Freudenberg Group continues to increase sales and result
Weinheim, 23 May 2007. The Freudenberg Group concluded the past financial year 2006 with success. For the first time in the company's 158-year history, the sales threshold of five billion euros was exceeded. All business areas of the global family enterprise contributed to this result. Adjusted to allow for exchange rate influences as well as acquisition and disinvestment effects, the rise in sales is roughly 6%. The result of the operational activities rose by approximately 9% compared with the same period of the preceding year. At the end of 2006 Freudenberg employed 33,526 people, 141 more than on the balance-sheet date of the previous year.
Dr. Peter Bettermann, spokesman of the Freudenberg Management Board, stressed at the annual press conference in Weinheim on Wednesday that all subgroups in the world contributed to these increases.
The economic recovery in Germany, Europe and South America contributed to the growth in sales in 2006. The continued strong upward trend in southeast Asia and India also boosted the development of sales. Business in the United States became increasingly difficult owing to the decreasing economic momentum there and the weaker dollar.
In addition to the rise in revenue, the systematically pursued improvement processes and the successful termination of the major acquisitions made in 2004 – Burgmann and Chemtrend/OKS – contributed to the above-average growth in the result. Furthermore, the strategy of highly focused development of individual markets had a positive impact.
The overall good economic development has strengthened in the current financial year. However, the slowdown of the American economy continues. The international performance factors are boosting results.
"The development during the first four months back up our cautious optimism," said Dr. Bettermann, commenting on the current financial year.
The 2006 financial year in figures
Sales improved by € 216 million (+4.5%), thus exceeding the five-billion-euro mark for the first time. Allowing for the changes in the consolidated group (in particular the disinvestments of the air-intake manifold line of business in Bad Salzdetfurth and Gotha) and the currency effects, this leaves an internal growth of 6%.
The result of operating activities rose by almost 25% to approx. € 304 million, thus topping the 300-million-euro mark for the first time.The consolidated profit, which at € 202 million had surpassed the 200-million mark for the first time last year, rose again to € 219 million.
Compared with the previous year, total assets rose by € 106 million to € 4.470 billion in 2006. The 2.4% increase was well below the growth in sales. After adjustment for the effects of the change in the consolidated group (- € 14 million) and changes in exchange rates (- € 158 million), this results in an increase in total assets of 6.4% or € 278.1 million.
In absolute terms, equity – without shares of third parties – rose by € 104 million to € 2,060 million. The equity ratio increased by 1.3 percentage points to a good 46%. Net borrowings increased by € 45.5 million to reach € 625 million – mainly due to higher credit balances of the partners.
The cash flow from current business activities amounted to € 333 million and clearly covered the cash flow from investment activities (- € 271 million). The operative inflow of funds corresponded to the average of recent years, but was well below the figure of last year which was influenced by one-off special effects.
Internationalisation with an active portfolio management
In order to strengthen the future viability of the globally operating Freudenberg family enterprise, the Group continued its active portfolio policy in the past financial year. In particular, small, specialised companies were taken over in line with the strategy involving the targeted development of the market.
Freudenberg-NOK General Partnership (FNGP) acquired a supplier to the oil and gas industry, the Canadian company Imperial Rubber and Urethane Corporation.
With the acquisition of all the shares in Helix Medical Inc. headquartered in California, FNGP has extended its range in the health and medical sector. Helix Medical develops, produces and markets silicone products for the pharmaceutical industry.
The Freudenberg Nonwovens Group took over the business to equip battery separators from SciMAT Ltd. Swindon, England. Through this acquisition, Freudenberg has strengthened its strategic position as one of the world\'s leading manufacturers of high-quality battery separators for nickel-metal hybrid batteries (Ni/MH).
Moreover, Freudenberg NOK Mechatronics bought the production of large-area flexible printed-circuit boards from Delphi Deutschland GmbH in Berlin and a large share of the associated business in order to broaden and considerably speed up its own market access.
These strategic acquisitions were offset in 2006 by the sale of the metal sealing ring manufacturer Hugo Fassbender Dichtungsgesellschaft, which had belonged to the Group since 1 September 1978. Moreover, Freudenberg reviewed all strategic options and decided to find a partner for the Building Systems Division to open up sustained opportunities of growth and success for the company through strategic expansion investments (especially in North America and southeast Asia) and to safeguard the present production in the Weinheim industrial park in the long term.
"The active shaping of the consolidated group has always been standard practice in the long history of Freudenberg," said Jörg Sost at the annual press conference.
Growth in the emerging markets
Freudenberg continued to pursue its globalisation strategy in order to participate in the growth in the emerging markets in Asia and eastern Europe. Freudenberg Politex opened the first major production facility of the Group in Russia in mid-2006 with the works in Zavolzhie (near Nizhny Novgorod). A new production and administrative building has been erected for Freudenberg Household Products in Suzhou, China.
Work was started on the construction of a twin plant for special lubricants and parting agents in Qingpu, 40 km from Shanghai. The new hydraulic seals production at Merkel NOK-Freudenberg Co. Ltd. has been launched successfully in Taicang, China.
Research and development, environmental protection and occupational safety
Refined innovation strategy
The Freudenberg Group invested a total of more than € 200 million in research and development in 2006. 2,256 workers were employed in this division of the Freudenberg Group in the year under review. Germany was the regional focal point with 1,427 employees.
Environmental protection and occupational safety
The Freudenberg Group increased its investments in technical occupational safety to over € 31 million in 2006 and thus more than doubled the previous year’s figure. Thanks to this special effort, a program lasting several years to improve machine safety was successfully completed. The costs for further optimisation in environmental protection amounted to just under € 9 million.
As a result of the environmental and occupational safety initiative "We are take care" and other activities at all levels within the Group, the number of accidents per 1,000 employees involving more than 3 days off work (1,000-employee rate) fell for the fifth time in succession and is now just 4.3 (previous year: 5.3).
Further information:
Cornelia Buchta-Noack
Freudenberg & Co.
Kommanditgesellschaft
External Communication
Tel. +49(0) 62 01 – 80 40 94
Fax +49(0) 62 01 – 88 40 94
cornelia.buchta-noack@freudenberg.de
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