Currently, long-term financial crisis scenarios are no longer an issue and the global economy is picking up steam once again. KSB too, despite some difficulties that remain on the market, is back on track. For the second time, our order intake has exceeded € 2 billion, and we are confident that this year our order volume will return to or even exceed its pre-crisis level. Sales revenue also looks set to continue to rise, as in 2010.

Our growth is supported by our general business with standard pumps and valves, which is directly benefiting from the recovery in demand. Our project business, with its emphasis on engineered products built to order, is growing rather more slowly. This is an area where the impact of the financial crisis – which led our customers to shelve some plans for new plants – will continue to be felt in the current financial year. Accordingly, fewer large project-based tenders are currently being awarded.

WE NEED TO FOCUS STRATEGICALLY, BUT REMAIN FLEXIBLE.

Today we can already see that, on the whole, KSB has weathered the economic storm better than many other companies in our industry. We believe we know the reason why: The stability of KSB, even in a global crisis, has a great deal to do with the good reputation of our products and our financial soundness, as well as with our broad positioning in the market. Since we supply our products to many different sectors and regions, there is always the possibility of balancing out the opportunities and risks in the various sales areas. We have taken advantage of this in the crisis that is now coming to an end, and thereby succeeded in stabilising our business overall. The flexibility and commitment of our employees have helped us very much in this respect.

We need to maintain our broad positioning and flexibility in the markets in the future. At the same time, as part of our strategy for the coming years we need to focus on particularly promising business lines and strengthen our position there. This is not a contradiction: “As focused as possible, as diverse as necessary” – this is one of our new strategic guiding principles.

We are following this principle with a number of strategic projects that aim to tap market opportunities that are interesting for us. One the one hand, we will be breaking new ground in technology, on the other we will be making the most of opportunities to reach more customers worldwide with our current range of products and services.

WE WILL USE OUR GLOBAL OPPORTUNITIES.

To do this, we will coordinate our activities within the KSB Group even more effectively. Putting it more specifically, this means: strengthening KSB’s manufacturing network, developing new global products, creating uniform global processes and establishing more regional centres for preparing quotations and handling projects.

By intensifying our activities in the regions outside Europe, we are responding to the shifts in the key growth areas to countries such as China, India and Brazil. In those countries we already rank among the leading suppliers of pumps and valves, and are continuing to expand our sales and production structures. In this context, we aim to grow our general business with standard products in countries where we are firmly established through our project business. But we are also entering some markets in Southeast Asia and South America that are only now starting to develop.

WE ARE BUILDING OUR BUSINESS ON A BASIS OF TRUST AND PERFORMANCE.

Throughout the world, wherever we look after our customers and work on their behalf, we set ourselves the same standard: We want to be better than our competitors, and as a result be more successful. This means constantly developing the trust of our customers, not least through high-quality, durable and energy-efficient products and excellent service.

In the same way, the people who provide these services can rely on us, and on the fact that we take responsibility for our workforce, environment and society. For this reason, in 2010 we signed the United Nations Global Compact, whose logo you will see for the first time in our Annual Report.

If you invested in our company last year, your confidence in KSB has been justified. Within the scope of twelve months our ordinary shares increased in value by more than 50 percent, while the increase in the value of our preference shares was not much lower at 45 percent. In 2011 we intend to ensure that investing your money in KSB will continue to be worthwhile in the long term.

Yours sincerely,

Dr. Wolfgang Schmitt,
Chairman of the Board of Management of KSB Aktiengesellschaft