Bietigheim-Bissingen, February 28, 2019 – The Dürr Group closed 2018 with new records for incoming orders and sales. While preliminary figures show a 3.4 % increase in incoming orders to € 3,930.9 million, sales rose by 4.2 % to € 3,869.8 million. Adjusted for currency fluctuations, the increases amounted to 5.2 % (incoming orders) and 6.1 % (sales). The operating EBIT margin stood at 7.1 % (2017: 7.6 %) and was thus at the top end of the target range (6.8 to 7.2 %), which had been adjusted in October. Ralf W. Dieter, CEO of Dürr AG: “Despite considerable political and economic uncertainty, we continued our growth trajectory in 2018. This was due, in large measure, to our excellent performance over the last few months of the year.” In the fourth quarter, incoming orders (€ 1,177.7 million) and sales (€ 1,135.8 million) achieved the highest levels of the last few years, while operating EBIT (€ 93.0 million) rose by 20.2 % over the fourth quarter of 2017. Following a strong fourth quarter, cash flow from operating activities increased by € 42.5 million in 2018 as a whole and stood at € 162.3 million.
Thanks to an organic increase in new orders of 28.6 %, the environmental technology division, Clean Technology Systems, posted the largest gains in 2018. Including the US companies MEGTEC and Universal, which were acquired in October, the division’s level of incoming orders rose by as much as 56.6 %. This resulted from the strong demand for exhaust-air purification systems to lower emissions from production processes. Business is growing particularly in emerging markets such as China, with an increasing demand for environmentally friendly production processes.
Incoming orders from the automotive industry also continued to increase. Business in paint shops and final assembly systems (Paint and Final Assembly Systems) rose by 13.8 %. Orders received by the painting robot division, Application Technology, were up 7.8 %, reaching an all-time high of € 632.4 million. The high level of incoming orders was helped by the brisk Chinese business (up 12.1 %) and the electromobility trend. Ralf W. Dieter: “We are benefiting from growing investments in production technology for electric cars. Furthermore, the market entry of new producers of electric cars is expanding our customer base.” Larger orders in 2018 came from Chinese e-car producers such as Sokon and Future Mobility Corporation. The HOMAG Group’s business with the woodworking industry reached a high level of orders (€ 1,336.8 million), despite a slight decline of 2.2 % after the extremely strong growth in the previous year (+17.2 %). Service sales generated by the Dürr Group increased by 9.7 % and, at € 1,039.0 million, exceeded the € 1 billion mark for the first time.
The Group’s operating EBIT (before extraordinary expenses) stood at € 274.9 million and was thus only slightly below the previous year’s level (€ 283.7 million / -3.1 %). The reason for this was a decrease in earnings of around 21 % in paint systems business, resulting from the difficult competitive environment in 2017 and the low margins on incoming orders at the time. By contrast, in 2018 order margins in paint systems business increased again slightly. In addition, the FOCUS 2.0 optimization program made an impact, with EBIT growth expected again for 2019 and 2020. The HOMAG Group contributed the largest proportion to earnings. Despite production and supplier bottlenecks, its EBIT reached an all-time high of € 86.2 million. In the fourth quarter, optimizations in manufacturing and other areas enabled HOMAG to increase its EBIT by 60.6 % to € 27.6 million compared to the previous year’s period.
EBIT after extraordinary effects decreased by 18.6 % to € 233.5 million. After the previous year’s extraordinary income (€ 3.3 million), 2018 was marked by high extraordinary expenses of € 41.4 million. A large proportion of this was attributable to optimization measures aimed at increasing earnings and tapping new growth potential in subsequent years. These include the FOCUS 2.0 optimization program, the discontinuation of the micro gas turbine business, and the acquisition of MEGTEC/Universal. Earnings after taxes developed roughly in line with EBIT and stood at € 163.5 million (2017: € 199.6 million).
Expenditure on research and development reached a new all-time high of € 121.0 million. The most important area of innovation was the digitization of production processes. Dürr introduced, among other things, the EcoScreen Maintenance Assistant and the EcoScreen Equipment Analytics software programs for smart painting processes. HOMAG developed an app family with digital production assistants for machine operators.
The Dürr Group significantly improved its cash flow as planned, which was up 35.5 %. CFO Carlo Crosetto: “2018 once again showed that our business model enables us to generate a high level of cash. The strong cash flow is all the more remarkable given that we had to stockpile inventories to avoid the risk of short-term delivery shortfalls due to suppliers operating at high capacity utilization.” The net financial status was positive, at € 32.3 million, despite the acquisition of MEGTEC/Universal at a purchase price of € 103.9 million. An additional outflow of € 34.8 million was linked to Dürr increasing its equity investment in HOMAG Group AG from 56 to 64 %. The equity ratio improved, rising from 25.6 % to 27.4 %. Investments decreased by 15.5 % to € 74.4 million, after several sites had been built or expanded in previous years.
The acquisition of MEGTEC/Universal saw 865 new employees joining the Group. The workforce grew by 8.9 % to 16,312 employees, half of whom are based in Germany.
Outlook
The outlook is based on assumptions that the economy does not slow down more than expected, no macroeconomic distortions occur, and the political environment does not become increasingly volatile. For 2019, the Dürr Group expects the level of investment in the automotive industry to remain more or less constant. Steady demand is also expected in the woodworking industry.
Sales are set to increase to between € 3,900 and 4,100 million in 2019, and could thus reach the € 4 billion mark for the first time. MEGTEC/Universal will be consolidated for the full year for the first time, and is set to contribute around € 150 million more to sales than in 2018. In terms of incoming orders, the Dürr Group is targeting a range of € 3,800 to 4,100 million. The EBIT margin is set to widen to between 6.5 and 7.0 %. The extraordinary expenses contained in EBIT are anticipated to decrease to around € 25 million and mainly consist of purchase price allocation effects. Adjusted for extraordinary effects, the operating EBIT margin is set to reach between 7.0 and 7.5 % in 2019. As things stand today, the Dürr Group wants to further increase cash flow from operating activities. The number of employees is expected to increase slightly by the end of 2019.
The figures in this press release are preliminary and have not been audited. They have not yet been approved by the Supervisory Board. The 2018 annual report with the final figures will be published on March 22, 2019.
