage, we expect to be able to reach the full-year targets which we have set for order intake, sales and earnings.”
Orders on hand stood at a record € 2.9 billion at the end of March 2015. At 64.5%, growth in service business outpaced sales revenues as a whole. As a result, the proportion contributed by this business widened from 24.1% to 25.2%. Order intake and sales revenues rose – in some cases substantially – in the Paint and Final Assembly Systems and Measuring and Process Systems Divisions.
HOMAG reported record order intake of € 287.2 million and was able to more than double its EBIT to € 12.4 million. Integration within the Dürr Group is proceeding according to schedule. HOMAG will be launching its FOCUS optimization program in June with the primary focus on expansion in China and North America, growth of service and systems business and the optimization of business processes, IT systems and organizational structures. FOCUS will result in non-recurring expenses of up to € 10 million in 2015. HOMAG is being integrated in Dürr’s corporate funding structures in May. This necessitates once-only conversion expense of € 3.9 million in 2015 but will produce annual savings of € 2.3 million from 2016. Synergistic benefits of a total of € 5 to 10 million are expected.
Dürr continued on its innovation course in the first quarter of 2015 with R&D spending of € 21.2 million (up 82%). Capital spending rose from € 8.3 to € 17.3 million for the construction of new business locations in China and the United States as well as a training center in South Korea among other things.
Net finance expense temporarily widened to € 11.9 million (Q1 2014: € 3.9 million) due to the adjustments to group funding as well as further extraordinary effects from the domination and profit transfer agreement with HOMAG Group AG taking effect in March. The contract also caused a temporary increase in the tax rate to 52.7%, thus causing earnings after tax to drop from € 29.2 million to € 17.0 million. However, the tax rate will decline to around 30% again from the second quarter.
At € 39.6 million, cash flow from operating activities in the first quarter of 2015 only fell slightly short of the previous year’s good level (€ 42.7 million). The net financial status came to € 220.2 million, only € 91.8 million lower than on March 31, 2014 despite the intervening outflow of € 228.1 million for the acquisition of HOMAG. The equity ratio temporarily fell to 20.9% as a result of the domination and profit transfer agreement with HOMAG Group AG but should return towards 25% by the end of 2015. Ralph Heuwing, CFO of Dürr AG and CEO of HOMAG Group AG: “Our balance sheet remains solid and we have digested the acquisition of HOMAG well. We are now stepping up efforts to optimize HOMAG so that it can unleash its full potential.”
The Dürr Group had 14,220 employees, including 5,705 at HOMAG, on March 31, 2015. A further slight increase in employee numbers is expected in the course of the year.
OUTLOOK
At this stage, Dürr forecasts order intake of € 3.2 to 3.5 billion in 2015. Sales revenues should come to € 3.4 to 3.5 billion, with the HOMAG Group contributing just under € 1 billion. Dürr anticipates an increase in EBIT in the double-digit millions, accompanied by an EBIT margin of 7.0 to 7.5% in 2015. This reflects the fact that the HOMAG Group’s operating margin currently falls short of the Group average. The extraordinary effects caused by the acquisition of HOMAG primarily arose in the first quarter and will decline appreciably as the year progresses as well as in the coming few years. In the long term, however, the EBIT margin should return to 8 to 10%, driven by operational optimization efforts within the HOMAG Group as well as the rest of the Dürr Group.
