Dornbirn, Austria – In the first quarter of the current financial year (May to July 2017), in what was a challenging business environment for the industry, earnings at the Zumtobel Group lighting group approached the strong performance of the prior-year period. Adjusted EBIT totalled EUR 18.2 million (previous year: EUR 20.1 million).
Revenues impacted by currency translation effects and weak sectoral development
In the first quarter of the current financial year, Group revenue development was impacted by negative currency translation effects of EUR 6.2 million, above all due to the appreciation of the euro against the British pound. As a result of the late cyclical nature of the lighting business, like many of its competitors in the professional lighting industry, the company was not yet able to benefit to the anticipated extent from the improved economic outlook for the European construction sector. In this difficult environment for the industry, Zumtobel Group revenues declined by 2.6% to EUR 317.2 million (FX-adjusted minus 0.7%). The Zumtobel Group continued to report dynamic growth in the field of innovative and energy-efficient LED products. Thus, total revenues from the sale of LED products rose by 8.0% year-on-year, leading to an increase in the LED share of Group revenues from 69.9% to 77.5% within 12 months. The newly established Zumtobel Group Services unit (ZGS) which bundles all the Group’s project- and software-related offerings also reported sound development with an increase of 9.5% in revenues to EUR 43.3 million. ZGS has successfully positioned itself in the marketplace with projects in the field of light contracting, such as for a handball arena in Hard, Austria and a connected lighting solution for Land Securities, the largest commercial property company in the UK.
Revenues by region
A breakdown by region reveals continuing weakness in the French and Australian markets, joined more recently by America. In the D/A/CH region, Germany, Austria and Switzerland, the strongest market for the Zumtobel Group, revenues reflected the previous year in Austria, but were slightly lower in Switzerland and Germany. Influenced by strong negative foreign exchange effects revenues in Northern Europe fell by 7.3% to EUR 77.6 million. After adjustment for these effects, revenues were just 0.5% down on the high prior-year level. The Benelux & Eastern Europe region also continued the sound trend from previous years during the reporting period with an increase of 10.7% in revenues (FX-adjusted: plus 11.6%) to EUR 43.4 million.
Higher sales expenditures to strengthen market position
Despite the lack of revenue growth, Group EBIT adjusted for special effects was only slightly lower year-on-year at EUR 18.2 million in the first quarter of 2017/18 (previous year: EUR 20.1 million, minus 9.5%). Efforts to strengthen the cost position were able to largely offset the continuing pressure on prices, the negative currency translation effects and investments in future growth through higher sales expenditures. Net profit for the period totalled EUR 9.7 million (previous year: EUR 12.6 million, minus 22.9%).
“In a highly challenging business environment for our industry, we were almost able to follow on from the successes of a strong previous year. With the measures that we have already implemented in the strategic redirection of the Zumtobel Group we are on a very sound course and have put in place strong foundations for profitable growth. On the one hand we are focused on improving the profitability of and expanding our traditional business with luminaires and lighting components. On the other hand we are developing and establishing new business models, in particular in the field of service offerings and connected light. In this future-oriented area we can see new opportunities for growth that we will leverage systematically,” says Zumtobel Group CEO Ulrich Schumacher.
Headcount: 6,453 full-time equivalents
Compared to the balance-sheet date (30 April 2017) the size of the workforce remained almost unchanged. The Zumtobel Group currently has 6,453 full-time employees, including contract workers but not including apprentices (30 April 2017: 6,562; minus 1.7%). In Austria the number of employees declined by 63 in the first quarter to 2,367, mainly due to a reduction in the number of contract workers. The headcount at the Group’s headquarters in Dornbirn, Austria totals 2,107 full-time equivalents
(30 April 2017: 2,157).
Outlook: Revenue and earnings guidance for the full 2017/18 financial year confirmed
As in the previous quarters, the visibility in our business remains low and the regional differences are substantial. We are currently unable to predict with certainty whether the improved economic outlook will be strong enough for demand to regain the necessary and expected momentum during the second half-year. Negative currency effects should gradually decline, and we assume the Components Segment will return to a moderate growth course over the coming months. Against this backdrop, we can confirm our communicated guidance for the 2017/18 financial year with a slight improvement in revenues (FY 2016/17: EUR 1,303.9 million) and adjusted Group EBIT (FY 2016/17: EUR 72.4 million)
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