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24.09.2009

Despite the economic crisis, DORMA posts good set of results with liquidity high

Focal points: Cost reduction and cautious planning with expansion on hold

Düsseldorf/Ennepetal. In the face of the financial crisis that extensively overshadowed fiscal 2008/09 (June 30), the DORMA Group posted consolidated sales of €882.2 million, almost matching the level of the previous year. In fact, this figure represents a fall of just 1.3% or 0.3% after adjusting for foreign exchange and acquisitions. Cash and cash equivalents increased during the reporting period from €120.6 million to €180.2 million. The company’s equity ratio rose again, by 3.5 percentage points from 59.0% to 62.5%. At €85.9 million, operating cash flow remained at a high level. With €59.8 million in earnings before taxes (EBT), its return on sales amounted to 6.8%. As of June 30, 2009, the number of employees was 6,621, a decline of 290 compared to the end of the previous financial year (6,911). DORMA CEO Dr. Michael Schädlich made particular mention of DORMA’s response to the financial crisis during fiscal 2008/09, which saw the company switch emphasis from expansion to cost reduction and strengthening liquidity.

Financial year a roller coaster of peaks and troughs
In economic terms, the year under review was a real roller coaster. “The first few months saw business grow in the customary manner, only then to stagnate and, in the fourth quarter, to undergo rapid decline. All in all, however, we feel that we have given a good account of ourselves.” declared Dr. Schädlich. The economic trend also affected the traditional growth regions of the DORMA Group. In the Gulf States, for example, where the company has in the past achieved impressive annual growth rates of 40 – 50% in local currency terms, the rate of revenue expansion this time was “a mere” 19.1%. Sales in the Emerging Markets region, dominated by Russia and India, and in South America also increased by 10.3% per region. Sales improvements were likewise posted by the regions North America (+2.8%), Far East (+3.8%) and Australasia (+3.6%).

Business volumes in all the other regions fell. Aside from China, where sales fell by 20.7% due to a significant decline in major project construction activity in year one following the Olympic Games, the European regions particularly suffered a heavy fall in revenue compared to the previous financial year.
Central Europe (-1.3%) presented a typically mixed picture in this regard. Initially Belgium and Switzerland performed well while the Netherlands posted markedly negative growth rates. Germany, the company’s core market, held steady at just -1.1%.

DORMA’s countermeasures introduced in good time
A cautious budget on the expenditures side, introduced at the beginning of fiscal 2008/09, proved to be highly appropriate as the economic downturn unfolded. With the “Shelter” cost reduction programme, moreover, further specific potential economies within the DORMA Group were identified and utilised in the course of the year under review. With these, according to CEO Dr. Schädlich, the company was able to generate total savings of €22.2 million across all its subsidiaries worldwide.

Family company approach
The company’s declared objective was to maintain a steady balance between deceleration and acceleration, between saving and investing, between euphoria and reticence, and between freedom and discipline. This desire for balance derives from the corporate philosophy inherent in a family-run company committed to continuity founded on dependability.
As an extension of this, the process of generation change within the proprietor family initiated in the year under review carries important symbolic character. At the beginning of 2009, previous sole owner Karl-Rudolf Mankel transferred a majority of the shares in the business to his daughters Christine and Stephanie Mankel.

Solid basis for the coming years
Taken overall, DORMA's financial year saw sales held constant with the company suffering only a moderate decline in earnings. Profits stabilised at a high level while the equity ratio once again rose by 3.5 percentage points from 59.0% to 62.5%. The DORMA Group was also able to finish the financial year with its liquidity strengthened. “We have thus laid a good foundation for the years to come and DORMA's market position is now better than ever. We are convinced that DORMA will be able to make good ground in the current crisis, albeit against a strong head wind,” explained Dr. Schädlich. “And if we should have miscalculated and find that the crisis passes more quickly than previously feared, then the results achieved are all the more gratifying.”