BERU AG: BERU Achieves Record Sales Revenues and Earnings in 2006.LUDWIGSBURG Ludwigsburg (l  t`vĭkhsb rkh'), city (1994 pop. 86,220), Baden-Württemberg, SW Germany, near the Neckar River. , Germany Germany (jûr`mənē), Ger. Deutschland, officially Federal Republic of Germany, republic (2005 est. pop. 82,431,000), 137,699 sq mi (356,733 sq km). -- In the 2006 financial year (January January: see month. 1 -
December December: see month. 31, 2006), BERU Aktiengesellschaft of Ludwigsburg increased its
Group revenues by 7.1% to EUR EURIn currencies, this is the abbreviation for the Euro. Notes: The currency market, also known as the Foreign Exchange market, is the largest financial market in the world, with a daily average volume of over US $1 trillion. 439.0 million compared with EUR 409.9 million in the comparable prior twelve-month period (January 1 - December 31, 2005). The youngest division, Electronics and Sensor Technology, posted substantial revenue growth in 2006. Group operating profit Operating profit (or loss) Revenue from a firm's regular activities less costs and expenses and before income deductions. operating profit See operating income. (EBIT EBIT See: Earnings Before Interest and Taxes EBIT See earnings before interest and taxes (EBIT). ) amounted to EUR 53.5 million in 2006 (prior year: EUR 32.0 million), equivalent to an EBIT margin of 12.2% (10.5%). Net profit after minority interest increased to EUR 43.0 million, compared with EUR 19.5 million in the nine-month period of short financial year 2005 (April 1 - December 31, 2005). Earnings per share amounted to EUR 4.30 (EUR 1.95). With the prior-year figures, it is necessary to consider the fact that short financial year 2005 was only a nine-month reporting period. Only the comparative figures for sales revenues apply to the twelve-month period of January 1 - December 31, 2005. '2006 was a challenging but very successful year for BERU. With a net profit of EUR 43.0 million, we reached a new record in the history of the Company,' commented Marco von Maltzan, Chairman of the Executive Board of BERU AG, on the development of business. Positive trend in all sales segments BERU increased its sales revenues in all three sales segments. In the Original Equipment segment, sales revenues increased by 8.0% to EUR 288.8 million (EUR 267.5 million). In BERU's important Aftermarket Aftermarket See: Secondary market. aftermarket See secondary market. segment, revenues rose by 5.5% to EUR 122.7 million (EUR 116.3 million). And in the General Industry segment, BERU increased its sales revenues by 5.4% to EUR 27.5 million (EUR 26.1 million). Growth driver Electronics and Sensor Technology The main growth driver last year was BERU's youngest division, Electronics and Sensor Technology. Once again, this division achieved BERU's strongest growth rate of 31.6% with sales revenues of EUR 135.8 million (EUR 103.2 million). This was primarily a result of revenues from sales of tire-pressure monitoring systems, which more than doubled from EUR 21.9 million to EUR 46.5 million. And stronger demand for PTC (PTC, Needham, MA, www.ptc.com) Long a world leader in mechanical computer-aided design, manufacturing and engineering software, PTC, through acquisitions and reorganization, has transformed itself into a leading provider of Internet-based B2B solutions for discrete manufacturers. auxiliary auxiliary In grammar, a verb that is subordinate to the main lexical verb in a clause. Auxiliaries can convey distinctions of tense, aspect, mood, person, and number. heating systems also led to increased sales revenues of EUR 31.5 million from these products (EUR 29.5 million). BERU sees considerable future growth potential for its youngest division. Core division defends its market position BERU's Diesel Cold-Start Technology division defended its strong position as a world market leader, although its sales revenues decreased by 6.6% to EUR 181.2 million in 2006 (EUR 194.0 million). On the one hand, production cuts by some automobile manufacturers led to lower unit sales unit sales Sales measured in terms of physical units rather than dollars. Unit sales data are often used by financial analysts when evaluating the health of a company. in the Original Equipment segment; on the other hand, this development was partially due to high pressure on prices from customers. BERU also anticipates a tough competitive situation for these products in the years 2007 and 2008, with a resulting impact on revenues and earnings. As of 2009, the global diesel trend and the production startup of innovative new products are expected to stimulate rising sales revenues once again. Ignition ignition, apparatus for igniting a combustible mixture. The German engineer Nikolaus A. Otto, in his first gas engine, used flame ignition; another method was heating a metal tube to incandescence. Technology posts higher sales revenues BERU's Ignition Technology division achieved an increase in sales revenues of 8.2% to EUR 122.0 million (EUR 112.7 million). This was due in particular to higher revenues from sales of ignition coils. In addition, the supply of the new compact 12-millimeter spark plug spark plug: see ignition. spark plug Device that fits into the cylinder head of an internal-combustion engine and carries two electrodes separated by an air gap, across which current from a high-tension ignition system discharges, creating a spark for series production started successfully. The French subsidiary, BERU Eyquem, developed positively; its sales revenues increased by approximately 11% compared with the twelve-month period of the prior year. Increased sales revenues in Germany In its German domestic market, BERU increased its sales revenues by 15.0% or EUR 17.9 million to EUR 137.1 million (EUR 119.2 million). In the rest of Europe, sales revenues rose by 4.0% to EUR 207.8 million (EUR 199.9 million). Once again, additional growth stimulus stimulus /stim·u·lus/ (stim´u-lus) pl. stim´uli [L.] any agent, act, or influence which produces functional or trophic reaction in a receptor or an irritable tissue. came from Asia, where BERU achieved an 11.2% increase to EUR 38.7 million (EUR 34.8 million). Sales revenues decreased slightly only in North America North America, third largest continent (1990 est. pop. 365,000,000), c.9,400,000 sq mi (24,346,000 sq km), the northern of the two continents of the Western Hemisphere. : from EUR 46.0 million to EUR 43.3 million. In the rest of the world, sales revenues increased by 21.0% to EUR 12.1 million (EUR 10.0 million). High operating-profit margin In 2006, BERU achieved an operating profit (EBIT) of EUR 53.5 million (EUR 32.0 million). In relation to sales revenues, this represents an EBIT margin of 12.2% (10.5%). BERU therefore succeeded in posting an above-average operating margin Operating Margin A ratio used to measure a company's pricing strategy and operating efficiency. Calculated by: once again. However, various special effects special effects, in motion pictures, cinematographic techniques that create illusions in the audience's minds as well as the illusions created using these techniques. had a net negative impact of EUR 1.0 million (EUR 9.3 million) on earnings in 2006 (due to impairments, pension-plan changes, altered conditions for pre-retirement part-time work and restructuring restructuring - The transformation from one representation form to another at the same relative abstraction level, while preserving the subject system's external behaviour (functionality and semantics). in the production of spark plugs). The adjusted EBIT margin was 12.4%, and was thus 1.1 percentage points below the EBIT margin adjusted for special items in short financial year 2005. Despite internal cost-cutting actions, BERU was not able to fully compensate for the price reductions demanded by automobile producers and the ongoing increases in raw-material prices. Earnings before taxes amounted to EUR 56.5 million (EUR 33.5 million), including all special effects. This is equivalent to a return on sales Return on sales A measurement of operational efficiency equalingnet pre-tax profits divided by net sales expressed as a percentage. return on sales The portion of each dollar of sales that a firm is able to turn into income. of 12.9% (11.0%). Adjusted for all one-time special effects, the return on sales before income taxes amounted to 13.1% (14.0%). High level of investment As in previous years, BERU invested large sums in innovative production technologies, new product startups and capacity expansions. During the period under review, this investment totaled EUR 43.2 million (EUR 35.0 million). The sum includes the capitalization capitalization n. 1) the act of counting anticipated earnings and expenses as capital assets (property, equipment, fixtures) for accounting purposes. 2) the amount of anticipated net earnings which hypothetically can be used for conversion into capital assets. of in-house In-house In the context of general equities, keeping an activity within the firm. For example, rather than go to the marketplace and sell a security for a client to anyone, an attempt is made to find a buyer to complete the transaction with the firm. development projects in an amount of EUR 10.0 million (EUR 6.9 million). Excluding own work capitalized Capitalized Recorded in asset accounts and then depreciated or amortized, as is appropriate for expenditures for items with useful lives longer than one year. , 53.8% of total investment took place at locations in Germany. EUR 33.5 million was invested in research and development. This represents a ratio of 7.6% in relation to sales revenues (8.1%). Increased equity ratio The Group's cash flow (net profit plus depreciation and amortization and changes in long-term Long-term Three or more years. In the context of accounting, more than 1 year. long-term 1. Of or relating to a gain or loss in the value of a security that has been held over a specific length of time. Compare short-term. provisions) amounted to EUR 77.4 million (EUR 45.9 million). All investment was therefore financed out of the cash flow. BERU continued to strengthen its sound balance-.sheet structure in 2006. Equity before minority interest increased by 11.3% to EUR 342.4 million (EUR 307.7 million), resulting in an increase in the equity ratio from 70.0% to 72.2%. The net financial position (liquid funds minus liabilities to banks) also developed very positively: BERU recorded an increase of 45.5% to EUR 105.9 million (EUR 72.8 million). Furthermore, as announced, liabilities to banks were reduced to EUR 0.2 million. This makes BERU virtually independent of external sources of financing. Balanced workforce structure At the balance-sheet date of December 31, 2006, the BERU Group employed a worldwide workforce of 2,555 persons (2,702), which was 5.4% fewer than in the prior year. The number of persons employed outside Germany decreased by 14.8% to 1,072 (1,258). On the other hand, the number employed in Germany rose by 2.7% to 1,483 (1,444). Moderate growth anticipated In 2007 and 2008, the Executive Board of BERU AG anticipates only moderate growth in global demand for automobiles. Due also to rising pressure on prices and margins combined with high prices for raw materials and energy, the Executive Board expects BERU's organic growth rate to slow down somewhat, with growth in sales revenues likely to be in single digits this year and next. In terms of operating profit, a phase of consolidation is expected. As of 2009, new orders and the ramp-up of new products should lead to stronger growth again. 'We will continue to pursue the strategy of profitable growth that we initiated four years ago, and will strive to maintain the high quality of our operating profits also in the future,' stated von Maltzan. 'BERU's solid financial position also allows us to examine the possibility of external growth in existing and new areas of business.' Dividend proposal In line with BERU's long-term dividend policy featuring strong continuity, the Executive Board and Supervisory Board Supervisory board The board of directors that represents stakeholders in the governance of the corporation. intend to propose the distribution of a dividend of EUR 1.10 per share at the Annual Shareholders' Meeting shareholders' meeting n. a meeting, usually annual, of all shareholders of a corporation (although in large corporations only a small percentage attend) to elect the Board of Directors and hear reports on the company's business situation. of BERU AG on June 27, 2007. This represents a total dividend distribution of EUR 11.0 million. Annual Report BERU AG published its Annual Report 2006 on March 29, 2007, and made its accessible on the Company's Internet Internet Publicly accessible computer network connecting many smaller networks from around the world. It grew out of a U.S. Defense Department program called ARPANET (Advanced Research Projects Agency Network), established in 1969 with connections between computers at the website at www.beru.com. BERU business developments in 2006 Consolidated income statement consolidated income statement An income statement that combines the income statements of two or more organizations. As with other consolidated statements, a consolidated income statement eliminates any funds owed to or due from firms within the same group. All figures given for 2005 refer to the nine-month period of the short financial year from April 1 to December 31, 2005.
Short FY
EUR million FY 2006 2005
Sales revenues 439.0 305.8
Changes in inventories and work in progress and
own work capitalized -0.8 3.9
Other operating income 11.1 4.7
Cost of materials -175.5 -116.1
Personnel expenses -117.4 -87.0
Depreciation and impairments -34.4 -25.8
Other operating expenses -66.6 -52.2
Other taxes -1.9 -1.3
Earnings before interest and taxes 53.5 32.0
Financial income 3.0 1.5
Earnings before taxes 56.5 33.5
Income taxes -12.8 -13.7
Net profit 43.7 19.8
Consolidated balance sheet
EUR million Dec. 31, 2006 Dec. 31, 2005
Assets
Non-current assets 202.9 196.6
Current assets 271.1 243.0
Equity and liabilities
Equity* 345.1 309.8
Non-current liabilities 44.6 38.0
Current liabilities 84.3 91.8
Other key figures
FY 2006 Short FY 2005
Dividend distribution (EUR million) 11.0** 8.3
Dividend per share (EUR) 1.10** 0.83
Investment*** 43.2 35.0
Research and development expenditure 33.5 24.8
Number of employees (at end of period) 2,555 2,702
* Including minority interest
** Management's dividend proposal for the Annual Shareholders' Meeting
on June 27, 2007
*** Including capitalized development projects in an amount of EUR
10.0 million (EUR 6.9 million)
Language: English
Issuer: BERU AG Morikestr. 155 71636 Ludwigsburg Deutschland
Phone: +49 (0)7141 132-948
Fax: +49 (0)7141 132-586
E-mail: investor-relations@beru.de
www: www.beru.de
ISIN: DE0005072102
WKN: 507210
Indices: Listed: Amtlicher Markt in Frankfurt (General Standard),
Stuttgart; Freiverkehr in Berlin-Bremen, Munchen, Hamburg, Dusseldorf
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