7 September 2001

Claas prospects look good

By Andy Collings

WITH just two months to go before the end of Claas UKs fiscal year, company boss Clive Last is confident the financial report will reveal healthy profits.

"Revenues have increased in a falling market, we have a strong cash flow and a minimal inventory – in fact we are sold out," he enthuses.

And, while conceding that laudably extolling the virtues of ones own business is almost mandatory, the figures would appear to justify Mr Lasts exhuberance.

In Europe, Claas market share of the combine market rose to 36% from 34% last year and, similarly share increases were recorded for forage harvesters (52% +1%) and round balers (19% +1%). Market share of big square balers remained static at 26% and, in the 200hp+ tractor market share fell by 1% to 6% although in the unofficial high power track market Claas would claim to have a 60% share for its Challengers.

Percentage claims are, of course, important but it is also essential to realise that in Europe total unit sales for all manufacturers fell significantly this year. Combines were down by nearly 1000 units – 8040 to 7110, forage harvesters by about a 100, big balers by almost 200, round balers by an enormous 2000, and 200hp tractors by 400 units.

But Mr Last is optimistic, despite this decline in key market areas.

"Future market indications are encouraging," he says. "Wheat and milk prices are improving and most growers are now achieving lower operating costs through use of larger, more efficient machines and lower labour requirements. Things are starting to look better."

Mr Last predicts cash flow for farming will soon begin to increase and, as result, machinery spend will also increase.

"But not to the levels we were seeing in the early nineties," he insists. A few years ago Mr Last weathered criticism from the industry when he stated that machinery spend would drop by a half.

Few could argue with him on that score now.

"It was the early acknowledgement there was not going to be a "get-out-of-prison-card" for the industry which has enabled our position to be maintained. We looked at our operating costs and those of our dealers and set about reducing them accordingly. It has meant, on occasions, the loss of staff.

"We also realised that, with a falling number of machines being used in the industry, we could not continue to rely on spare part sales as a major source of revenue. We had to make better profits from sales of new machines – which was a difficult concept to get over to our dealers."

Mr Last takes the fall in combine sales to illustrate the spare parts sales predicament.

"In 1994 there were 8000 combines under seven-years-old and 14,000 between eight and 14 years old being operated in the UK. This meant there was a spares market for some 22,000 machines. This year, through an increasing use of larger capacity machines, this figure has dropped to just 13,000 – and the trend is for even smaller totals."

Claas now has 60 dealers in the UK of which it has financial interests in 19. Claas would claim to have a 38% market share of the UKs combine sales, 60% of self-propelled foragers and 30% of the big square baler sales.

The only thorn in the side would appear to be the telehandler operation which continues to struggle to make an effective impact against established competition.

"Its not been an easy year to predict," says Mr Last. &#42