Vossloh looking back on a heartening first six months of 2005
EBIT up despite burdens / Clear improvements in Q2/2005In spite of the still troubled situation in certain rail industry markets, the Vossloh Group can look back on a heartening first six months of 2005. At €439.1 million, H1 sales were €33.9 million or 8.4 percent above the prior-year €405.2 million. Sales of €29.4 million at the diesel locomotive plant acquired from Alstom as of April 1, 2005, and now operating as Vossloh España, were included in the accounts for the first time. Even though this acquisition was not—as originally planned—closed at the start of the year, Vossloh España’s sales contribution completely offset the severe revenue shortage at Kiel-based Vossloh Locomotives GmbH caused by the lack of invitations to bid for diesel locomotives.
The still adverse trend affecting the German rail industry, surging steel prices, as well as the situation in the diesel locomotive market had prompted Vossloh to launch a groupwide efficiency enhancement and cost reduction program at the start of the year. The problems are most conspicuous at the Kiel plant, where for some time the high production figures of previous years will be beyond reach. However, the previous market shares have been maintained. The restructuring costs were adequately provided for in the H1/2005 accounts.
In spite of these one-off burdens and the sharp rise in steel prices compared with the preceding year, EBIT rose by €0.5 million to €36.5 million during the first six months of 2005.
As a consequence of net interest expense rising by €3.5 million, group earnings came to €16.6 million, falling short of the prior-year €19.3 million. The higher interest expense was mainly due to the funding of the Valencia locomotive plant acquisition and a somewhat higher interest rate level than the year before.
The trend in the second quarter of 2005 was especially encouraging, with substantial sales and earnings hikes recorded between April and June 2005 versus Q2/2004. Second-quarter sales surged by 22.0 percent in 2005, from €208.0 million to €253.7 million. Compared with the prior-year period, EBIT accelerated by some 32 percent from €19.3 million to €25.4 million. At €13.1 million, group earnings in Q2/2005 were 21 percent or €2.3 million above the year-earlier level of €10.8 million. "This latest trend demonstrates that we picked up pace during the second quarter, which we will seek to increase further in the months ahead," stressed Vossloh AG’s CEO Burkhard Schuchmann at the presentation of the semiannual report.
A glance at the regional breakdown of sales reveals a substantial decline in domestic German business, whose share has fallen drastically from 31.8 percent in H1/2004 to 17.7 percent during the period under review. In contrast, sales in France have risen markedly, exceeding the revenues generated in Germany for the first time. France accounted for one-quarter of group sales in H1/2005, for example. During the first six months of 2005, sales in Europe excluding Germany came to €322 million, representing about three-quarters of total group sales. “This proportion emphasizes that Vossloh has meanwhile graduated into a European player, and also shows that such a strong international base largely helps our group offset shrinking business in certain markets (like Germany at present) with incremental sales elsewhere,” added Schuchmann.
As of June 30, 2005, Vossloh employed a worldwide workforce of 4,745, up 10.1 percent or 435 employees from June 30, 2004. This increased headcount was chiefly due to the first-time inclusion as of April 1, 2005, of Vossloh España with some 460 employees.
In spite of the delayed acquisition of the Valencia-based diesel locomotive plant, group sales are expected to rise by some 10 percent to about €1,013 million during the current fiscal year, after taking account of all presently foreseeable sales risks from project business. Even if the most recently announced sales target of €1.06 billion is not completely achieved, from today’s perspective Vossloh group earnings are still predicted to reach €47.4 million for the entire year, with EBIT amounting to a good €91 million.
Werdohl, July 26, 2005
For more information contact
Christiane Konrad, Vossloh AG, phone: (+49-2392) 52-249