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Zumtobel AG 1st Quarter Report (May-July): Efficiency programme proves an effective remedy to the crisis
15.09.2009
  • Revenues down 12% at EUR 278.6 million; -10.2% adjusted for foreign exchange effects
  • EBIT reaches EUR 19.2 million (-28.9%)
  • EBIT margin falls to 6.9% (PY: 8.5%)
  • Sales and administration expenses cut by a further EUR 10 million in Q1.
  • LED business continues to show strong growth at +41.1%
  • Outlook: Management Board reaffirms savings target of up to EUR 100 million

Dornbirn, Austria – The Zumtobel Group, based in Dornbirn, Austria, continues to feel the effects of the global economic crisis in the new 2009/10 financial year. In the first quarter (May – July) consolidated revenues fell 12% to EUR 278.6 million (prior year: EUR 316.7 million). Along with the global economic crisis, negative foreign exchange effects primarily related to the weak British Pound continued to impact on revenues. After adjustment for these effects, the drop in sales amounted to 10.2%. Earnings before interest and taxes (EBIT) reached EUR 19.2 million (PY: EUR 27 million, -28.9%). First-quarter EBIT was strongly influenced by non-recurring license fee income on the one hand and negative restructuring charges on the other, particularly in connection with the efficiency programme Excellerate. The EBIT margin attained a respectable 6.9% (PY: 8.5%) given the difficult business environment. Net income for the first quarter totalled EUR 10.2 million (PY: EUR 14.3 million; -28.7%).

"To counteract the crisis we focussing on the implementation of our efficiency programme and the first results of the measures introduced to date are clearly visible. In the first quarter of 2009/10 alone we have cut our sales and administration expenses by a further EUR 10 million. This means that over the past nine months we have reduced our current expenses by roughly EUR 30 million. That gives us the room for manoeuvre that we need to safeguard our liquidity in these tough times, while at the same time making targeted investments in selected technologies and markets of the future," explained Zumtobel Group CEO Andreas Ludwig.

Downturns in both segments and almost all regions
Both segments – lighting and components – were hit by a marked downturn in revenues. While the lighting business was affected disproportionately by negative foreign exchange effects, posting an 11.6% downturn in revenues to EUR 207.5 million (-9.8% after adjustment for foreign exchange effects), the components business had to contend with a somewhat larger decline in volume, as revenues fell 14.4% to EUR 87.8 million (-13% after adjustment for foreign exchange effects). In the components segment the technology shift from conventional magnetic ballasts to the more sophisticated electronic ballasts continued. A regional breakdown reveals that all markets, with the exception of Asia, showed a marked drop in revenues. In the German-speaking region, revenues fell 6.7% to EUR 72.8 million. Business in Western Europe too (including the UK) was down 15.6% at EUR 87 million. Adjusted for the negative foreign exchange effects, the downturn amounted to approximately 10%. Europe as a whole posted a 14.3% decline as revenues reached EUR 220.9 million, which equates to 79.3% of the Q1 total. In Asia, revenues rose 8.6% to EUR 23.5 million, or by +2.3% after adjustment for foreign exchange effects. The Group's LED business showed further positive development as revenues from the sale of LED-based products saw a first-quarter rise of 41.4% to stand at EUR 15.8 million.

Year-on-year reduction in the workforce
Compared to the 31 July 2008, the headcount (full-time equivalent – FTE – including temporary workers) showed a drop of 709 employees. On the balance sheet date (April 30, 2009) the size of the workforce showed a slight seasonal increase, with numbers rising from 7,165 to 7,280. This was mainly due to additional temporary workers hired over the summer months.

Financing remains sound
In terms of balance sheet structure and liquidity, the Zumtobel Group's position remains very sound. The equity ratio remains unchanged over the previous year at 43.8%, with a debt coverage ratio of 1.71. This means that the Zumtobel Group comfortably meets its covenants under the loan agreement that expires in 2013. In line with the usual seasonal patterns, free cash flow is negative but at EUR -13.8 million on 31 July 2009 remains at the healthy level of the previous year.

Outlook: Management Board reaffirms savings target
The outlook for the Zumtobel Group remains beset by great uncertainty. Given the late-cycle nature of the lighting business, with lighting being one of the last items to be installed in new or renovated buildings, the Management Board is not expecting the crisis to bottom out until 2010: "We envisage having to contend with substantial downturns in revenues and earnings over the full current financial year, although the decline should prove more moderate in the second half-year in view of the lower prior year comparative values. So we are standing by our target of attaining savings of up to EUR 100 million by the end of the next financial year. That said, the results for the first quarter make us optimistic that this year, as planned, we will be able to sustain free cash flow at a positive level," said Andreas Ludwig, explaining the outlook of the Management Board.

Q1 at a glance:

in Mio EUR

 Q1 2009/10

 Q1 2008/09

Change in % 

Revenues

 278.6

 316.7

 (12.0)

Adjusted EBIT

 22.8

 28.0

 (18.5)

as a % from revenues

 8.2

 8.8

 
EBIT

 19.2

27.0

 (28.9)

as a  % from revenues

6.9

8.5

Profit before tax

 11.4

 17.0

(33.3)

Net profit for the period

10.2

14.3

(28.7)

Earnings per share (in EUR)

0.25

0.31

(20.7)

in Mio EUR

 31 July 2009

30 April 2009

Total assets

 1,069.0

 1,135.8

Equity 468.1 497.5
Equity ratio in %

43.8

43.8

Net debts  175.7 167.6
Cashflow from operating results 29.4 34.2
Investments

7.8

14.5

Headcount incl. contract worker (full-time equivalent) 7,280 7,989

Media contact
Astrid Kühn-Ulrich
Head of Corporate Communications
Tel. +43-(0)5572 509-1570
astrid.kuehn@zumtobel.com


Investor Relations contact
Harald Albrecht
Head of Investor Relations
Tel. +43-(0)5572509-1125
harald.albrecht@zumtobel.com




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