Drägerwerk AG & Co. KGaA recorded a rise in order intake in the second quarter of 2009, which almost made up for the weak level of orders in the first quarter. At EUR 484.2 million, the Company exceeded the prior-year figure by 4,9 percent in the second quarter, net of currency effects. Net sales of EUR 468.7 million in the second quarter were also an improvement on the prior-year period (up 2.2 percent net of currency effects), as were net sales for the entire first half at EUR 893.9 million (up 3.0 percent net of currency effects).
Change in product mix impacts gross margin Earnings, on the other hand, continued to come under pressure due to currency effects and stiffer competition as well as a shift in the product mix. In the safety division, government orders largely offset a decline in industrial orders in terms of net sales. However, the lower level of profitability of these orders – mostly respiratory protection equipment for fire departments – impacted earnings. The measurement of construction contracts for deep-sea diving systems also pushed down earnings. In the medical division, the stronger dollar compared to the prior year and the disproportionate growth in infrastructure projects and service business led to a lower gross margin. Consequently, the Dräger Group’s gross margin in the first half of 2009 decreased from 47.0 percent in the prior year to 43.8 percent.
R&D expenditure rises to 8.4 percent of net sales
The planned high level of research and development costs, which rose to 8.4 percent of net sales (June 30, 2008: 7.4 percent) also had a negative impact on earnings. In addition, expenses of EUR 3.5 million were incurred in the second quarter for measures to improve earnings as part of the turnaround program. These effects reduced EBIT before non-recurring expenses by a substantial 74.4 percent to EUR 15.1 million; net profit decreased by 92.3 percent to EUR 1.6 million. Nevertheless, the Company succeeded in improving the net cash flow provided by operating activities by EUR 7.5 million to EUR 39.8 million in the first six months of 2009, thereby reducing net financial debt by 6.3 percent in comparison to June 30, 2008.
Turnaround program being implemented
“Our turnaround program for optimizing revenues, increasing efficiency, reducing costs and investing in future projects, which was initiated in June, will guide the Company back to its former strength”, said Stefan Dräger, Executive Board Chairman of Drägerwerk Verwaltungs AG. The 400 individual measures will have a positive effect on earnings of EUR 100 million per year as of 2011. In the second half of 2009, we will continue to drive forward the implementation of these measures so that a substantial portion will already take effect in the second half”, said Dräger.
