Dr. Wolfgang Schmitt,
Chairman of the Board of Management

There is no point in beating about the bush: 2013 was not one of KSB’s better financial years. Certainly, we made progress in many of our strategic projects, launched new products on to the market and ensured that, globally, we are well-positioned to face the future. However, we cannot be content with a 10.1 % fall in pre-tax earnings and a 0.9 % drop in sales revenue. Rather, what our performance has made very clear is the extent to which our company’s success to date has also been dependent on a prospering project business. And it is this project business that has failed to take off in the present economic climate, with investors in many sectors continuing to postpone their investment projects.

We will therefore now be expanding our general business even more rapidly. Outside Europe in particular is where we see great potential for this business with standard pumps and valves. At the same time, we will of course be exploiting the opportunities associated with growing project business in 2014, as the expected economic upturn comes into play. In this context, we are assuming that the global backlog of investments will slowly clear.

SERVICE OFFERS GROWTH PROSPECTS

A further development focus for us is our service and spare parts business. We continue to view the aftermarket segment as a good source of growth opportunities. We will be tapping into these by establishing new sites, providing customers with a rapid service and offering a broad range of services, complete with energy-saving measures. In 2013, we made good progress in this regard, as reflected in the performance of our Service segment. Looking to the current year, our aim is to grow strongly in this segment while focusing our attention on growth outside our European core market. To achieve this, we will be setting up new and expanding existing service centres, not least in the world’s mining regions. New framework agreements with the energy industry give us the opportunity to demonstrate our service expertise in France and to do so over the long term.

REORGANISATION STRENGTHENS GLOBALISATION

This year, we will be putting our energy into making the necessary progress in the targeted areas. Our Group’s organisational structure, implemented in 2014, will help us to achieve this. The new organisation, including in particular a promising positioning of Sales, will contribute to serving our customers across the world as effectively as possible using all of the different sales channels, from e-commerce through to individual project management. At the same time, we are strengthening our global networks and regional responsibility for business operations and our finances.

The KSB Group s management team was also restructured at the beginning of the year. It now comprises the Board of Management together with eleven top managers, with the aim of shortening decision-making channels and facilitating liaison at a global level. Another aim of these organisational measures is to strengthen team spirit and the sense of responsibility across all hierarchical levels.

RESPONSIBILITY HAS MANY ASPECTS

For KSB, responsibility is one of the key values underpinning our corporate culture. It is only when every single employee feels responsible for the company’s success, and commits to achieving that success, that we can achieve the excellence that we promise our customers. Yet, for us, responsibility also means promoting economically reasonable production processes, contributing to the protection of the environment and helping to find solutions to social issues. Some examples of how we go about doing this are provided in this Annual Report.

Not least, however, we have an obligation to you, our shareholders, to ensure that KSB has a successful future ahead of it. This year we will be working on a range of measures that reflect this responsibility, reducing our structural and project costs, improving our range of products and services and making targeted use of the opportunities presented by the global economic recovery. We are more than confident that KSB will be able to report on renewed levels of growth over the coming year.

Dr. Wolfgang Schmitt,
Chairman of the Board of Management of KSB Aktiengesellschaft