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| Lübeck, May 29, 2001 - Drägerwerk AG, Lübeck, a leading manufacturer of medical, safety and aerospace equipment, is confident as to fiscal 2001. The extensive restructuring measures in Medical Technology and ProTech, which had badly hurt Group earnings in 2000, are beginning to take effect, are well within budget and are receiving the full support of employees, customers, banks, and stockholders, said Theo Dräger, Executive Board Chairman of Drägerwerk AG, on the occasion of this year's annual accounts conference. "We intend to be back in the black in 2001 and, by 2003, to have achieved a sustained improvement in the Dräger Group's overall profitability."
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| In fiscal 2000, the Dräger Group raised its sales by 11.3 percent to DM 2.2 billion (up from DM 2.0 billion), adjusted for exchange-rate effects by 7.4 percent. Last year, all divisions increased their sales: Medical Technology by 11.0 percent, Safety Technology by 11.5 percent, and Aerospace slightly by 0.5 percent. Medical Technology's share of Group sales is now 64.4 percent (down from 64.6 percent); Safety Technology's 32.8 percent (up from 32.4 percent), and Aerospace's 2.1 percent (down from 2.2 percent). Non-German business has shown a significant increase as a percentage of the aggregate and is now at 67.5 percent (up from 64.7 percent). Largely contributing to this were sales in Asia/Australia (up 30 percent) and in the United States (up 20 percent).
In Germany, sales rose by just under 3 percent. At the same time, order intake within the Dräger Group grew further, at DM 2,267 million (up from DM 2,019 million) accelerating 12.3 percent and overtaking sales by DM 44 million. As a consequence, the Dräger Group launched into fiscal 2001 with a tall order backlog of DM 537 million.
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| Dräger Medical Technology upheld its market position throughout its activities and generated world sales of DM 1.43 billion (up from DM 1.29 billion). Outstanding in this largest corporate segment within the Dräger Group and up 33 percent were sales in Asia/Australia; North America, too, showed slight increases. Within the European market outside of Germany, the advance was 8 percent and in the difficult, dormant domestic market, Medical Technology still managed to record an overall growth of 4 percent. Expenses of DM 75 million for necessary restructuring programs impacted heavily on earnings by Medical Technology in fiscal 2000. Discounting these programs, Medical Technology showed an EBIT from operating business of DM 17.8 million, clearly short of the prior year's DM 59.2 million). This radical surgery, already completed in its initial phases, aims at achieving inside three years an EBIT margin of 10 percent of sales for Medical Technology. On an annual average, this division employed 4,868 employees worldwide (up from 4,704).
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| Dräger Safety Technology raised its world sales to around DM 747 million (up from DM 670 million), the growth being due to good gains outside of Germany. Within Germany, sales inched down by 3 percent, whereas within the remaining countries of Europe a plus of 13 percent was achieved. Safety Technology generated its steepest growth rates in Asia/Australia (up 23 percent). Likewise heartening at a nominal 25 percent was the increase in the major market of North America. Safety Technology's EBIT showed commensurate gains, up by 22 percent from DM 44.1 million to now DM 53.7 million. Worldwide, Safety Technology had an annual average headcount of 2,816 (down from 2,832).
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| Dräger Aerospace continued its successful course of previous years to attain a sales increase of 0.5 percent to DM 49.3 million (up from DM 49.1 million). EBIT rose slightly from DM 1.6 million (the previous year) to DM 1.9 million. At 187, the number of employees was virtually unchanged from 190 in 1999. The year 2001 saw the inception of a deal to cooperate with Carleton Technologies, Buffalo, a US aviation company, which will open up new opportunities for a further segment in aviation business, e.g., new system developments for wide-bodied aircraft.
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| In fiscal 2000, Dräger ProTech (parts and components) generated sales of DM 135 million (down from DM 155 million), including intercompany transfers of DM 128 million. The company showed a negative EBIT of DM 20.5 million, the negative EBIT before the DM 18.3 million total restructuring expenses amounting to DM 2.2 million. Versus December 31, 1999, the company's headcount shrank from 807 to 706. Since 2001, altogether 133 persons of its workforce have been employed by Dräger Electronics GmbH.
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| The Dräger Group's three service units, DrägerForum GmbH, Dräger Interservices GmbH, and Dräger Synematic GmbH, again showed good revenues and earnings during the past year. DrägerForum GmbH raised its sales by 6 percent to DM 10.7 million (up from DM 10.1 million). Dräger Interservices GmbH and its 403 staff generated total sales of DM 65 million (down from DM 71 million) while Dräger Synematic GmbH raised its sales from DM 53.1 million in 1999 to DM 68.5 million in 2000.
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Fiscal 2000 was an exceptional year, the Group reporting a net loss of DM 114.6 million (contrasting with net income of DM 20 million in 1999) while Drägerwerk AG's net loss added up to DM 110.4 million (down from net income of DM 14.6 million in 1999).
As already reported at the start of the year, the comprehensive restructuring and cost-saving programs introduced in Medical Technology and ProTech since the spring of 2000, reduced Group EBT by DM 93.3 million. This expense provides adequately for restructuring measures still planned. Adjusted for these nonoperating expenses and before the net interest result and all taxes, the Group generated an operating profit of DM 58.9 million (down from DM 76.6 million). The progression of the remaining operating expenses mostly remained below the sales growth rate, likewise personnel expenses, which climbed 7.9 percent, while average headcount rose by 101 or 1.1 percent to 9,376 (up from 9,275), of which 6,020 (up from 5,986) worked in Germany and 3,356 (up from 3,289) abroad. Only the cost of materials rose disproportionately due to the higher degree of outsourcing and to product range purges.
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| In 2000, additions to tangible and intangible assets amounted to DM 95 million (down from DM 117 million), focusing primarily on production plant, factory and office equipment, and computer software. Research and development in 2000 accounted for around DM 140 million (up from DM 134 million), equivalent to 6.3 percent (down from 6.7 percent) of sales. Hence and despite an economically trying year, Drägerwerk AG again outspent the average for German industry. The Group invested DM 22 million on apprenticeship and ongoing training (up from DM 21 million). In all, capital expenditure, R&D, and training, all aimed at securing the Group's future and extending its technological leadership, totaled DM 258 million (up from DM 271 million), equivalent to 11.6 percent of sales.
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| No dividend will be proposed for the fiscal year 2000 since the Executive Board has refrained from transferring any part of the reserves retained from earnings in order to fund such a dividend. Neither will any dividend for participation certificates be paid, with the exception of the guaranteed minimum dividend of €1.30 for series A and K participation certificates. For series D participation certificates, a cumulative preferred obligation exists analogous to that for preferred stock.
No dividend will be proposed for the fiscal year 2000 since the Executive Board has refrained from transferring any part of the reserves retained from earnings in order to fund such a dividend. Neither will any dividend for participation certificates be paid, with the exception of the guaranteed minimum dividend of €1.30 for series A and K participation certificates. For series D participation certificates, a cumulative preferred obligation exists analogous to that for preferred stock.
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Despite uncertainties about the German economy and the international markets plus a tougher competitive situation, the Dräger Group with its innovative product and services lineup and its highly efficient distribution and service network is well positioned and poised worldwide.
The Group is again expecting growth momentum to be stronger abroad than in Germany, which is believed to remain overall stable. After a good start into the first half of fiscal 2000, Dräger altogether looks forward to raising Group sales by 5 to 10 percent for all of 2001. Present order intake is over 10 percent higher than in 2000. The main sales momentum is again expected to come from Asia, the United States, and European countries outside of Germany. Capital expenditure for intangible and tangible assets will remain at the previous years' level. The financial structure and tied-up capital will be improved by reducing the levels of inventories and trade receivables. An important focal point in this context is increased emphasis on the return on capital by applying the EVA® method (Economic Value Added). Alongside good sales and earnings in Safety Technology, pivotal to the profitability of the Dräger Group is the success of the restructuring program embracing Medical Technology and ProTech, which Draeger is convinced will bear fruit starting from the second quarter. Incipient improvements had already been evident even before April. In view of this situation, the Group is expected to return to profitability as early as 2001.
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(c) Drägerwerk AG & Co. KGaA, 2007 |
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