Annual Report 2010 - Pfisterer

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Finances The following data is taken from the audited consolidated financial statements of PFISTERER Holding AG as at 31 December 2010. The world economy suffered the most serious downturn of the post-war era in 2009. For this reason, the increase in the gross domestic product in 2010 was primarily driven by catch-up effects in the aftermath of the economic crisis. The German Council of Economic Experts now deems the world economy to be in a recovery phase: following a downturn of 4.2% in GDP in the European Union states in 2009, it proceeded to rise in this region by an average of 1.7% in 2010. At 3.6%, growth in Germany was significantly above average. The primary force of growth was once again the export-driven industrial sector. German economic research institutes are anticipating slightly more moderate growth ranging in a corridor between 2.0% and 2.5% for 2011, roughly similar to the growth forecasts for the EU, the IMF and the OECD. Sales After a moderate decline in sales the previous year, the PFISTERER-Group returned to the path of growth in 2010: Group revenues rose by 11.7% or approx. EUR 30 million to EUR 274 million (unconsolidated, taking into account internal sales of approx. 20%). This growth in sales reflects both the overall positive development of our industry and the Group’s targeted expansion in growth markets. Furthermore, the relative “weakness” of the euro compared with other currencies contributed to nominal growth within the Group. 300 275 250 225 200 175 150 Sales trend (in EUR million) 2008 2009 2010 Sales breakdown by division Following a decline in 2009, in line with the development of the GDP and driven by catch-up effects, the worldwide consumption of electrical power rose by over 3% in 2010. In the long term the International Energy Agency (IEA World Energy Outlook 2010) expects an annual increase in global power consumption of 2.2%, primarily driven by the hunger of the emerging countries for energy. The IEA anticipates that in the course of the next 15 years China will be putting a greater power station capacity into operation than that currently installed in the USA. At the same time, to date 1.4 billion people, i.e. approximately one fifth of the world’s population, still do not have access to electricity. Furthermore, these two factors driving growth in our industry are overshadowed by the necessity to enable the production of renewable energy by building urgently needed new power supply lines. For example, according to the DENA network study II, in order to keep abreast of the expansion of renewable energy in Germany it will be necessary to build 3,600 kilometres of electrical networks by 2020. These factors will continue to form the basis for long-term, sustainable growth in our industry in the foreseeable future. In view of the prospects, in 2011 we predict a further considerable growth in sales. However, this optimistic forecast is based on the assumption of stable development in the general economic environment. The breakdown of sales performance according to the four divisions of the Group shows that particularly the “Components” and the “Overhead Lines” divisions show aboveaverage growth rates. Growth in the Components division is based on the opening up of new customer segments and the establishing of new products on the market. Growth in the Overhead Lines division depends on the high acceptance of the insulators manufactured at Malters (CH) and Pietermaritzburg (ZA). The strategy of systematically expanding and renewing the range of products in the Cable Systems division resulted in a pleasing, sustained level of growth. Sales breakdown by division (in %) Cable Systems Components Overhead Lines Railway Catenary Systems Other Human resources (number of employees) 1,600 1,400 1,200 1,000 800 600 400 200 0 2008 2009 2010 In view of the upcoming product innovations and our aspirations to enter further growth markets, we also forecast sustained sales growth in the medium term. 10
GROUP Human resources Against a backdrop of pleasing sales growth and after the completion of targeted measures to adapt to the structures, staff numbers at the PFISTERER-Group rose to approx. 1,400 at the end of the year. An average of 1,380 people were employed during the year. In view of the continued growth expected in our industry, our company policy is geared towards a sustained increase in human resources. One of our key challenges is to recruit new qualified employees. Employees who are new to PFISTERER tell us they especially appreciate the flat hierarchies in our organisation and the freedom that goes with them. Investments (in EUR million) 12.0 11.0 10.0 9.0 8.0 7.0 6.0 5.0 4.0 3.0 2.0 1.0 0 2008 2009 2010 60 50 40 30 20 10 0 20 15 10 5 Equity ratio (in %) 2008 2009 2010 Cash flow return on total assets (in %) Investments Together with considerable investments in more efficient technologies, this company strategy again forms the basis for the continuance of the sustained productivity performance increases in the financial year 2010. The apparent decrease in investments compared with the previous year is merely connected with the postponement of projects. The investment volume of almost 10 million euros in 2010 and the resulting capital expenditure ratio of 4.3% (in relation to consolidated sales), which is significantly higher than the depreciation expense ratio, underline the unchanged sustained growth and innovation strategy practised by the PFISTERER-Group. The main focus of investment in 2010 was the new production facilities, largely designed for the manufacture of new types of product. This forward-thinking investment strategy will be maintained throughout the course of 2011, and we see it as an essential cornerstone of a long-term, sustainable and positive company development. Equity ratio The development of the Group’s net profit for the year reflects the stable development of the profitability of the Group entities: in 2010 the earnings situation was affected by valuation adjustments made necessary by new accounting regulations in Germany. PFISTERER did not exercise its option to spread the corresponding expenditure over several years, but recognised it in full in 2010. Thus the PFISTERER-Group recorded slightly lower but nevertheless very pleasing Group net profit for the year. For the current financial year 2011 we predict Group net profit above that of the previous year due to the one-off effects from the previous year that are not likely to repeat themselves. An essential advantage of family businesses is the close solidarity of the partners with the company. The accompanying conservative equity policies, the stable earnings situation as well as exchange-rate-related valuation effects combined to produce an increase of a further two percentage points in the equity ratio to total 54%, which gives the Group a very solid capital structure. Cash flow return on total assets Again in the financial year 2010 the basis for internal financing continued to be stable. In view of the good earnings performance, which was impacted by one-off effects, at more than 12%, the cash flow return on total assets (cash flow divided by the average balance sheet total for the year) continued to be at a gratifyingly high level. The fact should also be taken into account that the considerable increase in the balance sheet total of the PFISTERER-Group is largely due to nominal exchange rate-related effects. 0 2008 2009 2010 11
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Annual Report 2010 - Pfisterer

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