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KHD Humboldt Wedag reports on Q3 results

World Cement,

After a difficult year, KHD is reporting signs of improvement at the end of Q3.

For the three months ending 30 September 2009, KHD recorded revenues of US$ 148.2 million as compared to US$ 193.6 million for the same period of 2008. Q3 net income reached US$7.5 million down from US$ 30.8 million in Q3 2008. Revenue for the first nine months of the year stood at US$ 366.2 million compared to US$ 474.7 million for the first nine months of 2008.

The company’s balance sheet had improved at the end of this quarter compared to the previous quarter, with cash and cash equivalents up to US$ 407.4 million, working capital up to US$ 312.2 million and shareholders’ equity up to US$ 279.8 million.

New business 
Order intake for the third quarter was US$ 113 million, up 39% y/y. Some 31% of new orders came from Russia and Eastern Europe, 25% from Asia, 18% from the Middle East, 15% from Europe and 11% from Africa. In total, US$ 76.8 million of the order intake came from the cement and the remainder was generated from the coal and minerals industries. The cement order intake tripled from the previous quarter and also showed an increase of 19% y/y.

Order backlog
The order backlog for the September quarter decreased 41% to US$ 626.3 million. Of this a total US$ 542.7 million are cement orders that will continue to make up KHD’s order backlog going forward. Some US$ 95.8 million worth of contracts were removed from the order backlog as of 30 September, after the company determined that these would not be proceeding. These contracts were categorised as ‘at risk’ at the end of last year, along with US$ 63.4 million of other contracts that have now been determined as normal contracts that remain in the order backlog.

In October, KHD divested its coal and minerals customer group and its Cologne workshop in order to focus on its core competencies and reduce costs. (KHD retains the rights to its proprietary roller press technologies and capabilities.) The company has been working on a restructuring plan since the first signs of a slowdown were felt about a year ago, and is now some way along with the implementation of this plan. Restructuring was originally estimated at about US$30 million, but the sale of the Cologne workshop brings this down to approximately US$12 million. CEO Jouni Salo commented: 'Our restructuring programs are progressing well. We have a significant net cash position and this means we have the financial strength to complete our restructuring plans and take advantage of any opportunities that may emerge as global economies recover. We also intend to invest in developing technology to differentiate ourselves from our competitors.'

In a statement released by the company, Mr Salo said that he is hopeful that there will be a gradual improvement in market conditions. 'We continue to see good levels of enquiries from emerging regions such as India, North Africa and the Middle East. While we remain cautiously optimistic about market recovery and we believe that order intake is the best measure of this, we remain realistic in our expectations that 2010 and 2011 will continue to be difficult years in sales volumes.'

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