KHD Humboldt Wedag International reported yesterday that it achieved a 16.9 per cent YoY increase in 2013 revenues. Order intakes, however, were significantly below the previous year’s level due to unfavourable market conditions. Strong competition and lower margin quality in the company's order backlog had a negative impact on results but a positive EBIT was recorded.
The German cement plant services company’s order intake fell by 58 per cent to EUR172.4m due to "continued cautious investment activity and delays in the awarding of orders," the company said in a statement. It did, however, receive important large orders from Russia, USA and Turkey in the fourth quarter.
The high order backlog from the previous year prompted revenue to rise to EUR249.6m. Gross profit margins declined from 20.5 to 11.8 per cent due to the “lower margin quality of projects won in a highly competitive environment with strong margin pressures, as well as difficulties in the execution of some projects,” the company added.
Despite strict management of overhead costs, KHD reported EBIT of EUR1.2m and a EBIT margin of 0.5 per cent, remained significantly below original forecasts. Earnings per share were EUR0.01m.
The company forecasts a significantly higher order intake in 2014 financial year due to projected market improvement. The group expects only slightly positive EBIT margin for the current financial year due to continued project execution of contracts with lower margins. Revenues are forecast to be on a similar level as 2013.
Going forward, KHD CEO, Jouni Salo, said: “The takeover and intensified cooperation with our strategic partner AVIC offer new opportunities.
“Together with AVIC, we will continue to develop our business and leverage the strengths of both companies.” Furthermore, the expansion of the spare parts and service business, which will be managed in the newly launched “Parts & Services” business unit, is an important cornerstone of KHD’s future development.