Results of operations

In the 2016 financial year, the Wilo Group increased its consolidated net sales by 0.8 percent year on year. At the same time, the depreciation of numerous currencies had a significant negative impact on the development of net sales. Adjusted for exchange rate effects, net sales were improved by 3.9 percent. Earnings before interest and taxes (EBIT) fell by EUR 14.1 million to EUR 107.1 million. The ratio of EBIT to net sales (EBIT margin) declined from 9.2 percent in the previous year to 8.1 percent.

The development of earnings is presented below.


Results of operations

EUR million 2016 2015 Change %
Net sales 1,327.1 1,317.1 0.8
Cost of sales 828.0 -815.1 1.6
Gross profit
Selling and administrative expenses
499.1
355.0
502.0
-341.0
-0.6
4.1
Research and non-capitalised development costs -47.8 -43.1 10.9
Other operating income 10.8 3.3 > 100

Earnings before interest and taxes (EBIT)

Net finance costs and net income from
investments carried at equity

107.1

-4.1

121.2

-8.1

-11.6

49.4

Income taxes -27.0 -32.6 -17.2

Consolidated net income

 

EBIT as a % of net sales (EBIT margin)

76.0

 

8.1%

80.5

 

9.2%

-5.6

 

 

Earnings per ordinary share (EUR) 7.88 8.35  

The gross margin, i.e. the ratio of gross profit to net sales, declined from 38.1 percent in the previous year to 37.6 percent in 2016. This was due to a change in the product sales mix with a larger share of low-margin products. Firstly, the lower-margin OEM business grew disproportionately strongly. Secondly, business activity in the Water Management market segment declined in the higher-margin regions, while growth was generated overwhelmingly in countries with lower margins. Intensified price competition in some markets also contributed to the reduction in the gross margin.

Selling and administrative expenses climbed by 4.1 percent year on year to EUR 355.0 million. The Executive Board anticipated the in some cases substantial volatility on the currency markets, the increased geopolitical risks and the resulting weaker development of net sales and took suitable measures at an early stage. For example, planned cost increases were adjusted in line with actual business development. Certain growth-oriented investments and projects to strengthen the Wilo Group’s future prospects for the long term were nevertheless initiated or continued as planned. This especially relates to projects in connection with the digital transformation, the strategic location development in Dortmund and corporate acquisitions. 

Research and development plays a central role at Wilo. Total spending on research and development, i.e. all research and development costs including capitalised development costs, was increased by 4.1 percent to EUR 65.0 million in the 2016 financial year. At 4.9 percent of net sales (previous year: 4.7 percent), it remains very high. At EUR 47.8 million, research and non-capitalised development costs exceeded the prior-year figure of EUR 43.1 million by a considerable 10.9 percent.

Other operating income increased by EUR 7.4 million year on year to EUR 10.8 million. This improvement resulted primarily from a EUR 6.8 million increase in net foreign-currency income from operating activities. Net foreign-currency income includes, firstly, realised gains and losses from exchange rate changes between the inception and settlement of intragroup and external foreign-currency receivables and liabilities and, secondly, as yet unrealised gains resulting from the measurement of intragroup and external foreign-currency receivables and liabilities at the exchange rate as at the end of the reporting period. In addition, the income from the sale of the old production site in China of EUR 2.2 million is included in other operating income.

The net finance costs of the Wilo Group (including net income from investments carried at equity) improved significantly by EUR 4.0 million, from EUR 8.1 million in the previous year to EUR 4.1 million in the year under review. This was due firstly to the EUR 2.4 million improvement in net interest costs. For example, interest expenses fell by EUR 2.0 million. This was primarily attributable to the fact that a senior note of USD 40.0 million was repaid on schedule in March 2016. Secondly, interest income from cash investment was increased by EUR 0.4 million. Adjusted for the prior-year hedge accounting effects from the senior note redeemed in the year under review and the corresponding cross-currency interest rate swap, net income from the utilisation and remeasurement of derivative financial instruments improved by EUR 2.1 million.

Consolidated net income declined by a total of 5.6 percent or EUR 4.5 million to EUR 76.0 million after taxes. Accordingly, earnings per ordinary share also fell from EUR 8.35 in the previous year to EUR 7.88. The return on sales, which describes the ratio of consolidated net income to net sales, decreased from 6.1 percent in the previous year to 5.7 percent in the 2016 financial year.

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WILO SE
Corporate Communications
Nortkirchenstraße 100
44263 Dortmund
T +49 231 4102-0
F +49 231 4102-7363

Contact

WILO SE
Corporate Communications
Nortkirchenstraße 100
44263 Dortmund
T +49 231 4102-0
F +49 231 4102-7363