PALFINGER steps up growth pace in 3rd quarter of 2015

• Revenue expanded by 14.9 per cent to EUR 898.9 million 
• EBIT increased by 38.7 per cent to EUR 77.7 million 
• Consolidated net result rose by 49.2 per cent to EUR 48.4 million 
• Continuation of growth expected

 In the first three quarters of 2015, the performance of the PALFINGER Group continued to be marked by steep growth. Revenue rose by 14.9 per cent from EUR 782.5 million in the first nine months of 2014 to EUR 898.9 million, which is a new record level. EBIT showed an extraordinarily strong increase of 38.7 per cent from EUR 56.0 million to EUR 77.7 million. This, in turn, generated a marked rise in the EBIT margin, which came to 8.6 per cent, as compared to 7.2 per cent in the first three quarters of 2014. The consolidated net result for the first three quarters of 2015 was EUR 48.4 million, 49.2 per cent higher than the previous year’s figure of EUR 32.4 million.

The major factors accounting for this positive performance included the huge gains achieved in the sale of loader cranes in Europe as well as the continued progress made by PALFINGER outside Europe. In North America, strong demand coupled with the strong US dollar facilitated a significant boost in revenue and earnings. In Russia/CIS, the strategic investments in local value creation made it possible for PALFINGER to continue its success in this market region. In Asia, PALFINGER’s cooperation with SANY was fruitful. In the marine business, the low oil price dampened customers’ willingness to invest; nevertheless, PALFINGER continued its growth, achieving an increase in revenue of approx. 25 per cent. In South America, however, PALFINGER recorded further losses in revenue as a result of the generally slack economy even though PALFINGER’s share in this market increased. The contributions to earnings made by the EUROPEAN UNITS segment and, in particular, the AREA UNITS segment showed a significant increase in the first three quarters of 2015.

Outlook
The present level of incoming orders gives reason to expect further growth in the fourth quarter of 2015. In Europe, visibility is still low but has stabilized. The investment propensity of customers in Europe is still restrained, despite some positive trends, whereas in the USA there is greater confidence in a revival of the economy.

Performance by segment
In the first three quarters of 2015, the EUROPEAN UNITS segment reported a year-on-year increase in revenue of 12.1 per cent, from EUR 546.8 million to EUR 612.7 million (Q3 2014: EUR 169.2 million; Q3 2015: EUR 198.4 million). The revenue generated by Norwegian Deck Machinery AS, which had been acquired in January, accounted for 17.7 per cent of this growth. The segment saw an increase in EBIT of 22.7 per cent to EUR 76.3 million for the first nine months of 2015, as compared to EUR 62.2 million for the same period of the previous year.

In the first three quarters, the loader crane business picked up substantially, with improvements being reflected in higher sales, revenue and earnings. An increase in revenue was also achieved in Access Platforms, Railway Systems and EPSILON Timber and Recycling Cranes. Truck Mounted Forklifts and Hooklifts also saw an expansion of sales.

In the global marine business, PALFINGER increased its revenue by around 25 per cent. This growth was made possible not only by the NDM Group (Norwegian Deck Machinery AS) acquired in the first quarter of 2015 but also by the market success achieved by Launch & Recovery Systems, Boats and Rope Access. In June 2015, PALFINGER was awarded a major contract with a value of approx. EUR 33 million for its offshore business. The Norwegian oil company Statoil invited tenders for the equipment for a new oil and gas field and, in early June, awarded the contract for large marine cranes to PALFINGER. In addition, in the third quarter PALFINGER was awarded contracts with a value of approx. EUR 10 million for the delivery of wind cranes to Germany and Great Britain. One of the decisive factors accounting for the success over the company’s international competitors in both cases was PALFINGER’s verifiably lower costs over the lifecycle, given comparable quality.

In the first three quarters of 2015, the revenue of the AREA UNITS segment recorded a year-on-year increase from EUR 235.7 million to EUR 286.2 million (Q3 2014: EUR 82.1 million; Q3 2015: EUR 94.3 million), corresponding to a growth rate of 21.4 per cent. The segment’s EBIT surged by 86.2 per cent, from EUR 6.8 million in the first three quarters of 2014 to EUR 12.7 million. This remarkable improvement was caused by the expansion of business in Russia and, in particular, by the organic growth achieved in North America and the strong US dollar.

In North America, PALFINGER recorded an increase in revenue of more than 30 per cent, approx. one third of which was the result of organic growth and approx. two thirds of which were due to the appreciation of the US dollar. As compared to the previous year, the product areas established on the market, namely Loader Cranes, Tail Lifts, Hooklifts and Access Platforms, recorded significant increases in sales, which were also reflected in earnings. In South America, the weak economy caused a contraction of PALFINGER’s business volume. All in all, market volume in South America shrank by around 30 per cent. PALFINGER succeeded in expanding its market shares in this challenging market environment. In Russia/CIS, PALFINGER achieved a substantial increase in revenue and managed to further expand its market share. PM-Group Lifting Machines, which had been acquired in the fourth quarter of 2014, was the main contributor to this development, but INMAN also posted significantly higher revenue. The development of the Asia and Pacific market region was marked primarily by PALFINGER’s successful cooperation with SANY.

Development of key financials
As at 30 September 2015, the equity ratio of the PALFINGER Group came to 41.6 per cent, slightly below the level on the reporting date in the previous year (30 Sept 2014: 42.1 per cent). Due to the satisfactory development of earnings in the first three quarters of 2015, equity rose by EUR 45.0 million from EUR 464.7 million to EUR 509.7 million as at 30 September 2015. Total assets increased compared to the first three quarters of 2014 from EUR 1,104.9 million to EUR 1,225.0 million, primarily as a consequence of the acquisitions made in the previous twelve months and the related increase in capital employed. Thus, equity increased by 9.7 per cent, and total assets rose by 10.9 per cent in the same period.
In comparison with the first three quarters of 2014, the average net working capital decreased to EUR 194.1 million (Q1–Q3 2014: EUR 208.1 million). The average capital employed rose by EUR 128.8 million to EUR 855.5 million.
Net debt increased by a slight 0.2 per cent year on year to EUR 383.4 million as at the end of September 2015 (30 Sept 2014: EUR 382.6 million). As a result of the retention of current earnings, the gearing ratio dropped to 75.2 per cent (30 Sept 2014: 82.3 per cent). 95.9 per cent of PALFINGER’s total capital employed has been secured on a long-term basis.
In the first three quarters of 2015, cash flows from operating activities amounted to EUR 53.7 million, as compared to EUR 7.3 million in the same period of the previous year. Free cash flows were positive at EUR 11.8 million despite investments in capacity expansion as well as the acquisitions made.

The Interim Report for the First Three Quarters of 2015 is available for download at
www.palfinger.ag/en/newsroom/financial-reports.