Significant increase in order intake, revenues and EBIT / positive outlook for the year
Lübeck, November 10, 2005 – Drägerwerk AG, Lübeck, a globally operating medical and safety technology group, enjoyed a significant increase in order intake, revenues and EBIT in the first nine months of 2005. Both subgroups, Dräger Medical und Dräger Safety, were successful.
At the end of the third quarter of 2005, both order intake and revenues were substantially higher year on year, up 11.7 percent and 9.6 percent, respectively. At €1,211.5 million, order intake roughly corresponded to three quarters of the anticipated annual figure, and, as in prior years, was significantly higher than the revenues of €1,114.2 million.
Up 17.6 percent to €224.6 million, revenue growth was the most pronounced in the Americas. This increase was driven by Dräger Medical. In Europe excluding Germany, both subgroups contributed to revenue growth of 11.2 percent to €438.6 million. In Germany, consolidated revenues were down 3.1 percent at €250.7 million, due in part to Dräger Medical’s weak domestic market. In the Asia/Pacific region, revenues picked up noticeably during the first nine months thanks to the upward trend in core business, increasing by 10.9 percent to €136.2 million.
At €66.7 million, the nine-month EBIT (before non-recurring expenses) was 11.5 percent higher than in the prior year. This was achieved on the back of a 9.6 percent increase in revenues, despite a slightly lower gross margin and a moderate increase in functional costs of 6.7 percent.
At €23.5 million, consolidated net profit as of September was still significantly down on the prior-year figure of €29.0 million, which was heavily influenced by the result from discontinued operations (sale of IT consultancy business: €10.3 million).
Dräger Medical – double-digit growth in order intake, revenues and EBIT Dräger Medical closed the first nine months with EBIT before non-recurring expenses of €49.2 million. Compared to the prior year, this corresponds to an increase of 43.0 percent (9M 2004: €34.4 million before non-recurring expenses of €7.2 million). At 6.6 percent, the EBIT margin was significantly higher than in the same prior year period (2004: 5.2 percent). Revenues rose by 12.8 percent to €747.4 million (9M 2004: €662.8 million).
Order intake rose by 16.6 percent from €704.2 million in 2004 to the current €821.4 million. The reasons for this development include the further expansion of the global sales structure and the ongoing drive to improve internal processes. In the third quarter, EBIT before non-recurring expenses rose from €6.6 million (2004) to €15.1 million. At 5.9 percent, the EBIT margin was significantly higher than in the prior year (2004: 2.9 percent). In the third quarter, Dräger Medical generated revenue growth of 12.8 percent to 255.3 million (Q3 2004: €226.3 million). Order intake rose 11.8 percent from €246.8 million in 2004 to €275.9 million in 2005.
As of September, Dräger Medical achieved the largest regional growth in order intake in the Americas, recording 41.3 percent (to €183.2 million). This is attributable to a number of projects and the investments made in the new subsidiaries in Canada, Chile and Mexico in the prior year, as well as to the improved sales coverage in the US. In Germany, order intake and revenues were down again (down 4.8 percent and 7.3 percent, respectively, against the prior year), which is mainly a reflection of the shrinking German market. There continued to be an investment backlog in German hospitals coupled with uncertainties due to the prolonged political wrangling over the country’s healthcare system.
In the rest of Europe and in Asia/Pacific, double-digit growth against the prior year was seen in order intake (24.3 percent and 16.4 percent year on year) and revenues (12.9 percent and 17.0 percent year on year). The well established sales structure in Europe was the driving force behind the ongoing success and growth in market share. In Asia/Pacific, Dräger Medical continued to be a successful player in the expanding healthcare sector thanks to its clear sales strategy.
The divisions anesthesia, intensive care and neonatal experienced double-digit growth in order intake in the first nine months. In addition, Dräger Medical gained further market shares in Monitoring.
By relocating anesthesia production from Telford in the US to Lübeck in Germany, the Company improved its process and cost structure. Since September 2005, Fabius GS and Primus anesthesia equipment has been supplied globally from Lübeck.
Dräger Medical’s commitment to its innovation campaign is reflected in renewed high research and development expenditure of €59.4 million, which corresponds to 8.0 percent of revenues. Evidence of the subgroup’s innovative strength can be seen in the launch of SmartCare® (automated ventilator weaning software) in the US and the unveiling of another option for the Zeus® anesthesia device: the new 3.05 software module enables the enhanced automatic control all types of anesthesia gases, making it particularly suitable for use in pediatric ventilators.
Dräger Safety – EBIT growth ahead of revenues
Dräger Safety generated EBIT of €32.1 million in the first nine months of 2005, which was 14.6 percent up on the same prior-year period (€28.0 million). Core business and a pleasing performance by many subsidiaries forged this positive development, which saw the EBIT margin rise to 8.2 percent (2004: 7.8 percent).
Dräger Safety’s global revenues rose year on year by 9.5 percent to €391.3 million in the first nine months of 2005 (2004: €357.3 million). This growth was again achieved through core business, but also on the back of projects in many of the regions and product divisions as well as the integration of Dräger Interservices GmbH. Order intake rose by 8 percent to €414.6 million (9M 2004: €383.9 million).
EBIT stood at €8.1 million in the third quarter of 2005 (Q3 2004: €6.7 million), which corresponds to an increase of 20.9 percent. The EBIT margin rose to 6.4 percent (Q3 2004: 5.8 percent).
Dräger Safety’s revenues stood at €127 million (Q3 2004: €116.4 million), 9.1 percent up on the prior-year figure. €136.9 was generated in order intake (Q3 2004: €122.1 million) which equals a 12.1 percent gain on the prior year. In terms of core business, all regions contributed to the growth of the subgroup in the first nine months of 2005. The Company held its market position in the Americas. However, revenues fell short of the comparable prior-year period. This region experienced above-average revenue growth from project business in the prior year. The current trend has again been particularly bolstered by the subgroup’s core business. Orders for equipping the New York fire department and a power company in New York City with portable gas detectors and for supplying the Puerto Rican police with escape masks provided positive impetus for business performance.
Dräger Safety’s core business was also stable in Asia/Pacific, with order intake up and revenues unchanged against the prior year. Stationary gas monitoring equipment and systems for industrial use were the main growth drivers. Business was also good in many European countries in the first three quarters of the year. In Europe excluding Germany, order intake and revenues were up 6.6 percent and 8.7 percent, respectively. The British subsidiary Draeger Safety UK Ltd. commissioned a new development and construction center at its registered office in Blyth. The Dräger Alcotest 6510 breathalyzer was approved for use for the first time by the British police.
Despite the strained financial situation and the resulting tight rein on public spending, Germany generated year-on-year revenue growth of 10.5 percent in the first three quarters of 2005, excluding Dräger Interservices GmbH’s revenues of €18.3 million.
Research and development expenses amounted to €18 million (4.6 percent of revenues) and were largely channeled into new products such as the multi-gas detection device X-am 7000 PID (photo ionization detection) and the new FPS 7000 full respiratory protection mask.
Outlook – positive revenues and earnings forecasts unchanged
The Dräger Group does not expect to see any noticeable recovery in the global economy in the last quarter of fiscal year 2005. Dräger Medical and Dräger Safety are facing difficult challenges in their markets as a result of competition in operating business and consolidation among providers and customers. The initiated income and efficiency-boosting measures will be pursued further in all areas of the Dräger Group. Overall, the Executive Board expects the Dräger Group to enjoy revenue growth of 5 to 7 percent, coupled with an increase in EBIT and net profit of up to 10 percent. The high revenue growth rates should be seen in the context of improvements carried out by the Group to achieve a more linear revenue trend over the entire year. Dräger Medical and Dräger Safety ultimately aim to increase EBIT ahead of revenues in the current fiscal year.
This press release contains forward-looking statements regarding the development of the Dräger Group. No assurance can be given as to the content of these statements as they are based on assumptions and estimates that entail certain risks and uncertainties.
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Dräger presents nine-month figures