Preliminary figures for financial 2008

• Orders received and sales revenues slightly lower than last year; adjusted for non-operative effects, at last year's level
• Operating result (EBIT) down from EUR 70.4 million last year to EUR 52.0 million due to a one-time fourth-quarter charge previously announced
• Order backlog (2.6 percent) higher than last year; securing capacity utilisation for first half year 2009 

KUKA Group 2008 business performance

Despite the worldwide economic slow down, made worse in mid-2008 by the international financial crisis, KUKA Group's total orders received for fiscal 2008 came in at EUR 1,279.9 million, 4.8 percent less than 2007's EUR 1,343.8 million. However, without non-operative effects, such as the adjusted purchases of input materials at the US subsidiary KTPO (EUR 35.0 million), the revised posting related to the redemption of the financing of the company (EUR 10.1 million), and the altered EUR/USD exchange rates (EUR 19.6 million), orders received at the Group were at the same level as last year. 

KUKA Group sales revenues for the financial year just ended came in at EUR 1,266.1 million, down 1.6 percent from last year's EUR 1,286.4 million. Taking into account the non-operative effects at KTPO as well as the effects of EUR/USD exchange rates (EUR 18.8 million), Group-level sales revenues were actually 3.6 percent higher than in the year prior.

KUKA Group's order backlog was up 2.6 percent, from EUR 528.8 million on December 31, 2007 to EUR 542.3 million on December 31, 2008. The company's current level of order backlog secures capacity utilization for the first five months of the current fiscal year.

In 2008, KUKA Group generated an operating result (EBIT) of EUR 52.0 million, which compares to last year's EUR 70.4 million. This gives an EBIT margin of 4.1 percent for the financial year 2008 versus 5.5 percent the year prior. This includes the impact of the previously announced cancellation by Getrag USA of two transmission assembly lines. On November 17, 2008, the Getrag company filed for creditor protection under the terms of Chapter 11 of the US bankruptcy code. To date, the Systems division has not been paid by the company. The impact of the cancellation on operating result (EBIT) was EUR 20.8 million, which was charged in full during the fourth quarter. Adjusted for this one-time charge, KUKA Group's operating result (EBIT) for the year overall would be EUR 72.8 million, and EBIT margin 5.7 percent compared to 5.5 percent for fiscal year 2007.

The Group's net debt, which is short and long-term financial liabilities minus cash and cash equivalents, was EUR -53.6 million as of December 31, 2008. This represents an improvement of EUR 44.3 million compared to September 30, 2008. Last year, the group's cash and cash equivalents stood at EUR 163.6 million. This difference is due to the redemption of the financing for US subsidiary KTPO, the dividend payment, the share buyback initiative, taxes and the difference in working capital because of a changed order mix.

As of December 31, 2008, KUKA Group had 6,171 employees, 439 employees or 7.7 percent more than the prior year's 5,732. The Robotics division added a total of 238 employees by hiring new staff members or extending permanent employment to temporary workers to support its business growth, primarily in R&D, sales and manufacturing (Hungary). As of December 31, 2008, the division's workforce totaled 2,261 persons, up 11.8 percent from the prior year's record date. The Systems division hired an additional 199 persons, primarily in China and in manufacturing. Overall, the division had 3,781 employees at year end, 5.6 percent more than at the same time last year. The Group holding company and other companies had 129 employees versus 127 last year. The majority of this work force is located in the Augsburg headquarters and provides services for the whole KUKA group.

KUKA Group fourth quarter orders received came in at EUR 251.3 million, down 12.7 percent from last year's fourth quarter posting of EUR 287.7 million. This decline is primarily because orders were pulled forward by Robotics in the third quarter and the Systems' division's orders received remained at the almost the same level as last year.
However, sales revenues of EUR 342.1 million almost matched last year's already high fourth quarter figure of EUR 353.4 million. The decline from last year is 3.2 percent. Because of the one-time Getrag USA charge, Group operating result (EBIT) in the fourth quarter was at breakeven, EUR 0.0 million, compared to EUR 21.3 million last year.

Robotics division 2008

The Robotics division's orders received climbed 6.8 percent, from EUR 434.9 million in 2007 to EUR 464.4 million as of the end of 2008. The division was particularly successful in expanding its general industry business and subsequently also its service business, reporting double-digit growth of 24.4 percent and 23.6 percent respectively year-over-year. In total, general industry orders received for 2008 came in at EUR 194.3 million versus EUR 156.2 million the year prior, and service went from EUR 81.4 million 2007 to EUR 100.6 million in 2008. On the other hand, automotive sector orders received decreased, particularly in the fourth quarter of 2008. Overall, they dropped 14.1 percent to EUR 169.5 million from EUR 197.3 million in 2007. 

The Robotics division's sales revenues increased strongly in 2008, soaring 14.9 percent to EUR 474.4 million at the end of 2008 from EUR 412.9 million in 2007. Order backlog as of December 31, 2008 closed at EUR 100.2 million, down 3.6 percent from December 31, 2007's EUR 103.9 million. Operating result (EBIT) improved from EUR 33.6 million in 2007 to EUR 42.0 million in 2008 because of higher sales, particularly from general industry and service, and better capacity utilization. In parallel, EBIT margin over the same comparable time periods improved from 8.1 percent to 8.9 percent.

The Robotics division's orders received in the fourth quarter of 2008 were significantly lower, down from EUR 110.8 million in 2007 to EUR 89.2 million. A contributing factor were some automotive sector orders received that were pulled forward into the third quarter of 2008. However, sales revenues were up substantially, jumping from EUR 114.2 million in 2007 to EUR 129.6 million, an increase of 13.5 percent. As a result of the weak economy, general industry orders received growth was not as robust as in the earlier quarters, but were still up 5.5 percent in comparison to last year. Operating result (EBIT) rose from EUR 10.3 million in 2007 to EUR 12.0 million in 2008. EBIT margin also climbed during the period under review, from 9.0 percent to 9.3 percent.

Systems division 2008

In 2008, the Systems division's orders received came in at EUR 854.9 million, down 8.8 percent from 2007's EUR 937.7 million. Taking into account the KTPO effects and the altered EUR/USD exchange rates for orders received (EUR 17.4 million), the comparable orders were down only -2.3 percent from last year.

KUKA Systems' project business was impacted by major regional shifts during the reporting year. While orders from German customers in 2007 totaled EUR 308.7 million, almost one-third of the total orders received of EUR 937.7 million, in 2008 domestic orders dropped substantially, to EUR 150.2 million. Instead, German manufacturers placed more orders for their European plants. As a result, the Systems division's orders received from Europe (excluding Germany) went from EUR 134.7 million in 2007 to EUR 276.7 million in 2008. In North America, 2008 orders received from automotive industry customers came in at EUR 329.5 million, down from last year's EUR 395.6 million. The largest order received from the region during the reporting year was an order from Ford for an car body line in Mexico for the B-Car, the equivalent of the European Ford Fiesta. In Asia and the remaining regions, orders received of EUR 98.5 million for 2008 were almost the same as the prior year's EUR 98.7 million.

Order backlog rose from EUR 434.7 million as of December 31, 2007 to EUR 450.3 million as of December 31, 2008. This backlog notionally secures the Systems division's capacity utilisation for over six months.

The Systems division's sales revenues for the 2008 financial year were EUR 837.5 million, down 6.9 percent from EUR 900.0 million in 2007. However, adjusted for non-operative effects at KTPO and the changed EUR/US dollar exchange rate impact on sales revenues (EUR 16.8 million), sales revenues were about the same as last year on a comparable basis.

The Systems division's operating result (EBIT) for 2008 was EUR 26.8 million, which compares to last year's EUR 37.2 million. This gives an EBIT margin of 3.2 percent for the financial year 2008 versus 4.1 percent the year prior. This includes the previously announced cancellation of the Getrag USA order, originally valued at EUR 23 million. The cancellation resulted in a one-time loss at the operations level of EUR 20.8 million. Without this one-time impact, the division's operating result (EBIT) and EBIT margin would have been EUR 47.6 million and 5.7 percent respectively.

In the fourth quarter of 2008, the Systems division's orders received and sales revenues were reported at EUR 169.5 million and EUR 222.0 million despite the economic slow down, slightly under the prior year's fourth-quarter results of EUR 175.6 million and EUR 238.8 million. Fourth-quarter operating result (EBIT) was negative at EUR -5.0 million due to the one-time charge associated with Getrag USA. At the same time last year, the division reported EUR 12.9 million.

Economic environment and current situation

During the second half of 2008, the international financial market crisis and the recession that began in the major industrial regions in the fourth quarter weighed on the economic situation. According to the experts, all markets in which KUKA does business are affected. The effects of the crisis will therefore continue to impact the 2009 financial year.

KUKA's management analyzed these changed general conditions at an early stage and is preparing an appropriate action plan. The aim is to mitigate the impact of the crisis, while at the same time maintaining the high ratio of reinvestment in R&D to ensure that the company's future remains secure. 

Capital spending to streamline operations will continue to play an important role, especially during an economic downturn. This will protect the company's profits. KUKA's flexible robot based automation technology puts it in an excellent position and the company expects to see further new business opportunities, particularly from general industry customers in sectors such as the aerospace and solar industries. The automotive sector may benefit from the increasing demand for smaller and more fuel-efficient cars.

KUKA will release the final figures for the 2008 financial year at the press conference presenting the annual financial statements on March 12, 2009 in Munich.