‘Madness’ on the markets has not dented Krones orders, chairman

By Ben Bouckley

- Last updated on GMT

Related tags: Revenue

‘Madness’ on the markets has not dented Krones orders, chairman
Despite flat earnings in the third quarter (Q3) and ‘madness’ on world stock markets, Krones chairman Volker Kronseder said his firm remains cautiously optimistic for the rest of 2011.

Addressing shareholders as the firm released details of its Q3 earnings yesterday, Kronseder said the German-based food machinery supplier had not got carried away by a strong second quarter.

And between January 1 and September 30, Krones increased sales to €1.814.2bn compared with €1.583bn for the same period of a difficult 2010; net profit rose 85.9 per cent to €59.3m from €31.9m

Nonetheless, Kronseder urged caution: “The past has taught us how quickly the overall economic situation can change for the worse. Those words have proven sadly prophetic.”

He added: “As the sovereign debt crisis and the ensuing euro crisis have escalated in recent months and madness has reigned on the world’s stock markets, the economic outlook has turned increasingly bleak.”

Turmoil on capital markets

But with most industries in German posting strong growth, Kronseder said Krones was no exception: “The order books are well-filled and our key figures for the first 9 months of 2011 are considerably up over last year.”

Nonetheless, if “turmoil on the capital markets”​ dragged the world economy down, Krones would not be completely immune from adverse effects, Kronseder added.

Within its core business of machines and lines for product filling and decoration, Krones said its strong growth trend continued from January to September, with sales up 18.2 per cent year-on-year to €1.578.2bn (€1.334,7bn: 2010).

Pre-tax earnings of €99.6m were up 70 per cent year-on-year (€58.7m: 2010) with Krones blaming an “unsatisfactory price situation”​ for the fact that earnings on machine sales in this sector were not even higher.

“The main driving force for this growth was continued high demand for machines and lines for bottling beverages and liquid foods in plastic,” ​the company said.

Beverage process technology slump

As a major supplier of machines and lines for producing, filling and packaging PET bottles worldwide, Krones said this segment provided 87 per cent of total revenues in the first 9 months.

However, sales of machines and lines for beverage production/process technology (9.3 per cent of sales down from 11.9 per cent year-on-year) fell 10.5 per cent in the first three quarters, Krones said, from €188.7m (2010) to €168.8m (2011).

Krones recorded an even steeper loss than last year within this sector for January to September, at €6.4m compared with €2.9m in 2010.

Glossing these figures, the company pointed to a “heavily project-based”​ process engineering business that meant sales revenues often fluctuated quite sharply during the course of the year.

And after a strong H1 – due to rising Eastern European demand – sales of low output machines and lines fell slightly to 3.7 per cent during Q3, down from 3.8 per cent in 2010.

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