One key factor for the profit growth was the earnings turnaround at Cleaning and Surface Processing. Due to a realignment this business unit had recorded a loss in 2013; however, the reorganization resulted in a clearly positive EBIT in the first quarter of 2014.
Growing service business also made a larger contribution to earnings. Service sales rose by 10.6% to € 130.0 million and accounted for 24% of the Group’s top line. Ralf W. Dieter: “With our CustomerExcellence@Dürr optimization program, we are enhancing our offerings and efficiency in service business. The growth achieved in the first quarter shows that we are headed in the right direction with our customer-centric approach.”
As part of its innovation course, Dürr stepped up R&D spending by 18.4% to € 11.6 million. There was also a slight 5.1% increase in capital expenditure to € 8.3 million. Driven by increased interest income and reduced interest expense, net finance expense dropped by 19.1% to € 3.8 million. Dürr expects a slight deterioration in net finance expense in 2014 as a whole due to temporarily heightened expense in connection with the new funding arrangements completed at the end of March. These comprise a bond of € 300 million with a coupon of 2.875% and a syndicated loan also valued at € 300 million. CFO Ralph Heuwing: “We have broadened our financial flexibility with this long-term funding. The favorable terms which we were able to secure will have clearly positive effects from 2015.”
Dürr achieved a positive cash flow of € 42.7 million in the first quarter (Q1 2013: € -29.7 million). At € 482.2 million, cash and cash equivalents were at a high level (December 31, 2013: € 458.5 million). Equity grew by 5.1% to € 537.5 million thanks to the strong earnings performance, with the equity ratio widening from 25.7% at the end of 2013 to 26.8%. The net financial status reached a high of € 312.0 million at the end of March 2014.
The Group’s headcount has risen by 475 since March 31, 2013 to 8,259, equivalent to an increase of 6.1%. There were 117 new recruits in the first quarter of 2014. The headcount in Germany rose by 9.2% compared with March 31, 2013 to 3,816. This disproportionately strong increase was due to the acquisition of exhaust-air purification technology specialist LTB GmbH in mid-2013.
Dürr is confident of achieving its full-year targets in the absence of any material deterioration in macroeconomic conditions. It projects order intake of € 2.3 - 2.5 billion and sales of € 2.4 - 2.5 billion for 2014. The full-year EBIT margin should also come to between 8.0 and 8.5%.