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| Business performance of the Dräger Group in the first quarter of 2007 |
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- Greater interest in Dräger Medical AG & Co. KG (75%)
- Safety remains strong
- Optimistic outlook for the current fiscal year
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| Lübeck, May 8, 2007 – The Dräger Group, Lübeck, a global leader in medical and safety technology, demonstrated its strength in the first three months of fiscal year 2007. Business in the Safety division was particularly successful. Business performance in the Medical division is stable; comparison between the quarters is influenced by a number of major projects in the prior year. |
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| Following the acquisition from Siemens of a 10 percent interest in Dräger Medical AG & Co. KG on February 28, 2007, the interest held by Drägerwerk AG in the latter company rose from 65 percent to 75 percent. The purchase price of EUR 110 million was primarily financed by note loans of EUR 100 million. |
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| Order intake and revenues reached the same high levels of the prior year. Order intake of EUR 444.9 million was 1.6 percent lower than the prior-year figure of EUR 452.2 million, while revenues of EUR 392.5 million exceeded the prior-year quarter by 1.9 percent. The change in exchange rates, especially the US dollar exchange rate, reduced the current figures by some 3 percent compared with the prior-year quarter. While revenues grew slightly at both divisions – Medical up 0.7 percent, Safety up 3.0 percent – the Safety division was able to generate a particularly good increase of 11.8 percent in order intake; in the Medical division, order intake (before adjustment for currency effects) was down 9.2 percent on the prior-year figure, which unusually high amount had been achieved thanks to project orders. This was noticeable in the order intake of the Dräger Group, especially in Europe excluding Germany, with a decrease of 7.7 percent. Performance in the other markets, Germany (down 0.4 percent), Americas (down 0.7 percent) and Asia/Pacific (down 3.9 percent), was slightly negative, but this was more than compensated for by an increase of 38.7 percent in growth in the other countries. |
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| Revenues in Germany (down 1.3 percent), the rest of Europe (down 2.7 percent) and Asia/Pacific (down 3.6 percent) were slightly lower than the prior year. On the other hand, the Americas (up 12.7 percent) and also the other countries (up 17.3 percent) performed well. |
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| At EUR 17.4 million, EBIT is down 3.1 million on the prior year (Q1/2006: EUR 20.5 million) due to a smaller increase in revenues. The Group’s improved gross margin largely compensated for the rise in functional costs, which tend to follow a straight line rather than being dependent on revenues. Functional costs increased in marketing and sales especially, up 4.8 percent to EUR 118.2 million. |
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| Research and development costs of EUR 29.6 million came to 7.5 percent of revenues in the first quarter (prior year: 7.4 percent). The interest result increased due to a rise in interest income from investments and constant interest expenses. The lower tax expense is primarily attributable to the fall in earnings. Due to the acquisition of the 10 percent interest in Dräger Medical AG & Co. KG, earnings per preferred share rose from EUR 0.37 in the prior year to EUR 0.40 in the first quarter of 2007. |
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| Q1/2007
| Q1/2006
| Change
| Order intake |
€444.9 million |
€452.2 million |
-1.6% |
| Revenues |
€392.5 million |
€385,3 million |
+1.9% |
| EBIT |
€17.4 million |
€20.5 million |
-15.1% |
| EBIT margin |
4.4% |
5.3% |
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| Net profit |
€6.5 million |
€7.4 million |
-12.2% |
| Headcount as of March 31 |
10,069 |
9,761 |
+3.2% |
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| Medical division |
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- Order intake lower than in the unusually strong prior-year period
- Stable revenue development
- EBIT for the first quarter still down on the prior year
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| Order intake in the Medical division of EUR 275.7 million was down 9.2 percent on the prior-year figure, which was extraordinarily high as a result of project orders. However, revenues increased by 0.7 percent to EUR 260.0 million. Both order intake and revenues were affected by changes in exchange rates to the tune of 2.5 percent and 3.2 percent, respectively. Adjusted for currency effects, revenues would have increased by 3.9 percent. |
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| Order intake fell in Germany (ongoing tight rein on investments), Europe excluding Germany (high volume of project orders in the comparable period of the prior year), the Americas (projects in Latin America in the comparable prior-year period and exchange rates) and Asia/Pacific (healthcare policies in China). The “other countries”, including the Middle East and Africa, saw a rise in order intake. The increase in revenues in the other countries and in the Americas was able to offset the decrease in the other regions and the drop in revenues resulting from exchange rates.
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| In the first quarter, EBIT of EUR 8.5 million was under the EUR 12.9 million achieved in the prior-year period. Although gross margin and gross profit almost reached the levels of the prior year, the overall rise in functional costs, which tend to follow a straight line rather than being dependent on revenues, by EUR 3.4 million put a drain on EBIT. Net profit in the Medical division comes to EUR 6.2 million due to an improvement in the interest result and – given lower earnings – a fall in tax expense. The progress made by the innovation campaign is evidenced by renewed high research and development expenditure of EUR 22.9 million, which corresponds to 8.8 percent of revenues in the first quarter (prior year: 8.1 percent). |
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| Safety division |
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- Growth across all regions
- Proportionately greater increase in EBIT
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| The Safety division recorded EBIT of EUR 12.3 million in the first quarter of 2007 (Q1/2006: EUR 10.9 million), up 12.8 percent. The EBIT margin in the first quarter of 2007 was 8.9 percent (Q1/2006: 8.1 percent). Global revenues rose 3.0 percent (5.5 percent net of currency effects) to EUR 138.9 million in the first three months of 2007. This growth was again achieved in all product divisions through core business. At EUR 174.9 million, order intake was up 11.8 percent (net of currency effects 14.6 percent) on the prior-year period (EUR 156.4 million). |
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| In terms of core business, all regions contributed to this growth. Order intake in Germany climbed 10.0 percent to EUR 48.5 million in the first quarter of 2007. Despite the strained financial situation and the resulting tight rein on public spending as well as increased competition, revenues were maintained due to the strong market position. Revenues were driven in this region by respiratory protection equipment and fire training systems for fire departments and training galleries for industry. In Europe – excluding Germany – the Safety division improved its business performance and reconfirmed Dräger’s market share. Order intake increased by a total of 7.5 percent. Great demand for respiratory protection and gas detection equipment was the driving force behind a positive performance in Europe overall. Business in the Americas continued to do well, with revenues net of currency effects growing by 11.8 percent. Revenues in the Asia/Pacific region were up 18.1 percent on the prior year, net of currency effects. In terms of core business, the Safety division extended Dräger’s market position in this region, despite cost pressure on its customers.
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| Research and development expenses amounted to EUR 6.6 million (4.8 percent of revenues; prior year: 5.2 percent) and was largely channeled into new products. The two new strategic business fields, Solutions and Compliance, continued to perform well. |
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| The Dräger Group aims to continue its top and bottom-line success in 2007, according to Executive Board Chairman Stefan Dräger. In light of the effects described, business performance in the first quarter of 2007 was in line with expectations. Both divisions, Medical and Safety, remain in a strong position in their respective markets: acute point of care and hazard management. The focus in 2007 will be on improving cooperation throughout the Group in order to tailor the organization to a greater degree to the needs of customers, take advantage of economies of scale and strengthen the Dräger brand with a view to increasing the value of the Company. Another priority in 2007 will be optimizing capital employed through a group-wide program and other appropriate steps. Combined with the planned change in legal form to that of a partnership limited by shares, this will give us the requisite financing leeway to secure the future of the Company and further healthy growth. |
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This press release contains forward-looking statements regarding the development of the Dräger Group. No assurance can be given as to the content of these statements as they are based on assumptions and estimates that entail certain risks and uncertainties. |
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