Economic momentum slackens
The first three months of the reporting year saw the early signs of a slowdown in Europe, particularly in the highly indebted economies of Southern Europe. In North America, the positive momentum of the previous year continued unabated. China experienced a slowing of its dynamic growth trend, with the construction machinery sector suffering a distinct slump.
High sales growth
The Group benefitted from the solid order book at the beginning of the year, generating very high sales growth of 28% in the first quarter of 2012, with good overall capacity utilization. At the end of the first quarter, the order book was still well above the same period a year ago, which will continue to stretch capacity until mid-year. Year on year, order intake was at a lower level in all divisions except Kuhn Group and Bucher Specials. In the agricultural machinery segment, this trend was due to advanced ordering in the fourth quarter of 2011, while in glass forming machinery it was attributable to a major order worth CHF 40 million from India that was booked in the same period of last year. The other divisions were affected by the economic slowdown in Europe. The Swiss franc exchange rate against the Group's main currencies had a negative impact on sales growth of 5%. The number of employees rose significantly due to the majority interest acquired in Shandong Sanjin Glass Machinery Co., Ltd in China and the acquisition of Krause Corporation in the USA effected in the second quarter of the previous year.
Good conditions in agriculture
Kuhn Group generated a marked sales increase of 30%, benefitting from the favourable conditions still prevailing in the market, with good prices for agricultural products, and a full order book. Order intake was only slightly higher than the previous year's level because many dealers, influenced by the positive outlook, had placed advanced orders in the fourth quarter of 2011. The positive trend was sustained in the markets of Western and Eastern Europe as well as in North America. In the countries of Southern Europe, by contrast, the effects of the adverse economic situation were increasingly felt. Moreover, certain European countries introduced tighter conditions for the granting of credit.
In the first quarter of 2012, demand for municipal vehicles declined in Europe, particularly in France, Italy and Spain. The effects of the weak economic situation in the southern countries were clearly felt. Competitive pressure remained high and orders were strongly contested. Bucher Municipal was not spared the effects of this increasingly difficult business environment and the order intake year on year declined. However, thanks to the large order from Moscow, the division enjoyed very high capacity utilization and achieved a marked increase in sales amounting to 24%.
Flatter market trend
Bucher Hydraulics increased sales in the first quarter of 2012. This good performance was driven by projects with major customers as well as the high level of orders in hand at the beginning of the year. The decline in the order intake from existing customers was only partly offset by new projects. The flatter trend in Western Europe and parts of Asia contrasted with a welcome upswing in North America. Demand in the construction machinery and industrial hydraulics segments was particularly hard hit by the slowdown. By contrast, demand in the elevator hydraulics segment picked up again.
Stabilisation at a high level
Emhart Glass entered the first quarter with its order book at a high level and achieved a healthy increase in sales. Contributing to the positive trend were the major order from Hindustan National Glass & Industries Ltd in India, with machinery that was manufactured the previous year being delivered during the reporting period, and the positive trend in inspection machinery and spare parts. In Western Europe and America, the demand for new machinery was subdued during the first two months of the year, but recovered towards the end of the quarter, a turnaround that did not compensate for the weak performance during the first two months. As a result, there was a project-related decrease in the order intake compared with the same quarter last year when the figure was exceptionally high owing to the booking of CHF 40 million from the major order in India.
Positive market trends
Demand in the three independent businesses consolidated under Bucher Specials developed well. The market for winemaking equipment recovered significantly in the first quarter, while Bucher Unipektin's business with equipment for the production of fruit juice and instant products benefitted from the more favourable market environment. Demand for tractors and agricultural machinery at Bucher Landtechnik also showed a pleasing upward trend. Overall, Bucher Specials reported a marked increase in sales and order intake.
Outlook for 2012
With little change in the underlying macro-economic factors, the level of uncertainty remains high. Apart from the expected introduction of stringent economy measures in the European countries, the first signs of more restrictive lending practices in the financial markets are apparent. Positive stimuli can be expected from the agricultural machinery sector as well as from the North American and Asia markets. Bucher Industries' worldwide market presence and the strong positions held by its businesses in their respective markets make it possible to stick with the cautiously optimistic forecast for the current year. The Group continues to reckon with an improvement in sales, operating profit and profit for the year, though at lower growth rates than the previous year.
Simply great machines
Bucher Industries is a global technology group with leading market positions in speciality areas of mechanical and vehicle engineering. The company's operations include specialised agricultural machinery, municipal vehicles, hydraulic components, manufacturing equipment for the glass container industry and for production of wine, fruit juice and instant products. The group's shares are traded on the SIX Swiss Exchange (SIX: BUCN).