Grammer AG Business report FY2008

Business Highlights

Financial Overview (in million EUR)
  FY2008 FY2007 Rate of Change(%) Factors
Revenue 1,007.0 998.1 0.9 1)
EBIT 32.0 32.1 (0.3)
Automotive segment
Revenue 637.6 657.7 (3.1) 2)
EBIT 3.1 10.7 (71.0)

-Product-related difficulties in US production at the start of the year and additional restructuring-related costs meant considerably higher costs in the division. The effects of the financial crisis also triggered capacity utilization problems and additional cost disadvantages from the middle of the third quarter onward.

Automotive segment
-The Company experienced declining order volumes in the Automotive division during FY2008. Unfavorable effects arose from model changeovers and the initial impacts of the financial crisis from the middle of the third quarter. Although the Company was able to win additional development orders for center consoles from German automakers and thus continues the expansion of its product base, this will not result in a noticeable improvement to revenue until the following years.

-Another positive aspect was the Company's involvement in Asia, as its Chinese production sites in Tianjin and Changchun developed according to plan. Moreover, set up of the site in Shanghai and local development of a center console for the Epsilon platform of General Motors marked another milestone in the Asian market.

-For long-term strengthening of the earnings situation in this division, the Company implemented additional measures to improve profitability and cost efficiency. In addition to initiatives aimed at enhancing processes and structures, these also involve optimizing the worldwide production network. Expansion of its plant in Serbia and steps to increase productivity continued as planned, but were overshadowed in the fourth quarter by the substantial decline in sales.

-The positive growth effects from the first half were undermined in the fourth quarter by the moderate demand for new cars around the world. Additional burdens arose from the rapid appreciation of various Eastern European currencies. In conjunction with rising wage and infrastructure costs, this made some of its production sites significantly more expensive to operate. The considerable rise in raw material prices in the first half and strong volatility in currencies and commodity markets added to the difficulties.

-The Company announced plans to cut up to 700 jobs. In the meantime, a total of 630 jobs will be reduced at the international sites within the first step of its restructuring program. Moreover, in a second step, the Company intends to cut an additional 150 jobs. (From a press release on Feb. 8, 2008)


R&D Expenditure (in million EUR)
  FY2008 FY2007 FY2006
Overall 39.2 50.2 46.1

-In fiscal year 2008, the Company registered a number of patents in the Automotive division that contribute to the safety of car passengers. The emphasis is on further development of active safety features, from the active head restraints system to active application of X-adjustment, as well as sensor-based triggering.

Investment Activities

Capital Expenditure (in million EUR)
  FY2008 FY2007 FY2006
Automotive 24.9 14.9 16.6
Overall 39.9 34.6 32.1

-In the Automotive division, the Company invested EUR 24.9 million, mainly on new production facilities for pending customer projects and expansion of the sites in Shanghai, Serbia and Schmolln, which will contribute to optimizing its cost structure as low-cost locations for sewing operations featuring integrated production with a high degree of automation. Moreover, set-up was begun on the production facilities for integrated center console production.