Lenze: Solid ground for future growth

At the end of the financial year we noticed a bottoming out in the mechanical engineering sector, at least a temporary one, albeit at a considerably reduced level. We expect it will take the sector several years to recover and regain the success of 2007/2008. Our contribution to customers during the crisis consists in providing a creative range of products, cost cutting solutions and services. Our energy-efficient solutions are an important feature. In these difficult times our customers benefit from our comprehensive solution expertise and our modern product portfolio: they can take full advantage of their cost cutting potential. Despite the economically challenging times our research and development expenditure has remained high. This is the best way to build on the success of previous years for when demand increases again, Dr. Tellbüscher said.

Lenze introduced a comprehensive cost cutting program in the company early on: apart from substantial reductions in non-personnel costs, allowing fixed-term contracts to expire and temporary employment, the company started to work short-time at the German sites. Lenze has always acted in favour of a core workforce. However, due to the worsening of the economic situation in mechanical engineering and the expected duration of the crisis, the number of staff had to be adjusted. The size of our workforce was appropriate for sales of EUR 620 m and further growth. Therefore, we had to reduce the number of staff during the current financial year. On a global scale, Lenze will employ approx. 2,700 people in the coming years, Dr. Tellbüscher explained. The company structure and internal processes have been further developed to help Lenze in this situation as well as establish a basis for future growth and sustainable protection of jobs.

The number of staff employed in the Lenze Group was reduced by 246 people from 3,449 (previous year) to 3,203 (end of reporting year). This is mainly because fixed-term contracts were allowed to expire. As a consequence, the average number of German employees was reduced from 1,931 to 1,861. They make up 56 per cent of the total staff. The biggest sites are in Aerzen near Hamelin (Lower Saxony) and Extertal (North Rhine-Westphalia). The biggest sites abroad are in Asten near Linz (Austria), Shanghai (China), and Uxbridge (USA).

Compared with last year the turnover of the Lenze Group in the financial year 2008/2009 dropped by 19 per cent from EUR 621 m to EUR 505 m. Earnings before interest and taxes saw a drop from just under EUR 49 m (previous year) to approx. EUR 7 m in the financial year 2008/2009. If special items such as expenses due to redundancy programmes and accompanying measures are taken into account as well, it dropped to EUR -10 m.

Approx. two thirds of the effects of the drastic and, most notably, very sudden drop of EUR 122 m in the total operating performance could be absorbed by cost cutting measures. The material costs decreased in proportion to the turnover by EUR 50 m. The operating costs could be reduced by EUR 30 m due to short-term cost cutting measures. The group earnings after tax amount to EUR -9 m (previous year: EUR 35 m) due to the reduced operating result and the incurred special items.

Despite the economic and financial crisis Lenze AG did not cut back much on their investments in research and development. After almost EUR 39 m had been spent in the previous year about EUR 37 m were spent on the development of new products and the extension of the product portfolio. The share in sales increased to more than 7 per cent, compared to about 6 per cent in the previous year. Our customers can rely on our expertise, service and products in the future too.

The equity ratio of the Lenze Group on 30th April 2009 amounts to 59 per cent, compared to almost 64 per cent in the previous year. This means that the Lenze Group has above average equity capital. Despite the economic and financial crisis the financial situation within the Lenze Group is sound. The liquidity could be increased considerably.