KEMA achieves 48% profit growth in 2008
Favorable market for energy consulting, testing and certification activities.
KEMA has realized continued growth in sales and results over 2008. Global developments in energy, like the transition to sustainable energy and a stronger international position, pushed sales by 13.3% to € 226.7 million (2007: € 200.1 million). Autonomous sales growth increased to 15.2%, while net profit rose by 48.1% to € 16.6 million (2007: € 11.2 million) as a result of higher sales and continued improvement of operating processes. As in 2007, all business units contributed to this growth, which occurred in both the Dutch and the international offices.
Major developments in 2008
KEMA's growth strategy again proved successful in 2008. Autonomous growth, both in the Netherlands and internationally, contributions by new offices and acquisitions, and continued professionalization boosted the operating result by 66.8% to € 15.9 million. The cost level was marginally higher than in 2007. In spite of the economic recession, the markets in which KEMA operates did not show any significant slowdown. Particularly the operations in the U.S. grew strongly (sales up by 22%). The number of FTEs at the end of 2008 increased by 13.4% to 1,751 (end of 2007: 1,544). For the first time in KEMA's 80-year history, the firm’s international staff outnumbered its Dutch staff. Its development in 2007 and 2008 earned KEMA a nomination for the prestigious King Willem I Award in 2008.
Global energy consulting operations benefited from the strong emphasis on transition to sustainable energy, strict environmental targets and regulations, and new technology like 'smart grids' and 'smart metering'. Moreover, there was a strong demand worldwide for services relating to electric power generation and optimization of obsolete energy plant and infrastructure.
KEMA continues to play a prominent role in the field of testing and certification in the high-voltage and medium-voltage sectors. Developments like the installation of ultra-high-voltage lines in China and a strong demand for third-party certificates in the Middle East had a favorable effect. The low-voltage sector also developed positively. The clear trend towards global testing and certification standards, and the strong focus on health, safety and the environment had a positive impact. This also applies to the continued internationalization of manufacturers, retailers and wholesalers of electrical appliances and components.
Innovation
In 2008, KEMA continued to invest in innovation. It commissioned its new Flex Power Grid Lab, while further optimizing and integrating internal innovation processes into the organization. Concrete results of these efforts include successful projects and services in the area of electric transport, energy storage, ‘smart grids’ and ‘smart metering’, 'green buildings’, certification of LED lighting, ultra-high-voltage level testing and sustainable energy. KEMA also further developed services promoting innovation in client organizations, such as support to energy companies in their energy transition process.
Investments
In the past year, KEMA continued to invest in growth and internationalization. A new office was opened in Lisbon and two companies, Northeast Inspection Services, Inc. (NISI) and RLW Analytics, were acquired in the U.S. Existing offices were able to expand and reinforce their positions, like in the United Arab Emirates, Germany, Spain and the U.S. Construction of a new high-voltage laboratory – the world's biggest commercially operating high-voltage lab – was close to completion. KEMA also invested in other test facilities in the Netherlands and abroad, like the moving and expansion of the Shanghai lab. Substantial investments were also made in staff training and processes relating to project and account management and finance. In spite of these investments, KEMA managed to further reinforce its financial position.
Comment by Pier Nabuurs, KEMA CEO:
'Last year was a good one for KEMA. Not only because we continued to improve our results, but also because we reinforced our market position. In 2008 again, we clearly noticed that major global players are calling in our expertise for increasingly more complex projects; not only international energy utilities or producers, but also government bodies. However, the economic recession has intensified and we too will experience an impact. Nevertheless, our focus for 2009 is still on continued growth.'
Financial summary(figures in millions of euros)
Profit and loss account 2008 2007 Movement (%)
Net sales 226.7 200.1 13.3%
Operating result (EBIT) 15.8 9.5 66.8%
Net result 16.6 11.2 48.1%
Balance sheet 2008 2007 Movement (%)
Total 133 112.4 18.3%
Shareholders' equity 64.9 49.6 30.9%
Net liquidities 27.2 27.8 -2.2%
Ratios 2008 2007 Movement
Net margin 7.3% 5.6% –
Return on shareholders' equity 25.6% 22.6% –
Return on capital invested 42.2% 49.6% –
Solvency 49.7% 44.9% –
Workforce (FTEs at year end) 1,751 1,544 13.4%
Prospects
Fundamental developments in the area of energy and testing and certification are promising for KEMA's activities. However, the current global economic situation is unprecedented and will likely affect KEMA as well. At this point, KEMA cannot predict its potential impact on the future results. Nonetheless, KEMA believes it is right on target in continuing its successful implementation of the strategy launched in 2007.
The forecast of continued growth assumes unchanged accounting principles and stable exchange rates, and excludes special items and unforeseen developments.