Revenues increased once again
Positive trends in markets of importance to Heraeus—the electronics and semiconductor industry, the steel industry, the chemical industry and medical products—as well as an international presence in significant growth markets and a substantial increase in the price of precious metals had a positive effect on business developments in 2007.
Product revenues increased by 8.2 % to more than € 2.9 billion, exceeding the excellent results of the previous year. Adjusted for exchange rate effects, product revenues grew by 12 %. Precious metal trading revenues amounted to € 9.3 billion, or roughly the level of the previous year, again benefiting from the extreme volatility of precious metal prices. "This trend confirms the wisdom of our strategy of sustainable and profitable growth," noted Dr. Helmut Eschwey, Chairman of the Board of Management, at a press conference on the company's annual results held today in Frankfurt.
Improved financial performance and increase in equity-to-assets ratio
At € 301.7 million, operating earnings before taxes (EBT) once again exceeded the previous record for the Heraeus Group, set in the previous year, by 15.2 % or € 39.8 million; after-tax earnings (net income) rose by 19.2 % to € 210.3 million. "We are especially pleased that once again nearly every business segment increased its earnings over the previous year," Board of Management member and CFO Jan Rinnert pointed out. "By further increasing our equity-to-assets ratio, to 55 %, we have established a solid foundation for expanding our presence throughout the world," Mr. Rinnert went on.
Some 15 % of the Group's profit distributions benefit directly and indirectly associated foundations. This means that a significant share of Heraeus' earnings is used for charitable purposes that contribute to the public good.
Investments in property, plant and equipment increased by 23.3 % over the previous year, to reach a total of € 103.5 million. The Heraeus Group invested € 40 million in Germany alone.
Competitive position in Germany safeguarded
The number of Heraeus employees increased worldwide by 5.3 % to a total of 11,875, which corresponds to 600 additional employees. This growth occurred primarily in Asia (+ 234 employees), but also in Germany (+ 168 jobs).
As of January 1, 2008, all Heraeus companies in Germany operate under the pay scale agreement for the chemical industry. A landmark wage agreement facilitated the transition for businesses previously operating under the pay scale agreement for the metal industry to the agreement for the chemical industry. At the same time, the work week was expanded by 2.5 hours for approximately 3,000 employees in an effort to secure and enhance Heraeus' competitive position in Germany.
Higher revenues for all divisions – strong business in Europe
In 2007, all of the business segments contributed to the increase in revenues for the Heraeus Group. The business segment specializing in precious metals (W. C. Heraeus) stood out, with an increase of 11 % over the previous year. The sensor specialist (Heraeus Electro-Nite) recorded an increase of 5 %, dental and medical products (Heraeus Kulzer) gained 3 %, quartz glass (Heraeus Quarzglas) 2 % and specialty lighting sources (Heraeus Noblelight) 3 %. "Our regional presence and the range and diversity of our products, which we offer to attractive growth markets worldwide, are important factors in our success," observed Dr. Frank Heinricht, Vice Chairman of the Board of Management, as he described revenue trends in various world regions.
Growth was particularly strong in Europe, with revenues increasing by 14 % or € 85.5 million. Heraeus recorded a revenue increase of approximately € 49.3 million (+10 %) in Germany.
Successful strategy of innovation
"Our innovative capacity is one of our strengths. In 2007, we were once again able to increase our innovation rate—which has remained high for many years—to its current level of 25 % (this refers to revenues from products that are less than three years old) and to increase the number of patents we hold from 4,300 to 4,700," said Dr. Frank Heinricht, explaining the success of Heraeus' strategy of innovation. For the last five years, the company has held a competition for the in-house Heraeus Innovation Award, which recognizes groundbreaking products that contribute to the success of Heraeus customers throughout the world. Among the winners in 2007: a microphotoreactor for the production of pharmaceutical ingredients used in treating cancer, a new generation of durable synthetic quartz glass for microlithography and a new combination of flux and solder paste for the semiconductor industry. With its investments in the technologies of the future relating to the environment, health and communications, Heraeus stands for superb product solutions that provide outstanding benefits to its customers.
Heraeus remains on a stable course
"2008 is off to a strong start. Our first quarter results are very good, and we are pleased to report that overall order volumes are stable," noted Dr. Frank Heinricht, Vice Chairman of the Board of Management, in assessing the current financial year. Heraeus is expecting the rate of growth to decline over the coming months, primarily owing to macroeconomic risk factors such as the effects of the financial and real estate crisis in the United States, a continuing trend toward a stronger euro and the cyclical nature of the semiconductor industry. "We are working to ensure that the high revenue and profit levels of previous years are maintained in 2008. Over the medium term, the Group will take advantage of further opportunities for sustainable growth. Accordingly, our planning includes substantial resources for investment and acquisitions," Dr. Heinricht pointed out in his concluding statement.
Heraeus, the precious metals and technology group headquartered in Hanau, Germany, is a global, private company with over 155 years of tradition. Our businesses include precious metals, sensors, dental and medical products, quartz glass and specialty lighting sources. With product revenues of € 3 billion and precious metal trading revenues of € 9 billion, as well as over 11,000 employees in more than 100 companies worldwide, Heraeus holds a leading position in its global markets.
For further information please contact:Martina Rauch
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