Gildemeister (FRA:GIL)

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Cornelius Becker

Company profile

GILDEMEISTER AG is a leading manufacturer in the machinery and equipment industry with base in Bielefeld, Germany. The full name is Deckel Maho Gildemeister. The stock is listed in the MDAX under GILDEMEISTER AG. The core business of the group is the production of machine tools and components for the automotive, telecommunication, aerospace, electro-technical and medical equipment industries.

GILDEMEISTER AG is the parent company of ten production plants, which are mainly baded in Germany, and the DMG Vertriebs und Service GmbH Deckel Maho Gildemeister with its 69 subsidiary companies. The company operates globally in 34 countries in Europe, America and Asia with a total workforce of 6,451 employees.

The group is divided into three divisions Machine tools, Services and Corporate Services. The Machine tools segment consists of turning, milling, ultrasonic and laser technologies, as well as automation and software solutions for machine tools and solar tracking systems. The product range includes standard machines as well as high-tech machines for highly complex machining operations. The Services divsion is formed by the globally lined up sales and service network by the DMG Vetriebs und Services GmbH and it subsidiaries focusing on customer services. This division offers service products ranging from machine installation, training, software implemantation, maintanance and transportation. Corporate services covers group wide holding functions, such as group strategy, development and purchasing coordination, management of overall projects in the logistics and production areas, funding, corporate controlling and personnel management

The group has 139 years of experience in the manufacturing business and developed into a technological trendsetter and one of the leading full-liner in the global market for machine tools. The group is aiming to further expand its market share and competitive advantage following a global growth strategy.

Despite a distinctly more difficult global market environment through strong Asian competition and the international financial crisis triggering significantly weaker demand in the second half of 2008 GILDEMEISTER AG was able to increase market share.

financial situation

The financial crisis was the main issue every machine building company had to deal with in 2008. But Gildemeister was able to grow revenues and income although the global economy slid into a downturn phase. Even china suffered a setback although their historical long growth phase.

Despite these bad signs Gildemeister was able to close with the best year of over 130 years of history.

Gildemeister was able to improve most of the key performance indicators and met all anual forecast in 2008. Sales revenues grew to € 1,904 million (+ 22%). Yet, the machine-building segment did not drive this performance. The main driver was the service segment of Gildemeister especially by the product SunCarrier. This product of the subsidiary a+f GmbH has hopefully an great impact on the further development of Gildemeister.

In the same way as sales revenues developed the EBT (rose by 52 % to € 126,7 million), the sales profitability (based on EBT; 6,7 %), the group annual profit (grew by 62 % to € 81,1 million) and earnings per share (grew by 61 % to € 1,87) increased. Gildemeister was even able to distribute a higher dividend of € 0,40 per share (2008: € 0,35).

The order intake of exports, reported by the German machine tool industry, declined by 11,25 % and domestic demand fell by 14 % even stronger while the international demand decreased by 9 %. Sales revenues(group cost allocations and rents) grew to € 15 million (2007: € 13,1 million) while the other operating incomes decreased to € 3,5 million (2007: € 5,7 million). Expenses for purchased services increased by 52,27 % to € 4,4 million mainly because of maintenance for the production halls in Bielefeld which is also the reason for the increasing of financial assets which will be concerned later.

Another important development was the increase of personnel costs. They rose by 25,33 % to € 18,8 million. This results mainly from allocations to provisions for risks arising out of severance pay benefits and from a rise in the variable wage components. Depreciation remained at € 1,5 million. Other operating expenses reached € 35,5 million which is an gain of nearly 22 %. On the other hand the income from profit and loss agreements reached € 117,2 million which equates a gain of 32,88 %. The higher amount of tax expenses of € 25,9 million (2007: € 20,9 million) resulted from the higher taxable income of the Gildemeister group and the tax provisions for the previous years. As said before the higher tangible assets results mainly from land and buildings at the Bielefeld site.

The increase in financial assets results mainly from investments in Gildemeister Beteiligungen AG and DMG Vertriebs und Service GmbH in total of € 27,6 million. Current Assets rose by 38,45 % to € 475,3 million, mainly because an increase in liquid funds. The extension of the balance sheet of € 110 million results from a draw on syndicate loan in cash practically in full and to invest the funds avoiding risk as far as possible. But therefore Gildemeister accepted interest loss of € 0,2 million to year-end. Other provisions increased by 106,25 % to € 19,8 million.