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- Concept of sustained value enhancement and realignment taking effect
- Net income 2002 doubled to €19.8 million versus prior year
- International sales accounting for 72 percent of the total
- Net financial debts slashed by €51.4 million
- Global success by strong Medical and Safety subgroups
- Headcount climbing 330 to 9,865
- Cash dividend increased to €0.35 (preferred stock)
- Stable first quarter 2003
- Prospects and financial targets for years ahead
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| Lübeck, May 15, 2003 - Lübeck-based Drägerwerk AG, an internationally leading medical and safety technology group, continues its realignment and value enhancement concept in 2003, too. With net sales up 2 percent, the Group earned a net €2.2 million in Q1 (up from €2.0 million versus Q1/2002) and has thus upheld its position well in these economically dismal times. Experience has shown that first-quarter sales and earnings are usually below the remaining quarterly averages. As CEO Theo Dräger explained at the annual accounts press conference, the Dräger Group's growth will in 2003, too, outpace the market, and its earnings outgrow sales. In the past three years, the two major subgroups, Dräger Medical and Dräger Safety, further sharpened and honed their competitive edge and are well positioned in the global marketplace. Since the beginning of 2003, Dräger stock has risen by some 75 percent, from €18 to presently about €32.
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| Group net income doubled-international sales 72%
In fiscal 2002, the Dräger Group almost doubled its prior-year net income of €10.2 million to €19.8 million. EBIT climbed €15.0 million or 30 percent to €64.5 million (up from €49.5 million) and the EBIT margin 0.9 percentage points to 4.8 percent, key contributors being the distinct EBIT improvements at the Dräger Medical and Dräger Safety subgroups. Sales in 2002 were stepped up by 6 percent from €1,257 million the year before to €1,333 million and mainly generated in Western Europe, the United States, and Asia. While altogether 72 percent (up from 70) of the Dräger Group's products and services was sold outside of Germany, the Group sales breakdown has remained unchanged: at 63 percent Dräger Medical is the biggest subgroup, followed by Dräger Safety at 35 percent, and Dräger Aerospace (sold in 2003 to the British Cobham Group) at just under 2 percent. The volume of new orders received by the Group increased by 4.1 percent to €1.345 billion (up from €1.292 billion).
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Financial position, asset and capital structure
The combined effects of Group earnings, goodwill offset, parity changes and other consolidation entries left the Dräger Group's equity almost unchanged at €170 million (down from €172 million). With total capital down, the equity ratio returned to a level of 20+ percent (up from 19.8 percent). The free cash flow soared to €55 million (up from €28 million). As net financial debts were slashed by €51 million, net interest expense was trimmed to €13.2 million (down from €15.7 million). ROCE hiked up from 9.2 to 13.2 percent.
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Capital expenditures, R&D expenses, and advanced/further training
Most capital outlays were made for tangible and intangible assets, primarily production plant, factory and office equipment, as well as software, the total spent by the Group rising to €48 million (up from €44 million); this was €2.7 million above total depreciation and amortization of €45.5 million. The Dräger Group's R&D expenses amounted to €77.5 million (up from €72.6 million), equivalent to an unchanged 5.8 percent of sales; spending for advanced and further training came to around €10 million. The Dräger Group thus invested again more than 10 percent of sales (€135 million) in the bases to secure its future.
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Worldwide headcount up
On annual average, the Dräger Group employed a workforce of 9,865 (up from 9,535), 3.1 percent more than in 2001, including 5,843 (down from 5,905) in Germany. The current percentage of the Dräger workforce outside of Germany has meantime risen to over 40 (4,022 employees, up from 3,630). Personnel expenses in the Group inched up to €529 million (from €504 million), corresponding to 39.5 percent of total operating performance (down from 39.7 percent) and including a payroll of 112 at smaller, newly consolidated companies previously carried at equity. Both this trend and the international structure of the German workforce reflect Dräger's evolution into a globally oriented group.
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Dräger Medical 2002: EBIT doubled
An indicator of Dräger Medical's uptrend in 2002 is its EBIT of €75.3 million, almost double the prior-year €39.0 million. Moreover, the capital employed by the subgroup shrank by 5 percent to €301 million (down from €316 million), thus doubling ROCE (return on capital employed) to 25.0 percent (up from 12.3). With a total sales gain of 5.3 percent, the stronger orientation toward global markets is particularly evident from the double-digit growth rates (local currency) in the US and Far East/Pa-cific markets, up 30 and 15 percent, respectively. This performance is ascribable to Drä-ger Medical's successful reconfiguration into a globally positioned, process-oriented organi-za-tion, as well as to its unswerving efforts commenced two years ago to enhance productivity, stim-u-late growth, and initiate further innovations. The new international alliances and, above all, the joint venture with Siemens Medical Solutions (approved in April 2003) offer added opportunities.
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Dräger Safety 2002: market outpaced
With an EBIT up 32 percent to €40.1 million, Dräger Safety in 2002 duplicated its above-average earnings growth (up from €30.3 million); capital employed was reduced by 4 percent to €150 million, which raised ROCE to 26.8 percent (up from 19.4). With business up 20 percent, Western Europe (excluding Germany) was Dräger Safety's biggest growth market; worldwide growth came to 11 percent. The factors leading to this repeated increase from a high baseline were consistent market segment orientation, the rigorous alignment with customer requirements, services tailored to target groups, as well as close customer proximity due to a worldwide sales and service base network. Strict process and cost management significantly improved Dräger Safety's efficiency in 2002, too. The alliance with Schuberth Helme GmbH, an internationally renowned helmet manufacturer based in Braunschweig, Germany, and the acquisition of additional specialist firms, such as the IMS operations of IUT (Institut für Umwelttechnologie GmbH, Berlin) will further boost the subgroup's innovative strength and market position.
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Cash dividend proposed at €0.35 per preferred share for 2002
Drägerwerk AG's Executive Board aims to pursue a consistent dividend policy. Earnings per share in 2002 surged 94 percent to €1.56. In view of the earnings uptrend, the Executive Board will propose to the annual stockholders' meeting on June 20, 2003, to increase the dividend to €0.35 per preferred share. Participation certificates rank for 10 times the preferred dividend since their par value corresponds to 10 times the arithmetic unit value of one preferred share. If resolved as proposed, participation certificate holders will receive a dividend of €3.50 per certificate.
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Stable development in Q1/2003
Business showed a stable, slightly upward pointing trend in the first quarter of 2003. At €10.4 million, Dräger Medical doubled its year-earlier EBIT of €5.0 million, equivalent to an EBIT margin of 6.2 percent (up from 3.0). The reverberations of both SARS and the Iraq war downscaled Q1 order intake by 7.7 percent to €192 million, especially affected being the markets of Asia, the US, and the Near & Middle East. Sales, however, remained at a stable €167 million in comparison with Q1/2002.
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| In contrast, Dräger Safety recorded a gain in both sales and order intake versus a year ago. Contracts valued at a total €130.2 million were received, up 24.5 percent from the Q1/2002 level of €104.6 million. First-quarter EBIT 2003 came to €7.9 million, equivalent to an EBIT margin of 7.3 percent (down from 8.6 percent). At worldwide sales of €109.3 million in Q1/2003 (up from the year-earlier €106 million), Dräger Safety showed 3.1-percent growth.
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| In the present overall environment, Dräger's Executive Board expects fiscal 2003 to produce a growth in sales by 4 to 5 percent to approx. €1.38 billion and an improvement of Group net income by about one third to some €27 million, excluding the Siemens joint venture and the divestment of Aerospace. Including these two transactions, sales and net income are pre-dicted to rise to approx. €1.5 billion and €37 million, respectively.
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| In the further strategic focus on the Group's two core competencies as subsumed under Dräger Medical and Dräger Safety, Dräger aims to achieve an EBIT margin of 10 percent and an ROCE of 20 percent by 2006. In the years ahead, sales are set to increase annually by an average 6 percent and thus outgrow the market.
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| As from July 1, 2003, the Dräger Medical/Siemens JV will take effect and hopefully generate sales of about €1.2 billion in 2004, the first year of its full consolidation. The Dräger Group will thus be able in 2004 to attain a sales magnitude of €1.7 billion and an EBIT of around €150 million.
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| Estimates: This press release contains a number of forecasts and estimates which are based on present expectations, anticipations and predictions on the part of the Executive Board and the information it currently has. Such estimates should not be construed as a warranty that the future developments and results therein stated will in fact materialize since these hinge on a host of factors, and encompass a variety of risks and imponderables while resting on assumptions that might be inappropriate. We therefore incur no obligation to update any forecasts or estimates herein made.
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(c) Drägerwerk AG & Co. KGaA, 2007 |
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