The Germany-based beverage filling and packaging machinery company said a large increase its workforce was largely responsible for year-on-year earnings falling almost 8% to €32.5m. Net earnings also dropped by around 10% to €22.5m.
The company instead highlighted a near 7% leap in sales to €649m and orders increasing by 5% to almost €660m compared to the same period in 2011 as evidence of strong Q1 performance.
It said it was “cautiously optimistic” for the outlook for 2012 – fuelled mainly by emerging markets - but that the financial crisis was likely to lead to cutbacks in capital expenditure investment by its Eurozone customers.
“Confidence with respect to global economic development has increased since the start of the year and fears of a global recession have faded. And that has a positive impact on our business,” said company chairman Volker Kronseder (pictured right).
German machinery orders fall
While overall orders for the firm’s “products and services” jumped to €660m, orders in the Germany machinery sector fell 16% year-on-year between January and March 2012 – although Krones said Q1 2011 had seen “exceptionally strong growth”. However, a comparison with the last three months of last year revealed that German machinery orders had still tumbled 11%.
The German Engineering Federation (VDMA) said output in the sector as a whole would “stagnate” in 2012 but that the food processing and packaging machinery segment would fare better as the sector was less cyclical than other areas.
Heavy investment in emerging markets
Krones said the rise in sales outstripped the target of between 2% and 4% - with the biggest contribution coming from Eastern Europe and South America.
“International food and beverage companies are investing heavily in building and expanding capacities there since the economies and therefore consumer demand are growing rapidly,” said the firm.
Continuing demand for PET-based products continued to out-perform that of other materials it added.
Sales in Germany rose 7% to €80m; in Europe (excluding Germany) they increased 11% to €208m and outside Europe they grew 4% to €354m.
Segment revenue – impending skills shortage
Sales in its core machine lines for product filling and decoration rose almost 5% to €568m but earnings dropped by more than €4m to €36.6m – with the company attributing this to a large increase in workforce.
“We have taken this short-term burden to earnings into account as a necessary investment to protecting Krones from an impending shortage of skilled workers,” it said.
Its two other divisions both improved but both made losses; machine lines for beverage production and process technology was €1.8m in the red while its machine and lines for low outputs showed a negative earnings balance of €2.3m.
The company expressed cautious optimism for 2012 – highlighting opportunities were especially good in Asia, South America, Africa and the Middle East.
It estimated the North American market would remain unchanged compared to 2011 but that challenges would remain in Europe.
“The euro area markets are showing considerable capital expenditure restraint due to the Euro and sovereign debt crisis”, said an investor statement from Krones.