VOSSLOH AG 
By
03/29/2012
By the close of fiscal 2011, demand for the Vossloh Group's products and services was higher than ever. In an operationally difficult year the Group reached a record order backlog of around €1.5 billion. Especially buoyant was demand for locomotives and the new light rail vehicles. Werner Andree, Vossloh AG's CEO, thus looks ahead with a matching degree of confidence: "2011 has been a challenging year yet 2012 will see Vossloh back on the growth track. This and next year sales and earnings are set to resurge. With our tall order backlog we have laid the groundwork."
In 2011 and after years of above-average growth, the Vossloh Group suffered setbacks in sales and EBIT. This was mainly due to project delays in China, a suspension of shipments to Libya, and weak demand from several European markets. Year-on-year sales fell 11.4 percent to €1,197.2 million, the decline at the Rail Infrastructure division being somewhat steeper than at the Transportation. Vossloh AG's EBIT amounted to €96.5 million (down from €152.1 million).
Likewise down in fiscal 2011 were return on sales (ROS) and return on capital employed (ROCE), the latter sinking from 17.2 to 11.9 percent. The shortfall is largely due to the plunging EBIT. In 2011, the EBIT margin shrank from 11.3 to 8.1 percent.
Rail Infrastructure
Rail Infrastructure sales slipped 12.6 percent to €778.8 million; its Fastening Systems business unit, after a very strong 2010, reported the sharpest decline. Rail Infrastructure's EBIT dropped from €141.9 million to €86.2 million chiefly due to the plummeting sales in China and accelerating price and cost pressure at the Fastening Systems and Switch Systems business units. Nonetheless by year-end, order backlog at all Rail Infrastructure business units had topped the prior-year levels, especially at Vossloh Fastening Systems and Vossloh Rail Services.
The Fastening Systems business unit reported sales of €262.8 million (down by 28.9 percent) for the period. The weaker performance was primarily attributable to project delays in China where since July 2011 there has been a hold on shipments for ongoing projects. Revenue in Libya and Russia was also short of expectations again on account of project postponements. The Fastening Systems business unit scored a strategic success with its very first order to supply products for a high-speed railway line on ballasted track in Morocco. The North American customer base also branched out and in a number of Asian countries business expanded appreciably.
In terms of sales the biggest business unit, Switch Systems reported revenue of €433.0 million (down only 1.4 percent) for 2011. Burdening its business were the suspension of shipments to Libya and soft demand in Southern Europe. In 2011 and alongside countless orders from various countries in North Africa, Asia and South America, Vossloh Switch Systems booked a major contract as part of the reconstruction of Iraq's railway network.
Sales were strong at the Rail Services business unit, which has belonged to the Group since the start of 2010; they rose 3.5 percent to €87.7 million. At €92.6 million, order intake during the period was likewise well up over the prior year's €85.7 million. This reflects rising demand for all-in rail maintenance work.
Transportation
Given the poor performance of the first half of 2011, twelve-month sales at the Transportation division were, as expected, short of the prior year's level. Revenue shrank by 8.6 percent to €420.0 million. Both business units, Transportation Systems and Electrical Systems, reported lower sales. Transportation's EBIT improved marginally, however, by 1.1 percent to €27.8 million, its EBIT margin mounting from 6.0 to 6.6 percent. Year-on-year, order intake by Transportation doubled, a clear indication that its business downturn has bottomed out.
Sales at the Transportation Systems business unit slipped 8.2 percent to €279.9 million. Within the unit, business was mixed: whereas the German location at Kiel reported a revival, the Spanish location at Valencia showed the expected shrinkage due to poor order inflow back in 2010. Both Kiel and Valencia reported sizable new orders in 2011: at Kiel especially two megacontracts from German industry for altogether over 40 of the new family of shunting locomotives while Valencia won numerous large orders to be handled in unison with the Electrical Systems business unit. These include light rail vehicles for Karlsruhe and Rostock and 31 suspension rail cars for Wuppertal. A contract for 29 EURO 3000 and EURO 4000 for Israel underscores the surging demand for these types of locomotive.
The Electrical Systems business unit reported an 8.4-percent sales reduction to €146.7 million due to shelved order placement. In addition to various contracts to be handled together with Vossloh Rail Vehicles, this business unit booked further megacontracts such as 50 light rail vehicles for the Hannover local transport operator.
Dividend unchanged at €2.50 per share
For fiscal 2011, the Executive and Supervisory Boards of Vossloh AG will propose to the AGM a dividend of €2.50 per share, unchanged from the prior year's record level.
Workforce
At December 31, 2011, the Vossloh Group employed a workforce worldwide of 5,011, up 2.1 percent or 105. Of these, 1,762 (including 82 apprentices) worked in Germany.
Prospects
For this year and 2013, the Vossloh Group expects a rebound in sales and earnings. The main reason is the brimming order backlog of around €1.5 billion at the start of 2012. For fiscal 2012, group sales are predicted to total between €1.25 billion and €1.3 billion and EBIT between €100 million and €110 million. Vossloh is aiming to improve both its ROCE and EBIT margin, the former from today's vantage point to between 12.5 and 14.0 percent and the latter to between 8.0 and 8.5 percent. From today's viewpoint, the Rail Infrastructure division will over the next two years recover through ongoing internationalization and expand its market position, one factor being the optimization of cost structures. Transportation's downtrend has petered out, and the division is now benefiting increasingly from a rush of incoming orders for new locomotive models and local transport rail vehicles as demonstrated by locomotive orders from Israel and light rail vehicles for Hannover, Karlsruhe, Rostock and railcars for Wuppertal's suspension railway. As to 2013, Vossloh is looking to sales of €1.3 billion to €1.35 billion and an EBIT ranging between €120 million and €130 million. ROCE is set to climb to 14.5-16 percent, the EBIT margin to 9 or 10 percent.
Key indicators at a glance
- Order backlog at a record of around €1.5 billion
- Sales and EBIT 2011 below prior year
- Project delays burden business
- Proposed dividend unchanged at €2.50
By the close of fiscal 2011, demand for the Vossloh Group's products and services was higher than ever. In an operationally difficult year the Group reached a record order backlog of around €1.5 billion. Especially buoyant was demand for locomotives and the new light rail vehicles. Werner Andree, Vossloh AG's CEO, thus looks ahead with a matching degree of confidence: "2011 has been a challenging year yet 2012 will see Vossloh back on the growth track. This and next year sales and earnings are set to resurge. With our tall order backlog we have laid the groundwork."
In 2011 and after years of above-average growth, the Vossloh Group suffered setbacks in sales and EBIT. This was mainly due to project delays in China, a suspension of shipments to Libya, and weak demand from several European markets. Year-on-year sales fell 11.4 percent to €1,197.2 million, the decline at the Rail Infrastructure division being somewhat steeper than at the Transportation. Vossloh AG's EBIT amounted to €96.5 million (down from €152.1 million).
Likewise down in fiscal 2011 were return on sales (ROS) and return on capital employed (ROCE), the latter sinking from 17.2 to 11.9 percent. The shortfall is largely due to the plunging EBIT. In 2011, the EBIT margin shrank from 11.3 to 8.1 percent.
Rail Infrastructure
Rail Infrastructure sales slipped 12.6 percent to €778.8 million; its Fastening Systems business unit, after a very strong 2010, reported the sharpest decline. Rail Infrastructure's EBIT dropped from €141.9 million to €86.2 million chiefly due to the plummeting sales in China and accelerating price and cost pressure at the Fastening Systems and Switch Systems business units. Nonetheless by year-end, order backlog at all Rail Infrastructure business units had topped the prior-year levels, especially at Vossloh Fastening Systems and Vossloh Rail Services.
The Fastening Systems business unit reported sales of €262.8 million (down by 28.9 percent) for the period. The weaker performance was primarily attributable to project delays in China where since July 2011 there has been a hold on shipments for ongoing projects. Revenue in Libya and Russia was also short of expectations again on account of project postponements. The Fastening Systems business unit scored a strategic success with its very first order to supply products for a high-speed railway line on ballasted track in Morocco. The North American customer base also branched out and in a number of Asian countries business expanded appreciably.
In terms of sales the biggest business unit, Switch Systems reported revenue of €433.0 million (down only 1.4 percent) for 2011. Burdening its business were the suspension of shipments to Libya and soft demand in Southern Europe. In 2011 and alongside countless orders from various countries in North Africa, Asia and South America, Vossloh Switch Systems booked a major contract as part of the reconstruction of Iraq's railway network.
Sales were strong at the Rail Services business unit, which has belonged to the Group since the start of 2010; they rose 3.5 percent to €87.7 million. At €92.6 million, order intake during the period was likewise well up over the prior year's €85.7 million. This reflects rising demand for all-in rail maintenance work.
Transportation
Given the poor performance of the first half of 2011, twelve-month sales at the Transportation division were, as expected, short of the prior year's level. Revenue shrank by 8.6 percent to €420.0 million. Both business units, Transportation Systems and Electrical Systems, reported lower sales. Transportation's EBIT improved marginally, however, by 1.1 percent to €27.8 million, its EBIT margin mounting from 6.0 to 6.6 percent. Year-on-year, order intake by Transportation doubled, a clear indication that its business downturn has bottomed out.
Sales at the Transportation Systems business unit slipped 8.2 percent to €279.9 million. Within the unit, business was mixed: whereas the German location at Kiel reported a revival, the Spanish location at Valencia showed the expected shrinkage due to poor order inflow back in 2010. Both Kiel and Valencia reported sizable new orders in 2011: at Kiel especially two megacontracts from German industry for altogether over 40 of the new family of shunting locomotives while Valencia won numerous large orders to be handled in unison with the Electrical Systems business unit. These include light rail vehicles for Karlsruhe and Rostock and 31 suspension rail cars for Wuppertal. A contract for 29 EURO 3000 and EURO 4000 for Israel underscores the surging demand for these types of locomotive.
The Electrical Systems business unit reported an 8.4-percent sales reduction to €146.7 million due to shelved order placement. In addition to various contracts to be handled together with Vossloh Rail Vehicles, this business unit booked further megacontracts such as 50 light rail vehicles for the Hannover local transport operator.
Dividend unchanged at €2.50 per share
For fiscal 2011, the Executive and Supervisory Boards of Vossloh AG will propose to the AGM a dividend of €2.50 per share, unchanged from the prior year's record level.
Workforce
At December 31, 2011, the Vossloh Group employed a workforce worldwide of 5,011, up 2.1 percent or 105. Of these, 1,762 (including 82 apprentices) worked in Germany.
Prospects
For this year and 2013, the Vossloh Group expects a rebound in sales and earnings. The main reason is the brimming order backlog of around €1.5 billion at the start of 2012. For fiscal 2012, group sales are predicted to total between €1.25 billion and €1.3 billion and EBIT between €100 million and €110 million. Vossloh is aiming to improve both its ROCE and EBIT margin, the former from today's vantage point to between 12.5 and 14.0 percent and the latter to between 8.0 and 8.5 percent. From today's viewpoint, the Rail Infrastructure division will over the next two years recover through ongoing internationalization and expand its market position, one factor being the optimization of cost structures. Transportation's downtrend has petered out, and the division is now benefiting increasingly from a rush of incoming orders for new locomotive models and local transport rail vehicles as demonstrated by locomotive orders from Israel and light rail vehicles for Hannover, Karlsruhe, Rostock and railcars for Wuppertal's suspension railway. As to 2013, Vossloh is looking to sales of €1.3 billion to €1.35 billion and an EBIT ranging between €120 million and €130 million. ROCE is set to climb to 14.5-16 percent, the EBIT margin to 9 or 10 percent.
Key indicators at a glance
