Bottled up

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Related tags: United states dollar

It's that time of year again. Companies are releasing their third
quarter results amid great fanfare, even if there isn't that much
to cheer about. The bottling industry in particular has had a
fairly difficult year, with companies such as Krones Group
complaining of a stagnating market.

It's that time of year again. Companies are releasing their third quarter results amid great fanfare, even if there isn't that much to cheer about. The bottling industry in particular has had a fairly difficult year, with companies such as Krones Group​ complaining of a stagnating market.

Indeed the firm reports that there was no sign of any real improvement in the general economic situation in the third quarter of the year. The continued weak economic growth was not the only thing to lead to a decline in companies' propensity to invest - stagnating markets also have an effect on suppliers' price policies.

As a heavily export-oriented company, the strengthened euro also made trading in the North American and Asian dollar region more difficult. All of this has affected the sales figures and thus also the group profits.

Despite this, the group has succeeded in improving on its previous year's result for the fourth time in a row and achieved an 8.5 per cent increase in its sales figures. Orders received have increased by 4.1 per cent and profit after tax has increased by a further 4.8 per cent.

The number of orders on hand for the Krones Group amounted to €621.7 million on 30 September 2003, 7.1 per cent down on the previous year's figure. This lower figure is the result of the lead times which have again been shortened compared to the previous year.

Despite the difficult economic situation, Krones believes there is room for innovation and improvement. The PET sector for example continues to set the market trends as more and more beverages are being filled in PET products instead of in cartons. In Germany the compulsory deposit imposed on non-returnable bottles is leading to the introduction of beer in PET bottles.

The firm is also looking at diversification. Different discount food chains have already ordered complete filling lines from Krones and in addition to the group's traditionally strong position in the beverage industry, more and more business is being carried out in the non-beverage sector.

Krones remains optimistic that business will remain solid. It anticipates that sales will amount to over €1.4 billion at the end of the year, which corresponds to a 9 per cent increase. The annual profit after tax will exceed €60 million for the first time ever, according to the company.

However, the group's overall assessment of the economic situation remains realistic. There is still no sign of a radical improvement in the industry as a whole, and a stimulation of investment in the beverage industry is not in sight. There is also no end to the pricing pressure in the foreseeable future.

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