Tognum Reports Double-Digit Growth for 2011

Tognum reports double-digit growth for the 2011 financial year, and anticipates a positive economic outlook for 2012.

Tognum AG remains on its course of growth and continues to expand its position on the market. “2011 was another successful financial year for Tognum,” says Joachim Coers, CEO of Tognum AG. “Following a strong finish at the end of the year, we exceeded our own forecasts slightly and saw a significant increase in our consolidated net income. Once again our customers were convinced by the performance and technology standard of our products. The majority shareholding that Daimler AG and Rolls-Royce plc acquired in Tognum AG last year also shows that we are moving in the right direction. The commitment of these two international groups is recognition of what we have achieved to date and of the excellent quality of our products.”

In the implementation of its strategy, Tognum made considerable progress in the course of the financial year just ended. Coers says, “We have invested heavily in the future: on the one hand by expanding our R&D activities and on the other hand with higher investments. We have increased our market share in most applications and improved our earnings situation. For the current year, despite moderate economic prospects, we are confident that we will continue to see profitable growth.”

As a result of the positive economic performance, the order intake in the year just ended increased by 13% to €3,199.7 million (2010: €2,830.5 million). At the same time, revenues were up 15.9% to €2,972.1 million and were thus significantly above the level of the previous year (2010: €2,563.6 million). Some 85.3% of the revenues were generated outside Germany (2010: 81.3%).

The adjusted EBIT rose by 42.6% to €345.2 million (2010: €242.1 million). This represents an adjusted return on sales of 11.6% (2010: 9.4%). Tognum thus slightly exceeded its autumn 2011 forecast. The improvement is due primarily to an increase in the capacity utilisation, increased efficiency and an improved revenue mix.

The adjusted consolidated net profit, compared with the previous year, showed strong growth, increasing by 51.8% to €241.6 million (2010: €159.2 million). The adjusted earnings per share amounted to €1.84 (2010: €1.21). In line with the proposal made to the Annual General Meeting on June 5, the shareholders are to share in this result in the form of a 50% increased dividend of €0.75 per share (previous year: €0.50 per share). This represents a total dividend payment of €98.5 million (previous year: €65.7 million).

Tognum reinforced the foundations of its course of expansion once again in the year just ended by increasing its investments to €165.8 million (2010: €152.8 million). Of this amount, €123.4 million (2010: €113.7 million) was invested in property, plant and equipment. A regional focus was on investments in U.S. locations. To ensure that these are state of the art, the company set up a new assembly and manufacturing plant, a modern spare parts warehouse and a training center. In addition, Tognum invested in a materials management centre in Friedrichshafen to further optimise the group’s production logistics system. As planned, the company also increased its adjusted R&D activities in the year just ended to €215.3 million (2010: €192.6 million). Almost one in 10 of the entire workforce is now involved in research and development.

The high free cash flow enabled Tognum to reduce the net financial debt to €5.0 million (31.12.2010: €57.2 million). The group’s equity base was up 19.2% compared with the previous year to €876.9 million (31.12.2010: €735.8 million). This resulted in the equity ratio increasing to 28.1% (31.12.2010: 26.8%). “The pleasing earnings performance of the Tognum Group in 2011 enabled us once again to strengthen the financing structure and provide a sufficiently high liquidity level,” states Dieter Royal, CFO of Tognum AG.

With its three reporting segments – Engines, Onsite Energy & Components (OE&C) and Distribution – Tognum has a broadly diversified and balanced business model. This means that it enjoys limited vulnerability to the economic cycles of individual application areas and regions. This once again paid off for the group in the financial year just ended. All reporting segments benefited from the positive economic performance.

In the Engines segment, the order intake in the year just ended was up 12.2% to €2,186.0 million (2010: €1,948.8 million), with revenues increasing by 8.5% to €1,995.1 million (2010: €1,839.4 million). The adjusted return on sales once again improved significantly as a result to 15.0% (2010: 12.0%). The increase in revenues in Marine applications was due primarily to the business in propulsion systems for yachts and commercial vessels. In the Industrial application area, rail and mining business performed positively. In the Oil & Gas application area, as a result of higher investments due to the increase in raw material prices, there was a significant above-average increase in revenues. As expected, revenues in the Defense business remained stable, as new projects, in accordance with the implementation schedule, were not yet ready for completion. After Sales business declined slightly, but remained at a high level.

The OE&C segment reported an increase in the order intake of 11.5% in 2011 to €1,046.6 million (2010: €938.8 million), with revenues increasing by no less than 29.8% to €990.5 million (2010: €763.3 million). The adjusted return on sales rose to 7.7% (2010: 4.1%). In the OE Diesel Systems & Engines application area, both the business in diesel systems and the supply business to OEM customers performed positively. Revenues in the OE Gas & Fuel Cell Systems subsegment were up €14.4 million to €64.7 million (2010: €50.3 million) due to the growing demand for gas systems. After Sales/Other business increased once again at a high level. In the case of business in injection systems, Tognum reported an increase of 27.4% to €194.8 million (previous year: €152.9 million).

In the Distribution reporting segment, the order intake was up 48.5% to €552.6 million (2010: €372.0 million). The revenue volume also saw a very strong increase of 58.7% compared with the previous year, rising to €504.0 million (2010: €317.6 million). The adjusted EBIT increased by 21.4% to €28.9 million (2010: €23.8 million) with an adjusted return on sales of 5.7% (2010: 7.5%).

At the end of 2011, the Tognum Group had a total of 9,821 employees on its payroll, which is 8.6% more than in the previous year (31 December 2010: 9,046). Of these, 7,845 are employed in Germany, 861 in the USA and 741 in Asia.

Despite economic uncertainty, Tognum anticipates further profitable growth for the 2012 financial year. The company expects a revenue increase in the single-digit percent range and an adjusted return on sales of more than 10%. 

The new Tognum Annual Report, including a letter from the CEO to shareholders, customers and business partners as well as the Individual Financial Statement for the 2011 financial year, are available for download from the company’s website.