Hans-Georg Frey

Jungheinrich AG has ended its 2008 financial year (FY) with record net sales and the second-best earnings in its corporate history.

However, the German forklift manufacturer is expecting a "significant" reduction in the market and business volume for 2009.

In FY 2008, the group's net sales increased about 7% from the previous year's EUR2.001 billion (USD2.657 billion) to EUR2.145 billion (USD2.848 billion). Domestic business grew 10%, while foreign sales grew by 6%. As a result, Jungheinrich's foreign business to domestic business ratio dropped 1% to 74%.

All divisions contributed to net sales growth but the largest increase was contributed by the new truck business area, which recorded a 9% jump. This is followed by the used and short-term hire equipment business areas, growing at a rate of 7%.

Short-term hire activities gained 8%, contributing to the rise in net sales. The after-sales service business area grew 4%.

Incoming orders climbed 1% to EUR2.145 billion (USD2.848 billion) compared to the previous year's EUR2.120 billion (USD2.814 billion). However, by 31 December 2008, the value of orders on hand from new truck business had dropped to EUR242 million (USD321 million) compared to the previous year's EUR334 million (USD443 million).

"Despite the difficult business environment in the second half of 2008, Jungheinrich managed to close the fiscal year with its second-highest earnings after the record level achieved in 2007," Hans-Georg Frey, board of management chairman, said at an annual press conference in Hamburg last week.

Earnings before interest and taxes decreased 13% to EUR122 million (USD162 million) compared to the previous year's EUR140 million (USD186 million). Net income was EUR77 million (USD102 million), compared to the previous year's EUR82 million (USD109 million).

Jungheinrich invested in R&D to strengthen the company's innovative power. Capital expenditure totalled EUR39 million (USD52 million) compared to the prior year's EUR41 million (USD54 million).

"We work hard to create new products and services even in times of crisis, in order to win customers in the future," Frey says.

The group enlarged its workforce in FY2008, focusing on sales and after-sales service. At the end of 2008, the group employed 10,784 people compared to 10,178 the previous year. About 54% or 5,834 people work abroad.

According to Jungheinrich, the global materials handling market declined by about 40% in the fourth quarter, a trend that continued in the first two months of 2009.

"The market was cut in half compared to the preceding year. The trend displayed the sector is thus in line with the development of the mechanical engineering industry as a whole, which strongly depends on exports and is declining by between 30% and 50%," a group statement says.

In the first two months of 2009, the value of incoming orders was down about 31% to EUR254 million (USD337 million) compared to the previous year's EUR368 million (USD489 million). By the end of February, net sales amounted to EUR249 million (USD331 million), 19% less than the previous year's EUR306 million (USD407 million).

Frey says the group prepared for the economic downturn early by compiling a comprehensive crisis-management package.

Construction work on the new warehousing and system truck manufacturing plant in Degernpoint near Moosburg has been postponed and production across all factories was rapidly adapted to declining demand. About 240 temporary staff were cut and 80 temporary employment contracts were not extended. Shorter work shifts were introduced to 2,000 employees at the Norderstedt and Moosburg plants on 1 March.

About 200 members of Jungheinrich Group's management board and executives have accepted a voluntary pay cut to demonstrate their solidarity with staff affected by shorter work shifts.

Frey says Jungheinrich is braced for a significant reduction in market and business volume in 2009 and that redundancies in certain group units hit hard by the crisis will be "unavoidable".

The company expects a decrease in earnings but anticipates avoiding posting negative earnings for FY 2009.