Grundfos strengthens its market position, but profitability must be improved - Seite 2

For some years, Grundfos has worked hard on strengthening its position in the United States. In 2014, a growth equivalent to 11 per cent in local currency has been reached, which, like the achieved growth rates in South America, was above expectations.  The Chinese market grew with approximately 9 per cent in 2014. The establishing of sales offices in Central and Western China shows positive results. During the last six months of 2014, the growth, however, decreased due to the slowdown in the Chinese property market and it will be a challenge maintaining the growth rates in the years to come.

Economic independence is one of Grundfos' fundamental values. The solidity continues to be strong, and has risen to 68.1 per cent - from 67.0 per cent in 2013. The Group holds interest-bearing deposits of DKK 2.7 bn.

The profitability has declined during the last few years, and unfortunately the trend continued in 2014. The result before tax amounted to DKK 881 mill. - compared to DKK 1,475 mill. in 2013. In particular lower margins due to intensified competition, unfavourable currencies developments and an unfavourable geographical sales mix affected the profitability negatively. In addition, a further increase in fixed costs worsened the operating profit. Finally, the result before tax has been negatively influenced by one-off restructuring costs as well as write-downs totalling DKK 224 mill.
Irrespective of this, the profitability is not satisfactory.

The trend from the previous years' meant that the Board of Directors found it necessary to make changes to Group Management and the business strategy. Mads Nipper joined the company as new Group President on 1 August 2014, and a new Group Management has been put together, consisting of seasoned executives from within the company and new people recruited externally. They have implemented a number of initiatives to improve the Group's profitability while at the same time securing financial transparency, greater decision-making-power and a faster pace in implementing decisions. A new strategy will make sure that the organisation's full potential is utilized.