After a slow start, the global economy in 2013 continued to grow; global gross domestic product increased by 3 %. Gross domestic product in industrialised countries rose by approximately 1.3 % despite a predominantly restrictive financial policy. The emerging countries demonstrated a comparatively stronger growth rate of +4.7 %, however the overall economic development in this group of countries was again weaker than in the previous year. Economic and structural reasons were major contributors towards the low growth rate. The depreciation of the currencies in Australia, Brazil, India, Indonesia, Pakistan, South Africa and Turkey, primarily as a result of capital flowing back around the middle of the year from emerging markets to the USA, was a financial burden on these economies.


In Europe, which is still the most important market for KSB’s business, the demand situation made a slow recovery in 2013. This was mainly due to exports to non-European countries; there was only a slight increase in domestic demand. The gross domestic product in the euro zone fell by 0.4 % in real terms. However, Germany and Austria demonstrated an inverse trend with figures that were slightly higher compared with the previous year. Outside the European Monetary Union, the economies of Great Britain and some Eastern European countries in particular, experienced slight growth. Economic development in Russia, where the KSB business has expanded significantly over the last few years, fell short of expectations however. This is down not least to falling commodity prices. Contrary to other emerging countries, the volume of capital investments in Russia declined.

In 2013 market development was again weak in the countries of the Middle East and North Africa, some of which are affected by political turmoil. The region’s gross domestic product only rose by 2 % with development in the different countries varying enormously. Saudi Arabia and the United Arab Emirates were rays of hope. The countries in sub-Saharan Africa were able to maintain the growth rate of the previous year; they achieved an increase in gross domestic product of around 5% in real terms. The economy of the Republic of South Africa also continued to develop despite the ongoing social unrest and the depreciation of its currency.

The market situation in Asia was largely affected by the slow development in China, where the economy in 2013 only grew in the single-digit percentage range by +7.7 %. Besides poor demand from abroad, restrictive monetary policy measures dampened the economic expansion of the People’s Republic where we are represented by five subsidiaries. The situation in India was still weighed on by unresolved structural problems and uncertainty about the political future. The outflow of capital to the USA caused financing constraints. The economic performance of South-East Asian emerging nations, where we have had strong exposure for some years, was mixed, with scenarios ranging from one of renewed buoyant expansion in Indonesia to a recessionary trend in Thailand. In Japan, where we only serve a niche market, the growth-oriented fiscal policy boosted investment.


In the Americas region, the USA cut public budgets and along with Canada achieved moderate growth. Brazil’s economic recovery was slow due to falling commodity prices and domestic political difficulties. Nevertheless, the country continued to develop new oil and gas reserves. Chile, where KSB sales revenue has grown considerably in recent years, remained an attractive sales market despite depressed copper prices.

New offshore projects off the Brazilian coast offer new order opportunities for process engineering pumps and valves.


Germany was again one of the world’s largest machinery exporters in 2013, together with the USA and China. The growth in sales for these products slowed down compared with the previous year, however, and growth in global sales revenue for machinery, including pumps and valves, fell from 2% to 1%.

According to the German Engineering Federation (VDMA), the backdrop to this was underutilisation of production capacities in many countries limiting the need for investments in new plants. In this respect, customers primarily ordered new machinery in the form of replacement investments.

In 2013 China presumably was once again the country with the highest growth in machinery production, even though the rate of increase was lower than in previous years. In the USA, the process of re-industrialisation and investments in the oil and gas industry provided for above-average growth.

Deviating from the upward trend of these global competitors, the sales revenue for the German mechanical engineering sector fell by 1 % in the year under review. According to the estimates of the VDMA, the order intake was 2 % lower year on year.


KSB continued to be one of the world’s leading manufacturers of centrifugal pumps in 2013. The market for these products again developed inconsistently during the year under review: While demand for standard pumps for industry and building services was satisfactory, there were insufficient project order volumes to utilise the capacities of the manufacturers of pump sets designed for specific orders. The price pressure for large pumps continued.

In many European countries, no notable expansion investments were made as a result of the realignment in energy policy regarding power plants. As a result, the demand for pumps for energy applications was restricted to replacement pump sets. However, new buildings incorporating highly efficient equipment in Asia as well as the construction of gas-fired power plants in the USA represented individual sales opportunities for suppliers of power plant pumps. Manufacturers of pumps also had opportunities to get involved in large projects in the refinery and petrochemical sector, though the competition was fierce.

Collectively the German pump companies recorded a 2 % increase in sales revenue in 2013, according to the VDMA.

KSB remained among the ten companies with the highest sales revenue in the market for shut-off valves. During the year under review, development in this area was as weak as in the pump sector. The VDMA reported only a 1 % increase in sales revenue in real terms for the industrial valves sector, which includes most of the globe, gate and butterfly valves manufactured by KSB.

Demand developed well in the oil and gas sector, partially served by KSB. Buoyant business activity was reported specifically in the equipping of liquefied gas tankers and terminals for which we provide cryogenic valves. In contrast, the manufacturers of power plant valves were still faced with an overall weak market.

In the sectors where customers postponed investments, there was increased demand for service offerings to maintain and modernise equipment. The companies providing services relating to pumps and valves also benefited from this development.


The process of company acquisitions did not continue in the pumps and valves industry, except for a few takeovers in the USA and India. On the one hand, the number of interesting target businesses was reduced through earlier acquisitions, and on the other hand their prices rose. Furthermore, the uncertainties in the energy industry prevented the pump and valve manufacturers in this area from expanding through business acquisitions.

Various pump companies have taken steps, however, to expand their activities in the water and waste water sectors through acquisitions. This relates to the processes for filtration and water treatment, for example.

Similarly to KSB, other pump and valve manufacturers also increased their presence in the BRIC countries as well as other attractive markets. This is the case in Brazil for example, where competitors who want to participate in the offshore projects for oil and gas production are setting up local production facilities. International pump and valve companies also increasingly invested in service facilities in the growth markets.

In China domestic high-pressure pump manufacturers increasingly targeted the power plant market, while Chinese and Korean pump suppliers pushed their way into foreign markets that had previously not been served by them.

The KSB Group and its competitors in the market were essentially faced with the same opportunities and risks. However, due to the continued reluctance of customers in the project business to invest, there was greater pressure upon suppliers who operate partially or fully within this sector than upon those who exclusively operate a general business.


In 2013 the order situation for the project business was once again challenging. This was due to weak demand in the power plant market, but also deferrals of larger projects for water supply and waste water treatment. The correspondingly high pressure on prices in the project business made it in some cases less attractive to accept fiercely contested orders.

In contrast, the general business for standard pumps performed well overall. Our initiatives to expand this business segment for KSB showed initial signs of success in Europe. In several Asian countries and Brazil, the order intake for standard pumps for use in industry and building services was higher.


In 2013 the volume of the Group’s new incoming orders was 0.7% lower than in the previous year, amounting to € 2,241.2 million. Alongside the difficult project business, negative currency effects amounting to € 70.4 million represented a determining factor behind this development. The order intake also includes eight operative companies consolidated for the first time; these companies recorded € 27.2 million.


The order intake in the Business Unit Pumps was € 1,453.3 million, 2.5 % less than in the previous year. One of the main causes besides the changes in exchange rate, was the weak business in the water and waste water industry as well as the mining sector. Order intake for high-pressure pumps for power plants was also unsatisfactory.

On the other hand, the pump business in industry continued to grow. The introduction of technically improved standardised pump type series manufactured identically by our companies at several locations around the world has contributed towards this. In addition we recorded growth for refinery pumps in South Korean plant engineering which is of international importance. Business for our energy-efficient circulators developed well, despite the continued domination of two large competitors. Due to the increasing energy and cost awareness of many customers, the order intake for automation products and energy-efficient drives grew.

Business performance in the Business Unit Valves improved for our cryogenic valves for the oil and gas industry, which are primarily supplied for equipping liquefied gas tankers. The expansion of our product range by triple-offset high-performance butterfly valves contributed towards this improvement. Our valves were also successful in the chemical industry and general industry sectors in Europe, where we have launched new shut-off gate valves onto the market for price-sensitive applications. Demand for power plant valves was weak however. The order intake for valves was € 387.0 million, down 1.3 % from the previous year.

The Business Unit Service reported strong growth in its order intake including the companies that were first consolidated in 2013. The value of incoming orders for service and spare parts increased by 7.1 % to € 400.9 million. The business unit profited from the expansion of service centres in the Asian and American mining regions, where mining operations that use pumps for solids transport, have a high application-related demand for spare parts and repairs. Thanks to the new local facilities we were able to better position ourselves to meet this demand. Power plant service in France and service activities for industry in Italy developed positively. We reported a decline in orders in the German power plant business. As part of the change in energy policy, the need for our service personnel in traditional operating areas in this sector decreased.


Our companies in Europe recorded incoming orders of € 1,338.4 million, which was 0.5 % below the previous year’s level, as development was slower in Russia where OOO “KSB” did not achieve the strong order intake recorded over the previous two years. Most of the companies based in Southern Europe experienced a persistently low development within the market. Our French company KSB S.A.S. performed well however. Its incoming orders grew, which was primarily due to higher demand for butterfly valves that are used by customers to shut off liquefied gases. The order intake for KSB AG was up slightly at € 807.8 million (+ 0.8 %), supported by the strong demand for our standard pumps in the chemical and processing engineering sectors.

Our four Group companies in the Region Middle East / Africa reported strong growth in orders. They succeeded in increasing their order intake by 9.7 % to € 129.8 million. More orders for standard products were received in the Region, in particular for our technically improved standardised water and chemical pumps. However, in the project business our customers lacked the funds to some extent to realise new projects. Companies in Saudi Arabia and the United Arab Emirates proved to be exceptions and placed an increasing number of orders for our products for the building services, water and energy sectors.

In Asia order volumes at our Group companies totalled € 355.6 million. The year-on-year difference was – 0.5 %, so the trend in the Region was more or less stable, as in Europe. Despite the challenging economic environment, KSB Pumps Limited in India increased its order intake. Our largest Chinese firm, KSB Shanghai Pump Co. Ltd., only achieved marginal growth in the volume of incoming orders. Our valve companies in China and India reported falling orders due to the situation in the power plant market; the companies in Indonesia and Thailand posted significant improvements.

Incoming orders at our companies in the Region Americas / Oceania totalled € 417.4 million, down 4.4 % on the previous year. A key reason for this was a marked drop in orders at our Brazilian firm KSB Bombas Hidráulicas S.A. This was mainly due to the devaluation of the national currency, the real, against our Group currency, the euro. Our business in Brazil also suffered as a result of the deferral of larger projects in industry, the energy sector and the water and waste water business. The decline was almost counterbalanced by improved business in standard pumps and orders to kit out new deep-sea drilling platforms, measured in the national currency. Thanks to a growing distribution network and local warehouses, we continued to expand our general business with standard products outside Brazil in other South American companies. This includes KSB Chile S.A., which saw a significant increase in its order intake, partly due to service activities in the mining sector.

Employees in La Roche-Chalais conduct tests in liquid nitrogen to see whether valves for liquefied gases still function reliably at temperatures of – 196 °C

In the North American market where our companies operate a niche business, the project business in the waste water engineering sector and in mining was also restricted by a lower number of orders being placed. We received a large order for water supply to the oil sands industry in Canada.

The recession in Australia impacted upon the order situation for pumps and valves. The new construction and expansion of mines slowed down, reducing the order volumes for slurry pumps.


Our two Business Units (Pumps and Service) with the strongest sales revenue developed positively in 2013. Nevertheless, the total sales revenue of the KSB companies of € 2,247.3 million fell 0.9 % short of the prior-year value. This was a result of reconciliation effects from the measurement of construction contracts in accordance with IAS 11. Similarly to the order intake, the sales revenue also suffered from negative currency influences amounting to € 68.4 million. The companies newly consolidated in the year under review accounted for € 27.1 million of Group sales revenue.

At € 1,526.2 million, the sales revenue in the Business Unit Pumps was slightly (+ 0.6 %) up on the previous year. Single-stage pumps continued to be the strongest product group. The sales revenue for this product group remained stable, while business with multistage pumps as well as automation equipment and drives grew considerably. By contrast, the sale of submersible pumps was down compared with the previous year, due to a lack of project orders from the waste water sector.

The Business Unit Valves reported a 3.4 % drop to € 372.5 million, due primarily to the subdued development of the general business in Europe as well as weak sales for power plant valves in Asia. In the previous year, the Business Unit Valves had shown the strongest growth by comparison.

The Business Unit Service reported a markedly positive development in sales revenue. The 9.2 % growth to € 402.3 million was due to expansion initiatives as well as structural changes within the Group.


After two financial years where sales revenue increased in all four Regions, in 2013 the companies in the Region Middle East / Africa were the only ones to post growth (+ 4.3 %). The Group companies in Europe (– 0.8 %), Asia (– 1.9 %) and Americas / Oceania (– 1.8 %) reported a decline. Currency influences played a decisive role in this in the latter two Regions.

The European companies achieved sales revenue of € 1,358.4 million in the year under review, equating to just under 60.5 % of the overall volume for the Group. KSB AG remained the company with the highest sales revenue by far, also due to a 3.4 % increase (in accordance with HGB [German Commercial Code]) to € 856.0 million. Russia-based OOO “KSB” posted an outstanding increase due to the invoicing of several large orders in the energy sector.

The Region Middle East/Africa benefited especially from the good performance of KSB Middle East FZE in Dubai. Collectively, the four consolidated operative companies in the Region recorded a sales revenue of € 117.5 million.

In Asia the sales revenue development of two Indian companies contributed considerably to the decline in the Region. In contrast, our Chinese business KSB Shanghai Pump Co. Ltd. reported a marked increase in sales revenue. Overall, our Asian subsidiaries reached a volume of € 352.7 million.

The company in the Region Americas / Oceania with the highest sales revenue in 2013 was again our slurry pump manufacturer GIW Industries, Inc., which continued to grow. In contrast, however, two companies in Brazil and Australia reported a marked decline in sales revenue. With a sales revenue of € 418.7 million, the companies in the Region therefore did not match the prior-year level.


We did not fully meet our previous year’s expectations due to the economic conditions. Contrary to our forecasts, the order intake only rose in the Business Unit Service, as described in the Business Development section. Our Business Units Pumps and Valves suffered declines caused to some extent by currency translation. Therefore our order intake for the entire Group was slightly lower (– 0.7 % to € 2,241.2 million). Sales revenue did not reflect our expectations (moderate growth) either, it experienced a 0.9 % decline across the Group. Alongside negative reconciliation effects from measuring construction contracts in accordance with IAS 11, the translation of currency into euro also had a negative impact. Compared with the previous year, the Business Unit Service improved considerably and the Business Unit Pumps moderately, whereas the Business Unit Valves recorded a slight decline. As a result of the unexpectedly difficult market environment combined with the continued price pressure in the project business, the moderate increase that was expected failed to materialise. Earnings before interest and taxes (EBIT) fell by € 14.2 million to € 136.2 million. The Business Units Valves and Service experienced a decline, while the Business Unit Pumps improved earnings. Earnings before taxes for the Group were 10.1 % below the previous year’s level; accordingly we also failed to meet our target for pre-tax return on sales. Contrary to initial expectations, we did not increase our investment volumes. In fact, we held off making new investments due to the economic situation. Accordingly, the net financial position also developed better than planned twelve months previously.

It should be borne in mind in the following explanations that the prior-year figures presented include the effects resulting from the revision of IAS 19 Employee Benefits. For more information, see the Notes to the Consolidated Financial Statements.


The difficult economic situation at large – in particular for the project business that continues to be affected by high pressure on prices – resulted in a decline in earnings within the Group.

Total output of operations

The above-mentioned decline in sales revenue as well as the considerable reduction in work in progress and inventories of finished goods resulted in a lower total output of operations, which amounted to € 2,223.9 million, 3.0 % below the 2012 figure (€ 2,293.8 million).

Income and expenses

Other income remained more or less constant, rising from € 44.3 million to € 44.6 million. The slightly higher contributions from the reversal of provisions no longer required compensated for declined earnings from the current assets.

The cost of materials fell by 9.4 %. As a percentage of total output of operations, the cost of materials (€ 892.3 million) dropped from 42.9 % in the previous year to 40.1 % in the year under review. More favourable market conditions on the procurement side together with price optimisation initiatives in purchasing led to this improvement.

Staff costs rose by 3.9 % to € 787.6 million in absolute terms. In relation to total output of operations, this meant an increase of 2.3 percentage points. This was caused by the collectively agreed salary increases and the higher number of employees. Compared with 2012, the number of employees rose by 339, taking the total figure at the end of the year under review to 16,546. This growth of 2.1 % is due exclusively to the first-time consolidation of nine smaller subsidiaries in Europe and India. 365 employees joined the Group as a result. Therefore, the KSB Group employed on average 369 more people than in the previous year. Due to the lower total output of operations, the average output per employee fell from € 141 thousand to € 134 thousand compared with the previous financial year.

The ratio of other expenses to total output of operations rose from 16.5 % to 17.2 %. In absolute terms, they changed little, and now total € 383.4 million compared with € 377.7 million in the previous year.

Financial income / expense improved by € 1.2 million. This is above all attributable to higher income from investments accounted for using the equity method (€ +3.5 million), which more than compensated for the decline in financial income (€ – 2.4 million).


The KSB Group achieved earnings before interest and taxes (EBIT) of € 136.2 million (previous year: € 150.4 million). The Business Unit Pumps reported EBIT of € 105.2 million (previous year: € 91.3 million), the Business Unit Valves € 7.3 million (previous year: € 8.8 million) and the Business Unit Service € 42.7 million (previous year: € 50.7 million). The reconciliation effect from the measurement of construction contracts in accordance with IAS 11 changed by € – 18.7 million year on year.

The earnings before taxes (EBT) amounted to € 119.4 million, following € 132.8 million in 2012. This means we achieved a pre-tax return on sales of 5.3 % (previous year: 5.9 %). The income tax rate increased by 1.1 percentage points, up from 32.0 % in 2012 to 33.1 %. As a result, the 11.5 % fall in earnings after taxes to € 79.9 million (previous year: € 90.3 million) was thus somewhat more pronounced than the decline in earnings before taxes (EBT) (– 10.1 %).

Earnings attributable to non-controlling interest fell by a similar percentage from € 15.6 million to € 14.2 million. They remained virtually constant relative to earnings after taxes (17.8 % compared with 17.3 % in the previous year).

The earnings attributable to shareholders of KSG AG (€ 65.7 million) were € 8.9 million lower than in the previous year (€ 74.6 million).

Earnings per ordinary share were € 37.38, compared with € 42.48 in the previous year, and € 37.64 per preference share, compared with € 42.74 in 2012.


The financial position of the KSB Group improved slightly. The net financial position in particular developed positively as a result of a restrictive investment policy and our systematic working capital management.


The KSB Group’s equity amounts to € 844.5 million (previous year: € 832.2 million). This includes KSB AG’s subscribed capital of € 44.8 million as in the previous year. The capital reserve remains unchanged at € 66.7 million. Revenue reserves total € 618.8 million (previous year: € 596.4 million), including the proportion of earnings after taxes attributable to shareholders of KSB AG of € 65.7 million (previous year: € 74.6 million). € 114.2 million (previous year: € 124.3 million) is attributable to non-controlling interest. Due to the € 36.5 million (1.7 %) decline in total equity and liabilities, the equity ratio has improved (39.3 %; previous year: 38.0 %).

Non-controlling interest mainly relates to the following companies: KSB Pumps Limited, India (€ 36.2 million), KSB America Corporation, USA (€ 17.3 million), GIW Industries, Inc., USA (€ 13.5 million), KSB Shanghai Pump Co. Ltd., China (€ 12.7 million) and PAB GmbH, Germany (€ 8.2 million).


The largest item under liabilities continues to be provisions for employee benefits, including, also as the largest item, pension provisions. Due to an amendment to the applicable accounting standard IAS 19 Employee Benefits, it is no longer possible to manage actuarial gains and losses in a corridor outside the balance sheet and spread them over the remaining period of service of the employees. They now form part of the provision. Changes in the actuarial assumptions have a direct impact on the Group’s equity. We have adjusted the previous year’s figures in accordance with the accounting principles. On the basis of this new initial figure, the provision as at the reporting date was reduced by 0.6 % to € 398.1 million. A large number of the pension plans currently in use in the KSB Group are defined benefit models. We will be reducing the associated risks, such as demographic changes, inflation and salary increases, for example by introducing defined contribution plans for new staff.

Our obligations for current pensioners and vested benefits of employees who have left the company account for just over half of the amount recognised in the balance sheet. The rest relates to defined benefit obligations for our current employees.

The remaining provisions for employee benefits, which, in contrast to pension provisions, are predominantly current, fell slightly from € 126.9 million to € 124.1 million.

Compared with the previous year, the other provisions fell primarily as a result of lower provisions for taxes. They include non-current components of € 14.4 million (previous year: € 16.2 million) for warranty obligations. The excess relates to provisions for mainly current uncertain liabilities.

Non-current other liabilities remained more or less unchanged at € 205.0 million, following € 208.0 million at the end of 2012. As in the previous year, they include liabilities from a loan against borrower’s note of € 175 million, which we placed in December 2012 due to the favourable capital market conditions. It is divided into repayment tranches of 3 to 10 years. Current other liabilities fell overall by € 27.7 million (€ 455.3 million compared with € 483.0 million at year end 2012). The financial liabilities included in this increased by € 6.6 million. At the end of 2013, the remaining commitments from the loan against borrower’s note placed in 2009 stood at € 6 million, which we will pay back in 2014, thus reporting them now as current. Inversely, other liabilities fell from € 223.8 million to € 188.7 million as a result of declining advances from customers. Trade payables were practically unchanged at € 204.8 million (previous year: € 204.0 million). Taking into account the decline in total equity and liabilities, the share of current liabilities in total equity decreased to 22.3 % (previous year: 23.1 %).


As in the previous year, the additions to intangible assets amounting to € 4.2 million (previous year: € 9.8 million) primarily concerned the sale of licences.

Investments in property, plant and equipment in the year under review amounted to € 52.8 million, considerably below the figure of € 81.5 million for the previous year. The highest additions at € 21.6 million (previous year: € 23.1 million) relate to technical equipment and machinery. The focus of our investment activities remained Europe, predominantly Germany and France. Outside Europe, the highest additions were again made at our plants in the USA as well as India, China and Brazil. We maintained our policies for measuring depreciation and amortisation in the year under review.



Net financial position

The net financial position of the KSB Group has improved considerably from € 141.2 million to € 189.6 million. One of the contributing factors was the considerably decreased expenditure on financial assets.


Cash flows from operating activities amounted to € 135.3 million, a year-on-year increase of € 41.3 million. As well as a decline in receivables, the freeing up of resources from inventories had a positive impact on cash flows. This contrasted with more funds released from advances received from customers and the lower earnings.

In the year under review, we reduced our investment activities primarily in property, plant and equipment. Accordingly, cash flows from investment activities decreased markedly to € – 60.7 million (previous year: € – 99.4 million).

Cash flows from financing activities changed from € +102.9 million to € – 22.3 million as a result of the new loan against borrower’s note raised in the previous year.

The KSB Group’s cash and cash equivalents from all cash flows together increased from € 401.0 million to € 451.4 million (including € 18.0 million of cash used to secure credit balances for partial retirement obligations and – for the first time in the year under review – credit balances for long-time working hours accounts, which is available for immediate use at any time, compared with € 14.8 million the previous year). Exchange rate effects amounting to € – 5.0 million (previous year € – 2.8 million) played a role in this.

We assume that, in future, we will continue to be able to meet our outgoing payments largely from operating cash flow. From the current perspective our financial management is meeting the goal of ensuring liquidity at all times without any significant additional external financing measures. For more information on liquidity management (such as credit lines) see the section on Risk Reporting on the Utilisation of Financial Instruments elsewhere in this group management report.

Contingencies and commitments

The KSB Group’s off-balance sheet contingent liabilities totalled € 11.1 million as at the reporting date (previous year: € 14.1 million). These arise mainly from collateral and performance guarantees.

There are no other extraordinary obligations and commitments beyond the reporting date. Other financial obligations arise only within the normal scope of long-term rental, lease and service agreements (in particular IT and telecommunications) necessary for business operations and from purchase commitments amounting to € 12.5 million (previous year: € 11.8 million).


Our total assets fell by 1.7 % to € 2,151.5 million. Declines in non-current assets (in particular for property, plant and equipment) for inventories and receivables as well as other current assets contrasted with the higher cash and cash equivalents.

Around 28 % is attributable to fixed assets, as in the previous year. Intangible assets and property, plant and equipment with a historical cost of € 1,168.7 million (previous year: € 1,155.5 million) have carrying amounts of € 554.2 million (previous year: € 563.2 million). Above all the first-time consolidations of older KSB companies in the year under review resulted in changes in goodwill of € +10.9 million. As investments in property, plant and equipment in the year under review were below the figure for the previous year as well as the figure for write-downs (€ 54.7 million following € 52.1 million in 2012), this balance sheet item changed by € – 17.7 million. Taking into account the opposing effects of the first-time consolidations, the carrying amount of financial assets fell by € 1.8 million to € 37.0 million.

The inventories decreased by 7.3 % to € 423.8 million because of the project business which continued to be challenging. They tied up around 20 % of our resources (previous year: 21 %).

As a result of the decreased sales revenue, trade receivables were € 4.7 million below the figure at the end of the previous year. The difficult situation in the project business was also reflected in the development of receivables for customer orders, measured according to the percentage-of-completion method. Besides a reduction in advances received from customers for these orders, the associated value also decreased by € 58.0 million. As a result, receivables and other current assets made up around 30 % of total assets (previous year: around 32 %), taking into account the change in total assets.

Cash and cash equivalents account for around 21 % of assets (previous year: approx. 18 %). Improved cash flows from operating activities along with reduced investments contributed to this change.

Inflation and exchange rate effects

There were no consolidated companies within the Group whose financial statements were required to be adjusted for the effects of inflation.

The translation of financial statements of consolidated companies that are not prepared in euro gave rise to a difference of € – 53.5 million (previous year € – 13.9 million). This was taken directly to equity.


Despite the difficult market situation faced predominantly by the project business, Management considers the KSB Group to be in good economic shape overall in comparison with the previous year. Our three Business Units – Pumps, Valves and Service – contributed as follows:

The Business Unit Pumps achieved order intake amounting to € 1,453.3 million, which represents a decline of 2.5 % compared with 2012. In contrast, the sales revenue and earnings before interest and taxes (EBIT) developed positively; we increased sales revenue by € 9.1 million to € 1,526.2 million; EBIT rose by € 14.0 million to € 105.2 million.

The order intake for the Business Unit Valves also fell slightly by € 5.0 million to € 387.0 million compared with the previous year. Sales revenue decreased as well from € 385.6 million to € 372.5 million. Earnings before interest and taxes (EBIT) fell by € 1.5 million to € 7.3 million.

The order intake and sales revenue in the Business Unit Service developed positively. The volume of incoming orders increased by 7.1 % to € 400.9 million, while sales revenue rose from € 368.2 million to € 402.3 million. However, due to one-time costs incurred earnings before interest and tax (EBIT) fell by € 8.0 million to € 42.7 million.

As a result of stagnating business development along with a fall in earnings, the pre-tax return on sales, at 5.3 %, remained below the comparative figure for 2012 (5.9 %). Due to our systematic working capital management as well as modest investment activity, we nevertheless considerably improved our net financial position.

At the end of 2013, the economic situation of the KSB Group was therefore stable at a high level. We consider this a good basis for achieving continued success in the coming years.