Krones posted a loss in the first quarter of 2009

Due to the sizeable fall in sales, Krones’ made a loss of EUR 4 million during the first quarter 2009 compared to EUR 45.6 million in earnings before tax a year ago.

The high level of fixed costs, especially salaries and wages, hit Krones’ earnings hard in the year’s first quarter. As Krones is confident that markets will pick up again in the long term, the company intends to retain its permanent staff even though it may be scolded for not laying off people by the investors.

Krones plans to introduce short-time working in June. Under the terms of short-time work compensation provided by the German government, employees usually receive a net wage of approximately 90 percent despite having their hours cut. Short-working is seen as an alternative to redundancy.

In the event that clients remain reluctant to invest, Krones cannot rule out a negative consolidated result for 2009. Krones is highly export-dependent. Nine out of ten plants are exported. Most export markets are currently affected by the economic crisis, but eastern Europe appears to be worst of. In the Ukraine and Hungary, clients have no Euro currency to pay for plant and machinery. Other customers have trouble persuading their banks to give them credit.

Only Africa, the Middle East, Latin America and China provide a glimmer of hope.

However, as many of its customers continue operating their old plant and machinery, Krones’ service division is working round the clock.

Krones does not expect the markets to recover before next year.