We focused our business activities on three global and two regional focus markets in 2015. We consider the industrial sector, the water and waste water industry and energy supply to be the key global sales markets. Our regional focus markets are mining in the Americas and construction / building services in Europe.

To serve these markets quickly and cost-effectively, we have embarked on the task of making our global production structures more efficient. This involves closing some of the smaller plants in Europe. At the same time, however, we have invested in a mechatronics centre in Turkey. By setting up a new central spare parts warehouse for standard products in Europe, and by creating eleven additional service centres, we have also extended our logistics base, enabling us to support our customers across the world even more effectively as they make long-term use of our products and service. With this in mind, we contact users of our pumps and valves via our Installed Base sales channel.

At the same time, we used new sales activities and logistics structures to boost sales of our standard products. In this way we were able to offset some of the decline in orders resulting from the fierce competition in the project business against the background of the market situation described above.

It should be borne in mind in the following explanations that the prior-year figures presented include the effects resulting from the adjustment under IAS 8. For more information, see the Notes to the Consolidated Financial Statements.


Orders received by the KSB Group totalled € 2,261.2 million, which was € 60.0 million or 2.6 % down on the previous year. Large orders from Asia expected during the final months of 2015 were delayed, and a pump order placed for three Egyptian power stations in November was not able to make up the difference. Consequently, the planned “significant increase” in order intake did not materialise. In addition to projects being postponed by customers, the intense price competition was a contributory factor in this regard. The latter made some contracts, which were only awarded by potential customers after protracted negotiations with several providers, unattractive to KSB from a profitability perspective.

Clear regional differences emerged in relation to new orders in 2015. Companies in Asia (+ 9.6 %) and the Middle East/Africa (+ 22.3 %) recorded increases in purchase order levels. Alongside a strong increase in orders from the water and waste water sectors, orders placed by the petrochemical industry in the Middle East and the Asian energy sector contributed to this improvement.

In contrast, order intake of our companies in Europe decreased (– 7.0 %), with a major factor being the poor business situation of energy utility companies. One of the companies hit by the fall in demand was KSB AG, whose order intake fell by 8.0 % to € 780.6 million. New orders also dipped in the Americas and Oceania (– 5.8 %), with a reluctance to invest in the mining sector proving particularly crucial.


A 4.7 % decline in orders received for pumps, totalling € 1,452.4 million, can be attributed to the lull experienced in the mining sector, the demand situation in the petrochemicals sector and the change in the basic parameters of European energy supply. We had expected to see a significant increase in order intake.

In light of the situation on the commodity markets, mine operators frequently backed away from ordering new plant components, a reticence that was also felt by GIW Industries, Inc., which predominantly produces and sells pumps for transporting solids. In both Asia and South America, reduced demand for pumps for use in petrochemical plants had an adverse effect on order levels. In Brazil, the lower volume of incoming orders was attributable to the difficulties faced by the country’s major oil company, among other factors. The decrease in orders for power plant pumps can be explained by the situation on the European market, with some energy utilities withdrawing from the fossil-fuelled power plant business.

We recorded strong order intake growth for our pumps in the water and waste water sector. The companies in the Regions Asia and Middle East/Africa in particular expanded their business substantially. Based on orders received to date, they are set to be involved in both new projects and infrastructure modernisation measures. Business with industrial customers also progressed well, with not least the KSB companies in Europe benefiting from this positive development.


The order intake for valves was € 368.0 million, down 9.7 % on the previous year. In the report on expected developments we had assumed that there would be significant growth in orders. The lack of growth is mainly due to the reduced requirements of energy suppliers in Europe and also to the fact that suppliers of equipment for transport ships in East Asia needed fewer butterfly valves than in earlier years. As with pumps, business with valves used in the petrochemicals sector was adversely affected by our large Brazilian customer halting any investment.

Good success was achieved selling valves to industry in general, particularly in Europe and the United Arab Emirates. This and other increases in order intake in individual sales markets were too low overall, however, to completely offset the decline recorded in relation to power plant and ship valves.


Our Service segment enjoyed very strong growth in 2015. Orders worth € 440.8 million, a year-on-year increase of 13.1 %, came in for our range of services, including retrofit measures. This improvement exceeded our expectation of just moderate growth in this segment. Service orders were placed for pumps and other rotating equipment, as well as for valves, and we also accepted orders for products from other manufacturers.

We recorded considerable increases across nearly all markets. Customers from industry and the energy sector in particular made greater use of our service offering than in 2014, with considerably more orders also being received for work on transport equipment and on water and waste water systems. Not least the setting-up of new service centres in ten countries was a contributory factor.

Our sales channel used to target existing customers, which was expanded further in 2015, also had a positive impact on the sale of services and the related spare parts in many areas. Service orders rose strongly in all four Regions – Europe, Middle East/Africa, Asia and Americas/Oceania. Our efficiency analysis service also played a key role in this regard, enabling us to show customers ways of making savings in their plants, as well as offering possible ways of cutting electricity costs.


Consolidated sales revenue rose as expected during the reporting year, up by € 153.1 million to € 2,334.8 million, which equates to an increase of 7.0 %. This positive divergence from the development in order intake can be attributed to large-scale orders placed in earlier years that we completed on schedule in 2015. This resulted in sales revenue growth in the Pumps and Valves segments, just as the orders received during the year under review had a similar effect in the Service ­segment.

Growth in sales revenue in 2015

Sales revenue growth was strongest in the Regions Asia (+ 16.9 %) and Middle East/Africa (+ 12.0 %), but the companies in Americas/Oceania (+ 8.7 %) and Europe (+ 3.4 %) also improved. Performance in our home market of Europe was slightly impeded by the 0.7 % fall in sales revenue ­recorded by KSB AG (in accordance with the HGB German Commercial Code), down to € 809.5 million.


In our strongest segment, Pumps, sales revenue grew in line with our forecast, increasing by 5.3 % to € 1,514.0 million. It was mainly performance outside of our home market of Europe that contributed to this growth. Our companies in East and South-East Asia in particular boosted pump sales. This similarly applies to the companies in North America, with GIW Industries, Inc. fulfilling major contracts placed by customers in Canada for the supply of slurry pumps.

Sales revenue by segment


In the Valves segment, we improved sales revenue by 1.5 % to € 384.6 million. This moderate growth was driven by the development of sales in Asia, where above all our companies in China, India and South Korea invoiced valve orders on a large scale. In the Regions Europe, Americas/Oceania and Middle East/Africa, the sales revenue volume was, however, lower than in 2014. Overall, in our forecast, we predicted that this product group would see a significant increase in sales revenue.


Our strongest sales revenue growth in percentage terms came from the Service segment, in which we initially only anticipated a moderate rise. In fact, we were able to boost sales revenue by 10.6 % to € 413.6 million. Above all, the expansion of our service business in Europe had a very positive impact on volume. However, it was our companies in Asia and the Americas that recorded the strongest growth rates in percentage terms. The companies in North America in particular were able to record far more service contracts than in the previous year.


The KSB Group achieved earnings before interest and taxes (EBIT), excluding the effects from measuring construction contracts in accordance with IAS 11, of € 101.9 million (previous year: € 102.0 million). The Pumps segment contributed an EBIT figure of € 55.4 million (previous year: € 56.3 million). We were therefore unable to realise our forecast in the previous year’s report (considerable increase) and instead had to accept a slight decline. EBIT fell strongly in the Valves segment, reaching € 10.3 million (previous year: € 16.9 million). We therefore did not achieve the marked increase that was forecast. EBIT for the Service segment rose considerably, as planned, reaching € 36.2 million (previous year: € 28.8 million). The reconciliation effect from the measurement of construction contracts under IAS 11 to EBIT changed by + € 16.1 million year on year.


The above-mentioned increase in sales revenue is also reflected in a higher total output of operations, totalling € 2,350.3 million compared with € 2,197.7 million in the previous year. Work in progress and inventories of finished goods increased by € 10.7 million, and was thus € 1.3 million lower than in the previous year. In contrast, other work performed and capitalised rose slightly.


Other income grew from € 36.3 million to € 50.0 million, partly due to higher income from the reversal of provisions no longer required and also from the reversal of impairment losses on receivables.

The cost of materials rose by 10.4 % and thus at a higher rate than total output of operations. In percentage terms, the cost of materials (€ 979.5 million) increased from 40.4 % in the previous year to 41.7 % in the year under review. As a result of the continued pressure on prices in our pumps and valves business, we were not able to pass on material price effects to our customers in full.

Staff costs increased by 4.4 % to € 819.3 million. In relation to total output of operations, however, this represented a decrease of 0.8 percentage points. Key factors were the collectively agreed salary increases on the one hand and a lower number of employees on the other. Compared with 2014, the number of employees fell by 113, taking the total figure at the end of the reporting year to 16,196. The German companies KSB AG and KSB Service GmbH, Frankenthal, recorded a significant decrease in staff numbers, down by 172 as a result of measures that we have introduced to adapt to new market conditions. In contrast, the size of the French workforce increased, mainly due to the integration of a service unit (126 employees). Consequently, the KSB Group employed on average 138 fewer people than in the previous year. Based on the higher total output of operations and simultaneous decrease in the number of employees, the average output per employee improved from € 134 thousand in the previous financial year to € 144 thousand.

The ratio of other expenses to total output of operations fell from 17.9 % to 17.5 %. In absolute terms, they rose from € 393.0 million to € 411.5 million, however. Higher sales expenses and more third-party services accounted for this change.

The financial income/expense increased by € 6.3 million. This is above all attributable to higher income from investments which we accounted for using the equity method (+ € 2.8 million), and to a reduction of € 2.3 million in financial expenses.


The KSB Group generated earnings before income taxes (EBT) of € 93.4 million, compared with € 72.8 million in 2014. This meant that we lived up to our prior-year forecast, according to which we were targeting a significant improvement in EBT and a value approaching the three-digit million mark. Correspondingly, the return on sales before tax increased from 3.3 % in the previous year to 4.0 % and is therefore at the lower end of the forecast range. The income tax rate rose, primarily due to prior-period taxes, but also due to more frequent non-tax-effective impairments on goodwill. The rate was 44.1 %, compared with 36.4 % in 2014. As a result, earnings after income taxes, which totalled € 52.2 million (previous year: € 46.3 million) and thus grew by 12.7 %, rose less markedly than earnings before income taxes (EBT) (28.2 %).

Consolidated earnings (EBT) in 2015

Earnings attributable to non-controlling interests were up from € 7.6 million to € 12.9 million. This can be attributed to improved contributions to earnings from our Asian companies. Relative to earnings after income taxes, there was therefore a change from 16.4 % to 24.7 %.

The earnings attributable to shareholders of KSB AG (€ 39.3 million) were € 0.6 million higher than in the previous year (€ 38.7 million).

Earnings per ordinary share were € 22.30, compared with € 21.97 in the previous year, and € 22.56 per preference share, compared with € 22.23 in 2014.

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