• Good performance in difficult market conditions
• Sales €2.475 billion (-14.7%)
• Gross margin improved to 23.4 %
• Profit before tax on income €77 million (previous year: €112.3 million)
• Free cash flow €215.8 million (previous year: € -264.8 million)
• Equity capital base strengthened: liquidity at record level
• Research and development remain at high levels
• 15% decline in sales, market positions strengthened
Omaha, December 23 — Claas used the 2010 financial year to prepare itself for profitable growth with various new products and improved structures and processes.
The Claas 2010 financial year (balance sheet date 30 September) was characterized by a decline in sales due to the global recession and financial crisis. The turnover of the Claas Group was €2.475 billion, which represents a drop of 14.7%. In many markets, Claas was not only able to consolidate its market share, but actually increase it. In a difficult market environment, the company achieved a profit before tax of €77 million, with a return on sales of 3.1%. This figure is 31.3% below that of the previous year.
At the same time, the company was able to improve the quality of its profit (gross margin). Overall, the company significantly reduced its working capital, achieving a free cash flow of €215.8 million. Claas has thus demonstrated its strength over two difficult years.
Various regional developments characterize the international agricultural machinery markets
The agricultural machinery markets of Western Europe stagnated, even though the income of farmers and farm contractors stabilized in some regions. A change in growing patterns is also becoming evident. There has been a significant increase in the amount of land used to produce biomass. As a result, the demand for machinery shifted towards harvesting machines for biomass and biogas production. This meant that demand increased for forage harvesting technology, large tractors for silo compaction and telescopic loaders.
Eastern Europe and, in particular, Russia experienced significant negative growth in 2009 but have since stabilized at a low level. The unsatisfactory income situation of farming operations, the reluctance of banks to provide credit and, in some cases, catastrophic weather conditions have meant that the market has only been able to recover slowly. In central Europe, on the other hand, agricultural machinery markets have suffered significant declines.
In North America, a low level of growth was maintained. Here, harvest yields were largely good, holding the incomes of farmers and farm contractors at a high level.
The South American markets registered major growth. This was due to positive weather conditions, good harvests and significant price rises for farmers. Furthermore, attractive state support programs also benefited the agricultural sector
The Asian markets continued to grow. In some regions of India, strong monsoon rains had a very favorable effect on agricultural production. State aid for the agricultural sector also encouraged the positive trend.
Expenditure on research and development remains at high levels
With expenditure of €125.2 million on research and development, Claas maintained the high level of the previous year. The presentation of the new Lexion combine harvester generation and many other new products in other areas bore testament to the company's focus on development and its modern product range.
As of the balance sheet date of September 30,2010, Claas employed a total of 8,968 staff. This represents 499 less staff than a year ago. As well as this moderate reduction in the number of employees, other flexible methods of adjusting staffing capacity were implemented successfully, including short-time work and using up the credit on employees' time accounts. At the same time, the company is in a good position to respond quickly to the increase in demand for modern agricultural machinery which is currently being experienced.
Respectable result achieved
Equity capital and financial base strengthened With a profit before tax on income of €77.2 million and an improvement in the equity ratio to 35.7%, Claas has proven that the company can stay on course even in difficult market conditions. The successful "Fitness 2010" program produced all of the savings and process improvements expected of it. Furthermore, the high free cash flow figure of €215.8 million strengthens the financial operating base of the Claas Group. Liquidity has risen above €900 million for the first time.
The indications for the 2011 financial year in the global agricultural machinery sector are clearly pointing towards growth. Grain prices have recovered further and are ensuring good income levels. The industry associations are forecasting a significant market recovery.
However, these two difficult years have not changed the ever growing global developments: population growth and the increasingly sophisticated food demands of the world's population, limited availability of agricultural land and the increasing usage of renewable raw materials to produce bio energy. These trends will have a positive long-term effect on the demand for the latest agricultural machinery.
After two financial years of declining sales, significant positive developments are also becoming evident at Claas. The first sales figures of the new financial year indicate an increase in machinery purchases. The orders already received for the 2011 harvest season underline this noticeable upwards trend. A further driver is the low level of machinery stocks at dealerships.
Claas prepared for this growth in 2010. Along with the introduction of many new products, including the new Lexion combine harvester, the company improved its structures and optimized its processes. This noticeable increase in demand has also been taken into account in the production plans of the Claas plants.