PALFINGER continued its growth in 2014 – Revenue exceeded EUR 1 billion for the first time

• Record revenue of EUR 1,063.4 million (+ 8.4 per cent)
• EBIT decreased by 10.3 per cent 
• Proposed dividend of EUR 0.34 per share 
• Stable revenue growth expected again for 2015 

 * Proposal to the Annual General Meeting.

Attached please find a detailed five-year overview of the key figures of the PALFINGER Group. The Integrated Annual Report and the Annual Financial Report for 2014 may be downloaded at www.palfinger.ag

Salzburg, 6 February 2015

Local value creation in all market regions
Despite economic turbulences in the individual market regions, the PALFINGER Group once again achieved record revenue in 2014 and, for the first time in its history, exceeded the one-billion mark: revenue increased by 8.4 per cent to EUR 1,063.4 million in 2014.

“After the large number of acquisitions made in 2013, our priority in 2014 was on creating local value in Russia and China. In both market regions, production sites were either established or expanded, so that in the future local demand will almost entirely be covered by each country’s own production. We have thereby concluded a major step in our internationalization programme and are now in a position to focus on completing our product portfolio in every market region,” says Herbert Ortner, CEO of PALFINGER AG, commenting on the substantial progress made in the past financial year.

Financial position, cash flows and result of operations
EBIT for the 2014 financial year came to EUR 66.5 million, a decrease of 10.3 per cent from the previous year’s EBIT of EUR 74.1 million. This was caused by a reduction in incoming orders in the European core markets in mid-2014, declining sales in North America due to harsh weather during the first quarter of 2014, and drops in demand and fluctuations in exchange rates in South America and Russia.

The performance of the individual quarters clearly shows the stable development of revenue in 2014 (Q1: EUR 264,0 million; Q2: EUR 267,2 million; Q3: EUR 251,3 million; Q4: EUR 280,9 million) and the decline of EBIT in the second half of 2014 (Q1: EUR 20.4 million; Q2: EUR 21.9 million; Q3: EUR 14.6 million; Q4: EUR 10.5 million).

PALFINGER posted a consolidated net result of EUR 38.4 million, which is 12.7 per cent lower than the 2013 figure of EUR 44.0 million. In line with PALFINGER’s dividend policy, which provides that approximately one third of the annual profit is to be distributed to shareholders, the Management Board has proposed that a dividend of EUR 0.34 per share be distributed for 2014 (previous year: EUR 0.41 per share).

In the 2014 financial year, cash flows from operating activities amounted to EUR 47.2 million, as compared to EUR 62.5 million in the previous year. Cash outflows from investing activities increased considerably from EUR 39.7 million in 2013 to EUR 220.0 million in 2014; this was due to the fact that the cash effect of the acquisitions made in the fourth quarter of 2013 occurred only after these transactions were closed in 2014. As a consequence, free cash flows amounted to –EUR 162.1 million in 2014, after EUR 31.6 million in 2013.

The 33.0 per cent increase in total assets and the 19.5 per cent rise in equity to EUR 461.3 million resulted in an equity ratio of 40.8 per cent (previous year: 45.4 per cent). Due to the cross shareholding with SANY and the acquisitions of Megarme and PM-Group Lifting Machines, the gearing ratio rose by 56.5 to EUR 77.3 per cent.

Key events: Expansion in China, Russia and the marine business
In May 2014, the cross shareholding of PALFINGER and SANY, which had been in prepara-tion since the end of September 2013, was concluded with the entry of PALFINGER AG’s capital increase in the commercial register. Specifically, SANY acquired approx. 10 per cent of the share capital of PALFINGER AG by way of an acquisition of shares from the Palfinger family and the subscription of a capital increase. In return, PALFINGER AG acquired approx. 10 per cent of the share capital of Sany Automobile Hoisting Machinery Ltd., the unit within the SANY Group that specializes in mobile, tower and crawler cranes and is of a comparable size to PALFINGER AG. This transaction made SANY the second largest shareholder of the PALFINGER Group. SANY also delegated a member to PALFINGER’s Supervisory Board. This cross shareholding underlines the importance of the strategic partnership for both groups and forms the basis for further intensifying this cooperation.

Construction of the production plant in Rudong, north of Shanghai, is proceeding according to plan. Trial operations started in December 2014; full operations will begin in the first quarter of 2015 once all licenses have been obtained.

In December 2013, PALFINGER agreed on the takeover of the majority of shares in PM-Group Lifting Machines, Russia. In October 2014, all official approvals had been obtained and the transaction was closed. PM-Group is the parent company of the two Russian crane manufacturers Velmash and Solombalsky, both of which produce and distribute a broad range of timber and recycling cranes. The group also operates in the market segments of loader cranes, stationary cranes, hooklifts and customized solutions. The Group’s extensive sales network, comprising 86 dealers, service centres and regional offices, is the perfect addition to the market development efforts being pursued by PALFINGER and EPSILON.

In August 2014, the PALFINGER Group and the Russian company OJSC KAMAZ, Russia’s leading truck producer, agreed on the establishment of two joint ventures. The PALFINGER Group will hold 49 per cent and the KAMAZ Group 51 per cent in the joint venture focussing on mounting, which will specialize in truck bodies. The joint venture company will equip trucks with loading and handling systems. In addition to the existing dealer network of KAMAZ, the establishment of a separate network of dealers and service centres is planned. The closing is expected to take place in early 2015. PALFINGER’s stake in the cylinder production joint venture will be 51 per cent, while KAMAZ will hold 49 per cent. It will thus be fully consolidated. PALFINGER will acquire an interest in the existing cylinder production of KAMAZ in Neftekamsk in the Bashkortostan region, and will modernize the production plants and expand capacities considerably.

The expansion and modernization of the INMAN production site in Bashkortostan, including construction work on a new plant, went according to plan in 2014. Production in the new plant will probably be taken up in the first quarter of 2015.

At the end of June 2014, PALFINGER agreed to acquire an interest of 30 per cent in HIDRO-GRUBERT, an Argentinian family-run company based in Río Tercero, Córdoba. Moreover, PALFINGER was granted the option to take over the majority of the company’s shares during the next three to five years. The family members who had owned HIDRO-GRUBERT up to now will remain part of the management team. HIDRO-GRUBERT has been producing access platforms, hydraulic loader cranes and truck bodies for 76 years. It is the market leader in Argentina and has a great reputation throughout Latin America. Through synergies with MADAL in Brazil, revenue and earnings of the PALFINGER Group in South America are to be increased.

In November 2013, the Group expanded its portfolio of products and services for the shipping and offshore industries by taking over majority stakes in Palfinger systems GmbH and the Arab Megarme Group. The closing of both acquisitions took place in January 2014. The takeover of Megarme marked another step in the internationalization of the PALFINGER Group, which until then had had no value-creation structures in the Arab countries. Given the strong presence of the shipping industry in this region, it is a particularly important one for the marine business. Through Megarme, PALFINGER is in a position to contact previously inaccessible customer groups for cross-selling purposes. To this end, in autumn 2014, the Palfinger family founded a company in Singapore which, in a first step, took over the majority in Palfinger systems GmbH in December 2014. Next year, in a second step, investors from the marine industry will have the opportunity to acquire an interest in the newly founded company. For the time being, the PALFINGER Group will continue to hold 26 per cent in Palfinger systems.

Construction of the new production site for PALFINGER Dreggen Poland in Gdynia is well advanced and will be completed shortly after the end of 2014. Gdynia will serve as one of three production and testing sites for offshore cranes.

Fast RSQ, a boat producer acquired in 2010, has operated under the name of Palfinger Boats since May 2014. Due to the uniform market presence, it has now become a one-stop shop offering the complete range of davits and boats. Palfinger Boats employs a staff of approximately 70 at sites in Hanoi, Vietnam and Harderwijk, Netherlands.

In January 2015, PALFINGER agreed to take over 100 per cent of Norwegian Deck Machinery AS, a company with its registered office in Os near Bergen at Norway’s Atlantic coast. NDM has achieved a prominent market position with the development of special winches as well as handling equipment for offshore vessels, offshore service vessels, and oil and gas rigs. One of the distinctive features of the systems developed by NDM is the automatic compensation of wave movements, allowing for a safer and more efficient handling of loads.

Outlook: New record level of revenue expected for 2015
The unsteady market environment during the 2014 financial year confirmed the effectiveness of the three strategic pillars established by the PALFINGER Group: internationalization, innovation and flexibility. PALFINGER will therefore continue to pursue this long-term strategy of maintaining a leading position in the global market through its own efforts, in order to be able to generate sustainable, profitable growth in the future as well.

In the reporting period, the expansion of the PALFINGER Group was continued. Particularly in Russia and in China, local value creation was established and expanded. The Group’s flexibility will be continuously developed in all areas, also in the acquired companies. Order-based procurement, manufacturing and assembly have enabled PALFINGER to respond to order fluctuations quickly without running the risk of locking up excessive capital by increasing inventories.

Sustainable growth requires leadership, respect for different cultures and a willingness to learn. Therefore, numerous initiatives to promote junior executives and to deliberately increase diversity are being continued. Another factor facilitating the Group’s economic success is PALFINGER’s consistent focus on efficient and ecological production. At PALFINGER, sustainability as an integral part of its approach to doing business is regarded a key to success.

For 2015, PALFINGER sees growth potential in North America, Asia – primarily China – and in the marine business. Since the fourth quarter of 2014, PALFINGER has perceived stabilizing demand, also in the European core markets; in South America and Russia, no upswing is in sight. Overall, therefore, the management expects another boost in revenue in the 2015 financial year.

In 2012, the management of PALFINGER defined the objective of increasing the Group’s revenue to approx. EUR 1.8 billion by 2017. This target was agreed upon in the light of the framework conditions at that time (one of them being the full consolidation of all of the Group’s companies that are of strategic importance) and the expected economic development. Now that the 2014 financial year has drawn to a close, PALFINGER still continues to pursue this strategic target, even though it has become apparent in the course of the financial year that the development of the individual markets is becoming increasingly heterogeneous and that growth forecasts have to be corrected. Furthermore, accounting rules will make it impossible to fully consolidate the joint ventures with SANY. The Group’s long-term growth has been planned on the basis of the gradual completion of the product range in all market regions and the translation of the potentials harboured by the marine business into measurable market success. PALFINGER plans to reach this long-term revenue target through organic as well as inorganic growth.