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" Fives is set for a very good 2011, and should see increases in all its key performance indicators."
Frédéric Sanchez |
More than just a year of transition, 2010 ultimately proved to be a year of recovery
Just as it did in 2009, Fives ended 2010 with an acquisition. Following on from the Japanese company Decker - now Cinetic Decker Filling K.K. - it was the turn of Bronx International Inc. and its British subsidiary Bronx Taylor Wilson Ltd. to join the Group through a transaction finalized on November 30, 2010. Bronx International is an engineering company that leads the world in the design and supply of finishing equipment and mechanical processing for pipes and tubes. Among its customers are some of the world’s major steelmaking corporations and tube manufacturers, such as Vallourec and Baosteel. In 2010, Bronx, which has since become Fives Bronx, reported consolidated sales of approximately $80 million.
2010 also ended on another positive note: the Group order backlog rose during the year to once again break through the symbolic €1 billion barrier. With total orders in excess of €1.2 billion in 2010 and due to rise further this year, driven in particular by the fast-growing economies of the emerging markets, Fives can go into 2011 with renewed confidence.
As forecast, sales were significantly lower in 2010, at €1,049 million (down 18% on 2009) as a result of a smaller order backlog at the start of the year (€834 million, compared with €1,359 million a year earlier). The effects of this lower sales figure on consolidated operating profit were offset by the action taken in all Group subsidiaries to reduce costs and working capital requirements, whilst simultaneously increasing spending on commercial activity and Research & Development. In fact, consolidated operating profit, at €59.2 million, actually ended 5% up on 2009, also thanks to the sustained margins generated from contracts under implementation. With net profit of €33.5 million, up significantly (66%) on 2009, €214 million of cash and €223 million of equity, Fives is well placed to step up its pace of growth in the years to come.
The many major commercial successes achieved in 2010 reflect the competitiveness of the Group’s products and services. They also validate the strategy of recent years, prioritizing innovation and development as well as the Group’s growing presence in the world’s emerging economies.
Fives DMS secured a number of orders in China for rolling mills and production line mechanical equipment, not only with traditional customers like Baosteel and Tisco, but also with newcomers, such as Jisco and ESS. At the start of the year, Fives Stein began work on an order of strategic importance: two silicon steel annealing line process furnaces for Baosteel, thereby taking a foothold in a market of the future. Fives Solios was awarded a series of orders in Saudi Arabia for the future Ma’aden Aluminium plant, a joint venture between the state-owned Saudi Arabian Mining Co. and Alcoa. A number of landmark orders were received in the Automotive and Logistics Division, most notably from Ford and General Motors in the USA, Renault in Morocco, PSA Peugeot Citroën in Russia, MNG Cargo in Turkey and Yamato in Japan. In Energy, Fives Nordon once again won major contracts from EDF for the maintenance of its nuclear power plants in France.
2010 and the opening months of 2011 were also marked by a number of successful commissioning operations in all our business sectors, but especially in Steel, with the operational startup of several rolling mills and treatment lines in China, Korea, Brazil and India; in Aluminium, with the startup of installations supplied by Fives Solios for the Qatalum plant; and in Cement, with the acceptance of turnkey plants handed over by Fives FCB to QNCC in Qatar, Titan in Egypt, Vinaincon Corporation in Vietnam, and the successful startup of Holcim Apasco in Mexico.
More than just a year of transition, 2010 ultimately proved to be a year of recovery. Given its strong order backlog at year end 2010 together with the orders taken in the first quarter of this year, Fives is set for a very good 2011, and should see increases in all its key performance indicators.
In the longer term, the markets served by the Group will continue to be supported by growing urbanization and infrastructure needs, the quest for energy-saving and eco-friendly technical solutions, and the demographics of the emerging markets in which Fives now generates nearly 55% of its revenue. In each of its business lines, the Group possesses the expertise and the technologies needed to satisfy these underlying trends.
It is by remaining faithful to its roots and culture, by building on its strengths (cost control, risk management and project management expertise), by continuing to put innovation and international growth at the heart of its strategy and by attracting and integrating new talent to enhance Group diversity that Fives will embark on a new and profitable path to growth.
Frédéric Sanchez