After a record year in 2008, the worldwide market for agricultural machinery suffered significant declines in some areas. The VDMA (German Engineering Federation) estimates that industry turnover dropped by 25% in 2009. Volatile markets for agricultural products along with the worldwide financial crisis and recession created challenging circumstances for many people. Against this background, the sales of the Claas Group declined 10.4%. Although profit was 54.7% below the value from the previous year, this still represents a respectable result within the industry. Claas was able to maintain or even improve its market position in important markets.
Outside of Europe, sales of agricultural machinery dropped overall. However, there were differences in trends between individual regions. Sales dropped in central Asian countries, but sales in the USA increased significantly. Production engineering and industrial engineering segments weaken sales through the production engineering segment dropping significantly in the past financial year by 17.9%.
Claas Fertigungstechnik (production engineering segment) is a supplier to the international aviation and automotive industry. Both industries are currently going through periods of major restructuring and are characterized by uncertainty. Claas Industrietechnik (industrial engineering segment), a system supplier of drive technology, hydraulic systems and electronics, was also unable to escape the difficult conditions unscathed.
Investment in R&D further increased. Accordingly, expenditure on R&D amounted to 4.3% of turnover (previous year: 3.5%). This further increase in expenditure on development emphasizes the value that the Claas Group places on investment in the future, even in tough economic times. The main areas of R&D activity in 2009 included the extension of the tractor product range with the addition of the 4x4 XERION 5000 / 4500 large tractors for the heavy duty segment in Europe (up to 524 hp). This machine received the award for "Machine of The Year" at Agritechnica held in November 2009 in Hanover, Germany. Claas also had two further innovations receive gold medals from the DLG (German Agricultural Society).
On September 30, 2009, the Claas Group had 9,467 employees (previous year: 9,100), with over 40% of these based outside of Germany. Despite this increase in the number of employees, personnel expenses were maintained at the level of 2008. The main reasons for this included the development of capacity in growth markets, greater investment in training, the effect of variable compensation systems and the use of short-time work. Even in difficult economic conditions, the human resources policy of Claas is designed to ensure continuity and a promising future for the company.
Greater difficulty in obtaining finance and the generally uncertain investment climate also had an increasing effect on the ag industry over the past year.
The negative market trends of 2009 will not come to an end in 2010. According to the German Engineering Federation, a further market decline of at least 10% is expected in the agricultural machinery sector. Nevertheless, initial signs of stabilization in the markets are becoming apparent. This applies both to raw material prices and to the development of interest rates and exchange rates.
The overall economic conditions remain affected by the ongoing crisis on the financial markets. CLAAS has prepared itself for this situation with cautious production and sales plans. The company is also counteracting these possible negative trends with a comprehensive program of cost reduction and efficiency improvements. As part of this "Fitness 2010" program, all business processes and operational cost centers are being carefully examined.
The long-term positive trends in the agricultural machinery sector remain intact: population growth and increasing demand for food by the world's population, increasing scarcity of land and use of land for the production of renewable raw materials will have a long-term positive effect on demand for the latest agricultural machinery.
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