GUD Holdings Ltd, Australia

September 2004

Pump Industry Analyst

Ebara Corp, Japan

GUD Holdings Ltd, Australia

2004

2003

2004

2003

Net Sales Of Which: Fluid Machinery & Systems

66.5

65.7

Sales Revenue

393.8

372.4

35.5

35.6

395.8

373.2

Cost of Sales

58.8

58.7

Operating Revenue Of Which: Davey

72.8

71.9

Gross Profit

7.7

7.0

Cost of Goods Sold

238.9

238.7

R&D Costs

2.0

2.3

53.7

37.3

Operating Income/(Loss) Of Which: Fluid Machinery & Systems

(14.4)

(15.8)

Reported EBIT Of Which: Davey

8.3

7.4

(8.6)

(8.0)

47.5

(10.3)

(7.6)

Trading EBIT Of Which: Davey

67.1

Net Income/(Loss)

8.6

7.7

Orders Received Of Which: Fluid Machinery & Systems

121.1

114.6

35.5

21.8

47.4

47.3

Net Profit after Tax Of Which: Davey

5.1

4.7

Backlog of Orders Received Of Which: Fluid Machinery & Systems

329.0

364.5

No of Employees

1086

1111

123.1

128.2

2.3

2.4

R&D Expenses

COMMENT

COMMENT Ebara’s Fluid Machinery & Systems division - which includes pumps, blowers, turbocompressors, gas and steam turbines, chillers, machinery plant and pumping system engineering - has been focusing its domestic market efforts on growing private sector replacement equipment orders, where investment demand is rising. As a result, Ebara’s first quarter sales of fluid machinery and systems held firm. In the public sector, project budgets were cut further, and demand for fluid machinery plants was stagnant. In overseas markets, the group concentrated

on expanding sales of pumps, compressors and other equipment to the petrochemical, electric power and other industries in China, Southeast Asia and the Middle East. Sales for the quarter, at ¥35 484 million, were 0.2% down on the same quarter of the previous year. The operating loss for the quarter was ¥8576 million, which is a ¥555 million decline from a year earlier. Looking ahead, Ebara is currently forecasting Fluid Machinery & Systems net sales of ¥245 000 million for the year ending 31 March 2005 and ordinary income of ¥7000 million. ■

Davey managed to lift 2004’s profitability despite lower returns from export markets and a more subdued market for firefighter pumps in Australia. The growth came from new products and tight cost controls. During the year, Davey which specializes in pumps and pressure systems for household and farm water, water transfer pumps, swimming pool pumps and filters and spa bath pumps and manufactures 80% of its products - faced increased competition from imports, given the strength of the Australian dollar. In a corporatefile.com.au Open Briefing interview, GUD CEO Ian Campbell said that the fact that Davey was still able to achieve double-digit profit growth during the year was a credit to its management team. In terms of exports Campbell admits that Davey

is prepared to accept a lower level of profitability in key long-term markets like the US in order to maintain the distribution channels that the company has established over the last few years. Campbell says that the challenge now for Davey is to find new ways to reduce costs so that the business can compete profitably in the US market. At the end of April 2004, Davey completed the acquisition of New Zealand’s SpaQuip Ltd, a manufacturer and supplier of pumps and filters with annual sales of about A$14 million (see Pump Industry Analyst, June 2004). In the Open Briefing interview, Campbell said that they regard Spa-Quip as entirely complementary to Davey and believe they can derive strong synergies in distributing SpaQuip’s outdoor spa pool products through Davey’s dealer network. ■

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COMPANY WATCH

Key Figures (A$ million) Year ended 30.6

Key Figures (¥ billion) First quarter ended 30.6