March 26, 2015

Vossloh restructuring hits 2014 results

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DESPITE recording a 1.8% increase in group sales in 2014 to €1.32bn, Vossloh reported a negative Ebit of €171.6m as the company's restructuring plan continues to impact its performance.

A comprehensive company status appraisal, which was initiated in summer 2014, began the transformation process, resulting in adjustments in goodwill, actualisation of projection calculations, a correction to an overly optimistic assessment of business development, and additional costs associated with restructuring the various business units, all of which contributed to the negative Ebit result.

However, this was within the €150-€180m range projected in summer 2014, and excluding all special items, the company achieved an adjusted Ebit of €30.6m, with an adjusted margin of 2.3%. Vossloh's order backlog at the end of 2014 was €1.75bn, which is up 2.6% on 2013.

Orders received during the year totalled €1.37bn, which was down on 2013's partly due to the impact of an order in excess of €250m. Rail infrastructure reported sales of €868.9bn, down from €875.5m in 2013, with rail fastenings reporting a 12% fall following a large number of orders in Asia in 2013. In contrast switch systems increased by 6.4% to €473.1m, while Rail Services increased sales by 22.3% to €69.6m. Rail Services' performance was also a major contributor to the company's Transportation division reporting sales of €455m.

Vossloh's Supervisory Board confirmed in December 2014 that it plans to sell its Transportation division, including its locomotive and LRV business by 2017, either as a complete unit or in parts to focus on its track products with its infrastructure division split into three new business units: core components, customised modules, and lifecycle solutions, which includes the current Rail Services division. The Transportation unit will initially remain as a fourth division.

"We took forward-looking, far-reaching decisions in 2014," says Dr Hans Schabert, chairman of the executive board. "In 2015, we are working intensively on achieving operational improvements. At the same time, we are also implementing our new strategy. Earnings quality is therefore increasing gradually. We strive for the goal to complete Vossloh's transformation by 2017."

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