Vossloh adjusts earnings expectations for 2006
Having completed extensive internal audits, the Vossloh Group has now revised its earnings expectations for fiscal 2006. According to present estimates, the Executive Board forecasts an EBIT of only €70.3 million and group earnings of €35.6 million. The originally budgeted figures had been €91.7 million and €47.3 million, respectively. With the market environment still congenial, the Group expects sales to grow to the budgeted €1.04 billion.Most of the earnings erosion will be incurred at the Information Technologies division where unexpected problems with individual projects have led to heavy one-off burdens. As a consequence, this division’s negative EBIT of a probable €3.9 million will fall €9.5 million short of the original budget.
Dr. Gerhard Eschenröder, Vossloh AG CEO explains: “The one-off burdens at Information Technologies are solely project related. We will accordingly further improve our project management and step up our project controlling efforts in order to converge in the best possible way our customers’ high quality standards and our own profitability benchmarks for the various business units.”
On the basis of internal audits, the remaining divisions are likely to incur earnings reductions of altogether €7.9 million resulting from a series of smallish items. Restructuring expenses at Rail Infrastructure will probably account for €2.0 million while legal action at Motive Power is estimated to cost €2.4 million.
Other one-off burdens will arise through the refocus of the Company, which includes a review of the strategic orientation while concurrently targeting a marked efficiency enhancement in operating business. The corresponding projects GO 2010 and Vossloh FIT, which were launched in May, will incur consultancy costs probably in the region of €4.0 million in the course of fiscal 2006. Contrary to initial expectations, these one-off burdens will not yet be offset by any net savings in the current year.
Vossloh CEO Eschenröder emphasizes: “For Vossloh, 2006 is a transition period. As part of the planned strategic refocus we will optimize the Vossloh Group’s portfolio and enhance profitability. In doing so, we intend to pave the way for a sustained and successful future for Vossloh.”
Werdohl, June 23, 2006
Contact:
Christiane Konrad, Vossloh AG, phone: (+49-2392) 52-249
Email: christiane.konrad@ag.vossloh.com