A more successful year for Demag

Demag Cranes AG has exceeded its targets for financial year (FY) 2009/2010. Group revenue at Euro 931.3m was slightly higher than the Euro 900m forecast and EBIT of Euro 4.2m was also above the anticipated Euro 45 to Euro 50m.

Orders up

While the first quarters of the FY continued to feel the impact of the economic and financial crisis, the order situation improved considerably in the second half of the year as the global economy recovered. Order intake at Euro 910.6m was up 8.2% to Euro 841.9m with orders for the Industrial Cranes business segment up 3.6% year on year and up 29.7% to Euro 197m in the Port Technology segment which, in keeping with the other segments, reported that the largest number of orders was generated in Q4 as a result of increased demand for mobile harbour cranes and services.

Revenue down

Although Group revenue was 11.1% down on the previous year, this was due to the company only benefiting from any upswing after a delay of six to twelve months. Accordingly, the positive trend in order intake was not fully felt in revenue terms for the period under review.

Industrial Cranes’ revenue declined by 19.3% to Euro 440.8m, Port Technology by 6.9% to Euro 189.9m while the Services segment revenue remained almost unchanged from the previous year.

Profitability

Group operating EBIT dropped by 83.8% to Euro 4.8m in the Industrial Cranes segment, although in Port Technology this increased from Euro -14.8m to Euro 0.6m. According to the company, this latter satisfactory development was mainly due to the restructuring programme which significantly improved its cost base and lowered the break-even point to around Euro 200m. In the Services segment, operating EBIT declined by a marginal 3.1% to Euro 58.3m.

Restructuring concluded

By the end of the FY Demag had completed its restructuring programme which resulted in a 223 headcount reduction and a new management structure to integrate Group functions under a unified management. This has resulted in shortened decision-making processes, reduced redundant functions, a significant reduction of break-even points and annual savings of around Euro60m.

Refinancing secured

At the end of November 2010, Demag Cranes had refinanced its bank loans ahead of schedule, having signed a credit facility agreement for Euro350m with an international bank consortium. Net debt was not only repaid in full but the company also achieved a FY net cash position of Euro7.2m.

Outlook

Given the positive economic outlook, Demag expects to regain strong rates of revenue growth of between Euro 970m to Euro 1bn in FY2010/2011. By no later than FY 2012/2013, Group revenue is expected to re-attain the record level reached in FY 2007/2008 (Euro 1,225.8m).

Changes in cost structure will allow substantial improvements in operating EBIT and for FY 2010/2011 an operating EBIT margin slightly above the level attained in FY 2009/2010 (5.8%) is anticipated.

Subject to meeting the revenue targets, the company said that it expects Group operating EBIT margin to be back above 10% as early as FY 2012/2013. The operating EBIT margin is then set to climb sharply in FY 2014/2015.”
(Source:www.container-mag.com)