Zeppelin Group increases operating result again Sales and net profit reach record highs for the third year in a row

• Group sales: EUR 3.1 bn

• Group earnings before taxes on income and earnings: EUR 134 m

• Number of employees: 10,048 (FTEs as at the reporting date of December 31, 2019, including trainees and employees from acquisitions in Sweden and Denmark)

• Group  Management  Board expecting  further long - term  growth  as a result of  the takeover of new distribution and service territories in northern Europe

The Zeppelin Group finished the 2019 financial  year having  achieved the highest revenue and the highest net profit in its 70 - year history.  With Group  sales totaling  EUR 3.1 billion  (previous year: EUR  2. bllion) and a net profit before tax of EUR 134 mil lion (previous year: EUR 131 million), the  Group  has overtaken  its figures from  the previous year.  Creditreform Rating AG increased its assessment of the company’s creditworthiness to an A rating in 2019.

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The  total investment  volume for 2019 is EUR  369 million, which  includes expenditure for inorganic growth. In 2020 the Zeppelin Group expects to see a dramatic slump and a   significant   worsening of   economic conditions   arising from the coronavirus pandemic.“ 2019  was a  highly successful  year: We  had record - b reaking  sales, the  best bauma ever, and the  largest acquisition  in the history of our company.  All of this was only achievable by working  together,  and thanks  to the commitment  and outstanding contributions  of our employees!”  notes Peter Gerstmann,  Chairman  of the  Management  Board of Zeppelin GmbH. “I am very much looking forward to continuing this success with our new colleagues in northern Europe.”

Christian Dummler, Managing Director and CFO of Zeppelin GmbH, adds: “The very positive performance  enabled  us to further  improve our return figures,  and Group debt remains at a very conservative level even following the acquisitions. The capital market environment was highly  favorable  in 2019, and  we used the opportunity  to secure  our financing  in the longte rm, taking the acquisitions into account. We are delighted to receive an improved A credit 2 rating from Creditreform Rating AG; it makes it clear that we remain a solid, reliable business partner.”

“These outstanding results are proof positive that the Zeppelin Group is pursuing the right strategy and, above all, that it has the right employees on board. I hope that our acquisition of  the additional  northern Europe distribution  and service territories,  along  with numerous new  product  and service  innovations, will  enable us to continue  our successful trajectory  in 2020,  under the  new conditions  in play,” comments  Andreas Brand, Chairman  of the Supervisory Board of the Zeppelin Group.

Expansion of distribution and service territory into northern Europe

With  effect  from December  31, 2019, the Zeppelin  Group took over responsibility  for the distribution and service of Caterpillar products in Denmark, Greenland and Sweden. Zeppelin also took over service and distribution for MaK engines in Estonia, Latvia, Lithuania, Finland, Iceland  and the Faroe  Islands. With the  takeover of sales  activities  in northern  Europe, Zeppelin’s workforce grew to around 10,000 employees at the end of 2019. The company anticipat es  longterm  growth  potential  from successful  adaptation of the  new markets, built on decades of experience as a Caterpillar distribution and service partner and by making use of logistical synergies. The new unit has been integrated into the existing Group structure as the  Construction  Equipment Nordics  strategic business unit,  managed by Volker Poßögel, who was previously Head of the Power Systems strategic business unit.

Development of the strategic business units 

Thanks to the overall stability of the economic environment and good market positioning, all strategic business units (SBU) recorded positive development. The Construction Equipment EU strategic business unit succeeded in further expanding its leading po sition on all markets, and also increased its sales and net profit compared with the  previous  year. The  positive trend  was bolstered by  a favorable economic  climate in the construction  industry as well  as sales success at  bauma, the leading global  construction machinery  trade fair  in Munich. A  further expanded  machine population  and increased machine utilization  in its sales  territories meant  that the SBU was able  to make the best possible use of its service capacities and also grow its service business. The Construction Equipment CIS strategic business unit increased both its sales and its net profit in the 2019 financial year. Systematic development of the spare parts and customer service business resulted in a significant increase on the previous year’s figure. There was a 3 recovery  in mining  equipment business  in the various countries  of the region, and this contributed significantly to positive sales development and a large order backlog.

All  markets  relevant to the Rental  strategic  business unit – Germany,  Austria, the  Czech Republic   and the Slovak   Republic – recorded   growth, and   the SBU benefited disproportionately  from this growth, as  sales exceeded EUR 500  million for the first time.

With  the acquisition  of the Luther Group,  Zeppelin significantly  strengthened  its expertise  in the  field  of traffic  safety and traffic  engineering. The integration  of Baustellen - Verkehrs - Technik GmbH, which was acquired in 2018, was completed successfully.

The  overseas  companies contributed  significantly to the net  profit  of the Power  Systems strategic  business unit in  2019,  with particularly  high volumes of orders  for new engine sales  in Belarus  and the Czech  Republic. The expansion  of service sales led in  turn to an increase  in revenue.  Continued high  demand for alternative  drive systems  using hybrid and LNG  energy  for ferries,  cruise ships, and  special purpose vessels  helped secure several important  orders as well  as future sales arising  from maintenance contracts.  The company succeeded  in placing  a larger number  of ballast  water treatment  systems in ships  onto the market for the first time.  Demand also remained high  in the segments of power generation, large  data center  systems and combined  heat and power plants  (CHP), with the company successfully winning vario us major contracts.

Business  for the Plant  Engineering  strategic business  unit was  muted  in a number  of segments  and regions,  on account of  more challenging  global economic conditions,  a slowing  economy in  the chemicals  sector, and uncertainties  within t he  automotive  industry. However,  despite lower  sales revenue, an  improvement in profitability  was achieved. In addition, the SBU succeeded in further increasing its order entry in the 2019 financial year by means of various large - scale projects in the area of plastics production systems.

Digitization

The  Zeppelin  Digit strategic  management center  was established to  offer all strategic business units targeted support in relation to innovation and digitization. This cross - functional unit brings together IT, innovation, digitization, and the current Z LAB strategic business unit activities. The company Z Lab GmbH will continue in the future, as a division of Zeppelin Digit,  to develop  digital business  models for the construction  industry and the industrial sector.

The  company  further expanded  its digital offerings  for customers in 2019.  This expansion ranges from the introduction of new fleet management software to the wider market launch of the  zamics,  klickrent  and klickcheck  products, which customers in  the construction  industry can use to simplify their internal processes or to rent out and hire machinery and equipment via an independent platform.

Outlook for the 2020 financial year

The previously forecast 2020 upturn for the global economy will not materialize. In addition to continuing  trade disputes  and sanctions, and  the uncertainties surrounding  the terms of Brexit, the coronavirus pandemic has plunged the global economy into a far - reaching crisis, the effects of which cannot yet be predicted. The massive drop in oil prices and the conflict between  Russia and  Saudi Arabia  are also affecting  our core markets. Despite  the difficult business  outlook, the  Zeppelin Group  still sees opportunities  for the current financial  year.

The stable construction industry   and additional   investment in public   infrastructure in Germany have mitigated the negative impact on sales and revenue that is expected to arise from the coronavirus pandemic and oil prices. Zeppelin  will focus  on maintaining  its leading position on  the market  and on further expanding  its service  business within  the existing business  areas. In northern Europe,  the Group  will concentrate  entirely on integrating  the new companies and territories  served, which  will create  opportunities for  further sales  growth  in the future,  even if it can be assumed  that the  integration  will add certain  stress factors from  a net profit perspective.  In addition to the expansion and strengthening of its existing range of machinery and services, the  focus  will be  on expanding  the business  to include compact  machines, construction equipment and conveyor technology, as well as growing the branch network. Zeppelin  is clearly  signaling its  commitment to the  Eurasian markets, and  investing in the construction of a new headquarters in Kiev, Ukraine. Zeppelin  will counter  the effects of  the coronavirus pandemic  by means of cost - cutting measures, adjustment of capacities and a cautious investment policy.