3 April 2008 – 2007 was another record year for MAN Diesel, with the Group achieving new highs in all its key figures for the third consecutive year. The Augsburg-based large-bore engine manufacturer reported a 37% rise in operating profit to €313 million. Sales rose by 21% compared with 2006 to €2.2 billion, while the order intake also rose by a considerable 29% to €3.4 billion. With a return on sales of 14.4% (2006: 12.7%) MAN Diesel comfortably outperformed the company’s own guidance.
The MAN Diesel Group’s production facilities will be operating at full capacity until the end of 2009, with some sites working flat out until 2011. The company is well positioned for the current business year. The new structure of the European production network and the continued strength of the international shipbuilding and power plant markets point to further increases in sales and earnings in 2008.
The Chairman of MAN Diesel SE’s Executive Board, Dr.-Ing. Georg Pachta-Reyhofen, is upbeat about the company’s future prospects: “We are well-positioned to meet future challenges. As soon as our new production network in Germany, Denmark and France has bedded down, we can make even more efficient use of our capacities. Expanding our power plant and service businesses remains among our top priorities.“
Stabilisation of demand at a high level
The buoyancy of the shipbuilding industry also had a positive impact on demand for marine diesel engines, with MAN Diesel’s order intake again beating the previous year’s high figure. Orders for stationary engines continued to rise despite the high crude oil price and the further depreciation of the dollar. The company expects demand to stabilise at a high level in 2008. MAN Diesel continues to control over 80 per cent of the two-stroke marine engine market. The company is also the leading manufacturer in the four-stroke market (i.e. marine and stationary engines for power production) with a 34% market share.
A healthy order book
With an order intake of €3.4 billion, MAN Diesel again comfortably beat the previous year’s figure by €0.8 billion. Sales climbed €0.3 billion to €2.2 billion. The order backlog increased by 38% to a new record level of €3.8 billion at 31.12.2007. Since this level of orders means the production facilities are operating virtually at full capacity, the diesel engine division of the MAN Group is planning to further ramp up output. To this end the company initiated a wide-ranging restructuring of production in 2006 which is scheduled for completion in 2010. Assembly of especially heavy four-stroke engines will be transferred to the coastal sites of Saint-Nazaire in France and Frederikshavn in Denmark. In future production in Augsburg will be limited exclusively to light and medium-weight four-stroke engines. Overall investments in 2008 totalling €110 million are planned at the three production sites; this will mainly be used to finance the expansion of test beds and increase assembly capacity. In addition MAN Diesel aims to reduce lead times per engine from 35 days at present to 10 days by 2010. The company also plans to step up licensed production in order to quickly reduce its order backlog and boost sales. At the end of 2009 the current production of small two-stroke engines in Frederikshavn will end and be completely outsourced to licensees. MAN Diesel will use the free capacity to assemble large four-stroke engines. The company will also work more closely with licensees on the production of four-stroke engines in order to meet the high demand.
Profit and returns increase again
Higher sales and the related increase in its order backlog enabled MAN Diesel to post a significant increase in operating profit for the third consecutive year. Profit rose from €229 million in 2006 to €313 million in 2007, an increase of 37%. At 14.4% (2006: 12.7%), return on sales (ROS) comfortably exceeded the company’s target, making MAN Diesel the most profitable core division of the MAN Group once again. Return on capital employed (ROCE) climbed from 46.6% in 2006 to 70.5%.
New jobs created
On 31 December 2007 MAN Diesel Group had a workforce of 7,383 employees, including temporary staff (2006: 6,862), an increase of 7.6% on 2006. The figure was boosted primarily by staff increases at the main site in Augsburg. The international working environment, investment in employee training and the establishment of new sites have all helped secure MAN Diesel’s reputation as a highly desirable employer.
Outstanding contracts
MAN Diesel secured a number of outstanding contracts in 2007. In 2011 the company will deliver the 115,000 HP 14K98ME-C7, the world’s most powerful diesel engine. Eight of these engines will be used to power the same number of the logistics service supplier APL’s container ships. And the world’s largest ship will also be powered by MAN Diesel engines from 2010. The “Pieter Schelte“ is a special ship for the construction of offshore oil platforms and will be equipped with nine 32/44 Common Rail engines. The newly developed 51/60 Dual-Fuel engine is specifically targeted at the LNG tanker segment. The first order for five of these engines was received in April 2007. From 2009 these engines will power the largest ever LNG carrier with electric propulsion based on dual fuel engines.
Power Plants Unit remains buoyant
In 2007 MAN Diesel successfully met two major strategic targets: it bolstered its position in the power plant sector and stepped up its after-sales business. In Pakistan MAN Diesel entered into a strategic partnership with the Pakistani-owned Atlas Group to construct diesel power plants in the country. The cooperation covers the development, design, construction and maintenance of four turnkey diesel power plants by 2012 in northern Pakistan, near the city of Lahore. In Brazil the Power Plants Business Unit secured a contract to supply eight diesel engines for a plant in the state of Bahía, while an Argentine energy company has ordered two gas engines. This order is of particular importance to MAN Diesel because it is an important benchmark for its new 32/40PGI (Performance Gas Injection) engine, which features an innovative ignition system. This engine combines the advantages of the highly efficient Diesel principle with those of the environmentally friendly Otto principle without the use of spark plugs. In January MAN Diesel won the German Business Innovation Prize (Innovationspreis der deutschen Wirtschaft) in the Major Enterprises category for its PGI ignition system.
First class service for engines
The after-sales organisation MAN Diesel PrimeServ was further expanded in 2007. In May the MAN Diesel PrimeServ Academy opened its doors in Augsburg, and has since been offering training, seminars and workshops. In October MAN Diesel acquired MAN Rollo B.V. in the Netherlands and MAN Rollo Belgium N.V. In future the companies will be known as MAN Diesel Benelux, with offices in Antwerp and Rotterdam, and will be integrated into MAN Diesel PrimeServ’s global after-sales network. MAN Diesel has also founded after-sales companies in Panama, Italy and Latvia and has opened further service hubs in Spain, Sweden, Brazil, Australia and the USA.