Sauer-Danfoss Inc.
Sauer-Danfoss Inc.: Adjustment of Earnings Forecast despite Record Sales
Ad hoc announcement §15 WpHG
Periodenergebnisse
Sauer-Danfoss Inc.: Adjustment of Earnings Forecast despite Record Sales
Ad hoc announcement transmitted by DGAP.
The issuer is solely responsible for the content of this announcement.
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Sauer-Danfoss Reports Record Sales in Second Quarter 2005 / Rapid Growth
Related Inefficiencies and Ongoing Business System Implementation Costs
Require Adjustment of Earnings Forecast for 2005
Chicago/Neumünster, August 3, 2005 – In the second quarter 2005 Sauer-Danfoss
Inc., listed on the NYSE and Frankfurt’s prime standard (NYSE: SHS; FSE: SAR),
generated net sales of $438.1 million, compared to $379.1 million in the
second quarter of 2004. Excluding the impact of currency translation rate
changes, sales increased by 13 percent. The specialist for mobile hydraulic
and electronic systems and components reported a net income of $19.6 million
for the second quarter 2005, or $0.41 per share, compared to a record second
quarter 2004 net income of $21.6 million, or $0.46 per share.
Second quarter 2005 results were primarily affected by increased operational
expenses in specific product areas associated with this rapid growth as well
as the cost of implementing the new company wide business platform. The
quarter’s results were impacted by costs of $0.10 per share for the
implementation of this SAP business platform. The company now estimates the
total implementation cost for 2005 between $0.25 and $0.30 per share.
Therefore Sauer-Danfoss expects the earnings for the full year to come in at
$0.85 to $0.95 per share. Previously the company had expected the earnings for
the full year at $1.10 to $1.25 per share.
Sauer-Danfoss Inc.
Krokamp 35
24539 Neumünster
Deutschland
ISIN: US8041371076
WKN: 880208
Listed: Amtlicher Markt in Frankfurt (Prime Standard); Freiverkehr in Berlin-
Bremen, München und Stuttgart
End of ad hoc announcement (c)DGAP 03.08.2005
Issuer’s information/explanatory remarks concerning this ad hoc announcement:
Growth in all segments:
All operating segments contributed to the sales increase. Sales increased 18
percent in the Propel segment, followed by Controls with an 8 percent
increase, and Work Function with a 7 percent improvement over the same quarter
in 2004. Regionally, sales increased 13 percent in the Americas, while
European and Asia-Pacific sales rose 12 percent and 10 percent respectively.
“We are pleased to report another quarter of record sales”, David Anderson,
President and Chief Executive Officer, commented. “Our substantial growth is a
reflection of our ongoing investment in new product development combined with
our longstanding ability to respond to our customers’ short lead time
requirements, enabling us to capture market share in times of strong market
expansion.”
Orders received for the second quarter of 2005 were $437.3 million, up 14
percent from the same period last year. Excluding currency translation rate
changes, orders were up 11 percent.
Total backlog at the end of the second quarter of 2005 was $494.1 million, up
19 percent from the second quarter of 2004. Excluding currency impact, backlog
was up 18 percent compared with the second quarter of 2004. Growth in orders
and backlog over prior year, therefore, continues to be strong.
Six-Month-Review:
Net sales for the six months ended June 30, 2005, were $860.7 million compared
to $740.2 million for the first six months of 2004. On a comparable basis,
excluding the impact of currency fluctuations, net sales were up 13 percent
over last year. Net income for the first six months of 2005 was $30.4 million,
or $0.64 per share, compared to net income for the same period last year of
$32.6 million, or $0.69 per share.
Cash flow from operations for the first six months of 2005 was $69.8 million,
up slightly over the cash flow of $69.7 million for the same period last year.
The second quarter contributed a record $64.3 million, up from $58.4 million
in the same period last year. Capital expenditures for the six-month period
were $38.8 million, up from $29.5 million for the comparable period in 2004.
Debt to total capital ratio, or leverage ratio, improved to 39 percent at the
end of the second quarter from 43 percent at the end of the first quarter.
Outlook:
Sauer-Danfoss’ growth has continued to significantly outpace the market. At
the same time, the company has incurred substantial growth related operational
costs in manufacturing inefficiencies, including expediting and freight
costs, combined with the burden of producing products for the US market in
European-based currencies. Even though production will start up in a US plant
this year the company will not be in a position to make up for these year-to-
date margin losses thereby impacting full year expectations by $0.10 to $0.15
per share. Furthermore, in the process of implementing the new common business
platform Sauer-Danfoss is incurring higher costs for outside resources, which
will continue throughout this year. The company remains confident that cost
control and system improvement efforts together with an appropriate price
management will lead to more earnings improvements year over year as well as
to a further increase in return on net assets.
All statements regarding future performance, growth, sales and earnings
projections, conditions or developments are forward-looking statements. These
statements are based on current financial and economic conditions and rely
heavily on the Company’s interpretations of what it considers key economic
assumptions.
A conference call on the results for the first quarter 2005 will be held in
English on August 4, 2005 at 4:00 PM Frankfurt time. Please find further
information on the quarterly results at http://www.sauer-danfoss-ir.com.
Further Information: Sauer-Danfoss Inc. – Investor Relations
John N. Langrick, Director of Finance Europe, Sauer-Danfoss Inc., Tel.: +49
4321-871-190, Fax: +49 4321-871-121, Krokamp 35, D-24539 Neumünster,
jlangrick@sauer-danfoss.com
Linda Völpel, Investor Relations Specialist, Sauer-Danfoss Inc., Tel.: +49
4321-871-560, Fax: +49 4321-990-581, Krokamp 35, D-24539 Neumünster,
lvoelpel@sauer-danfoss.com
Christof Kaplanek, Public Relations, HOSCHKE & CONSORTEN, Tel.: +49 40-369050-
38, Fax: +49 40-369050-10, Deichstr. 29, D-20459 Hamburg,
c.kaplanek@hoschke.de
End of message (c)DGAP
032305 Aug 05
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