Aalberts Industries posts 27% rise in net profit, organic growth in turnover 7%

Transcription

1 date 2 March 2005 more information J. Aalberts info@aalberts.nl phone +31 (0) Aalberts Industries posts 27% rise in net profit, organic growth in turnover 7% 2004 excellent year thanks to growth of market share and introduction of innovative products Highlights 2004 Turnover increases 14% of which 7% organic Net profit rises by 27% to EUR 68.4 million (7.6% of turnover) Earnings per share of EUR 2.82, an increase of 25% Cash flow (net profit plus depreciation) reaches EUR million (up 16%) Dividend goes up 25% to EUR 0.70 Capital base increases to 34.2% of total assets (2003: 32.7%) Strong position is US Flow Control market Growth in market shares in both Western and Eastern Europe Key figures in EUR millions before amortisation of goodwill Change Turnover % Operating profit (EBITA) % Net profit % Average number of ordinary shares % Net earnings per ordinary share (x EUR 1) % Cash flow (net profit plus depreciation) % Capital base as a % of total assets Interest-bearing debt % Interest cover (EBITA / Interest charges) Gearing (Interest-bearing debt / Group equity) Jan Aalberts, President & CEO: The results for 2004 are excellent. We achieved strong growth in a market that otherwise hardly grew. All group companies contributed positively to our operational results. In many markets, we increased both our turnover and market share. We re using our extensive international sales network more intensively to seize market opportunities faster and reach more potential customers. Aalberts Industries N.V. Sandenburgerlaan CS Langbroek P.O. Box AA Doorn The Netherlands Trade register Utrecht No (t) +31 (0) (f) +31 (0) ABN AMRO Bank No (e) info@aalberts.nl (w) VAT No. NL B06

2 In 2004, we had more success than ever in launching innovative products. Acquiring the US company Elkhart Products has not only made us a major player on the US Flow Control market, it has also created a bridgehead for further expansion in America, where we soon expect to be earning much of our turnover. We re also growing in Eastern Europe, and we see ample potential for further growth in existing markets. Financial results (before amortisation of goodwill) Turnover increased to EUR million, or by 14%. The operating profit amounted to EUR million, up 18% on The cash flow (net profit plus depreciation) amounted to EUR million, 16% more than in Net profit rose in 2004 by 27% to EUR 68.4 million. Earnings per ordinary share came to EUR 2.82, an increase of 25%. Return Ratios The return on capital employed was approximately 15% (2003: some 14%). Group equity at the end of the year under review amounted to EUR 270 million and the capital base to 34.2% of total assets. Interest-bearing debt rose to EUR million (EUR million in 2003). The key financial ratios improved considerably: the debt service ratio (interest-bearing debt/ebitda) from 2.6 to 2.4 the interest cover from 5.3 to 7.2 the gearing from 1.6 to 1.3. Dividend In conformity with Aalberts Industries policy to consistently set aside some 25% of the profit achieved for dividend distribution purposes, the Annual General Meeting of Shareholders will be asked to declare a dividend for 2004 of EUR 0.70 per ordinary share having a nominal value of EUR The dividend is payable in cash or, at the option of shareholders, in the form of ordinary shares. This amounts to a dividend increase of 25% (2003: EUR 0.56 in cash or as stock dividend 1:41). The percentage of the stock dividend will be announced at the end of March Operational developments Industrial Services Growth Turnover of Industrial Services increased by 9% to EUR million. Growth was fully organic. The operating profit over 2004 amounted to EUR 43.7 million, an increase of 13% compared to last year. The positive results were due in part to the organisational adjustments implemented during Netherlands The activities of Industrial Products in the Netherlands, which are now coordinated by a single management structure, grew strongly thanks to close collaboration and a combined approach to the market. The activities in the Netherlands did especially well in making the most of the preference of large customers to work with as few suppliers as possible. The new organisational structure also yielded good results in the areas of cost savings and efficiency improvements. France The Industrial Services activities in France achieved substantial growth in A number of large customers who outsourced large product packages in full to the Aalberts Industries Group contributed to this. A development of note was the page 2 of 11

3 growth of Aalberts Industries market share in biomedical products (including prostheses) in France. Poland Based on a combined Dutch / French effort, Industrial Services started activities in Poland in the year under review. The new Polish company, Metalis Polska, serves as the vehicle for these new activities, whose scale was still limited in These operations aim to take advantage of industrial activities in Poland, which have been growing as a result of industries hitherto established solely in Western Europe relocating their production facilities to Eastern Europe. Turnover growth R&D material technology Capital expenditure Material technology turnover advanced in all countries relative to The results, too, were better in nearly all countries. In the areas of purchasing, capital expenditure and research & development, European structures are now in place which yielded their first results as early as the year under review. For research & development in particular, new processing methods have been developed for both surface and heat treatment. Significant breakthroughs were achieved, among other things in improved coatings to replace the environmentally harmful hard chrome process and the heat treatment of stainless steel products. The growth potential of these new technologies is promising, and the first increases in turnover are set to be achieved in The group company Imecotec developed newly patented treatment methods for fibreglass reinforced plastics. The market launch of the technology developed by this company was successful. A modest turnover was achieved with this technology in 2004 owing to delays in introducing this technology at one of our largest German customers. A substantial turnover is expected for Capital expenditure in respect of the Industrial Services activities reached EUR 23.9 million in In addition to the usual investment in replacements, new means of production were invested in at various locations as a result of specific long-term projects with leading customers. These investments are in line with the aim of Industrial Services to achieve growth in its activities based on specialised, unique production technologies. Flow Control Growth Turnover of Flow Control increased strongly from EUR million in 2003 to EUR million in the past year. While Raufoss Water & Gas and Elkhart Products added most to Flow Control s significant growth in turnover in terms of quantity, this growth (some EUR 60 million) was in no small measure driven organically (4%) as well. The operating profit increased from EUR 49.5 million in 2003 to EUR 60.3 million over Raufoss Water & Gas Raufoss Water & Gas is a major player in the European market for high-tech fittings applied predominantly in water and gas main distribution networks. In addition to a strong position in its home market (Norway), Raufoss Water & Gas is market leader in France and Germany. The company, which was taken over as of 1 January 2004, achieved a good result. In the meantime a start was made on utilising the Norwegian sales organisation for other products sold by the group. page 3 of 11

4 Elkhart Products Eastern Europe Russia Poland Slovakia Hungary Western Europe For Flow Control, the takeover of Elkhart Products is a breakthrough into the US and Canadian markets. Organically, developments at Elkhart Products have been good since its consolidation as of 1 August The company made a distinct contribution to Flow Control s results. Apart from the three production facilities forming part of Elkhart Products, the takeover included a sales and distribution network, covering the whole of the US with 24 points of sale, and its own sales organisation in Canada. In close collaboration with Yorkshire Fittings, preparations started in the last quarter of 2004 involving the introduction of a number of new products to the North American market in mid The products are based on a number of fitting technologies which Yorkshire Fittings developed for the European market. Organic growth was strongest in Eastern Europe, and especially in Russia. Growth in the Russian market, which has been considerable in recent years, continued unabated in 2004, with good prospects for the coming years. The group s own production and sales organisation in Russia is an important contributory factor in this success. The building of a new production plant, started in 2004, will double production capacity in Furthermore in the East European countries, the position in Poland in particular was strengthened. In addition to our leading position in the area of products for district heating, our other Flow Control companies in Poland were also able to benefit from positive trends in the Polish market. The sales of heating products and systems fared well. Investment in the expansion of production capacity also took place in Poland. The German Meibes organisation set up its own sales channel to develop the Slovakian market. The expansion of Yorkshire Fittings Hungarian production capacity, started in 2003, was taken into service during 2004, and this company has now started developing its own sales activities in Hungary. In the year under review, higher turnover figures were achieved in all Western European markets as well. Market share was enlarged in many of these countries. Developments in the market for steel and stainless steel fittings were particularly successful. In 2004, demand for these products was so strong that for long periods production capacity was insufficient. Investment in new equipment is accordingly required to be able to take appropriate advantage of the persistent strong growth in demand for these products. Capital expenditure Total capital expenditure in Flow Control amounted to EUR 17.6 million. page 4 of 11

5 Multi-branding Multi-branding, in terms of which the strongest business name per country or region is combined with the brand names relevant to that country or region, contributed to growth in turnover in a number of countries in 2004 as well. This combined multibranding strategy forms part of Aalberts Industries aim in the area of Flow Control to offer the widest possible complementary range of products. In this respect, as one of the few providers in Europe with a decentralised structure and a presence in many European countries, Aalberts Industries is in a position to take account of regional and national differences. While sales of dispense systems remained unchanged, profits increased strongly in In Europe and the US, Aalberts Industries was well able to maintain its position as the second largest supplier of dispense systems while its share in a number of local markets rose slightly. More focus on product and market development contributed to this growth. R&D dispense systems Important developments took place with respect to activities in the area of dispense systems. In close collaboration with the European automotive industry, much work has been done in the past few years on the development of a new natural gas fuel system. These efforts were crowned with success with the introduction in 2004 of a newly patented dispense system. Especially its safety aspects play an important part in this new system. The first orders were received in late The development of dispense systems for hydrogen as the fuel of the future has been proceeding for some years. The first results of these developments are expected in A number of new pressure regulators for application in mobile oxygen-dispensing devices have been developed for the home-care market. These devices make it possible for patients to revalidate in the comfort of their homes. Organisation In 2004, the management board fleshed out its aim to create the organisational structures required to enable the group s continuous and unimpeded growth in its market as a whole, while at the same time ensuring that this growth and the organisation as a whole are properly managed and controlled. Furthermore the new organisational structures will contribute to efficiency improvement and quicker decision-making. In this respect, the tasks of a number of coordinating management board members have been substantially broadened, resulting in fewer individuals reporting to the Aalberts Industries management board. This process will lead to further adjustments in the organisational structure in the course of Number of staff Including acquisitions, the number of staff rose from 6,325 to 7,131. The acquisition of Elkhart Products (with some 580 staff) in particular contributed to this. Some 100 staff were added as a result of the acquisition of Raufoss Water & Gas. Efficiency improvements and the reallocation of a number of activities within the group led to a decrease in staff at various companies. Labour productivity in the group as a whole was up. page 5 of 11

6 IFRS still in a state of flux IFRS Effective 1 January 2005, Aalberts Industries reporting will be in compliance with IFRS. Since these reporting standards are still in a state of flux, the final presentation of the figures may differ from the figures arrived at on the basis of current perceptions. For Aalberts Industries, the main IFRS topics are: Discontinuation of amortisation of goodwill Recognition of defined benefit pension commitments on the balance sheet Classification of cumulative preference shares as debt Recognition of leases on the balance sheet. Effects Based on current perceptions, we can summarise the effects of implementing IFRS in 2004 as follows: Balance sheet total would increase by about 5% A limited effect on the capital base Net profit would be higher by the amount of amortisation of goodwill (EUR 12 million) The pension charges would remain around the same level in the profit and loss account Earnings per share (before amortisation of goodwill) would be hardly affected The presentation of the interim figures for 2005 will include the IFRS compliant opening balance sheet as at 1 January 2004, and the adjusted figures for the first half of Organic and acquisitions Sound financial position Outlook Aalberts Industries good performance in 2004 has shown once more that the strategy it follows is successful over the longer term. Its capacity to achieve continuously sound growth, using both organic and acquisition strategies can therefore be relied upon in 2005 as well. The significant consolidation of Aalberts Industries market positions in Western Europe, the US and Eastern Europe has positioned it well to benefit from any upturn in economic activity in any of these regions. As in past years, new products and technologies will find their way to the various markets in 2005 and make their contribution to growth. The company s sound financial position will enable it to act swiftly to take advantage of new opportunities in the market and invest in capital expenditure projects as required. All in all, and barring unforeseen circumstances, the board of management expects the company to forge ahead in 2005 in line with previous years. Annexes: Consolidated balance sheet Consolidated profit & loss account Consolidated cash flow statement Key figures Information per group activity Financial agenda 2005 page 6 of 11

7 CONSOLIDATED BALANCE SHEET AS AT 31 DECEMBER 2004 before profit appropriation (x EUR 1,000) ASSETS Fixed assets: Intangible fixed assets Goodwill 214, ,713 Tangible fixed assets Land and buildings 100,964 84,847 Plant and equipment 138, ,058 Other fixed assets 8,392 8,698 Fixed assets under construction 7,218 1, , ,492 Financial fixed assets 99 1, , ,238 Current assets: Stocks Raw materials and consumables 45,355 37,723 Work in progress 43,153 36,848 Finished products and goods for resale 85,818 64,060 Other stocks 8,950 8, , ,615 Debtors Trade debtors 117, ,877 Other debtors, prepayments and accrued income 17,764 16, , ,209 Cash at bank and in hand , ,913 Total assets 788, ,151 PASSIVA Group equity * Shareholders' equity 267, ,900 Minority interests 2, , ,282 Provisions Pensions 9,181 9,021 Deferred taxation 8,731 7,876 Other provisions 4,137 6,820 22,049 23,717 Long-term liabilities Subordinated loan - 15,180 Other loans 181, , , ,956 Current liabilities Credit institutions 115,927 92,350 Current portion of long-term liabilities 53,733 62,930 Trade creditors 70,703 63,770 Taxation and social security charges 21,340 13,261 Other amounts owed, accruals and deferred income 53,815 46, , ,196 Total group equity and liabilities 788, ,151 * These items make up the capital base page 7 of 11

8 CONSOLIDATED PROFIT & LOSS ACCOUNT FOR 2004 (x EUR 1,000) Turnover 897, ,589 Movement in stocks of finished products and work in progress 3,576 (16,306) Own production capitalised Other operating income 5,635 6,546 9,488 (9,493) Total operating income 907, ,096 Costs of raw materials and consumables 258, ,885 Costs of subcontracted work 41,855 25,695 Personnel expenses 288, ,110 Depreciation of tangible fixed assets 41,825 41,656 Amortisation of goodwill 12,013 11,162 Other operating expenses 172, ,695 Total operating expenses 815, ,203 Operating profit 91,921 76,893 Interest charges 14,522 16,724 Group profit on ordinary activities before tax 77,399 60,169 Tax on profit on ordinary activities 17,895 14,548 Share in result of participating interests Group profit on ordinary activities after tax 59,504 45,207 Minority interests 1, Net profit 58,342 44,750 Dividend on cumulative preference shares 1,998 2,239 Net profit for ordinary shareholders 56,344 42,511 Net profit before amortisation of goodwill 68,357 53,673 page 8 of 11

9 CONSOLIDATED CASH FLOW STATEMENT FOR 2004 (x EUR 1,000) Cash flow from operating activites Operating profit 91,921 76,893 Depreciation of tangible fixed assets 41,825 41,656 Amortisation of goodwill 12,013 11,162 Changes in provisions (2,707) (2,603) Changes in working capital: Change in debtors (373) 11,475 Change in stocks (18,650) 22,199 Change in current liabilities (426) (16,702) Changes in working capital (19,449) 16,972 Cash flow from operations 123, ,080 Interest charges (14,522) (16,724) Tax on profit (10,720) (9,448) Cash flow from operating activities 98, ,908 Cash flow from investing activities Disposals/acquisitions of group companies (70,033) (24,230) Investments in tangible fixed assets (42,159) (30,719) Disposals of tangible fixed assets 2,707 5,389 Exchange differences on tangible fixed assets 1,606 5,201 Investments in financial fixed assets 935 (56) Cash flow from investing activities (106,944) (44,415) Cash flow from financing activities Long-term liabilities contracted 60,941 27,967 Share issue Repayments on long-term liabilities (67,019) (58,824) Dividend paid (4,750) (6,671) Change in minority interests 760 (103) Exchange differences and other movements (5,017) (11,216) Cash flow from financing activities (14,971) (48,847) Net cash flow (23,554) 24,646 page 9 of 11

10 KEY FIGURES Result (x EUR million) Total operating income 907,2 775,1 715,2 614,1 482,6 Turnover 897,7 784,6 706,1 603,7 474,4 Operating profit 103,9 88,1 84,2 68,9 59,3 Net profit 68,4 53,7 47,0 37,8 35,2 Depreciation 41,8 41,7 39,4 32,9 26,1 Cash flow (net profit plus depreciation) 110,2 95,3 86,4 70,6 61,4 Cash flow from operations 123,6 144,1 120,6 98,1 63,2 Balance sheet (x EUR million) Intangible fixed assets 214,2 201,7 199,4 95,6 - Tangible fixed assets 255,4 226,5 240,1 205,2 169,5 Investments in tangible fixed assets 41,5 32,5 30,8 46,4 36,6 Group equity 270,0 213,3 181,5 90,9 62,1 Capital base 270,0 228,5 211,8 136,4 96,2 Interest-bearing debt 350,7 338,2 394,8 308,2 226,7 Total assets 788,6 699,2 735,7 536,4 381,4 Employees at year-end The Netherlands 1,478 1,407 1,552 1,546 1,643 Other countries 5,653 4,918 4,833 4,037 2,767 Total 7,131 6,325 6,385 5,583 4,410 Ratios Operating profit as a % of turnover Interest cover Net profit as a % of turnover Capital base as a % of total assets Interest-bearing debt / Group equity (gearing) Shares issued (x million) Ordinary shares (average) 24,2 23,7 21,9 19,5 19,2 Ordinary shares (at year-end) 24,2 23,7 23,2 19,5 19,2 Cumulative preference shares 2,10 1,95 1,95 1,80 1,80 Figures per ordinary share Cash flow 4,55 4,02 3,95 3,63 3,19 Net profit 2,82 2,26 2,15 1,94 1,83 Dividend 0,70 0,56 0,50 0,48 0,46 Share price at year-end 35,70 20,53 14,80 22,05 26,00 Before amortisation of goodwill page 10 of 11

11 INFORMATION PER GROUP ACTIVITY (x EUR 1,000) Industrial Services Turnover 394, ,394 Added value 318, ,093 Operating profit (EBITA) 43,680 38,587 Operating profit (EBITA) as a % of turnover Capital expenditure 23,880 20,446 Depreciation 25,026 25,971 Average number of employees (x1) 3,715 3,667 Flow Control Turnover 503, ,187 Added value 283, ,868 Operating profit (EBITA) 60,253 49,468 Operating profit (EBITA) as a % of turnover Capital expenditure 17,615 12,030 Depreciation 16,269 15,108 Average number of employees (x1) 3,055 2,773 FINANCIAL AGENDA subject to change 2005 Announcement of stock dividend exchange ratio General Meeting of Shareholders in the Okura Hotel, Amsterdam Ex-dividend listing Making payable of dividend Publication of interim figures 2005 (before start of trading) End of March Thursday, 21 April Start: 14:00 hours Monday, 25 April Thursday, 28 April Friday, 12 August before amortisation of goodwill page 11 of 11