To our shareholders
An eventful and turbulent fiscal 2008 is now behind us. Jungheinrich stood its ground successfully in a difficult economic environment. Although the world economy started losing substantial momentum at the beginning of last year, the company displayed very encouraging development in the first nine months. Jungheinrich closed the 2008 reporting period with the second-best earnings in its corporate history as well as record net sales.
The severe intensification of the banking and financial crisis that began in September accelerated the global economic downturn. Business outlooks clouded, and the situation was compounded by raw material prices, which were still high at the time. The economic climate worsened considerably, making many companies reluctant to invest.
As expected, the crisis hit the intralogistics sector with a time lag. Following growth in the first three quarters of 2008, the world market for material handling equipment shrank by some 40 per cent in the fourth quarter, with certain regions and several products reporting even bigger contractions. Jungheinrich was unable to decouple itself from this negative development. We anticipate that the sector will see its market decline significantly both in Europe and worldwide. Our company is economically sound despite the difficult phase currently being experienced by the market and well equipped for the future, thanks to its motivated team, outstanding products and lastingly robust shareholder structure.
We have adapted to the current economic scenario and established an extensive crisis-management action plan: For instance, construction work on the new warehousing and system truck manufacturing plant in Degernpoint near Moosburg (Bavaria) has been postponed for the time being, and production across all factories has been adjusted to the drop in demand. This was followed by a series of measures taken to retain permanent skilled labour, including a reduction of the temporary workforce and work time account balances and the non-extension of temporary work contracts. To this end, short-time work was introduced at the Norderstedt, Lüneburg and Moosburg plants and preparations were made for this at corporate headquarters. Numerous comprehensive cost and structural projects have been initiated, designed to achieve additional positive effects. Thanks to this huge effort, we are confident, although we cannot decouple ourselves from the general economic trend.
We anticipate that the global market volume will start growing again in the long term, going hand in hand with a rise in incoming orders for our company. We are well prepared for this as well, thanks to our new plant in Landsberg in the vicinity of Halle (Saxony-Anhalt), which is scheduled to begin production in the middle of 2009. Furthermore, we will resume work on our Degernpoint site as soon as the economy picks up again.
Once again, the permanent expansion of our international market and service footprint, which we continue to implement especially in stormy times, will prove to be one of the major keys to profitable growth. Last but not least, it is our premium-class product range that will contribute to the company’s success over the long term. This was evidenced by the positive feedback received from our customers when we again showcased a host of innovations in 2008 at CeMAT, the world’s largest trade show for our sector.
Our customers, business partners and our shareholders can rely on this level of performance. We feel committed to them and thank them for their trust. We would also like to express our gratitude to our staff for their commitment and willingness to overcome the current crisis and successfully take on the challenges ahead of us as a team.
Hamburg, March 26, 2009
Hans-Georg Frey
Chairman of the Board of Management