Summary of the Performance in the Financial Year

The tangible improvement in order intake forecast in the previous year was not achieved. Essentially, this is attributable to the negative currency translation effects described earlier. The Indian rupee, the Brazilian real and the Argentinian peso, in particular, weighed on the order intake, as a result of which the Pumps segment recorded no more than slight growth instead of a pronounced increase. The previous year’s forecasts can be confirmed for the other segments despite the burden resulting from translation effects. Orders received rose sharply in the Valves segment and remained stable in the Service segment.

The trend of sales revenue corresponded to that of order intake. Adjusted for currency translation, the forecast tangible increase would have materialised, but the current exchange rates led to no more than a moderate rise. Sales revenue in the Pumps segment rose slightly, rather than tangibly as forecast; similarly, the Valves segment fell short of the projected slight growth, recording a stable performance instead. In the Service segment the forecast of tangible growth was confirmed.

The tangible improvement in EBIT predicted in the previous year failed to materialise due to unforeseen events. A considerable increase was expected for the Pumps segment, which materialised as forecast. However, this increase was not due to operational factors. For one, it was attributable to income from the decline in pension provisions resulting from the introduction of a lump-sum option in the pension plans of the German companies; for another, it was attributable to the provision made in the first half of the year for a legacy project in the United Kingdom. In the Valves segment, in contrast, the expectation of a stable performance did not materialise. Expenses for the goodwill impairment of a South Korean company and impairment losses on property, plant and equipment of a production facility in France weighed on EBIT for the Valves segment, which had to report a substantial decline as a result. Assumptions were also not confirmed for the Service segment, for which significant growth had been forecast. Among other things, this is due to the goodwill impairment of two French cash-generating units. Instead, this segment reported a sharp decline. Like the sharp drop in EBIT described above, earnings before income tax (EBT) and the return on sales fell significantly as a result of the effects described, falling short of expectations of a strong increase. At € 255.0 million, down from € 288.0 million in the previous year, the net financial position also fell strongly due to increased inventories and was thus lower than planned twelve months ago (significantly above the previous year).

Accordingly, business performance in terms of order intake and sales revenue corresponded to expectations, apart from the negative exchange rate effects.

Expectations for the earnings figures of the Group were not met overall owing to negative one-time special effects.

On the whole, the picture emerging is that which KSB announced back in August 2018. For the two key indicators, order intake and sales revenue, the corrected forecast of a moderate rise was reached. In the same way, the corrected forecast of a considerable decline in EBIT materialised.

KSB continues to have a healthy financial basis for the future.

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