Krones posts H1 loss as year-on-year profits plummet €107m

The beverage filling and packing technology company characterised the economic outlook for the second half of the year as “precarious”. It said it expected to endure a “difficult time” in the next six months as it also projected making a full year loss.

However, the German company said the recession was not hurting the beverage industry as much as other sectors and would “probably be over more quickly too".

Krones chairman Volker Kronseder said the results were “disappointing” as the firm unveiled a 23 per cent year-on-year drop in sales for the period January to June – from €1.2bn to €924m. The company said the poor performance was a result of a “cyclical downtrend”.

Economic uncertainties meant customers’ investment sentiment was “slight", with orders plummeting almost 30 per cent to €874m compared to the same period a year ago. But Q2 orders had shown an 11 per cent increase on the proceeding quarter, added the company. The firm’s order bookings from Eastern Europe had also been hit by the severity of the economic crisis there as custom from the region had “decreased significantly” during H1. By contras, demand from China remained buoyant.

“Because the market as a whole is currently shrinking, competitive pressure has increased, with a concomitant deterioration in the pricing quality,” said a Krones statement. It added that while sales continued to rise in regions like Germany, the Middle and Near East, and in China and Africa, they shrank significantly in the rest of Europe, and in America.

The credit crunch had also hit Krones’ business – so that the order backlog for June 30 had fallen by €50m to €787m in just six months.

Krones said it expected the financial crisis to impact its business significantly in the second half of the year but that, in the long term, it expected to “return to a growth trajectory” and that it remained on a “solid financial footing”.