In November 2011, a celebratory opening marked the start of activities at the new valve plant in Changzhou (China).

BUSINESS DEVELOPMENT AND EVENTS

  • Improved order situation for valves and services
  • Sales revenue rises to more than two billion euro
  • New sales, manufacturing and service locations

In 2011, our business was influenced by many different ­factors. In the first half of the year in particular there was robust demand and a strong order intake for our ­general business products. Quantities sold of industrial standard pumps reached a new record. At the same time, however, there was a palpable reluctance among many ­customers in project business to make large new investments. Inhibiting factors included political conditions, not least the modified or in some cases still unclear energy policy of some countries following the Fukushima disaster.

These market-related restrictions meant that the increase in our order intake overall was only moderate. Sales revenue on the other hand grew more strongly, based on a continuously high level of orders on hand.

MORE ORDERS FOR VALVES AND SERVICES

The Group’s order intake increased by 2.8 % to € 2,132.3 million in the year under review, with the ten newly consolidated companies accounting for € 66.3 million of this order volume.

Orders received for our main product, pumps, totalled € 1,445.7 million. This represented a slight decline compared with the previous year (–0.4 %). Reasons included the ­difficult market environment for power plant products. ­Order volumes for submersible pumps grew strongly, partly due to several major orders for water and waste water systems.

Order intake for valves rose by 5.1 % during the year to reach € 360.0 million. As with pumps, demand was strongest for the standard products. Our Asian business made good progress, aided in particular by marine valve sales.

Our service activities increased by 15.9 % to € 326.6 million, and remain primarily focused in Europe. Progress was ­hampered here, however, by Germany’s decision to turn its back on nuclear energy, as the service needs of the operators of ­existing nuclear power plants decreased drastically as a ­result. In contrast, growth outside Europe was very dynamic, with double-digit growth rates.

REGIONAL VARIATIONS IN THE ORDER SITUATION

The European Group companies posted a consolidated order intake of € 1,310.2 million, up 2.7 %. KSB AG’s order book in the same period increased by a significantly higher percentage, growing by 4.5 % to € 818.9 million, primarily attributable to strong demand for standard pumps and a large Chinese power plant order. The order intake of several companies in Central, Eastern and Northern Europe also grew well, while the production and sales companies in Spain and Italy ­recorded significant declines in orders received.

In the Region Middle East / Africa the order intake of our four consolidated operating companies fell by 5.8 %, totalling € 105.6 million. Our Turkish company, however, posted ­excellent growth, mainly due to strong sales of pumps for the water supply, industrial and construction sectors.

In the Region Asia / Pacific, the order boom seen in previous years did not continue in 2011. While several smaller Asian companies and KSB Australia Pty. Ltd. recorded exceptionally strong growth rates, the order volumes of the two large manufacturing companies in China and India were lower in 2011 than in 2010. Reasons for the decline included the overall business development and the devaluation of the ­Indian rupee against the euro. Total order intake measured in euro (the Group currency) fell by 3.4 % year on year to € 359.0 million.

Sales revenue by segment

The strongest growth in order intake was recorded by Group companies in the Region Americas, up 13.4 % and totalling € 357.5 million. The increase achieved by GIW Industries, Inc., was outstanding. With its range of slurry pumps, our US ­subsidiary benefited from higher demand from the mining sector, including from the oil sands industry in Canada. The KSB Group companies in Argentina and Chile too ­reported significant double-digit percentage increases.

SALES REVENUE VOLUME GROWS BY 7.8 %

KSB’s consolidated sales revenue as expected grew more strongly than order intake due to the processing of ongoing orders from previous years. Increasing by 7.8 %, it totalled € 2,091.0 million for the Group. Thus, in 2011 sales revenue for the first time exceeded the two billion euro mark. The newly consolidated companies accounted for € 64.7 million of this figure. Group sales revenue grew for pumps, valves and service.

Pump sales revenue totalled € 1,408.8 million, up 5.6 % on the previous year. Just as for order intake, sales revenue growth was highest for submersible pumps.

Despite declining in Europe, total valve sales revenue grew by 1.3 % to € 335.6 million. The strong growth in the Asian market offset the volume loss in Europe.

Our service sales revenue rose by 16.8 % to reach € 323.1 million.

GROWTH IN ALL REGIONS

Consolidated sales revenue increased – unlike in the previous year – in all four Regions. The European Group companies improved their sales revenue by 1.0 % to € 1,290.7 million, with the strongest nominal growth being recorded by KSB AG in Germany. It succeeded in increasing its sales revenue by 4.2 % to € 811.3 million (under HGB – German Commercial Code). Several Southern European companies suffered declining sales due to the difficult economic situation in those countries.

The companies in the Region Middle East / Africa managed to increase their sales revenue by 2.7 % to € 98.5 million. An ­outstanding achievement was the high double-digit percentage sales revenue growth of KSB Middle East FZE, Dubai, which resulted from the completion of part of its good level of orders on hand.

The Region Asia / Pacific recorded the highest percentage and absolute growth as a result of the invoicing of several major orders in China and India. The Group companies in Asia and Australia increased their aggregate sales revenue by 26.0 % to € 342.9 million.

In the Region Americas, Group company sales revenue rose by 12.0 % to € 335.4 million, primarily thanks to KSB Bombas Hidráulicas S.A. in Brazil and the US subsidiary GIW Industries, Inc.

GROUP STRATEGY BEING IMPLEMENTED FLEXIBLY

In addition to serving clients in our day-to-day business, we focused our attention on the implementation of our Group strategy in all four Regions. We have implemented a number of strategic measures since the start of 2010; additional projects, which we plan to complete by 2018, are still in the process of being prepared or implemented. These involve measures for accessing and penetrating key markets, developing new products and services, and improving the structures and processes in sales and production. In realising our strategy we will continue to remain flexible, and regularly check whether our approach is in keeping with market and technological developments. Doing so will also allow us to alter the priority status of individual projects in line with current trends and other factors of importance.

Our strategic measures include highly targeted promotion of our general business with standard pumps and valves. This includes setting up and expanding dealer networks, as well as continuously improving our offerings for the electronic ­selection and ordering of standard products. By the end of 2011 we were able to offer customers almost 200 type series via electronic selection systems in 19 languages. Some 30 % of all orders for pumps and valves worldwide were placed ­using such programs.

In early 2011 we split our general business sales from project business sales in three countries. This split took place in ­markets where the majority of our sales consisted of engineered products. The aim of the restructuring was to put the focus on the less developed business segment. After a two-year trial period, we will evaluate the success of this measure and take further organisational steps if necessary.

NEW SITES FOR PRODUCTION, SALES AND SERVICE

With the acquisition of the South Korean company Seil Seres Co. Ltd. in March 2011, we have strengthened our position in the market for marine valves. The product range of the company, which now trades as KSB Seil Co., Ltd., complements the cryogenic valves of our French subsidiary KSB S.A.S. for applications in shipbuilding / marine engineering. The remote monitoring and control systems from South Korea allow us to offer shipyards in East Asia all-in valve packages for equipping new tankers. The construction of tankers for transporting liquefied natural gas to consuming countries in particular is set to increase in 2012.

To expand our valve business, we opened a new production plant in Changzhou, China, at the start of November. Around 100 employees are now engaged in manufacturing ANSI-standard valves, primarily for industrial use. We have also built a warehouse and logistics centre at the new site, which is situated between Shanghai and Nanjing, and we aim to expand this in the future.

In 2011 we also established new sales companies in Peru, as well as in Croatia, Serbia and Slovenia. Our aim is to take advantage of the growing opportunities in these markets, which offer interesting development opportunities.

In mid-2011 we inaugurated a new regional centre in Dubai that includes storage, assembly and service facilities. KSB Middle East FZE now manages all sales and marketing ­activities in the United Arab Emirates and neighbouring Oman, Bahrain, Kuwait, Yemen and Qatar.

SPOTLIGHT ON ENERGY EFFICIENCY

The discussion on the future of energy supplies is linked to the question of how consumption of electricity by industry, households and public institutions can be further reduced. In this context, the energy-saving potential of fluid transport plants has also come under the spotlight.

At trade fairs at home and abroad, we presented a comprehensive energy efficiency concept under the brand name ­“Fluid Future®”. Our offering, including the selection of optimum pumps to match system conditions, automation options, solutions for demand-based operation and use of high-efficiency motors, was in line with customers’ desire to reduce their operating costs in a sustainable manner. At the same time, we showed ways of saving valuable resources and reducing CO2 emissions.