Dornbirn, Austria – The international lighting group Zumtobel Group has reported a substantial improvement in first-half profitability. Adjusted EBIT increased to EUR 52.0 million (previous year: EUR 42.3 million), while net profit for the period reached EUR 27.6 million matching the prior-year level (EUR 27.5 million) despite the increase in negative special effects.
Revenues impacted by foreign exchange effects
In a generally challenging industry environment, Group revenues for the first half of 2016/17 totalled EUR 667.3 million, roughly 5% below the high prior-year value (EUR 702.0 million). This decline was driven not least by substantial negative foreign exchange effects of EUR 24.3 million and the absence of revenues from the signage business which was sold in November 2015. The foreign exchange effects resulted largely from the increasing strength of the euro against the British pound. After adjustment for foreign exchange effects, the Group’s first-half revenues fell 1.5%. The dynamic growth with LED products remains unbroken: Revenues from the sale of LED products increased by 10.4% year-on-year to EUR 478.8 million (previous year: EUR 433.7 million). Thus over the past 12 months the LED share of Group revenues has risen to 71.8% (31.10.2015 61,8%).
Stable development in UK following BREXIT referendum
The first half of 2016/17 was characterised by widely different regional developments. In the UK, the most important single market for the Zumtobel Group, business remained stable following the BREXIT referendum, although it was impacted by substantial negative foreign exchange effects. Development remained weak in Australia, the Middle East and Switzerland, while project activities in France have not yet been reflected in revenues. Developments in Italy, Austria, the USA and the Benelux & Eastern European region, by contrast, were very positive.
Substantial improvement in profitability
The restructuring measures implemented to date made a positive impact on first-half profitability. Group EBIT adjusted for special effects rose from EUR 42.3 million to EUR 52.0 million in the reporting period, or by 23.0% year-on-year. Despite continued pressure on prices, the return on sales improved from 6.0% to 7.8%. This resulted primarily from efficiency improvements in the production and sales segments, as well as from the enhanced cost structure of the products introduced in the previous financial year. Negative special effects from the transformation process of the Zumtobel Group totalled EUR 7.7 million in the first half of 2016/17 (previous year: EUR 5.4 million). These effects are mainly related to the closure of the production plant in Usingen (Germany) on 31 December 2016. Despite the increase in negative special effects and a decline in financial results, net profit for the period matched the prior-year level, reaching EUR 27.6 million (previous year: EUR 27.5 million). Another positive development was the sustained improvement in free cash flow. Due not least to rigorous working capital management, the Group posted positive free cash flow of EUR 41.5 million (previous year: minus EUR 24.9 million).
“In recent months and years we have introduced targeted measures to improve the profitability of the Zumtobel Group,” said Zumtobel Group CEO Ulrich Schumacher. “This is now clear for all to see and shows that, with the steady implementation of the necessary restructuring measures, we are on the right course to successfully position the company for the future. On the one hand we are focused on putting in place competitive cost structures. On the other we are investing heavily in the technologies of the future in the context of the Internet of Things, and in setting up an effective and efficient service unit. Major projects like the EUR 22 million order from UK supermarket chain Wilko for whom we are handling all aspects of the lighting solution in 380 branches, show where we can leverage further growth opportunities as an international lighting group.”
Headcount: 6,707 full-time equivalents
Compared to the balance sheet date (30 April 2016) the size of the workforce has shown a slight decline. The Zumtobel Group currently has 6,707 full-time employees worldwide, including contract workers but not including apprentices (30 April 2016: 6,761; minus 0.8%). In Austria the number of employees rose by 142 in the first half-year to 2,453, due to an increase in the number of contract workers. The headcount at the Group’s headquarters in Dornbirn, Austria totals 2,180 full-time equivalents (30 April 2016: 2,083).
Full year outlook for 2016/17 confirmed
The continuing low visibility and high volatility on the foreign exchange markets make it very difficult to reliably forecast revenues and earnings for the 2016/17 financial year. Based on the solid first half-year results and the substantial improvement of the cost structure, the Management Board of the Zumtobel Group continues to expect a slight year-on-year improvement in adjusted Group EBIT (previous year: EUR 58.7 million).
Head of Corporate Communications
Tel. +43-(0)5572 509-575
Kontakt Investor Relations
VP Investor Relations
Tel. +43-(0)5572 509-1125