KUKA expects further growth after setting new records in 2012

26 March 2013

Consolidated orders received up 21.7 percent to EUR 1.89 billion
Sales revenues also up sharply: +21.1 percent to EUR 1.74 billion
At EUR 109.8 million, EBIT surpasses EUR 100 million threshold for the first time; EBIT margin improves to 6.3 percent
Guidance fully met for 2012
Board recommends dividend of 20 euro cents per share for fiscal 2012

BUSINESS PERFORMANCE IN FISCAL 2012

KUKA AG's Executive Board presented KUKA Group's 2012 annual report at its financial results press conference on March 26, 2013 in Munich and summarized the developments of the previous fiscal year. The strong demand for robot-based automation from every corner of the globe enabled KUKA Group to significantly beat the prior year's numbers in fiscal 2012. This applies as much to orders received and sales revenues as it does to operating earnings before interest and taxes (EBIT). The guidance numbers for 2012 - sales revenues of EUR 1.65 billion and consolidated EBIT margin of at least 6 percent - were thus fully met.

"After a successful year in 2012, we expect that sales and margins will again grow slightly in 2013," said Dr. Till Reuter, CEO of KUKA AG. "The growth will mainly be driven by our strong market share in the automotive industry and our potential in the emerging nations and general industry."

The key 2012 business numbers are as follows:

Consolidated orders received for the fiscal year just ended reached a record EUR 1,889.6 million, up 21.7 percent from the EUR 1,553.0 million posted for 2011. The Robotics division's orders rose 22.7 percent to EUR 803.1 million, driven by extensive releases from blanket orders received from European carmakers and significant growth rates in China. In 2011 the division had generated orders received of EUR 654.4 million. Orders from general industry totaled EUR 294.9 million, a new record. Thanks to the strong capital spending by the automotive industry, the Systems division was able to bring in orders of EUR 1,115.1 million, up from EUR 916.6 million in 2011. This is a year-over-year growth rate of 21.7 percent.

KUKA Group's sales revenues for the fiscal year just ended rose nearly in parallel with orders received, coming in at EUR 1,739.2 million overall, 21.1 percent higher than 2011's EUR 1,435.6 million. The Robotics division reported sales revenues of EUR 742.6 million, an increase of 20.5 percent from the EUR 616.3 million generated in 2011. Systems' sales were up 20.5 percent to EUR 1,025.3 million from EUR 850.7 million in 2011. The book-to-bill ratio remained above 1, coming in at 1.09. As a result, order backlog rose, which ensures high capacity utilization for 2013.

KUKA Group's order backlog rose accordingly and reached EUR 909.4 million at the end of fiscal 2012, 25.6 percent higher than the EUR 724.0 million reported on the December 31, 2011 record date. Robotics' order backlog to the end of 2012 was EUR 248.7 million, up 34.9 percent year-over-year, while Systems had EUR 666.1 million on hand, an increase of 22.2 percent over the year prior.

KUKA Group's earnings before interest and taxes (EBIT) for the fiscal year just ended grew faster than sales revenues. For the first time, KUKA Group's EBIT surpassed the EUR 100 million threshold. The company's overall EBIT came in at EUR 109.8 million, which compares to EUR 72.6 million in 2011. EBIT margin also improved, growing from 5.1 percent in 2011 to 6.3 percent in 2012. Both divisions contributed to this very satisfactory growth. Robotics generated earnings before interest and taxes (EBIT) of EUR 80.2 million thanks to the higher manufacturing volume, higher revenues from service and a higher share of sales of the new generation of KR QUANTEC/KR C4 robots. In 2011, the division earned EUR 51.0 million. EBIT margin for fiscal 2012 was at or above the 10 percent target in every quarter and came in at 10.8 percent overall. Driven by better process and project risk management, Systems' EBIT rose from EUR 33.7 million in 2011 to EUR 47.7 million in 2012. The division's overall EBIT margin was up accordingly and reached 4.7 percent. In the third and fourth quarters, the division reached its target margin of 5.0 percent.

Overall, KUKA Group's earnings after taxes went from EUR 29.9 million last year to EUR 55.6 million in 2012. The Group's earnings after taxes thus rose 86.0 percent. Earnings per share improved accordingly, going from EUR 0.89 in 2011 to EUR 1.64 in 2012. The Executive Board will therefore propose to shareholders at the Annual General Meeting that a dividend of EUR 0.20 per share be paid for fiscal 2012.

KUKA Group's financing is secured primarily by a Syndicated Senior Facilities Agreement in the amount of EUR 200 million and a corporate bond issued in November 2010 that is valued at EUR 202 million. To optimize its financing structure and to lock in the attractive current interest rate, KUKA Group placed a convertible bond in February 2013 worth EUR 58.8 million and maturing in 2018.

Free cash flow in fiscal 2012 reached a record EUR 77.1 million, up from EUR 6.5 million in 2011. The high positive free cash flow made it possible to not only completely eliminate the company's net debt, which had totaled EUR 32.6 million as of December 31, 2011, but also to build up net liquidity of EUR 42.8 million. The Group's financing structure thus continues to be very robust and secured for the long term.

Net income of EUR 55.6 million, up from EUR 29.9 million in 2011, had a particularly positive impact on equity. Overall, equity was up EUR 45.1 million to EUR 297.5 million as of December 31, 2012. Accordingly, the equity ratio; that is, the ratio of equity to total assets, was up 2.8 percent, from 23.4 percent to 26.2 percent.

KUKA Group's average capital employed in 2011 and 2012 was EUR 332.9 million and EUR 339.8 million respectively; that is, it rose slightly last year. The return on capital employed was 32.3 percent, up from 21.8 percent in 2011.

The sharp increase in business volume made it necessary for the divisions to hire additional staff. Overall, the workforce, including apprentices and work-study students, expanded by 10.2 percent to 7,264, which compares to 6,589 on December 31, 2011. Of the 675 new full-time employees hired by KUKA Group, the Robotics division accounted for 427 and the System division for 259. On a regional basis, most of the Robotics division's new staff was hired in Augsburg and at the Hungarian control cubicle assembly facility, as well as generally to expand its international business. The number of contract workers went from 1,078 as of December 31, 2011 to 1,408 on December 31, 2011.

In October 2012, KUKA AG set the stage for further growth in Asia when it laid the cornerstone for a new robot assembly facility in Shanghai. Starting in the second half of 2013, KUKA will be able to build about 3,000 extra robots annually at the 20,000 square-meter facility; by 2015, this is expected to increase to 5,000 units.

The company signed a strategic joint development agreement with Daimler at the end of 2012. The two companies aim to jointly develop human-robot safety concepts for lightweight robots used in industrial applications. KUKA lightweight robots have already helped assemble more than 500,000 rear axle differentials at the Daimler factory in Untertürkheim since 2009.

OUTLOOK

For 2013 generally, KUKA Group expects the global economy and its key automotive and general industry markets to grow, although at a significantly slower pace after the unusually high investments from 2010 to 2012. From a regional perspective, demand from Asia and North and South America is expected to be stronger, while Europe's is expected to be weaker.

Based on stable general conditions, a high order backlog and excellent business growth visibility, KUKA Group expects sales during fiscal 2013 to reach about EUR 1.8 billion, up from EUR 1.74 billion in 2012. Base on the sales growth forecast, EBIT margin should come in at around 6.5 percent, up from 6.3 percent in 2012.