In the wake of the divestment of its Dynamit Nobel chemicals businesses, mg technologies of Germany has reported a modest increase in sales for the first half of the year, helped by a good performance from its GEA subsidiary.
And despite a lacklustre showing by its Industrial Plant Engineering division, mg trimmed its pretax losses to €39.4 million, well down on the near €100 million loss in the same period of 2003, on sales up 2 per cent to €1.87 billion.
However, net losses expanded to €151 million from €12.1 million, taking into account the costs associated with its restructuring programme and divestments.
mg now says it expects its remaining operations to generate sales of around €4.2 billion this year, with stable pre-tax earnings in the mid tens of millions, including gains on disposals.
Processing machinery company GEA is the powerhouse of the group, and fulfilled its role with a more than 5 per cent hikes in revenues to €1.3 billion and pretax profits up 7 per cent to €73.7 million.
Industrial Plant Engineering actually saw its sales decline marginally over the first half of 2003 to €476.3 million, although it improved its pretax earnings by €10.0 million to report a loss of €20.2 million.
The Zimmer subdivision raised its pretax earnings by €3.8 million to €7.3 million, while Lurgi Lentjes improved profits by €7.2 million to report a loss of €4.9 million. Zimmer makes plants for the production of polymers and synthetic fibres, while Lurgi Lentjes specialises on environmental and energy-related businesses.
These positive developments were in contrast to Lurgi, which specializes in petrochemical and life sciences plants and which once again failed to meet its targets. Losses of €22.6 million at mid-year, 4 per cent higher than in the same period of 2003 - were caused by delays in new orders from last year and the resultant low capacity utilization, said the firm.
But mg is convinced that all its remaining divisions are on the right track. In the first half of the year, it said, the volume of new orders grew by more than 20 per cent to €2.2 billion.
The volume of new plant engineering orders in the first half of 2004 came to €729.1 million, a rise of roughly 59 per cent on the same period oflast year, and Lurgi's recent performance is particularly encouraging, with orders up 115 per cent to €198.8 million.
"In the first half of 2004, mg implemented the restructuring it began last year and continued to perform well in its core businesses. Our targets for 2004 and 2005 remain unchanged," said Udo Stark, chairman of mg's executive board.
He noted that Zimmer should 'easily' improve on the pretax earnings it reported last year, Lurgi will probably not break even until the fourth quarter, and Lurgi Lentjes should continue to turn its business around in the second half of the year.
Overall, "the target for our plant engineering business is to break even, said Stark.
He also hinted that the string of divestments at the firm - which include the Solvadis chemical distribution and Standardkessel boiler plant businesses as well as Dynamit Nobel - could be followed by acquisitions in its core areas. The company is earmarking up to €3 billion for additions to the group.