Claas maintains sales despite decline in farm machinery market

Members of the Claas executive board at the company's 2014 results conference, from left, Hans Lamp

Members of the Claas executive board at the company's 2014 results conference, from left, Hans Lampert (finance), Lothar Kriszun ( tractors) and Jan-Hendrik Mohr (sales). - Credit: Archant

International agricultural machinery company Claas, whose UK business is based at Saxham, near Bury St Edmunds, has reported broadly flat annual sales, despite a “significantly smaller overall market”.

Claas, which is based at Harsewinkel in Germany, posted total sales of 3.823billion euros (about £3.037bn) for the year to September 30, compared with 3.825bn euros euros the previous year.

Pre-tax profits fell by nearly half, to 155.1million euros (about £123.2m) from 295.3m euros, which Claas said largely reflected increased costs due to the switchover to new engine emission standards and events in eastern Europe.

Claas said growth had remained subdued in Western Europe while the Eastern Europe and Latin American markets had deteriorated as a result of economic and political uncertainty.

Markets were also down in Asia and North America, although Claas reported some positive developments in both terrirories.

“Further complicating the situation were worldwide reductions in commodity prices, which noticeably reduced the willingness of the agricultural sector to invest. Despite this, sales at CLAAS remained stable,” it added.

The company also said it had continued to invest in developing its international structures and expanding its product portfolio in order to further develop its market presence.

Most Read

In China, the largest and fastest-growing agricultural machinery market in Asia, a takeover of Shandong Jinyee Machinery Manufacturing Co. Ltd. with around 1,200 employees, was completed in January 2014, with the business contributing to a significant increase in sales in Asia.

The company added that a new management structure within its sales division would help it to target opportunities in individual markets.

The acquisition in China helped lift the company’s worldwide workforce to 11,407 at the year-end, up from 9,697 12 months earlier, meaning that one in every 10 of its employees is now based in China and, for the first time, that Claas now employs more people outside Germany (54.5%, against 48.7% a year ago) than within its home country.

Claas also increased its investment in research and development, from 197m euros in the previous 12 months to 212.3m euros (about £169m), and representing 5.6% of sales against 5.2% the previous year.

“The areas of emphasis were new models and further developments to harvesting machines and tractors,” it added. “In addition, there has been an ongoing effort to convert engine technology to comply with the new statutory emissions standards.”

Lothar Kriszun, spokesman of the CLAAS executive board, said: “In 2014, we remained successful despite the difficult economic and geopolitical circumstances and were able to further expand our market share in key products such as combine harvesters and tractors. At the same time, great progress was made on the internationalisation of Claas.”

In the UK, Claas generated sales after discounts of £204m, an increase of 4% from £196m the previous year, while pre-tax profits grew 6%, to £5.3m from £5m.

Looking ahead, the company added that the global outlook for 2015 was for sales and profits to remain largely in line with the past year.