Business trend

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Business trend—key figures

		2008	2007
Incoming orders	million €	2,145	2,120
Production	units	80,700	82,400
Orders on hand Dec. 31	million €	242	334
Net sales	million €	2,145	2,001

Despite the adverse underlying conditions in the period being reviewed, the Jungheinrich Group proved its mettle and stayed its course for growth: It posted another gain in business volume. However, the Jungheinrich Group’s business trend was less favourable than a year before, since the material handling equipment industry was hard hit by the economic downturn in the fourth quarter of 2008. The first three quarters of market growth were followed by a substantial decline in the fourth quarter, resulting in a massive decrease for the year as a whole, from which the Jungheinrich Group was unable to decouple itself. Incoming orders from new truck business based on units was down 8 per cent to 77 thousand trucks throughout the Group (prior year: 84 thousand units). Nevertheless, the value of incoming orders, including all business areas, was 1 per cent up year on year to €2,145 million (prior year: €2,120 million), but fell short of the medium single-digit per cent growth rate forecast in the preceding year. In 2008, the Group’s production output declined by 2 per cent to just under 81 thousand trucks (prior year: over 82 thousand units). The first set of measures was implemented to adapt production to lower demand at all manufacturing sites in early reaction to the downward market and order trend (e.g. reduction of temporary personnel and work time account balances). By December 31, 2008, the value of orders on hand in new truck business, which has a high share of logistic system contracts including a substantial number of third-party products, had fallen to €242 million (prior year: €334 million). Accordingly, the order reach decreased to a good two months, compared to nearly four months in the preceding year.

Net sales by region

in million €	2008	2007
Germany	557	505
Rest of Europe	1,467	1,372
Other countries	121	124
Total	2,145	2,001

Consolidated net sales in the reporting year amounted to €2,145 million, achieving a new record and surpassing the €2,001 million recorded a year earlier by 7 per cent. The originally anticipated rise in net sales by a mid-range single-digit percentage was thus exceeded. Domestic business posted a year-on-year gain of 10 per cent, while foreign sales advanced less, growing by 6 per cent. As a result, the foreign ratio declined to 74 per cent (prior year: 75 per cent). Net sales generated outside Europe were down a marginal 2 per cent due to the drop in sales in the USA (prior year: €124 million). As in the previous year, this level of sales accounts for a 6 per cent share of total net sales.

Net sales by business area

in million €	2008	2007
New truck business	1,209	1,110
Income from short-term hire, sale of used equipment	332	310
After-sales services	604	581
Total	2,145	2,001

All the business areas contributed to the uptick in net sales. The largest gain was allocable to new truck business, which posted an increase of 9 per cent, followed by the used and short-term hire equipment operations, achieving a rise of 7 per cent. Posting a gain of 8 per cent, short-term hire activities made a somewhat stronger contribution to the rise in net sales. Net sales from after-sales services, which benefited from the continued increase in Jungheinrich truck market penetration above all in Europe, grew 4 per cent. Their share in total net sales declined slightly due to the strong rise in new truck business, slipping to 28 per cent (prior year: 29 per cent).

Cost structure (according to the income statement)

in million €	2008	2007
Cost of sales	1,552	1,421
Selling expenses	399	369
Research and development costs	42	40
General administrative expenses	28	29

The cost of sales was up 9 per cent to €1,552 million (prior year: €1,421 million), slightly outpacing consolidated net sales. Burdens arising from high material prices, with steel and copper products leading the way, as well as for plastics, were offset to a certain degree by the slight improvement in the company’s cost structure. Furthermore, the share of consolidated net sales accounted for by the cost of sales advanced to 72 per cent (prior year: 71 per cent), driven by the strong growth in sales generated in the lower-margin new truck business. Selling expenses also posted a slightly disproportionate increase, climbing 8 per cent to €399 million (prior year: €369 million). Their portion of Group net sales amounted to 19 per cent.

As shown in the following table, at €39 million, the Group‘s total research and development costs were below the previous year’s level (€41 million). The capitalization ratio was down to 14.1 per cent (prior year: 24.2 per cent). As a result, research and development costs according to the income statement rose by over €2 million to €42 million (prior year: €40 million).

Research and development costs

in million €	2008	2007
Total research and development costs	39.0	40.9
thereof capitalized development costs	5.5	9.9
Capitalization ratio	14.1 %	24.2 %
Depreciation of capitalized development costs	8.6	8.9
Research and development costs according to the income statement	42.1	39.9

General administrative expenses posted a marginal decline, dropping by 3 per cent to €28 million (prior year: €29 million).