28.01.2010 08:16 CET

Schuler slightly more optimistic about 2010

In the past fiscal year 2008/09, Schuler launched a comprehensive restructuring program in response to the effects of the global economic crisis. As a result, the company was able to achieve significant cost savings and efficiency enhancements. The development of the fourth quarter of the past fiscal year 2008/09 and news from the sector indicate that the worst is now over. The German Engineering Federation (Verband Deutscher Maschinen- und Anlagenbau – VDMA) recently announced that the first green shoots of recovery are now visible, after 13 months of decline for the sector. As part of its diversification strategy, Schuler is currently establishing an additional pillar with its entry into the wind turbine market. The move is aimed at making the company less dependent on the cyclical fluctuations of individual sectors.

Earnings burdened by non-recurring special items

In the past fiscal year, earnings before interest and taxes (EBIT) amounted to € -43.9 million (prior year: € +36.7 million). This figure contains extraordinary expenses for restructuring and capacity adjustments, for the amendment to the Group’s finance, as well as for other non-recurring charges resulting from the financial and economic crisis of € 55.5 million in total. This was offset in part by income of € 6.5 million from a sale-and-rent-back transaction relating to real estate assets of the Brazilian subsidiary. Adjusted for these special items, Schuler was still able to post a positive operating income (EBIT) of  € +5.1 million. Earnings before taxes (EBT) amounted to € -71.8 million (adjusted: € -21.8 million), compared with € +10.9 million in the previous year. The Group’s net income amounted to € -64.9 million (prior year: € +8.6 million). There will therefore be no dividend for fiscal year 2008/09.

Decline in sales

Consolidated sales in fiscal year 2008/09 amounted to € 823.1 million, compared with € 966.1 million in the previous year. Sales in America reached € 197.1 million (prior year: € 215.4 million) and in Asia € 135.1 million (prior year: € 169.4 million). In Germany, Schuler generated sales of € 323.4 million (prior year: € 382.6 million) and in the rest of Europe € 166.4 million (prior year: € 194.0 million). The total proportion of consolidated sales generated outside Germany amounted to 60.7% (prior year: 60.4%).

Economic and financial crisis leaves its mark on new orders

In fiscal year 2008/09, consolidated new orders amounted to € 590.5 million and were therefore 41.3% below the corresponding prior-year figure of just over € 1 billion. New orders from America reached € 70.7 million, compared with € 220.4 million in the previous year. Orders received from Asian customers totaled € 158.4 million (prior year: € 188.4 million). In Germany, the value of new orders received reached € 221.2 million (prior year: € 389.4 million). Orders from other European nations amounted to € 137.4 million in the period under review (prior year: € 205.2 million). The proportion of new orders received from outside Germany amounted to 62.5%, compared with 61.3% in the previous year.

More stable development in first quarter of FY 2009/10

Preliminary new order figures for the first quarter of 2009/10 amount to around € 150 million. Compared with the preceding quarters, therefore, new orders are now more stable. The lowest level was reached in the second quarter of fiscal year 2008/09 with new orders worth around € 113 million. As expected, preliminary consolidated sales were down to around € 140 million, compared with € 228.4 million in the previous year. The final figures for the first quarter of fiscal year 2009/10 will be published on February 16, 2010.

Finance prolonged until September 2012

In early December 2009, Schuler prematurely extended the syndicated loan of € 450 million it concluded in March 2008 until September 2012. At the same time, the cash tranche was increased by € 50 million to € 200 million. The credit line tranche amounts to € 250 million. The size of the loan remained unchanged. As a result, the company has created a reliable financial structure for the years ahead.

Outlook 

The effects of the economic and financial crisis are also expected to dominate fiscal year 2009/10. Schuler has turned the corner and can see an increase in projects in certain areas, which it must now turn into firm orders. In terms of new orders, Schuler can already see signs of an upturn and expects a slow recovery. However, there is always a certain time delay before large-scale machine manufacturers feel the benefit of an upturn. Fiscal year 2009/10 will therefore remain difficult. Schuler will continue to pool its considerable expertise and innovative strength in order to react quickly to changing markets. The current forecasts of a macroeconomic recovery and the cost savings already introduced will also bring a sustained improvement in sales and positive earnings for Schuler from the next fiscal year onward.

Promising renewable energy market: entry into wind turbine sector

In a further move to secure its future, Schuler is entering the wind turbine market as part of its long-term diversification strategy. Development work on directly driven wind turbines for medium wind-speed zones – the most prevalent type in inland areas – has already been completed. Production has now started for a prototype with a rated power of 2.7 megawatts, which is already set to enter test operation in fall 2010.

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