Printing Unit Sales Down for MAN AG, But Earnings Improve
Press release from the issuing company
August 14, 2003 -- Highlights from MAN’s recent earnings include:
* Earnings before interest and taxes of e104 million (e74 million) in the first six months of 2003 and earnings before taxes of e24 million (e3 million) show a marked improvement over last year. Strong recovery in the performance of Commercial Vehicles, but losses in the Printing Machines Division.
* Second quarter of 2003 brought substantial improvement in earnings compared with previous quarter, but a drop against the relatively strong second quarter of 2002.
* New orders of e7.4 billion in the first six months of 2003 were 4% below the 2002 figure due to economic and currency influences. Sales rose 1% to e7.0 billion. Significant growth in Industrial Services and Industrial Equipment and Facilities, notable drop for Printing Machines.
* Prospects for 2003: new orders and sales in the order of last year´s figures. Due to the successful turnaround in the Commercial Vehicles Division, prospects of an overall improvement in MAN Group performance.
* Outlook 2004: following consistent restructuring since 2001 and additional measures introduced in 2003, sustained increase in the profitability of the MAN Group. Sharp upturn in earnings expected in 2004 subject to a more positive economic environment.
* Commercial Vehicles: good intake of new orders in July.
Overview: Printing Machines
The economic environment in the graphic industry and consequently the market situation for printing presses continued to be extremely unsatisfactory. New orders in the MAN Roland Group fell yet again by 9% to e706 million compared with last year´s already low figure. In the case of sheetfed printing systems, orders dropped by 5% to e311 million and in the case of webfed presses by 14% to e286 million.
However, successful sales activities have recently been recorded in the sectors of large sheetfed printing systems, including the new R 900 XXL, and commercial webfed offset presses. The distribution and services unit registered new orders of e109 million, more or less equalling last year´s figure.
Sales fell by 20% to e677 million, e286 million of which came from sales of sheetfed systems (-9%), e288 million from webfed systems (-33%) and e103 million from distribution and services (-5%). In the case of sheetfed equipment, second-quarter sales of e169 million were once again significantly higher than in the first quarter (e117 million) when production levels are traditionally low, and only marginally lower than the second quarter of 2002 (e178 million).
On the other hand, webfed presses registered a relatively steep drop in the second quarter of 2003 (e150 million; first quarter of 2003 e138 million) compared with the previous year´s figure (e241 million) which was well above average due to receipt of final settlements for several major orders.
The number of employees has declined by 6% to 10,025 over the past twelve months, a further reduction in the order of 4% being planned for the second half of this year and in some cases already realised. The sheetfed locations in the Rhine-Main region were mainly affected by the personnel reductions, a second settlement agreement involving a further 356 redundancies being concluded in June.
In all, the workforce in the main sheetfed works will have decreased by 1,300 or 30% between mid-2001 and the end of 2004.
Due to the inadequate employment situation in the sheetfed sector, deteriorating prices and falling sales, MAN Roland recorded another significant loss in the second quarter of 2003, which could not as yet be offset by the benefits accruing from the personnel reductions and other cost-saving measures currently underway. The EBIT for the first six months amounted to -e31 million (e14 million), of which -e39 million (-e25 million) resulted from sheetfed activities. Webfed operations continued to generate positive earnings of e9 million (e38 million), which due to the low level of sales were however considerably weaker than the previous year. The distribution and services sector closed with an EBIT of -e1 million (e1 million).
Concepts aimed at reducing costs by e130 million by 2005 are currently being implemented and are expected to bring first improvements in 2003. These will however by no means suffice to neutralise the substantial cost burden arising in particular from the deficits in the sheetfed sector, so that the Printing Machines Division will still be reporting a high loss for the full year of 2003. A considerable improvement in earnings is expected for 2004 as a result of the cost-reduction measures and a return to higher sales volumes, with added stimulus expected from the launch of new models and the Drupa trade fair.
The global economy remained weak during the first half of 2003, although there were signs of a slight upward trend in early summer. Negative impulses came from the Iraq crisis, intermittently soaring oil prices and the outbreak of the SARS lung infection. Meanwhile, these uncertainties are decreasing and prospects improving. However, as yet there has been no full-scale recovery.
The moderate economic upswing in the US continued throughout, mainly as a result of the generally expansive monetary environment which showed considerable further improvement following a marked devaluation of the US dollar. In the countries of Eastern Asia, the slowdown in economic growth continued into 2003, partially due to the SARS epidemic, while in Central and Eastern European countries, momentum weakened, even though their economies still recorded significant growth.
In the euro zone, economic growth almost came to a standstill during the first six months. Whereas domestic demand was nothing more than restrained, foreign demand was curbed by the increasing value of the euro against other currencies.
In Germany, the economy remaines lethargic. Production has been stagnating on a national scale for three years. In addition to the world economic situation, rising unemployment and an on-going lack of consumer confidence continue to dampen both consumer demand and investment activity.
Of those sectors in which the MAN Group operates, Printing Machines and Industrial Equipment and Facilities were most strongly affected by the poor economic situation. The demand for commercial vehicles was also initially subdued, but in June, and to an increasing extent in July, the number of new orders began to rise. The positive project situation points towards mounting signs of a recovery in our fields of activity.
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