Vossloh in 2008: another period of profitable growth
- Sales up 19 percent, EBIT up 24 percent
- Trackage construction business sold
- Higher dividend plus superdividend to be proposed
- Prospects remaining bright
2008 was a period for which Vossloh AG for the second time since 2007 reported all-time highs in like-for-like sales and EBIT. The former rose 18.5 percent to €1,212.7 million, EBIT hiked up 23.9 percent to €137.7 million. Hence Vossloh topped its already upscaled forecast. Excluding Vossloh Infrastructure Services, a business unit sold in 2008, the LFL 2007 sales had amounted to €1,023.3 million, the corresponding EBIT to €111.1 million.
The Group’s key controlling indicator, return on capital employed (ROCE), reached 18.8 percent, an appreciable improvement over the prior year’s LFL 16.5 percent. The EBIT margin totaled 11.4 percent (up from 10.9 on a comparable basis). Hence, the corporate benchmarks of a 15-percent ROCE and a 10-percent EBIT margin were outstripped.
Group earnings jumped from €71.4 million a year ago to €139.4 million in 2008, including a net result of €46.8 million from the discontinued operations of divestee Vossloh Infrastructure Services. Even after deducting this one-off profit and therefore like-for-like, group earnings still surged from €62.9 million to €92.6 million. Earnings per share (EpS) improved from €4.83 to €9.48.
Commented Vossloh CEO Werner Andree: “2008 was another outstanding year for Vossloh and provides us with a sound launching pad for the difficult economic situation. Despite the current economic concerns we look confidently ahead over the years to come. Rail traffic and rail technology will grow in demand, perhaps even more so than now. Indeed, rail transport is the preferred option for addressing the wish for mobility cost efficiently and, most especially, in an eco-friendly manner. In the conurbations and for high-speed links rail systems are comparatively fast and comfortable for passenger movement.”
Proposed dividend up to altogether €3.00
In view of the good 2008 performance, the Executive and Supervisory Boards will propose to the AGM for fiscal 2008 a dividend of €2.00, almost 18 percent above the prior year’s €1.70. Additionally, the payout of a one-time superdividend of €1.00 will be proposed to allow stockholders to share in the gain from the divestment of the Infrastructure Services unit.
Employees
At December 31, 2008, the Vossloh Group employed a global workforce of 4,684, up 6.9 percent or 301 persons compared with the end of 2007 (4,383 employees excluding those at Vossloh Infrastructure Services). The first-time consolidation of Vossloh Cogifer Australia, Sportek, Kloos Oving added 154 to the Group’s headcount. At 83 percent (down from 84), most are employed in Europe.
Rail Infrastructure
Following the divestment of Vossloh Infrastructure Services, the Rail Infrastructure division now comprises just two business units: Fastening Systems and Switch Systems. To improve comparability, Infrastructure Services’ figures have been eliminated from the prior-period results (pro forma representation). Rail Infrastructure reported sales of €707.1 million for 2008, up €152.8 million or 27.6 percent. The increase was the result of vigorous growth in both its business units.
Vossloh Fastening Systems contributed sales of €254.9 million, up €56.5 million or 28.5 percent. All of the incremental sales were generated abroad, with China once again the biggest market. Demand in Turkey was strong in 2008 and on March 6, 2009, the Fastening Systems unit opened its appreciably expanded rail fastener production plant in Erzincan, Turkey, which will chiefly supply fasteners destined for the expansion of the Turkish high-speed rail network.
At €453.6 million, Vossloh Switch Systems reported its highest-ever sales, up €96.3 million or 26.9 percent. Part of the increase was due to the newcomers; yet even adjusted for these, Vossloh Switch Systems showed organic growth of around 7 percent.
Motive Power&Components
Motive Power&Components consists of Vossloh Locomotives and Vossloh Electrical Systems. The division’s sales jumped by €36.1 million or 7.7 percent to €505.0 million, with the Locomotives unit contributing €34.7 million and Vossloh Electrical Systems €1.4 million to the rise.
At Vossloh Locomotives, both the Kiel and Valencia locations reported added sales. Shipments of center-cab locomotives from Kiel were once again made mainly under contracts placed by private rail operators and leasing companies. The Spanish plant generated around one-half of its sales from locomotives, the other half from LRV for suburban trains and bogies.
The Electrical Systems business unit generated increased sales over a high prior-year figure from both light rail vehicle products and trolleybus components. Vossloh Electrical Systems is ready to respond to the foreseeable demand for alternative traction systems with its deliverable series hybrid drive.
Stock repurchase program
On October 15, 2008, Vossloh AG’s Executive Board resolved after Supervisory Board approval to repurchase up to 1,479,582 treasury shares via stock exchange, equivalent to 10 percent of the capital stock. The repurchase program had commenced October 16, 2008, and was completed March 20, 2009, by acquiring the maximum number of treasury shares at a total expense of about €106 million, corresponding to an average €71.86 per share.
Prospects
When presenting its 2008 annual accounts, Vossloh reconfirmed its budgets for 2009 and 2010 published on December 4, 2008. Accordingly, for the next two years the Group is planning further moderate growth rates. For 2009, it is budgeting sales of around €1,291 million and an EBIT of €138 million. Because of the heavier tax burden, the expected group earnings of €86 million will be slightly short of the 2008 figure (adjusted for €46.8 million from discontinued operations). According to the current budget, ROCE as the Group’s key controlling indicator will range around 18 percent for 2009 and hence be above the 15-percent benchmark. Also outperforming the self-imposed target will be the EBIT margin which from today’s vantage point is set to be a good 10 percent in 2009. In terms of EpS, Vossloh is expecting for 2009 an amount of €6.37. For 2010, Vossloh is looking to further growth in sales and EBIT.
Present plans envisage that both divisions—Rail Infrastructure and Motive Power&Components—will over the next two years share in the added growth.
A groupwide capital expenditure program has been launched with the objective of strengthening market positions and fueling growth. Over the next two years around €60 million annually has been earmarked for modernization and expansion programs at the Rail Infrastructure division and the Electrical Systems unit. At the locomotive locations, Vossloh will focus on developing new products.
| Vossloh Group | 2008 | 2007 | Change | Q4/2008 | Q4/2007 | Change | |
|---|---|---|---|---|---|---|---|
| Sales | € mill. | 1,212.7 | 1,023.3 | +18.5% | 309.6 | 293.7 | +5.4% |
| EBIT | € mill. | 137.7 | 111.1 | +23.9% | 31.7 | 36.0 | –11.9% |
| EBIT margin | % | 11.4 | 10.9 | – | 10.2 | 12.3 | – |
| Group earnings | € mill. | 139.4 | 71.4 | 95.2% | 24.1 | 25.5 | –5.5% |
Werdohl, March 26, 2009
Media contact:
Uwe Jülichs
Head of Corporate Communications
Vossloh AG
Phone: (+49-2392) 52-608
Mobile: (+49 172) 2909852
Email: uwe.juelichs@ag.vossloh.com
Investor contact:
Lucia Mathée
Head of Investor Relations
Vossloh AG
Phone: (+49-2392) 52-359
Email: investor.relations@ag.vossloh.com
Today's Vossloh is a global player in the rail technology markets. The Group focuses on its core businesses of rail infrastructure, rail vehicles, and trolleybuses. Reflecting this focus, Vossloh's two divisions of Rail Infrastructure and Motive Power&Components operate under the roof of MDAX-listed Vossloh AG. In fiscal 2008, almost 4,700 employees generated sales of over €1.2 billion and an EBIT of €137.7 million.