MAN Group: 2005 Strong Profit Increase Reached
MUNICH, Germany, February 21 --
- With Photo
- Operating profit EUR765 million (EUR566 million)
- Return on capital employed (ROCE) 19.7% (13.6%)
- Return on sales (ROS) 5.1% (3.9%)
- Earnings per share EUR3.04 (EUR2.11)
- Dividend proposal EUR1.35 (EUR1.05)
- Cash provided by operating activities EUR1,402 million (EUR974 million)
- Program for performance increase on track
- Concentration on core business areas implemented
- Favorable economic environment / Expectations for 2006 positive
In an overall positive global economic environment, the MAN Group achieved a strong increase in 2005 operating profit to EUR765 million after EUR566 million in the previous year. Comprehensive internal measures for increasing the earning power have made a significant contribution to this in addition to higher sales. The return on sales rose from 3.9% to 5.1% and the return on capital employed from 13.6% to 19.7% and therewith exceeded the target of 18% for the first time. Earnings after taxes increased 46% to EUR472 million. A dividend increase to EUR1.35 should be proposed at the AGM on May 19, 2006 after EUR1.05 in the previous year.
"2005 was a very eventful year for us in which the MAN Group underwent major changes", said Chairman of the Executive Board Hakan Samuelsson at the presentation of the annual accounts: "We have achieved important structural improvements, burdens from loss makers have been eliminated, productivity has increased significantly and we have concentrated on our core business areas. Of course, the good business cycle contributed to the improved earnings. This has helped us come considerably closer to our goal of a 6% return on sales and 18% capital return over a business cycle".
Despite the business volume, which has been reduced through the sale of multiple holdings, the MAN Group has achieved the highest order intake in its history. The previous year's value (EUR15.6 billion) was exceeded by 15% with EUR18 billion. The volume of major orders was extraordinarily high with EUR3.3 billion (+74%). Commercial Vehicles, Industrial Services and Printing Systems received some major orders. This was above all the case with a major truck order by the British Ministry of Defence, an order for a methanol plant from Oman for MAN Ferrostaal and one web-fed press order by News International. In the current business excluding major orders, the MAN Group has shown an order plus of 7% up from 2004.
Sales reached EUR15.0 billion, 3% more than in 2004 (EUR14.5 billion). In the producing areas, the sales increase amounted to 7%. All areas managed to improve with the exception of Industrial Services.
The order backlog in the MAN Group reached a year-end peak-level with EUR10.9 billion on December 31, 2005 (previous year: EUR8.0 billion).
The MAN Group had 58,203 permanent employees as of December 31, 2005. This is approx. 1% less than the figure on the same day of the previous year of 59,008 employees, which is largely attributable to sales of smaller activities. The share of workers employed at foreign companies increased slightly to 37.6% (up from 36.8%). The number of loaned employees came out to 2,573 after 2,317 at the end of 2004.
The MAN Group executed its announced concentration on core business areas in the lapsed year. The holdings of MAN AG in Schwabische Huttenwerke (SHW), MAN Technologie, MAN WOLFFKRAN and MAN Logistics, whose business activities were no longer counted among the core business, were sold. These companies had already been accounted for as discontinued operations in 2005 and are no longer included in the 2005 figures or the comparable figures of 2004.
In 2005 the Executive Board decided to gradually convert the pension provisions to capital cover of pension entitlements. As such, the MAN Pension Trust e.V. was established according to the model of a CTA (Contractual Trust Agreement). This was allocated at the start with funds of EUR500 million; the allocation lowers the pension provisions accordingly, which thereafter amounted to EUR1,185 million at the end of the year down from EUR1,716 million at the end of 2004. This conversion should be continued through to the complete coverage of domestic pension entitlements through the CTA. The corporate pension entitlements for most employees were converted in 2005 from the previous income-dependent system to a defined contribution system and are therewith better calculable.
A new management system has been implemented at the MAN Group - "Industrial Governance". This means a strengthening of the entrepreneurial spirits of the business areas in the scope of a clear strategic orientation of the Management Board, in which all MAN areas are represented. The Corporate Center concentrates on the Group's strategic direction, recruitment for key positions and a more focused and thus more effective controlling.
The outlook on the year 2006 is continuously positive. The commercial vehicle market should stabilize at the high level reached - the demand for capital goods will continue to rise overall. For the MAN Group, a repeat of such considerable major orders as in 2005 is not anticipated, though in the current financial year further order intake is expected at least at the previous year's level. Sales will rise considerably - thanks to the high order backlog as well. Hakan Samuelsson: "With the sales growth and thanks to our internal measures we are again anticipating a significantly higher operating profit. In the case of return on capital employed, we will exceed the target figure even more, and in terms of return on sales we should come very close. We have to and want to reach a point where the target returns are really sustainable average figures for us."
Note:
The detailed report on financial year 2005 is available on the internet at www.man-group.com under Specials.
You may order this report as an e-mail attachment at Tel. +49-89-36098-111 _ Public.relations@ag.man.de
The MAN Group is one of Europe's leading manufacturers of engineering equipment and vehicles, generating annual sales of around EUR15 billion. MAN supplies products, systems and services to the capital goods industry and employs approx. 58,000 people worldwide. The Business Areas operated by the MAN Group, Commercial Vehicles, Industrial Services, Printing Systems, Diesel Engines and Turbomachines, all hold leading positions in their markets. MAN AG, Munich is a member of the DAX German Share Index, which comprises Germany's top 30 public limited companies.
At a glance
MAN Group 2005 2004(ii)) Change 2005 2004(ii)) Change
EUR million Q1 - Q1 - Q4 in % Q4 Q4 in %
Q4
Order intake 17,994 15,645 15 4,086 4,133 -1
Germany 4,065 3,850 6 1,110 1,026 8
rest of the
world 13,929 11,795 18 2,976 3,107 -4
Sales 14,955 14,504 3 4,416 4,501 -2
Germany 3,852 3,721 3 1,140 1,135 0
rest of the
world 11,103 10,783 3 3,276 3,366 -3
Order
backlog(i) 10,893 7,954 37 10,893 7,954 37
Employees
(number)(i)) 58,203 59,008 -1 58,203 59,008 -1
Germany 36,331 37,297 -3 36,331 37,297 -3
rest of
world 21,872 21,711 1 21,872 21,711 1
Employees incl.
loaned employees
(number) (i) 60,776 61,325 -1 60,776 61,325 -1
Germany 37,946 38,844 -2 37,946 38,844 -2
rest of
world 22,830 22,481 2 22,830 22,481 2
in EUR in EUR
million million
Operating
profit 765 566 199 292 242 50
Earnings before
taxes on income
(EBT) 638 450 188 282 208 74
Earnings after taxes
on income 472 323 149 203 152 51
Earnings per share
in EUR 3.04 2.11 0.93 1.35 1.01 0.34
2005 dividend per share
in EUR(iii) 1.35 1.05 0.30 - - -
Capital
expenditures 440 389 51 154 139 15
Depreciation of
tangible
assets 378 402 -24 114 139 -25
R&D
Expenditures 499 476 23 129 122 7
Cash earnings 991 915 76 414 349 65
Cash provided by
operating
activities 1,402 974 428 651 658 -7
Cash used in investing
activities (513) (369) -144 (231) (194) -37
Free cash
Flow 889 605 284 420 464 -44
Cash and cash
equivalents(i)1,019 604 415 1,019 604 415
Net liquid assets
(net debt)(i) 173 8 165 173 8 165
Equity (i) 3,344 3,031 313 3,344 3,031 313
2005 figures subject to audit by certified accountant and the approval of the financial statements by the Supervisory Board
(i) Value on 12/31/2005 compared to 12/31/2004
(ii) 2004 excluding areas discontinued in 2005 (SHW, MAN Technologie, MAN WOLFFKRAN, MAN Logistics)
(iii) 2005 Proposal of the Executive Board to the Supervisory Board
Note to Editors:
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