Group - L. Possehl & Co. mbH

Cleaning Machines: Significant Growth in Sales and Earnings
The market environment remained positive for Hako Group last
year. This applied to both indoor and outdoor cleaning. The growth
rates by region and type of machine were between about 2 % and 11 %.
Hako’s main competitors took advantage of the market situation
through a consolidation, in which they purchased smaller competitors.
Hako benefited from the generally favorable developments and increased
sales by 6.9 % to e 423.0 million. The increase in sales came
primarily from Germany and the rest of Europe. Thus, Hako was able to
increase its market share in Europe for many products. Similarly, the
Multicar brand had a positive result. In comparison with the previous
year, 112 or 7.4 % more cars were sold.
However, the situation in the USA deteriorated. While adjustments
to the Hako and Power Boss products were substantially completed
during the reporting year, steps introduced to reposition the
Minuteman products had not yet been completed. The reworking of the
Minuteman product program, the reorganization of sales, and the restructuring
of production in the USA will continue during the current
year. A production site will be closed in this context.
The earnings situation of the Hako Group has continued to improve,
but not to the same extent as sales growth. Overall earnings in 2007
were depressed by losses in the USA and Poland.
For the next fiscal year, we are expecting moderate growth and
an improvement in earnings for this area as well. In particular, the
market introduction of new products and the repositioning of Minuteman
should contribute to this result.
textile finishing Systems: Positive development in China
offsets Negative development
The overall economic climate was difficult for European manufacturers
of textile machines. In the Textile Finishing Systems division,
there were some double-digit declines in incoming orders. The decisive
factor here was the concentrated production of textile machines and
textiles in China. This market is extremely difficult for Western manufacturers
to access. The other countries of focus for textile production
such as India, Turkey, and Pakistan could not slow down the continued
shift to China. The European market improved slightly, primarily driven
by the manufacture of technical textiles.
Letter from the Executive Board
Company Boards
Report of the Controlling Boards
Successful over the Long Term
Group Management Report
Consolidated Financial Statements
Further Information
Excluding the pro rata consolidation of the Monforts Group in the
previous year, net sales declined by 3.5 %. However, this marginal sales
decline was accompanied by tighter gross margins. In order to secure
sustainable competitiveness, the European companies implemented
improvements and efficiency-enhancing measures in all areas. The
related expenses clearly depressed annual net profit.
Through our 50 % stake in the Chinese Monfongs joint venture,
which is reflected using the equity method in the consolidated financial
statements, we were able to participate in the textile boom in China.
Both sales and earnings from the joint venture rose sharply from the
previous year.
The global market for textile finishing is not expected to change
substantially in 2008, so we are anticipating sales at the same level as
last year. In view of the streamlining measures that have been taken,
however, we are assuming an improvement in earnings at the European
companies. On the other hand, the earnings contribution of the
Chinese joint venture could decline.
Special-purpose Construction: increase in Sales and Earnings
The construction industry in Germany was characterized by
weakening, but still positive growth in the reporting year. Sales in the
main construction trade rose by nearly 2 %. The street and com mercial
construction sectors saw growth of about 1.2 % and 4.3 %, respectively.
Net sales rose at a double-digit rate from the previous year to
e 79.4 million. This increase was primarily driven by extremely strong
growth at DFT Deutsche Flächen-Technik Industrieboden GmbH, which
was acquired in the previous year and offers ultra-precise, seamless
rolled concrete flooring solutions (e.g. for warehouses) to the logistics,
transport, and wholesale industries. Along with solid economic growth,
we were able to benefit from several large orders from Europe outside
Germany. On the other hand, sales declined from the maintenance,
refurbishment, and protection of transport surfaces. The closure of a
subsidiary in France also contributed to the sales decline.
The foreign subsidiaries in the Netherlands, Austria, Croatia,
Slovenia, and Belarus have performed according to plan and collectively
were able to maintain the sales level of the previous year. The
subsidiary in Spain was liquidated in the reporting year.
Assuming stable growth in the construction sector, we expect a
moderate increase in sales and earnings next year.
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