Annual Report 2016
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SUMMARY OF THE BOARD OF MANAGEMENT

The forecasts made in the previous year’s report have not been fully realised due to the circumstances outlined. The weak state of the economy had a major impact on our core markets in some areas, and thus also on the achievement of our order intake targets. A further negative effect resulted from delays in the award of orders for large-scale projects. Consequently, our order intake was down by 4.6 %, and the significant improvement that we were seeking failed to materialise.

Weak demand across the world in several important sectors held back the growth in our business. For various products we also once again experienced that our pricing flexibility was not sufficient in order to achieve satisfactory margins in a tougher competitive situation. The resulting impact differed across the various segments.

Consequently, sales revenue developed somewhat more poorly than expected (strong rather than “significant” decline).

As forecast, our earnings figures were impacted by one-off costs (around € 50 million across the Group). Positive effects were recorded as a result of cost-cutting measures initiated earlier (also around € 50 million across the Group). Their contribution was actually slightly higher than expected. Overall, while the substantial falls predicted in earnings before income taxes and return on sales did occur, the figures in real terms were higher than originally planned.

The sales revenue forecast (significant decrease) for the Pumps segment proved correct. Earnings generated were, however, € 5.5 million up on the 2015 figure and did not fall substantially, as anticipated. Order intake was expected to rise significantly, but actually fell by 4.5 % as a result of the general economic environment.

The difficult market situation also had an impact on the Valves segment. Consequently, the stable order intake that had been expected did not materialise, with orders down by 10.0 %. This translated into significant decreases in sales revenue. A year ago we were even expecting a substantial downward trend. Earnings, as predicted, were well down on the previous year.

In the Service segment, our forecasts of slight sales revenue growth proved correct. Counter to expectations, the decline in earnings was substantial, rather than moderate. Our order intake target (moderate increase) could not be achieved, however, and we were faced with a slight fall.

The net financial position, at € 259.5 million compared with € 211.3 million in the previous year, developed more favourably than forecast twelve months earlier (slightly less than € 211 million).

Our business development in the reporting year in terms of order intake and sales revenue was thus somewhat less favourable overall than expected. In terms of our earnings figures and net financial position, however, the overall picture was somewhat better than anticipated.

KSB continues to have a healthy financial basis for the future. The measures initiated to permanently improve our cost structures will strengthen this basis for the long term.

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