Dornbirn, Austria – In the third quarter of the 2016/17 financial year the Zumtobel Group showed very positive operating development. In the first nine months of the current financial year, Group EBIT adjusted for special effects rose to EUR 62.0 million, compared to EUR 47.8 million in the comparable prior-year period. Net profit for the period was slightly up on the prior-year level, reaching EUR 29.8 million (previous year: EUR 29.2 million).
FX-adjusted revenues show an increase in Q3
In the third quarter the Zumtobel Group nearly matched the comparable prior period revenues for the first time in this financial year at EUR 306.1 million (previous year: EUR 307.9 million; minus 0.6%). Adjusted for negative foreign exchange effects, this equates to a 2.8% rise in revenues. Total group revenues declined by 3.6% year-on-year to EUR 973.4 million in the first three quarters of 2016/17 (previous year: EUR 1,009.9 million). The development of revenues was influenced by substantial negative foreign exchange effects in the amount of EUR 34.6 million, due above all to the strength of the euro against the British pound. Another contributory factor was the absence of revenues from the signage business which was sold in November 2015. After adjustment for foreign exchange effects, Group revenues declined by 0.2% in the first three quarters. The dynamic growth with LED products remains unbroken: revenues from the sale of LED products increased by 11.7% year-on-year to EUR 709.5 million (previous year: EUR 634.9 million), as the LED share of Group revenues rose to 72.9% within 12 months (31 January 2016: 62.9%).
Different regional trends; stable revenue growth in Great Britain
In a generally challenging and volatile industry environment, regional trends remain widely different. In Great Britain revenue growth has remained stable since the BREXIT referendum. Revenues in Northern Europe fell by 6.9% to EUR 252.3 million, in a development influenced by strong negative foreign exchange effects from the British pound. Indeed, after adjustment for these foreign exchange effects, regional revenues showed a 5.0% increase. Revenue development remains weak in Australia, France, Switzerland and, above all, across the Middle East, influenced by the increasing tensions in the political and economic environment during recent quarters. In contrast, development is very positive in the Benelux & East Europe region, as well as in Austria, the USA and Italy.
Marked improvement in profitability
The measures introduced to improve cost structures are having a clear positive impact on the development of earnings: Group EBIT adjusted for special effects rose by 29.9% from EUR 47.8 million to EUR 62.0 million in spite of the lower revenues. Consequently, the return on sales improved from 4.7% to 6.4%. Both the Lighting and Components segments clearly exceeded the respective prior year results in the first three quarters. The Lighting Segment, which was also the focus of restructuring efforts in the previous year, reported a 19.0% improvement in adjusted EBIT to EUR 46.4 million (previous year: EUR 39.0 million), while the Components Segment recorded an 8.6% increase to EUR 30.8 million (previous year: EUR 28.4 million). Net profit for the period was slightly higher than the previous year at EUR 29.8 million (previous year: EUR 29.2 million). Working capital and free cash flow continued their positive development. On 31 January 2017 working capital totalled EUR 240.0 million, which was EUR 16.5 million lower than on 31 January 2016. Free cash flow showed a marked rise to EUR 40.6 million in the first three quarters of 2016/17 (previous year: minus EUR 10.1 million).
“It is very positive to see that our efforts to improve cost structures were clearly visible in nearly all functional areas during the first nine months. In the third quarter of the current financial year we initiated and implemented a series of important measures. These include our efforts to improve the competitive position of our global integrated production network, as well as to prepare the ground for the further development of our business with a view to the future. One milestone here is the creation of the new Zumtobel Group Services (zgs) business unit that will be making its market debut in the course of this week. In this unit, with its 240 staff, we are bringing together our full range of competencies in the service sector to enable us to offer our customers an extensive and innovative portfolio of services from a single source,” says Zumtobel Group CEO Ulrich Schumacher.
Slight reduction in headcount
Compared to the balance-sheet date (30 April 2016) the size of the workforce has shown a slight decline. The Zumtobel Group currently has 6,615 full-time equivalents worldwide, including contract workers but not including apprentices (30 April 2016: 6,761; minus 2.2%). In Austria the number of employees rose by 109 in the first nine months to 2,420. The headcount at the Group’s headquarters in Dornbirn, Austria totals 2,144 full-time equivalents (30 April 2016: 2,083).
Outlook: More specific earnings guidance for full 2016/17 financial year
Based on the solid development of business in the first three quarters and the visible improvement in cost structures, the Management Board of the Zumtobel Group is issuing more specific guidance for earnings in the current financial year and now expects operating earnings (adjusted EBIT) of approx. EUR 70 million. The former earnings guidance (adjusted EBIT) indicated a slight improvement over the previous year (previous year: EUR 58.7 million).
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