Strong Growth for Endress+Hauser Worldwide

Endress+Hauser has once again achieved above-average growth in 2007. The Group with headquarters in Reinach, Switzerland, has increased its turnover by 13.0 per cent to 1.113 billion euros and the profit before taxes by 20.4 per cent to 146.1 mil­lion euros. The company has invested 94.8 million euros in its worldwide network of production and sales, an increase of 19.4 percent. The creation of 810 new jobs provides evidence of this dynamic development. At the end of 2007, Endress+Hauser employed 7,855 people - an 11.5 percent increase on the previous year.

"Many companies in the field of automation have also developed comparatively well,” said CEO Klaus Endress at the presentation of the annual business report in Basel. "For Endress+Hauser however, it was the fourth successive year of strong growth.” Once again, the company was above average for the industry, which is estimated to have grown by between 10 and 11 per cent. "This is evidence that we have continued to gain market share,” declared Klaus Endress.

Good developments worldwide

The business of the measurement engineering and automation specialists has shown dynamic development. With an increase of 15.1 percent, growth in the Asia-Pacific region was again strongest. China, South East Asia and Australia saw strong growth, and Europe almost matched this with an increase of 14.5 percent. In addition to growth markets such as Russia, Poland and the Czech Republic, a large share of this success was also achieved in Italy, the UK, Switzerland and, in particular, Germany - still by far the largest market for Endress+Hauser. "This shows how well the great European export nations are placed,” explained Michael Ziesemer, responsible at Group level for sales and marketing.

Growth was also strong in Africa, with particularly good development in South Africa as well as the Maghreb states, which are supported by the French sales center. The only slight decrease in sales was seen on the American continent, where Endress+Hauser recorded a drop of 0.6 per­cent. However, the picture is distorted by the drop in value of the US dollar: in terms of local currency, the company saw a two-figure growth in the United States, Mexico, Chile and Brazil. "Three of our six largest markets are now outside Europe,” Michael Ziesemer commented. After Germany and the USA, China has now moved to number three on the list, followed by Italy, France and Japan.

The oil & gas industry, metallurgy and the power industries provided a large contribution to the increase. "The high energy prices have an immediate impact here,” explained Klaus Endress. As a result of this boom, investment continues to be strong. In many oil-producing countries, new industrial plants are being constructed along the value added chain, whilst in the industrialized countries, existing production facilities are being expanded and modernized. Increasingly, general contractors handle the construction of new plants. Endress+Hauser is responding to this new development with new structures. Major client projects around the world are supported by competence centers. At the same time, business from services and automation solutions has also grown at above average rates. "All these developments add to our strength in our strategic developments,” emphasized Klaus Endress.

In Romania, the company took over the former representative in 2007, and in Turkey, an Endress+Hauser sales center was opened. In April 2008, Endress+Hauser founded its own sales center in Venezuela. After the Middle East, the company now has its own support center in Central Asia. Based in Almaty, Kazakhstan, it supports customer projects in a region rich in natural resources and coordinates cooperation with local partners. "We also intend to set up a similar support center in Central America in the near future,” announced Klaus Endress. In South Africa, Endress+Hauser reinforced its position by the purchase of the temperature measurement engineering specialist Pyrotemp Services. The sales center in France took over the measurement engineering services supplier PB Mesures, further expanding its service business.

810 new jobs created

"We want to be close to our customers,” explained Klaus Endress. "This is the only way to ensure that we can offer reliable, fast and flexible service anywhere in the world.” This provides security for the locations in Europe and creates new jobs around the world. Last year alone, 810 new jobs were created (a plus of 11.5 per cent). At the end of 2007, Endress+Hauser employed a total of 7,855 people. In percentage terms, growth was strongest in the Asia-Pacific region. However, there was also strong employment in the German-French-Swiss region around Basel, where 4,042 persons are employed and 301 new positions created.

In production, despite the expansion of locations in Europe and elsewhere, Endress+Hauser was consistently working at capacity limit. The lack of specialist workers, engineers and IT specialists made it difficult to fill vacancies quickly. "In these circumstances, cooperation with universities is becoming increasingly important,” stated the CEO. Indeed, Endress+Hauser is presently supporting four students from Japan who are studying machine engineering at the University of Karlsruhe. And in Canada, the company has equipped the laboratory of the British Columbia Institute of Technology with the latest measurement technology. Endress+Hauser's commitment to in-house training also continues unabated. In 2007, the company started the Endress+Hauser Masterclass, networking internal personnel development programs and supplementing training modules at Group level. "For our growth markets we need managers who enrich and enliven our company culture,” stated Klaus Endress.

Exchange rates depress business figures

"The development of the exchange rate has had a major influence on our business results for 2007,” explained Endress+Hauser's Chief Financial Officer Fernando Fuenzalida. In particular, the US dollar, the reserve currency in many important markets, decreased sharply against the euro - by about 9.0 per cent over the course of the year. "In Swiss francs, our turnover has increased by 17.9 per cent,” added Fernando Fuenzalida, explaining the effects.

The steep increase in prices in the procurement markets has depressed the income. The costs of purchased goods and services increased by about 20 per cent to 330.4 million euros. This was partly recouped by increased productivity at a high level. The company was able to improve its operating profit (EBIT) significantly more than turnover by 19.4 per cent to 146.4 million euros, with the profit before tax (EBT) increased by as much as 20.4 per cent to 146.1 million euros. The regional spread of the pre-tax result, which had changed after last year, resulted in a lower tax burden, with the effect that net profit increased by 22.8 percent to 106.1 million euros.

Record levels of investment

In 2007, Endress+Hauser achieved investments amounting to 94.8 million euros, 19.4 per cent higher than the previous year (see separate text). "And for next year we are expecting to reach 120 million euros,” said Fernando Fuenzalida. The financial power of the company remains constant, despite the increase in bank loans of 5.0 per cent to 63.1 million euros. This is balanced by liquid assets of 141.3 million euros (plus 9.1 per cent). In spite of a balance sheet total grown by 14.0 percent to 897.5 million euros, Endress+Hauser has increased its equity ratio by 2.2 points to 58.7 percent. "For our industry, this is an exceptionally high level,” explained Fernando Fuenzalida.

In the past year, Endress+Hauser submitted 182 patent applications - three times as many as in 2006. About 3,900 'live' patents and patent applications protect the intellectual property rights of the company, according to Chief Technology Officer and Chief Information Officer Dieter Schaudel. From the technological point of view, the seamless integration of the field transmitters is still the dominant topic. "We are convinced that open systems and standardized interfaces bring our customers maximum benefits,” emphasized Dieter Schaudel. The opening of Memosens technology, developed by Endress+Hauser, for use by other suppliers attracted great attention in the industry. The revolutionary system should become an industrial standard in analysis measurement engineering. Endress+Hauser has already signed a contract with Hamilton Bonaduz, a manufacturer of top quality pH sensors, and negotiations are taking place with other interested parties.

Against all odds

Against a background of turbulence in financial markets and stock exchanges as well as the unfavorable developments in exchange rates, Endress+Hauser is predicting more subdued growth in 2008. "We have set ourselves a target of 8 percent growth in turnover,” stated Klaus Endress. "This won't be easy to achieve - not least because of the drop in the exchange rate of the US dollar.” In the first quarter, the company has recorded good growth, although less than the 2007 rate. The USA and particularly Japan have so far been below expectations, but the European market has developed well. "We are on schedule with incoming orders,” said Klaus Endress. "The developments regarding costs are causing us concern.” The increasing outlay for material and personnel added to the decrease in margins due to the exchange rates are all depressing profits.

Changes in the Executive Board of the company

The Executive Board of Endress+Hauser AG is facing changes. Chief Technology Officer and Chief Information Officer Dieter Schaudel, who has held responsible positions at Endress+Hauser for many years, will be retiring at the end of June 2008 at the age of 65. "In almost 26 years at Endress+Hauser, Mr Schaudel has achieved a great deal for the company - in the fields of strategy, technology, IT, patenting and public relations,” stated Klaus Endress. "We owe him our grateful thanks.”

Dieter Schaudel's area of responsibility will be divided up in future. As of 1 September 2008 Pieter de Koning will be responsible for Logistics, IT and Organization at Group level. The 47-year-old studied machine engineering and has also qualified in business management specializing in IT and logistics. Born in the Netherlands, he has had experience in several companies in the fields of logistics, supply chain management and production. His previous position was in the pharmaceutical industry.

An appointment still has to be made for a person with responsibility for the various Endress+Hauser product centers. "We want to strengthen the Executive Board to meet the needs of our expanding company,” stated Klaus Endress. Endress+Hauser will report on the new structures and appointments in due course.

The Endress+Hauser Group

Endress+Hauser is a global leader in measurement instrumentation, services and solutions for industrial process engineering. With over 8,000 employees worldwide, the Group generates annual net sales of more than1.1 billion euros.

Structure

Company-owned sales centers and a network of partners guarantee competent worldwide support. Production centers in eleven countries meet customers' needs and requirements quickly and effectively. As a successful family-owned business, Endress+Hauser is set for continued independence and self-reliance in the future.

Products

Endress+Hauser provides sensors, instruments, systems and services for level, flow, pressure and temperature measurement as well as liquid analysis and data acquisition. The company supports customers with solutions and services in automation engineering, logistics and information technology. Our products set standards in quality and technology.

Industries

Customers are primarily from the chemical/petrochemical, food & beverage, water/wastewater, life science, oil & gas, energy, primaries, pulp & paper and shipbuilding industries. Endress+Hauser supports its customers to optimize their process engineering procedures while taking into consideration reliability, safety, economic efficiency and environmental protection.

History

Founded in 1953 by Georg H Endress and Ludwig Hauser, Endress+Hauser has developed from being a specialist in level measurement to a provider of complete solutions for industrial measuring technology and automation, with expansion into new territories and markets.