Highlights 2008
- Revenue increase of 3% to EUR 1.75 billion (6% at constant exchange
rates)
- Organic revenue fall of 2% (at constant exchange rates)
- Operating profit (EBITDA) EUR 251.6 million in line with 2007
- Operating profit (EBITA) EUR 181.5 million (10.4% of revenue)
- Earnings per share EUR 1.02, in line with the update on 16 December
2008
- Continuation of the dividend policy with a pay-out ratio of more
than 27% (EUR 0.28 per share)
- Cash flow from operations (EBITDA + changes in working capital)
increased by 15%
- Strict working capital management and maintenance of healthy
balance sheet ratios
- Strategic expansion Flow Control with Henco, specialist in plastic
multilayer systems
Key figures (before amortisation) 2008 2007 Change
in EUR x million
Revenue 1,750.8 1,702.5 3%
Operating profit before depreciation (EBITDA) 251.6 254.2 (1%)
Operating profit (EBITA) 181.5 193.3 (6%)
Net profit 105.0 128.0 (18%)
Average number of ordinary shares 103.3 101.7 2%
Earnings per ordinary share (x EUR 1) 1.02 1.26 (19%)
Dividend per ordinary share (x EUR 1) 0.28 0.32 (13%)
Cash flow (net profit plus depreciation) 175.1 188.9 (7%)
Cash flow from operations 264.5 230.1 15%
Total equity as a % of total assets 34.5 37.5
Net debt 765.3 525.0 46%
Net debt / EBITDA (twelve month rolling) 2.9 2.1
Interest cover (EBITA / net interest expense) 4.1 5.4
Net debt / Total equity (gearing) 1.3 1.0
Jan Aalberts, President & CEO: "2008 was a year of contrasts. On the
one hand both Industrial Services and Flow Control managed to
strengthen our market position in the first half of the year through
organic growth and the acquisition of a number of strategically
complementary companies. The acquisition of Henco, market leader in
plastic multilayer systems, is of great importance and has a
significant impact on the financial position. While, on the other
hand, we experienced a significant downturn in almost all our markets
combined with negative exchange rate effects in the second half of
the year, and particularly in the last quarter. We immediately took
measures, which included reducing our workforce by more than 1,000
employees. During the course of 2008, various parts of the
organisation experienced an increase in the tempo at which our sales
force has been combined and management strengthened.
Revenue increased by 3% to EUR 1.75 billion (6% at constant exchange
rates) and an operating profit (EBITA) of EUR 181.5 million was
achieved, 6% less than in 2007. At EUR 251.6 million, the operating
profit before depreciation and amortisation (EBITDA) was comparable
to 2007. In 2008 considerable sums were invested, EUR 110 million, in
line with our long term objectives and our confidence in the future.
The cash flow from operations increased by 15% as a strong emphasis
was placed on working capital; in the second half of the year, we
realised a reduction of EUR 123 million. Our net debt was reduced by
EUR 121 million in the last six months of the year. Exchange rate
effects, and particularly the developments in the last quarter of the
year, had a negative impact on the year's net profit in Euros.
In 2008, our operational strength was further increased by enlarging
our share in various markets and reducing our operating costs, but it
was, without doubt, also enhanced by our focused investments in
several new products, production technologies and realised
acquisitions.
2008 was challenging and also 2009 will demand a great deal of
alertness, dedication and fast actions. We will not digress from our
ambition of further profitable growth, both by organic means and
acquisitions, and are convinced that we will emerge strengthened from
the current market situation."
Financial results (before amortisation)
Aalberts Industries achieved revenue of EUR 1.75 billion in 2008.
However, due to exchange rate fluctuations and the resultant
conversion differences, this ended up approximately EUR 50 million
lower, causing the growth to be 3% instead of 6%. Organic revenue
declined by about 2%.
The operating profit before depreciation and amortisation (EBITDA)
was EUR 251.6 million (14.4% of revenue) in 2008, marginally lower
than in 2007 (EUR 254.2 million). The operating profit after
depreciation and before amortisation (EBITA) amounted to EUR 181.5
million. When compared to 2007, more than three-quarters of the
decline can be attributed to higher depreciation. The EBITA margin
was 10.4% whereby, despite the challenging market conditions, Flow
Control maintained its operating margin at 11.3%, comparable to 2007.
Due to the general market slowdown and associated incidental effects,
Industrial Services realised an EBITA margin of 8.2% (2007: 11.5%).
The net interest expense amounted to EUR 44.5 million in 2008
compared to EUR 35.8 million in 2007. This increase was attributable
to the financing of the acquisitions and a higher average working
capital throughout 2008. In addition, the depreciation of the British
pound, the Polish zloty and the Russian rouble had a significant
impact on the net finance cost resulting in an exchange loss of EUR
7.2 million (2007: EUR 3.7 million gain). Returns on derivative
financial instruments, particularly interest swaps, showed a loss of
EUR 4.5 million (2007: EUR 1.9 million gain). Consequently, in 2008,
the total net finance cost amounted to EUR 56.2 million against EUR
30.2 million in 2007.
The net debt reduced by EUR 121.1 million to EUR 765.3 million in the
second half of 2008. The company remains within its covenants and the
principal financial ratios developed as follows:
- Debt service ratio (net debt / EBITDA twelve month rolling) from
2.1 to 2.9;
- Interest cover (EBITA / net interest expense) from 5.4 to 4.1;
- Gearing (net debt / total equity) from 1.0 to 1.3.
Net profit before amortisation amounted to EUR 105.0 million in 2008
(2007: EUR 128.0 million) and earnings per share were EUR 1.02. The
return on the average invested capital was 13.3% in 2008. In the
second half of 2008, net working capital was reduced by EUR 123
million to EUR 315.8 million. The cash flow from operations increased
by 15% to EUR 264.5 million in 2008 (2007: EUR 230.1 million).
In conformity with Aalberts Industries' policy to consistently set
aside some 25% of the net profit before amortisation achieved for
dividend distribution purposes, the Annual General Meeting of
Shareholders will be asked to declare a dividend for 2008 of EUR 0.28
per ordinary share having a nominal value of EUR 0.25. The dividend
is payable in cash or, at the option of shareholders, in the form of
ordinary shares, chargeable to the tax-exempt share premium account
or to the unappropriated profit. This amounts to a pay-out ratio of
more than 27%. The stock dividend will be determined after trading on
12 May 2009 based on the volume weighted average price of all
Aalberts Industries N.V. shares traded on 6, 7, 8, 11 en 12 May 2009,
in such a way that the value of the dividend in shares is
substantially the same as the value of the cash dividend.
Operational developments
Industrial Services
In 2008, Industrial Services' revenue increased by 2% to EUR 515.2
million with an organic decline in revenue of 6%. The operating
profit (EBITA) was EUR 42.4 million in 2008 compared to EUR 58.3
million in 2007. In 2008, EUR 50.5 million was invested in capital
expenditure projects, a considerable part used for heat treatment and
surface technique activities. In addition, investments were made in
the development of supplementary technologies for the production of
complex components.
Industrial Services activities were confronted by changeable market
conditions in 2008. In response to which, a number of measures were
taken, however, these could not fully avert the pressure on the
results.
In the first six months of the year, Industrial Services experienced
positive developments in the European automotive sector. The second
half was clearly less, partially due to the fact that various car
manufacturers decided to restrict their production activities for
longer periods. The precision engineering industry, an important
source of activities for the German network of service sites,
experienced a marked downturn in the latter months; this downturn
similarly affected the Dutch companies.
2008 was a difficult year for the semiconductor industry. This effect
was most noticeable in the companies producing, assembling and
treating components for this industry. The activities concentrating
on the production of components for future semiconductor platforms
remained stable.
2008 was a good year for the companies supplying the aircraft
industry. The turbine industry, which is related to the aircraft
industry, also developed positively both in Europe and North America.
Similarly, the medical and energy sectors did well in 2008. These
markets grew organically and created stable demand. The markets
mentioned above are all characterised by a high degree of innovation
which fits well with Industrial Services' strength of offering
targeted solutions. Furthermore, the market position of Industrial
Services offers sufficient scope for growth.
Industrial Services' aim is, on the one hand, to introduce
complementary processes and technologies and, on the other, to expand
the position in a number of growing market niches. Along with capital
expenditure, acquisitions are important, as these can expedite this
process. Examples were the acquisitions of Duralloy and Cotterlaz in
2008, which enabled complementary technologies, some of which were
patented, to be acquired. In addition, the acquisition of the IDE
Group has increased the capabilities of offering the market a
complete product, from engineering to production.
Flow Control
In 2008, Flow Control's revenue grew by 3% to EUR 1.236 billion with
a decline in organic revenue of 1%. The operating profit (EBITA)
amounted to EUR 139.1 million, an increase of 3% compared to 2007,
whereby the margins were comparable. Capital expenditure amounted to
EUR 60.0 million, primarily aimed at expanding the production
capacity in emerging markets, increased automation of production
methods and the introduction of a number of new products and complete
systems.
Flow Control was also confronted with changeable market conditions in
2008. However, by concentrating capital expenditure on new products
and achieving a high degree of market focus, the group had a good
year. In addition, the portfolio and market position were
significantly enhanced by acquisitions; in particular, acquiring
Henco was an important strategic step. The aim of strengthening the
sales platforms took further shape due, on the one hand, to the
complete portfolio of products and systems and, on the other, to
combining the sales force.
The Benelux market developed positively in 2008. By strengthening the
sales organisation and introducing a number of new products, organic
growth was realised. This was in contrast to the Scandinavian markets
where, after a good first half, market demand fell later in the year.
The level of production and the size of the workforce have been
adjusted accordingly. Developments in the French market were
reasonably good in 2008; in the neighbouring countries, such as Spain
and Italy, however, market conditions were unfavourable. Over the
last few years, there have been considerable investments in the
commercial organisation and, although the first successes are already
being recorded, there is still significant potential to expand the
market position. To broaden the portfolio, Alphacan's French heating
and sanitary activities were taken over in 2008.
Due to a more focused market approach, which enabled the complete
Flow Control portfolio to be introduced to the German market in
renewed form, the 2008 results for the German activities developed
positively, which applies to the United Kingdom as well. Full use was
made of the British sales platform, targeting (social) housing
construction and the commercial sector, in combination with the broad
product portfolio. In addition, the emerging markets in the Middle
East and Asia provided a source of revenue growth for the British
organisation. The East European markets (including Russia) had a good
first half year demonstrating strong organic growth, however, in the
second half it weakened clearly. In the future these markets will
continue to be an important area for growth. In spite of this, East
Europe remains to be an important growth market in the coming years.
In North America, developments in the commercial and industrial
building sectors were predominantly favourable in 2008, while the
downward trend in the housing construction sector continued. The
introduction of a number of group products and further automation of
production, enabled margins to be maintained and costs reduced. The
aim continues to be a strengthening of the market position in North
America through the introduction of more group products and targeted
acquisitions.
Organisation and Employees
The average number of employees increased from 10,686 in 2007 to
11,530 in 2008. In the middle of 2008, a total of 11,899 people were
employed. However, due to the exceptional market conditions, this
number had been reduced by approximately 1,000 to 10,880, by the end
of 2008.
Outlook
Given the current economic circumstances and the associated
uncertainties, it is not possible to give an outlook for 2009. The
solid financial position, the many years' investments, the
established market positions, R&D (both production automation and new
products) and the measures taken, will enable Aalberts Industries to
emerge strengthened from the current market situation when the
economy improves.
This announcement was originally distributed by Hugin. The issuer is
solely responsible for the content of this announcement.