Despite difficult market conditions, in 2003 the Grundfos Group was able to increase its turnover by approx. 4% to DKK 11.152 billion and its pre-tax earnings by an entire 48% to DKK 1.078 billion.
With the record earnings Grundfos has created the basis for further acceleration of the development in the pump manufacturing group. Foundation ownership ensures that earnings will mainly be invested in strengthening Grundfos' position in the global market, and investments will continue to be effected as a combination of development of trend-setting products, investments in new markets and globalisation of production.
The substantial growth in earnings in 2003 has not adversely affected long-term initiatives. On the contrary, in an aggregate investment programme of DKK 854 million the largest amount so far was spent on product development. In spite of the substantial investments, during 2003 the group halved its interest-bearing net liabilities by generating a free cash flow of DKK 1,743 million. Net financing costs constituted DKK 9 million.
The annual accounts 2003 are the first since Jens Jørgen Madsen and Niels Due Jensen assumed their new positions as Group President and Group Chairman, respectively. They comment the billion earnings by stating that improved efficiency in the entire group has resulted in a historical low growth in costs. They are also pleased that Grundfos has now taken a giant leap towards its two main objectives - pre-tax profits of 10% in 2005 and a turnover of EUR 2 billion in 2007.
For the first time ever, Grundfos achieved aggregate sales of more than 10 million pumps. Again in 2003, sales growth was largest in the new market economies in Eastern Europe and in the Asian growth markets. These will thus continue to be a high priority when the group opens new sales companies closer to the customers and establishes local workplaces in new production facilities.
With this very positive result in view, the major shareholder of the Grundfos Group, the Poul Due Jensen Foundation, has decided to offer employees shares in Grundfos Holding for the third time. The shares will be offered at a particularly favourable price in May 2004. The first sale of shares took place in 2001 and the second in 2003. Both times the offer was oversubscribed. Today employees own 2 per cent of the shares in Grundfos Holding. The share price increased by 57 per cent in 2003.
In 2004 Grundfos will establish production companies in Russia and India, and production capacity will be extended in both Hungary and China. For the first time in several years, Grundfos is establishing a sales company, and it will be in the vast and promising Ukrainian market.
In its 2004 budget, the Grundfos Group expects its turnover to increase by 7% and aggregated earnings on a 2003 level. Substantial investments in research and development are maintained at approx. 4% of the group's aggregate turnover in an aggregate investment programme of DKK 850 million.
The largest known threat to continued growth is the uncertainty related to the exchange rate of the US dollar. If it decreases additionally, it may be difficult for Grundfos to reach the level of the 2003 earnings.
At the end of 2003, the group employed 11,707 employees - 4,700 thereof in Denmark.