DORMA grows by 8.1 percent to € 663 million
 DORMA grows by 8.1 percent to € 663 million
Significant growth in sales achieved despite restructuring costs and foreign exchange influences
Düsseldorf/Ennepetal. Despite the sustained weakness of its markets worldwide, the DORMA Group succeeded in increasing sales during fiscal 2002/2003 (June 30) by 8.1 percent to €663.1m (previous year: €613.3m). This was announced by Dr. Michael Schädlich, Chief Executive Officer of the DORMA Group, during the Düsseldorf press briefing on the company's financial year. The increase in revenues was largely due to a contribution to revenue of around €74m emanating from the acquisitions of the previous year. In organic terms, DORMA grew by 0.3 percent.
"The weakness of the global market continues to hold us tethered. Yet despite this and the fact that DORMA also had to absorb exceptional charges arising from its 'Fit for Future' restructuring programme and integration of the new Movable Walls division - as well as the negative affects of foreign exchange fluctuations - we have succeed in holding our course towards further growth," emphasised the CEO. "Once again we have had to deal with what amounts to a further 15-percent revaluation of the euro in relation to the dollar," Dr. Schädlich continued. Against this background, earnings before taxes (EBT) rose by 6.5 percent to €27.7m (previous year:€26m). At 4.2 percent, the return on sales thus remained unchanged. The figure for cash flow remained strong at €58.1m.
Negative forex impact due to strong euro
Dr. Schädlich reported that a significant shift in foreign exchange rates had produced a distorted view, particularly in those countries in which DORMA had achieved a healthy degree of growth as measured in local currencies only to see this disappear once the figures were translated into euros. "Things even went so far that, in some cases, a de facto increase in sales converted into a downturn when expressed in euro," explained the CEO, citing the South America region as a case in point: Measured in local currency, this zone produced an increase in sales of 11.6 percent, but when converted into euros, the figures showed a collapse in revenues of -25.6 percent compared with the previous year. The results for fiscal 2002/03 were also influenced by the fact that the acquisitions of the previous financial year were consolidated this time for a full twelve months rather than a stub period.
Worthy of particular note, the CEO said, are the positive revenue developments (in euro, after adjustments for acquisition effects) in the Gulf region ( 10.4%), Australia ( 7.1%) and the Emerging Markets ( 6.1%) including large parts of Eastern Europe, the Middle East and the Indian subcontinent. By contrast, the company recorded a downturn in South America (-25.6%), North America (-15.9%) and Central Europe (-5.6%) including in particular the core market Germany which, due to its high weighting, also significantly impacted on the Group's overall results.
Focusing on integration and restructuring
One of the main challenges facing the Group in the year under review was, in the words of the Chief Executive Officer, the integration within DORMA's various national company groupings of the new Movable Walls division, this largely comprising a German and an American corporation that were both newly acquired in the previous year.
The company again put the brakes on its outgoings by continuing and expanding its 'Fit for Future' cost-cutting programme introduced in the previous fiscal year. The onset of the implementation phase with well over 500 individual national and international measures had, said Dr. Schädlich, already significantly impacted on the cost situation. DORMA calculates the potential savings at €24.6m. Of this figure, only a small portion had so far been realised in the year under review. "However, all the relevant decisions have been taken and the activities concerned will now be initiated," confirmed the CEO.
The consolidation process involving the Movable Walls division also had an impact on the number of employees at the Group during fiscal 2002/03. DORMA's average workforce in the year under review numbered 5,590, representing an increase of 477 over the previous year. As of June 30 the workforce was 5,534, approximately 200 fewer than the figure 12 months previously.
"Capital expenditure decreased by €7.9m and, at €30.2m, stands at what can be regarded as a normal level following several years of heavy investment activity," explained Dr. Schädlich. Meanwhile, total assets showed only a slight decline due to foreign exchange effects and loan repayments. The equity ratio was increased to 51.0% (previous year: 48.2%). Summing up, Dr. Schädlich proclaimed fiscal 2002/03 in general terms as a year in which DORMA can look back to its achievements with some satisfaction while being aware that, given the nature of the markets, those achievements were bound to be modest.
Outlook
"We feel that, although there are some early signs of an economic recovery on the horizon, there is currently still little chance of any great upturn in activity in the construction sector or in demand for our products," declared the CEO.
And he went on to say: "We intend to follow a clearly defined course directed specifically to targeted cost reductions and increased efficiency."
However, Dr. Schädlich also added that DORMA was very much conscious of the fact that an over-emphasis on cost-cutting could undermine its solid basis for entrepreneurial success. The company will therefore be energetically pursuing its development programmes "while at the same time stepping up its sales activities in order to make the most of the opportunities arising from any market revival." By sharpening its focus on the essentials, DORMA intends to remain a reliable and stable partner for its customers even in these present times.
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Dr. Schädlich, CEO of the DORMA Group
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