Highlights of the first half of 2008
¬ Increase of revenue by more than 6% to EUR 913 million (10% at constant exchange rates)
¬ Organic revenue growth of approximately 3% (at constant exchange rates)
¬ Operating profit (EBITA) up 9% to EUR 106 million
¬ Increase in net profit by more than 6% to EUR 67 million
¬ Earnings per share up 3% to EUR 0.65 (7% at constant exchange rates)
¬ Maintaining solid balance sheet ratios
¬ Acquisitions Flow Control (Henco and Zawgaz) and Industrial Services (IDE, Duralloy and Cotterlaz)
Key figures (before amortisation)
in EUR x million H1 2008 H1 2007 Change
Revenue 913.2 858.6 6%
Operating profit (EBITA) 105.7 97.3 9%
Net profit 66.7 62.7 6%
Average number of ordinary shares 103.3 100.1 3%
Earnings per ordinary share (x EUR 1) 0.65 0.63 3%
Cash flow (net profit plus depreciation) 100.8 92.6 9%
Cash flow from operations 22.8 13.5 69%
Capital base as a % of total assets 31.8 33.0
Net debt 886.2 667.5 33%
Interest cover 5.2 6.6
Net debt / Total equity 1.5 1.4
Jan Aalberts, President & CEO: "The results achieved in the first six months are a reflection of the strength of our activities and the strategic value of our balanced spread of revenue and profit… By constantly focusing on strengthening our market position, the group has achieved an increase of 6% both in revenue and net profit - in spite of deteriorating macro economic conditions and a negative currency impact - and an organic revenue growth of approximately 3% (at constant exchange rates), compared with our strong performance in the first half of 2007…
In the first six months of 2008 we continued our strategy of profitable growth through organic developments and acquisitions… On the one hand, investments occurred to increase efficiency and to accommodate the growing demand for products, systems and processes. On the other hand, a number of acquisitions were finalised to strengthen our market position, expand our portfolio of systems and technologies and extend our geographical presence…"
Financial results (before amortisation)
The group achieved an increase in revenue of 6% during the first six months, compared with the strong performance in the first half of 2007. The exchange rates of the British pound and the US dollar had a negative impact of approximately 4%. Operating profit (EBITA) rose by 9% to EUR 105.7 million (1H07: EUR 97.3 million), resulting in an EBITA margin of 11.6% (1H07: 11.3%). Earnings per share rose by 3% to EUR 0.65 (7% at constant exchange rates) including the effect of a 3% increase in the average number of outstanding shares.
Net finance cost amounted to EUR 20.2 million, an increase compared with the first half of 2007 (EUR 14.9 million), which may be attributed to the funding of acquisitions and financing of more working capital on average. Net debt amounted to EUR 886 million at the end of June 2008. The capital base amounted to 31.8% of the balance sheet total, interest cover was 5.2 and the net debt to total equity ratio was 1.5.
Operational developments
Industrial Services
Distinctive trends were discernible in the various markets in which Industrial Services operated in the first half of 2008. Whereas the aviation industry, the medical sector and the mechanical engineering industry experienced growth or were stable, developments within the semiconductor industry for example, clearly lagged behind what had been achieved in the first six months of 2007. Resulting from focused activities in the market and further investments Industrial Services achieved an organic revenue increase of approximately 2% (at constant exchange rates). Including acquisitions, growth in revenue amounted to 10%. Due to the fact that changing market circumstances are immediately reflected in revenue, whereas compensatory measures are expressed in results after some delay, the operating margin amounted to 11.5% of revenue (1H07: 12.0%).
Flow Control
Flow Control benefited from its wide geographical spread and the breadth of its product and system portfolio, which has further expanded following the acquisition of Henco. Supported by an increase in cross-selling activities and positive developments in the Eastern European markets, Flow Control achieved an organic revenue growth of approximately 3% (at constant exchange rates). The situation prevailing in North America appears to be stabilising somewhat, with the result that operating profit rose in spite of a decline in revenue. A further downward trend is evident in the Spanish market, although its impact on results has been limited to date owing to its size. In the first six months the British market was robust, with the result that, thanks to positive developments in the renovation, commercial and industrial construction sectors, organic growth was achieved in line with that of the rest of the group. Developments remained positive in Eastern Europe in the first six months. Most Western European markets exhibited a rising trend for Aalberts Industries in the first half of the year. Because high-grade products and complete systems have been accounting for a growing share of revenue, the operating margin increased to 11.6% of revenue (1H07: 11.1%).
Investments
Investments in tangible fixed assets amounted to more than EUR 51 million, a slight increase compared with the previous year. Both core activities benefited from the investment policy from the past, creating further cost savings and efficiency improvements. Industrial Services acquired a number of new projects, for which capital was invested in complementary production technologies and new processes. Investments also occurred to expand and replace part of the heat and surface treatment capacity. Within Flow Control investments occurred for the purposes of boosting production capacity, mainly in Eastern Europe, in order to accommodate growing demand.
Outlook
Given Aalberts Industries’ position in the various markets, the Management Board anticipates - barring unforeseen circumstances - achieving a further increase in the earnings per share over 2008 as a whole
