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Despite the negative impact of the Ukraine crisis, the Zeppelin Group achieved a good result in the 2014 fiscal year
Zeppelin Ukraine, Kyiv, Ukraine
Monday, July 6, 2015
§ Group revenues: EUR 2.3b
Group's earnings beforetaxes: EUR 71.6m (EUR 79.0m from operations)
Average number of employeesfor the year: 7,882 (including trainees)
§ Further expansion of thecompetence in solutions
§ Modest outlook for 2015
Garching near Munich,May 8, 2015. The Zeppelin Group posted revenues of EUR2.3b for the 2014 fiscal year (previous year: EUR 2.43b). However, earningsfrom operations before taxes were up on the previous year and amounted to EUR79.0m (previous year: EUR 77.3m). The Group achieved this positive result in anincreasingly difficult market thanks to the hard work and professionalism ofits employees. Considering the depreciation of goodwill from acquisitions,earnings before taxes of EUR 71.6m were reported, up sharply on the previousyear's figure of EUR 64.4m. The average number of employees was 7,882(including trainees).
The impact of the Ukraine conflict has had a significant adverse effect onZeppelin's activities in Russia and Ukraine because the company has dealercontracts that are linked to territory.As expected, revenues fell most sharplyin the Construction Equipment CIS strategic business unit. Thanks to stable servicebusiness and sound cost and risk management, the business unit still achieved avery attractive result.The Power Systems and Rental strategic business unitsalso had to accept falling revenues and depressed earnings in these countries.While the Rental business unit offset this with a positive trend in CentralEurope and inorganic growth, the Power Systems business unit posted slightlylower revenue and earnings figures with otherwise stable business development.The Construction Equipment EU business unit showed an extremely positive trend;its success was secured by the clear focus on stability and improving operatingefficiency. The restructuring of the Plant Engineering business unit started in2013 was mostly completed, with the business unit achieving another positiveresult from its operations after just one year.
"Despite a difficult market, the Zeppelin Group further consolidate itsmarket position and increased its earnings before taxes in 2014. In strategicterms, we enhanced individual business areas, thus noticeably mitigating thenegative effects of the regions in crisis," explains Peter Gerstmann,Chairman of the Management Board of ZEPPELIN GmbH. Christian Dummler, Member ofthe Management Board and CFO of ZEPPELIN GmbH adds, "Overall, ourdiversification and conservative financing and risk policy ensured thecompany's stability and earning power in a difficult and uncertain economic andgeopolitical environment. On balance, the Zeppelin Group has done superbly inan extremely volatile 2014."
Expanding competencein solutions
In 2014, the Zeppelin Group pressed further ahead with the strengthening ofits market position in the various business areas. The overground andunderground mining business acquired from Caterpillar was integrated quicklyand successfully thanks to the foundation of a competence center for the miningarea.
By taking over the project service business area of Streif Baulogistik GmbH,the Rental business unit made the second-largest acquisition in the history ofthe Zeppelin Group. The business unit also took over BIS Blohm + VossInspection Service GmbH with retrospective effect from October 1, 2013. Theseacquisitions significantly extended the range of services in the areas ofconstruction logistics, electrical installations for construction sites, energysupply, modular room systems, and mobile materials testing and represent afurther step in the sustainable reinforcement of Zeppelin's competence insolutions to enable customers to process their projects even more efficiently.In July 2014, the Rental business unit concluded an agreement with Ramirent A/Sto establish the joint venture Fehmarnbelt Solution Services. As a result, theskills and resources of two leading European rental service providers insupporting large construction sites have been pooled for the majorinternational project "Fehmarn Belt Fixed Link".
In September 2014, the Power Systems business unit concluded an exclusivepartnership agreement with Norwegian company Optimarin AS for the sale ofsystem solutions for regulating ballast water. The business unit also obtaineddistribution rights for gas engine sets from Caterpillar Energy Solutions GmbH.
New organizationalstructure for Plant Engineering
The restructuring of the Plant Engineering business unit was largelycompleted in the 2014 fiscal year. Processes were optimized, core competenciespooled at the relevant production sites, and management levels streamlined. Anecessary adjustment of staff numbers was carried out in a socially acceptablemanner without redundancies. The business unit achieved positive earnings fromits operations once more in 2014. In addition to the successful restructuringprogram, the Group also appointed an outstanding industry expert to the topplant engineering management position.
Strong partnership
Zeppelin and Caterpillar celebrated the 60th anniversary of theirpartnership in 2014. In a ceremony at the Colosseum Theater in Essen, bothcompanies pledged to continue their cooperation based on trust and respect.Caterpillar also awarded the Zeppelin Group the title of "Best Sales andService Partner in Europe" for the second time in a row. The ConstructionEquipment EU, Rental, and Power Systems business units were joint winners, andthe Construction Equipment EU business unit was also honored for its businesssuccess with used machines. Zeppelin's excellent result in Caterpillar'scustomer loyalty survey, in which the Group came first for the whole EAMEregion, is also worth highlighting.
Outlook for 2015
Prospects for 2015 are modest. In view of the current developments inRussia and Ukraine, the Zeppelin Group does not expect the economic conditionsin these countries to improve and is forecasting a further reduction inbusiness volume. The reluctance to invest in shale gas exploration due to thetrend in oil prices is having an adverse effect on the project situation inplant engineering in the USA and Eastern Europe. The raw material extractionmarkets will also remain at a low level in 2015. The construction equipmentbusiness area and energy sector are expected to develop positively in Europe,bolstered by the need for investment in infrastructure and pressure to act fromgovernments. Increasing flexibility and the trend towards short-term rentalharbor great potential for the Rental business unit. The short-term rentalbusiness in Russia will be incorporated into the existing sales and serviceorganization in 2015 and resized as a result.
In 2015, the Zeppelin Group will focus particularly on continuing tointegrate the recent acquisitions and increasing efficiency with the aim offurther expanding its position in the market on a sustainable basis.
