• Revenues up 1.8% after adjustment for foreign exchange effects
• Positive development in growth markets: Eastern Europe + 31.1%, Asia + 5.5%
• LED business continues to expand: + 35.1%
• Negative currency effects slow the pace of growth
• EBIT margin reaches 8.8%
• Management Board reaffirms full-year goals
Dornbirn, Austria – The Zumtobel Group based in Dornbirn, Austria has made the expected solid start to the new financial year. Despite a difficult economic climate, the international lighting group reported first quarter growth (May to July) of 1.8% after adjustment for foreign exchange translation effects. With the strong euro reducing nominal growth by 2%, revenues totalled EUR 316.7 million (2007/08: EUR 323.1 million). Thus, as expected, the negative currency translation effects – in particular resulting from the strong performance of the euro against the British Pound– added up to EUR 12.3 million in the reporting period. As a result, the development of earnings too was impacted not only by higher personnel expenses but also by foreign exchange factors. The company posted adjusted earnings before interest and taxes (EBIT) of EUR 28 million (2007/08: EUR 33.3 million). This equates to an EBIT margin of 8.8% or a drop of 150 basis points compared to the prior-year period.
"Our progress in the first quarter was in line with our expectations, given the current market environment. Along with negative currency translation effects and the additional impacts of high collective bargaining agreements and the increase in the strength of our sales force, we are also feeling the effects of increasing market volatility due to the uncertain economic climate. Against this backdrop, we are content with our start to the new financial year," said Zumtobel Group CEO Andreas Ludwig
, commenting on the Group's performance.
Developments by segment
The Zumtobel Lighting Division with the Zumtobel and Thorn brands posted first-quarter growth of 3.4% after adjustment for currency translation effects, which were above-average, given the high proportion of revenues accounted for by the UK market. In nominal terms the division reported revenues of EUR 234.7 million (- 0.5%). The components business of TridonicAtco returned revenues of EUR 102.6 million (nominal - 2.3%, adjusted for currency translation effects + 0.7%). The slowdown in the pace of growth compared to the previous year was primarily due to the weaker market environment in Southern Europe. The LED business continued to make dynamic progress: revenues from LED products and solutions rose 35.1% in the first quarter to reach EUR 11.6 million (2007/08: EUR 8.6 Mio).
Developments by region
A regional breakdown reveals that the Zumtobel Group posted continuing solid growth in the German-speaking markets (D-A-CH) where revenues were up 2.9%. The 9.1% downturn in revenues in Western Europe was primarily due to the fall in the value of the British Pound. The lighting group's growth markets reported very positive upward trends, with Eastern Europe moving ahead 31.1% and Asia returning 5.5% growth. At the same time, developments in Australia and New Zealand remained unsatisfactory, as revenue fell 3% in nominal terms – again remaining slightly ahead of the previous year after adjustment for currency translation effects.
First-quarter earnings / equity ratio
First-quarter earnings amounted to EUR 14.3 million (2007/08: EUR 25.1 million). The main reasons for the downturn over the same period of the previous year are non-recurring costs in the amount of EUR 4.4 million in conjunction with the early refinancing of a loan, and the absence of positive effects from the valuation of foreign currency positions realised in the comparable prior year period. As a result of the dividend payment for the previous financial year, the Group's equity ratio has fallen by comparison with the balance sheet date (30 April 2008) to 43.8%.
Buy-back of own shares
The reporting period included the Annual Shareholders' Meeting of Zumtobel AG at which the Management Board was authorised to buy back the company's own shares up to a limit of ten percent of the share capital. Commencing on 11 August, an initial buy-back programme for 1.9 million shares was initiated. To date, some 300,000 of the company's shares have been repurchased.
The development of business during the first quarter reflected expectations, and the Management Board of the Zumtobel Group is therefore able to confirm the outlook for the 12 months of 2008/09. This financial year will be influenced by a highly volatile economic environment, negative foreign exchange effects and a marked rise in personnel expenses. The Management Board is forecasting growth in revenues of 2 to 3% (after an adjustment for foreign exchange effects) above the weakening commercial construction sector in Europe. In terms of earnings, the Management Board considers an EBIT margin of 8 to 9% to be realistic for 2008/09.