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Vossloh Expects Higher Demand To Boost Growth Ahead, Despite Lower Q4 Earnings

Vossloh AG (VOSSF.PK) on Thursday said it expects a rebound in sales and earnings for the next two years with an all-time high order backlog. The positive outlook was issued after the German rail infrastructure provider reported a sharp decline in earnings for fourth quarter and fiscal 2011 as project delays in China burdened its operations.

Vossloh AG's CEO Werner Andree said, "2011 has been a challenging year yet 2012 will see Vossloh back on the growth track. This and next year sales and earnings are set to resurge. With our tall order backlog we have laid the groundwork."

In an operationally difficult year, the company reached a record order backlog of around 1.5 billion euros, giving it a launch pad for return to growth, the company said. By the close of fiscal 2011, demand for Vossloh's products and services was higher than ever. Especially buoyant was demand for locomotives and the new light rail vehicles.

For its fourth quarter, earnings fell 23.6 percent to 16.5 million euros from last year's 21.6 million euros. The company noted that prior-year results included 5.3 million euros from discontinued operations. Earnings per share, however, grew 9 percent to 1.33 euros from 1.22 euros a year earlier.

EBIT for the quarter edged down 3.1 percent to 28.6 million euros, with EBIT margin slipping by 0.1 percentage point to 8.6 percent. Quarterly sales were 333.3 million euros, 1.8 percent lower than last year's 339.4 million euros.

For fiscal 2011, earnings fell 42.8 percent and sales were down 11.4 percent with the decline at the Rail Infrastructure division being somewhat steeper than at the Transportation. The company said it experienced project delays in China, a suspension of shipments to Libya, and weak demand from several European markets.

Further, the company said its Boards will propose to the AGM a dividend of 2.50 euros per share, unchanged from the prior year's record level.

Looking ahead, Vossloh forecast fiscal 2012 EBIT in the range of 100 million euros to 110 million euros on sales between 1.25 billion euros and 1.3 billion euros. This is higher than fiscal 2011 EBIT of 96.5 million euros and sales of 1.20 billion euros. Vossloh is also aiming to improve EBIT margin to between 8 and 8.5 percent.

According to the company, the Rail Infrastructure division will over the next two years recover through ongoing internationalization and expand its market position. Transportation's downtrend has petered out, and the division is now benefiting increasingly from a rush of incoming orders for new locomotive models and local transport rail vehicles.

Further, for fiscal 2013, the company anticipates EBIT in the neighborhood of 120 million euros to 130 million euros and EBIT margin between 9 or 10 percent, with revenues expected to be between 1.3 billion euros and 1.35 billion euros.

Vossloh shares are currently trading at 73.85 euros, up 0.35 euros or 0.48 percent on Frankfurt's Xetra.

by RTTNews Staff Writer

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