BAUER AG reports third-quarter net loss due to one-off effects

Schrobenhausen – BAUER Aktiengesellschaft today published its third-quarter interim report. As already indicated by an ad-hoc release on October 28th, the global construction engineering and machinery manufacturing concern has had to adjust its 2013 forecast, and now predicts a net loss for the year. The reasons lie in a number of one-off effects, primarily relating to a well construction project in Jordan. Expected earnings from the Group's Equipment and Construction segments have additionally been reassessed, and the adjusted forecast now incorporates restructuring expenditure as part of a cost-cutting programme.

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In the first nine months of this financial year, the total revenues of the BAUER Group increased by 4.4 percent against the previous year comparative period (EUR 1,063.2 million) to EUR 1,109.5 million. EBIT fell from EUR 45.7 million to EUR 13.4 million. The net loss for the period of EUR 21.4 million represents a EUR 28.0 million decline against the previous year's net profit of EUR 6.6 million. Orders in hand continued to develop healthily, rising by 7.9 percent against the previous year to EUR 836.7 million.
 

Business segments

The total Group revenues of the Construction segment amounting to EUR 529.7 million were 9.4 percent up on the previous year. Segment EBIT increased by EUR 2.2 million to EUR 18.5 million. Large-scale projects in Russia, Saudi Arabia, Hong Kong and the USA contributed substantially to that growth, although delays on projects in the first half of the year impacted on contribution margins. Orders in hand increased by a pleasing 5.1 percent to EUR 497.7 million.

The Equipment segment improved its total Group revenues by 6.6 percent to EUR 473.6 million. EBIT decreased from EUR 20.4 million to EUR 13.3 million. The segment is suffering from weaker margins in its business: On the one hand significantly fewer large machines were sold, while on the other the business was faced with increasing competitive pressures. Orders in hand totalling EUR 162.1 million rose slightly relative to the previous year comparative of EUR 140.9 million. The machinery manufacturing business remains characterized by overcapacity and short-term purchasing behaviour.

The total Group revenues of the Resources segment fell by a substantial 23.2 percent to EUR 146.9 million. Segment EBIT of EUR -19.5 million was well down against the previous year comparative (EUR +8.7 million). The reasons for this decline relate to a major well construction project in Jordan. Complex project conditions substantially increased the costs of the construction companies involved. Due to the financial difficulties being experienced by Jordan, among other factors, no settlement has yet been obtained. Consequently, the project earnings forecast has had to be adjusted downwards by approximately EUR 20 million. Segment earnings were additionally impacted by higher fixed costs. The contracts for two large-scale projects expected at the start of the year have not yet been acquired. Moreover, reduced demand meant that Group companies involved in the manufacture of well engineering materials were not profitable. Orders in hand total EUR 176.9 million (previous year: EUR 160.7 million).

Outlook

The Group is responding to its reported loss by instigating an extensive programme of cost-cutting, based on close examination of costs across all business units. The programme also entails discontinuing a number of minor, economically challenging operations. The package of measures is planned to save some EUR 20 million in total.

Chairman of the Management Board of BAUER AG Professor Thomas Bauer comments: "The first nine months of 2013 were very unsatisfactory for our Group overall. A number of special effects forced us, for the first time in many years, to report a loss. This will not impact on our earning power over the years ahead however. We are planning for a small amount of growth in 2014, and expect to return to a profit in all segments, enabling overall performance to resume the trend seen in 2012."

BAUER AG now expects to make a net loss of approximately EUR 20 million, with EBIT of around EUR 25 million, in the 2013 financial year. The forecast for total Group revenues remain unchanged at around EUR 1.5 billion.Schrobenhausen – BAUER Aktiengesellschaft today published its third-quarter interim report. As already indicated by an ad-hoc release on October 28th, the global construction engineering and machinery manufacturing concern has had to adjust its 2013 forecast, and now predicts a net loss for the year. The reasons lie in a number of one-off effects, primarily relating to a well construction project in Jordan. Expected earnings from the Group's Equipment and Construction segments have additionally been reassessed, and the adjusted forecast now incorporates restructuring expenditure as part of a cost-cutting programme.

In the first nine months of this financial year, the total revenues of the BAUER Group increased by 4.4 percent against the previous year comparative period (EUR 1,063.2 million) to EUR 1,109.5 million. EBIT fell from EUR 45.7 million to EUR 13.4 million. The net loss for the period of EUR 21.4 million represents a EUR 28.0 million decline against the previous year's net profit of EUR 6.6 million. Orders in hand continued to develop healthily, rising by 7.9 percent against the previous year to EUR 836.7 million.
 

Business segments

The total Group revenues of the Construction segment amounting to EUR 529.7 million were 9.4 percent up on the previous year. Segment EBIT increased by EUR 2.2 million to EUR 18.5 million. Large-scale projects in Russia, Saudi Arabia, Hong Kong and the USA contributed substantially to that growth, although delays on projects in the first half of the year impacted on contribution margins. Orders in hand increased by a pleasing 5.1 percent to EUR 497.7 million.

The Equipment segment improved its total Group revenues by 6.6 percent to EUR 473.6 million. EBIT decreased from EUR 20.4 million to EUR 13.3 million. The segment is suffering from weaker margins in its business: On the one hand significantly fewer large machines were sold, while on the other the business was faced with increasing competitive pressures. Orders in hand totalling EUR 162.1 million rose slightly relative to the previous year comparative of EUR 140.9 million. The machinery manufacturing business remains characterized by overcapacity and short-term purchasing behaviour.

The total Group revenues of the Resources segment fell by a substantial 23.2 percent to EUR 146.9 million. Segment EBIT of EUR -19.5 million was well down against the previous year comparative (EUR +8.7 million). The reasons for this decline relate to a major well construction project in Jordan. Complex project conditions substantially increased the costs of the construction companies involved. Due to the financial difficulties being experienced by Jordan, among other factors, no settlement has yet been obtained. Consequently, the project earnings forecast has had to be adjusted downwards by approximately EUR 20 million. Segment earnings were additionally impacted by higher fixed costs. The contracts for two large-scale projects expected at the start of the year have not yet been acquired. Moreover, reduced demand meant that Group companies involved in the manufacture of well engineering materials were not profitable. Orders in hand total EUR 176.9 million (previous year: EUR 160.7 million).

Outlook

The Group is responding to its reported loss by instigating an extensive programme of cost-cutting, based on close examination of costs across all business units. The programme also entails discontinuing a number of minor, economically challenging operations. The package of measures is planned to save some EUR 20 million in total.

Chairman of the Management Board of BAUER AG Professor Thomas Bauer comments: "The first nine months of 2013 were very unsatisfactory for our Group overall. A number of special effects forced us, for the first time in many years, to report a loss. This will not impact on our earning power over the years ahead however. We are planning for a small amount of growth in 2014, and expect to return to a profit in all segments, enabling overall performance to resume the trend seen in 2012."

BAUER AG now expects to make a net loss of approximately EUR 20 million, with EBIT of around EUR 25 million, in the 2013 financial year. The forecast for total Group revenues remain unchanged at around EUR 1.5 billion.