Report for the third quarter 2011

Dear shareholders and friends of Krones,

After a very strong second quarter, we wrote the following in order to quell any exuberance that might be brewing: »The past has taught us how quickly the overall economic situation can change for the worse.« Those words have proven sadly prophetic. As the sovereign debt crisis and the ensuing euro crisis have escalated sharply in recent months and madness has reigned on the world’s stock markets, the economic outlook has turned increasingly bleak. More and more economic think tanks are dialling down their growth forecasts. Fears of recession have resurged even as the economy is doing well.

Most industries in Germany are reporting strong growth and the sense of crisis seems unjustified given the current figures. At Krones, too, the order books are well filled and our key figures for the first nine months of 2011 are up considerably over last year. Although our earnings performance was flat in the third quarter due to hiring, we are cautiously optimistic about the remainder of the year. It is difficult to predict what the new year will bring. If the turmoil on the capital markets drags the global economy down, our business will not be left completely unscathed.

We hope the doomsayers will be proven wrong and it will not come to a recession. But Krones has never placed its fate in the hands of hope. Back in 2010, we launched a new strategy programme entitled »Value« to ready our company for the rigours of a more volatile economy. With »Value«, we are harnessing our strengths to shape Krones’ future. Together with our employees we will do whatever it takes to keep Krones on track for success, come what may.

 

Volker Kronseder
Chairman of the Executive Board

Hans-Jürgen Thaus
Deputy Chairman of the Executive Board