In 2009, it will be vital to seek out growth wherever it can be found and to seize all opportunities for advancement.
Overall, the Group achieved an exceptional performance in 2008, ending the year with sales of €1,352 million and an operating profit of €74.6 million, representing significant growth of 19% and 16% respectively compared with the previous year.
The quality of our operational and financial performance demonstrates the resilience of our development model (based on a decentralized organizational model, combined with strong internal controls, a geographic presence in over 30 countries through some 60 business sites and a diverse portfolio of activities), against an economic and financial background that has become increasingly difficult since the middle of 2008. Fives’ operating profit grew by 16% in
one year (18% at constant scope and exchange rates), thanks to both the quality of orders taken and their masterly execution. Shareholders’ equity increased once again, totaling €182 million, and the Group’s net cash, at €235 million, maintained a very strong position.
After an exceptional first half-year in 2008, during which the Group secured nearly 1 billion euros in orders, the initial effects of the crisis became apparent from September onwards, with orders that were either delayed or cancelled (totaling nearly €137 million) as well as the postponement sine die of projects we had apparently secured (amounting to several hundred million euros). In total, Group order intake once again reached the high level of €1.3 billion in 2008 (our second best performance ever), although 14% lower than the record high of €1.5 billion attained in 2007.
We must face the facts: commercially in 2009, the Group will not be spared the sharp slowdown in the global economy, and this reality underpinned the decisions made starting in September 2008, to reduce external expenses, control internal costs and take a strongly selective approach in limiting investments (other than commercial or research and development investments).
With an opening order backlog of nearly €1.4 billion, providing firm activity and profit prospects for the Group, although with contrasting developments according to business line, we can embark on the current year with confidence. To date, we lack visibility for 2010 in view of the major uncertainties regarding the pace of replenishment of our order book.
However, the Group has every reason to approach the medium to long term with confidence, since Fives boasts strengths that will indisputably allow it to emerge from the crisis with greater strength than at its outset. Thanks to the efforts undertaken over the past few years, the Group has established a healthy and flexible cost structure, and our technical offer has never had such a large range, supported as it has been by a research and development budget that tripled in the last three years and will continue to grow. We have also stepped up our commercial presence abroad, in markets that are expected to better weather the financial crisis, such as Brazil, China and India. We have enhanced our portfolio of activities through various successful acquisitions, such as Landis in 2005, Sandvik Sorting in 2007 and The North American Manufacturing Company, a global leader in the fi eld of combustion systems and high-temperature burners in 2008. More importantly, Fives’ personnel include talented men and women whose experience and expertise are the Group’s primary asset.
Finally, the long-term growth of our business lines will be driven by two trends that will prove favorable to the Group, namely growing urbanization with the need for related infrastructure, and the increasing awareness of environmental and energy concerns across the globe. In the increasingly weak economic climate of 2009, it will be vital, now more than ever, to seek out growth wherever it can be found and to seize all opportunities for advancement, such as those offered by the CSR (Corporate Social Responsibility) initiative established by the Group in 2008. This must go hand-in-hand with the close monitoring of risks, costs and our generation of net cash.
Our management model, which favors initiative and responsibility, is an additional strength enabling us, once the impact of the economic slowdown has been factored in, to pursue growth at a pace aligned with our medium-and longterm objectives.