Business Development and Events

  • Increase in order intake and sales revenue
  • Strategy projects open up growth potential
  • Acquisitions strengthen the service business

The rapid improvement in the overall economic situation laid the foundation for positive growth in 2010. Order intake in our general business with standard pumps and valves saw considerable recovery during the second half of the year. Contrary to general opinion made in early 2010, we succeeded in increasing both our order intake and our sales revenue.

ORDER INTAKE UP 7.3 %

Driven by the rebound in general business and good growth of demand overall in markets outside Europe, we increased our order intake by 7.3 %. Once again, the overall volume of orders received within the Group exceeded the two billion euro mark and totalled € 2,075.0 million.

We posted an increase in orders for pumps, valves and services. In percentage terms, the service business achieved the strongest growth thanks to excellent performance in the German and French markets. Some 70 % of all orders were for pumps including automation equipment.

The growth in order intake is primarily attributable to the performance of our companies outside Europe. By contrast, order volume at our European Group companies fell slightly short of the previous year due to the project business, which was still impaired by the after-effects of the crisis. This was felt by KSB AG, in particular, where order intake in the year under review was 5.8 % lower than in the previous year.

Our four consolidated operating companies in the Region Middle East / Africa performed extremely well. This holds true especially for our Turkish company, which was able to boost its order volume by more than 50 % thanks to good business developments in industry, water and waste water engineering. In South Africa, major orders from the water and energy sectors, as well as industry helped generate considerable growth.

Group companies in the Region Asia / Pacific posted the greatest total order growth, increasing the total volume of incoming orders by around one third. This good performance was mainly based on demand from the engineering contractors and operators of power plants, water management companies and industry. Excellent growth rates were posted in China and India where, in addition to general growth in industrial production and the expansion of new power plant capacities, water engineering infrastructure projects stimulated demand. In China we also received orders from Chinese engineering contractors for export, chiefly to India and Indonesia. The order situation for Indian control valves also developed well in 2010.

Order intake at our American Group companies improved considerably over the previous year. Our US subsidiary KSB, Inc., in particular, succeeded in sharply increasing its order volume in 2010 through successful business with products for power plants and waste water engineering. KSB Chile benefited from rising demand for pumps for mining applications. The lion’s share of orders in Brazil were for the water business and industry.

SALES REVENUE GROWTH IN REGIONS OUTSIDE EUROPE

Consolidated sales revenue also grew 2.5 % to total € 1,939.3 million. In the strongest segment, pumps, sales revenue rose € 32.0 million to € 1,333.8 million while valve sales increased € 14.6 million to € 331.3 million. Sales revenue in the service business rose € 42.3 million to € 276.5 million.

As they did in order intake, the European Group companies saw a further decline in sales revenue overall (down 2.1 %). KSB AG was not affected by this development and generated sales revenue (in accordance with the German Commercial Code [HGB]) of € 778.8 million, up 1.3 % year on year.

Sales revenue generated by our Group companies in the Region Middle East / Africa rose 12.4 %. Similar to the order intake trend, the companies in Turkey and South Africa posted the most positive changes.

KSB companies in the Region Asia / Pacific also made a strong contribution to growth again in 2010. They succeeded in boosting their sales volume by 12.4 %. Strong growth rates were posted not only by our two Indian companies but also several subsidiaries in smaller countries as well as Australia.

The subsidiaries operating in the Americas also achieved 12.4 % growth. Sales growth in Chile and Mexico was particularly positive; KSB Brazil held its position as the KSB company in the region with the strongest sales by far.

Consolidated order intake and sales revenue reflect the first-time consolidation of five operating companies in Germany, Italy, Canada, Norway and Russia. Without this expansion of the consolidated Group, order intake and sales revenue would have been € 40.2 million and € 35.4 million lower respectively.

IMPLEMENTATION OF THE NEW GROUP STRATEGY

Outside of our operative business, in the year under review, we were focused on implementing our new Group strategy and, by doing so, tapping additional growth potential.

34 strategic projects were launched by the end of 2010. Around 170 further full or sub-projects are currently at varying stages of planning and will be completed by 2018. These include defined plans for

  • Developing new products and services or optimising existing ones
  • Better tapping selected regional markets, including those of the BRIC* countries
  • Creating new sales channels, especially for the sale of standard pumps and valves
  • Adapting manufacturing structures and processes in Operations in line with strategic projects

To perform these tasks in 2010, we trained about 150 people in project management. At the same time, we established a system for managing and supervising all projects according to uniform criteria: It ensures that projects that are still in progress can be completed reliably and implemented in line with objectives.

EXPANSION OF PRODUCTION TECHNOLOGY IN ASIA

To implement our strategic projects, in 2010 we further enhanced our production base in India, China and Indonesia. A key step toward expanding our Indian production facilities was the commissioning of a new, environmentally friendly foundry in Vambori, which allowed us to double our production capacity of steel and stainless steel castings in India from 600 tonnes a year to 1,200 tonnes a year.

In China, we integrated a new test field into our standard pump plant, making us equipped at KSB Shanghai Pump Co. Ltd. for planned growth in the sale of industrial pumps. Moreover, we established a new foundry for high-quality stainless steel on location. Starting from 2011, it will produce high-quality investment cast impellers for power plant and industrial pumps.

We completed construction of our factory for power plant pumps in Lingang in 2010. As part of a joint venture founded together with Shanghai Electric Group Co., Ltd. in 2008 we have begun to produce pumps there that will be used in China’s new nuclear power plants.

In Indonesia, we transferred our production, including test facilities, to a new plant at mid-year. This step allowed us to adapt our capacities to the strongly growing business of PT. KSB Indonesia. At the new site, the staff will primarily assemble products for industry and building services, mining and the oil and gas industries.

GLOBALLY STANDARDISED SYSTEMS

In order to integrate and accelerate our business processes across companies, we continued the migration of our IT systems to the central SAP ERP* System.

In the year under review we connected our valve sites in Germany to the new system. In the previous year, we had already migrated the IT systems at our butterfly valve production sites in France and Spain. Our sales staff can now directly initiate production orders in all of our European valve plants.

In addition, we integrated all of KSB Shanghai Pump Co. Ltd.’s sales, production, purchasing, controlling and financial processes into the central SAP System in 2010.

As a key strategic measure, we also started to roll out a new CRM** system to provide global support for our customer relationship management. It serves to make complex contacts with our customers clearer for their contact partners in the Group. The system allows us to optimally meet our customers’ requests with offerings from individual plants throughout the world and to follow up on projects. Sales, marketing and service activities can be managed more efficiently. Initially, we rolled out the system in selected sales offices in Germany and France and carried out a full rollout in Finland, the UK and Sweden. By 2012, we will integrate around 50 companies into the CRM system.

INNOVATIONS PRESENTED AT 65 TRADE FAIRS

In the year under review, we presented our product range to customers at 65 trade fairs in 27 countries. In addition to showcasing innovative products for heat transfer or high-pressure applications, the food industry and power stations, we put a major focus on energy efficiency.

Our energy-efficient motors supplied by the Italian firm ITACO s.r.l. in Ponte di Nanto, in which we took a majority stake in mid-2010, met with particular interest. The innovative pump drive developed for KSB surpasses even the most stringent requirements of the EU directives for high-efficiency motors* and proved effective in initial practical tests.

Our new monitoring unit, PumpMeter**, helps customers identify further savings potential in pump operation by continuously measuring the difference between optimum performance in terms of energy consumption and the actual operating conditions. The device, which has won an innovation award, has been very well received by the market.

ACQUISITIONS STRENGTHEN THE SERVICE BUSINESS

To strengthen our position in individual technical areas and regions, we made acquisitions of smaller service companies in 2010.

This included the acquisition of the business operations of a service provider in the US at the end of the year, which we incorporated into a newly formed company, Standard Alloys, Inc., based in Port Arthur, Texas / USA. By bringing on board this specialist in the modernisation of pumps and the production of replacement parts we are expanding our service offering, especially for customers in the southern US.

In France we acquired Euro Techno Consulting in Montcenis, a service company for power plant valves. In this way, we have improved the conditions for successfully handling orders for servicing nuclear power plants. These orders are only awarded to qualified service providers with a regional presence and a sufficient number of qualified employees.

Furthermore, in 2010 we acquired a majority interest in gear-tec GmbH in Eggebek, near Flensburg, a specialist in services for wind energy systems, thus expanding our expertise in the area of renewable energies. This brings the number of our service locations to 29 in the German market and over 144 worldwide.