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Krones increases sales substantially in 2011

Krones, the world’s market leader for beverage filling and packaging technology, remained on course for success in 2011 despite the challenging macroeconomic environment. Sales revenue increased 14.1 % year-on-year from 2,173.3 million euros to 2,480.3 million euros.
With that, Krones has not only continued the strong growth trend from 2010 but also surpassed its previous sales level achieved in 2008 (2,381.4 million euros).
Business picked up both in and outside Germany in 2011. Krones achieved the steepest improvement in sales in Russia, Eastern Europe, and Central Europe. The company was also successful in the emerging markets of Asia again last year.
At 2,514.0 million euros, new orders at Krones were up 14.6 % in 2011 over the previous year (2,193.5 million euros). Demand increased for large portions of the company’s range of products and services. Complete filling lines were in high demand. In regional terms, Africa and the Middle East contributed a significant share of orders intake. At the end of December 2011, orders on hand at Krones totalled 942.4 million euros (previous year: 908.7 million euros).

Krones improves earnings from operations and proposes a larger dividend
Earnings before taxes were up year-on-year from 70.8 million euros to 74.6 million euros in 2011. This figure is affected by a provision that Krones has recognised in its 2011 financial statements to cover a possible settlement arising from the Le-Nature’s litigation. As reported in January 2012, Krones is currently engaged in mediation with US plaintiffs regarding the Le-Nature’s case. Krones was able to strengthen earnings from operations – that is, earnings before accounting for the one-off expense – last year as planned despite the challenging macroeconomic environment.
After taxes, net income was down year-on-year from 50.9 million euros to 43.7 million euros in 2011. This was due in part to the one-off effect described above and in part to charges arising from a tax audit, which resulted in a significant year-on-year increase in the company’s tax rate. Earnings per share declined from 1.68 euros in the previous year to 1.45 euros for the financial year 2011.
Krones’ financial and capital structure was rock solid at the end of 2011. The company had no bank debt and held net cash and cash equivalents totalling 125.5 million euros at the end of the reporting period.
The company's equity ratio was 38.5 % at the end of 2011.
Krones invested heavily in expanding its core workforce in 2011. The number of employees worldwide grew by 814 people year-on-year to 11,389. This investment in highly skilled people is necessary in the medium term to support the growth planned under the “Value” strategy programme.
Given the positive operating trend in the financial year 2011, the Supervisory Board and the Executive Board will propose to the shareholders’ meeting on 13 June 2012 a dividend of 0.60 euro per share (previous year: 0.40 euro per share).

Krones right on target in the first quarter of 2012
In the first three months of 2012, the company laid a good foundation for achieving its sales growth target of 2 % to 4 % for 2012. First-quarter sales were up 6.9 % year-on-year to 648.6 million euros. The biggest contribution to growth came from the markets of Eastern Europe and South America. New orders increased 5.0 % year-on-year to 659.8 million euros.
In the period from January to March 2012, Krones generated 32.5 million euros in earnings before taxes. That is 7.7% less than the high year-earlier figure of 35.2 million euros. The pre-tax return on sales – the ratio of earnings before taxes to sales – was 5.0 % in the first quarter of 2012 (previous year: 5.8 %). Despite the slight decrease, first-quarter earnings are on target for the year 2012 as a whole. With the increasingly positive effects of the “Value” strategy programme and given the developments in the second half of 2011, the company expects earnings performance in the upcoming quarters to exceed the corresponding year-earlier levels.
After taxes, Krones generated consolidated net income of 22.3 million euros in the first quarter of 2012 (year-earlier period: 24.8 million euros). Earnings per share were down from 0.82 euro to 0.74 euro.

Looking at the development of Krones’ markets and the continuing uncertain macroeconomic outlook, Krones expects sales growth in 2012 to be a moderate 2 % to 4 %. The pre-tax return on sales, the ratio of earnings before taxes to sales, will exceed 5 % in 2012.

From today’s perspective and provided that the positive global economic trend continues, Krones expects to return to its target sales growth corridor of 5 % to 7 % on average and to further increase the return on sales in 2013.