Dornbirn / Austria – Zumtobel Group AG made excellent progress during the first three quarters of the current financial year (May 2014 to January 2015): The strategic reorientation and implementation of restructuring measures are generally proceeding as planned. The positive trend in revenues and earnings from the first half-year also continued during the seasonally weak third quarter. Group revenues rose by 4.0% to EUR 962.8 million for the first nine months (prior year: EUR 925.8 million) and by 2.5% (prior year: +1.4%) in the third quarter alone.
The Group‘s innovative and energy-efficient LED lighting and components again served as the most important growth driver. With an increase of 56.6% to EUR 456.8 million (prior year: EUR 291.7 million), the LED share of Group revenues grew from 31.5% in the previous year to 47.4% in the first three quarters of 2014/15. In the third quarter, the Zumtobel Group generated more than half its revenues with LED products for the first time in its history – the LED ratio rose to 53%.
“We set an important milestone in the third quarter with an LED ratio of over 50%. With our three brands, we are now well-equipped to position the company as an innovation leader in the technological change. The dynamic transformation in the lighting industry will continue. New technological possibilities in the areas of software and controls will allow light to take on entirely new functions – our goal here is to identify market opportunities at an early point in time to offer our customers future-oriented lighting concepts. At the same time, our management focus will remain on the steady implementation of the defined restructuring measures and the resulting improvement in our cost structure“, commented Zumtobel Group CEO Ulrich Schumacher on results for the first nine months of the 2014/15 financial year.
Sound developments in Lighting and Components Segments
A detailed analysis shows that the Lighting Segment (Zumtobel / Thorn), in particular, benefited from the stabilisation in the European commercial construction industry and the newly implemented multi-brand sales structure. Segment revenues rose by 4.1% to EUR 724.8 million in the first three quarters of 2014/15 (prior year: EUR 696.0 million). The development of this business is also supported by the European retail chains that want to convert their shop lighting to LED because of the attractive amortisation periods and have found a reliable, international lighting partner in the Zumtobel Group.
The Components Segment (Tridonic) continues to make very good progress in transforming its business to LED technology. Tridonic recorded an impressive 87.1% increase in LED revenues to EUR 149.4 million for the reporting period (prior year: EUR 79.9 million) and fully offset the declining demand for electronic ballasts as well as the revenues lost by the exit from magnetic technology and the sale of the connecting clamp business. Segment revenues exceeded expectations with an increase of 0.5% to EUR 289.0 million (prior year: EUR 287.6 million).
Major regional differences
The development of revenues differed significantly by region during the reporting period due to the different market environments and the speed of implementation for the restructuring measures and strategic reorientation. Northern Europe remained the growth driver with a plus of 11.0% to EUR 251.6 million, with the largest contribution provided by Great Britain. The D/A/CH region, the strongest market in the Zumtobel Group, recorded a 4.1% increase in revenues to EUR 276.5 million. Benelux & Eastern Europe increased revenues by 8.0% to EUR 86.5 million in the first nine months.
In the Southern Europe and Latin America region, the development of business in France and Italy remained clearly below expectations. Revenues in this region therefore fell by 6.1% to EUR 149.2 million. The Asia & Pacific region is undergoing extensive restructuring. The Components Segment generated sound growth, but the lighting business in Asia remained disappointing. Substantial efforts are still required at the product, cost and process levels in this region to ensure the planned profitable growth. Revenues in the Asia & Pacific region rose by 2.4% to EUR 111.2 million. In the Middle East & Africa region, revenues increased 3.2% to EUR 63.3 million. In North America, revenues reflected the previous year at minus 0.4%.
Improvement in earnings
Group EBIT adjusted for special effects rose by 21.9% to EUR 51.5 million (prior year: EUR 42.2 million). That represents a return on sales (adj. EBIT margin) of 5.3% (prior year: 4.6%). Both the Lighting Segment (Zumtobel / Thorn) and the Components Segment (Tridonic) reported an improvement in adjusted earnings over the comparable prior year period. The earnings growth was supported by the increase in revenues and the first positive effects from the adjustment of plant capacity, the merger of the previously separate Zumtobel and Thorn sales organisations and the Group-wide bundling of procurement activities. This was contrasted by a planned increase of 5.5% in development costs to EUR 53.8 million to strengthen the Group’s technology position. Net profit recorded by the Zumtobel Group rose by 28.1% to EUR 15.4 million for the reporting period (prior year: EUR 12.4 million), even though third quarter earnings (EUR -13.4 million // prior year: EUR -6.3 million) were negatively affected, above all, by the increase in the Swiss franc versus the euro.
Workforce at 7,091 full-time equivalent
The workforce declined 2.7% below the level on 30 April 2014 to 7,091 full-time equivalents, including contract workers but excluding apprentices, as of 31 January 2015 (30 April 2014: 7,291). At the Group level, the structural reduction in the plants and sales was contrasted by a volume-related increase in the production area. The number of employees in Austria declined 5.3% year-on-year due to the sale of Tridonic connection technology in Innsbruck and the exit from magnetic technology and the related shutdown of production in Fürstenfeld. The number of employees in Vorarlberg totalled 1,965.6 (full-time equivalents, including contract workers but excluding apprentices) as of 30 January 2015, which represents a year-on-year increase of 85 full-time equivalents (plus 4.5%).
Management Board confirms outlook for the 2014/15 financial year
The Management Board confirms the guidance for the 2014/15 financial year, which calls for an increase of roughly 3% in revenues and an improvement in the adjusted EBIT margin to 5% to 6% (adjusted EBIT margin for FY 2013/14: 3.8%). We are also on the right course regarding our medium-term goal to gradually raise the adjusted EBIT margin to 8% to 10% by 2016/17. Current information indicates that the Zumtobel Group’s earnings will be reduced by approx. EUR 25 million of special effects in 2014/15.
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