However, according to the company, despite the increases, Group overall business performance was “inconsistent.” In a year-on-year comparison, the Industrial Cranes and Services segment achieved excellent results, but they were unable to compensate for the decrease in earnings in the Gottwald Port Technology segment, which reported below expected results with an EBIT of EUR9.6m due to high manufacturing costs and transport bottlenecks for the new Generation 5 Mobile Harbour Cranes.
Responding to the situation, five measures were instituted in order to ensure a sustained reduction in manufacturing costs with a positive EBIT effect of EUR 15m. These measures will have been implemented by the end of the third quarter of the 2007/2008 financial year and their full effect on earnings will be seen in the 2008/2009 financial year.
In the Services segment, EBIT grew substantially year-on-year by 24.6% to EUR 61.4m. This marked improvement was attributed to the successful spare parts business and high demand for maintenance and refurbishment orders, as well as to the implementation of price increases.
Interestingly, the Group’s order volume for the period was excellent, with an increase of 14.3% to more than EUR1.2 billion, with all three business segments contributing to the increase.
In the Industrial Cranes segment, the demand for Standard and Process Cranes led to a 20.3% increase to EUR 575.4m, while the Port Technology segment’s order intake rose by 7.6% compared to the previous year’s figure of EUR 323.3m, with an all-time-high for order intake recorded for the fourth quarter of 2006/2007. In particular, the demand for Generation 5 Mobile Harbour Cranes was, and remains, high. The Services segment continued to see a positive trend with order intake growing by 11.3% to EUR 306.4m. This increase was driven, in particular, by the refurbishment services and spare parts business.
For financial Year 2007/2008, the outlook is for further growth in both revenues and EBIT. “Based on the strategy for our product portfolio in all segments and improved market development, as well as increasing market demand, sales volumes should continue to grow worldwide compared with the 2006/2007 financial year. The success of our product portfolio, the full order books and the cost-saving initiatives in the Port Technology segment, form a solid basis for sustained profitable growth. Demag Cranes is well-equipped for the future,” said Harald Joos, Demag Cranes’ CEO.