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Report on the First Quarter 2014/15 (May – July 2014) of Zumtobel Group AG: Lighting group generates planned revenue and earnings growth in first quarter
02.09.2014
  • LED share of revenues exceeds 40% for the first time
  • First quarter revenues rise by 4.6% to EUR 323.5 million (prior year: EUR 309.3 million)
  • Adjusted EBIT increases 7.5% to EUR 19.1 million (prior year: EUR 17.7 million)
  • Restructuring of lighting group proceeding as planned
  • Management Board confirms outlook for full year

Dornbirn / Austria – Zumtobel Group AG recorded sound revenue and earnings growth in the first quarter of the current financial year (May to July 2014). Revenues increased 4.6% year-on-year to EUR 323.5 million (prior year: EUR 309.3 million). Operating earnings adjusted for special effects (adjusted EBIT) rose 7.5% over the comparable prior year period to EUR 19.1 million (prior year: EUR 17.7 million). This represents a return on sales (adjusted EBIT margin) of 5.9% (prior year: 5.7%). The strategic reorientation of this international lighting group and the implementation of the related restructuring projects are proceeding as planned. First successes have been recorded, above all from the new multi-brand organisation and the intensified Group-wide cooperation:

The first quarter of 2014/15 fully met our expectations for revenues and earnings, whereby I am particularly pleased with the development of business in markets like Great Britain and the Middle East. The Group’s presence in these markets has covered both lighting brands for many years, and we can now generate further growth through the new multi-brand organisation. Our goal is to create a foundation that will allow us to utilise this potential in all regions“, indicated Ulrich Schumacher, CEO of Zumtobel Group AG.

LED share of revenues exceeds 40% for first time
In both the Lighting and Components Segments, the Zumtobel Group is well positioned to gain above-average benefits from the technology shift to LED. Innovative LED products are already responsible for major parts of the core business of Zumtobel Group AG. Revenues from the sale of LED products rose by 56.0% year-on-year to EUR 139.3 million in the first quarter of 2014/15 (prior year: EUR 89.3 million). During a period of only 12 months, the LED share of Group revenues increased from 28.9% to 43.1% in the first quarter of 2014/15.

Sound development in Lighting and Components Segments
A detailed analysis of results shows sound development in both the Lighting and Components Segments. The Lighting Segment benefited, above all, from stabilisation in the European commercial construction industry as well as positive impulses from the newly implemented multi-brand sales structure. Segment revenues rose by 5.9% to EUR 243.4 million (prior year: EUR 229.9 million).
The Components Segment recorded a solid improvement in revenues from the sale of LED products, with an increase of 76.8% to EUR 45.2 million in the first quarter. This confirms the strategic decision to concentrate resources more directly on LED technology. The increase in revenues from LED components was able to fully offset the declining demand for electronic ballasts. This growth also largely offset the end of revenues due to the exit from magnetic technology and the sale of the connecting clamp business. Segment revenues fell by 3.1% to EUR 96.6 million in the reporting quarter (prior year: EUR 99.7 million).

Growth in the key core markets of Great Britain and Germany
Business development differed on a regional basis during the first quarter of 2014/15. In the D/A/CH markets, an important region for Zumtobel Group AG, revenues rose by 5.5% to EUR 92.1 million. Sound revenue growth was recorded above all in Germany, in particular due to large orders from the retail trade. In the Northern Europe region, Great Britain served as the growth driver.
The Middle East & Africa continued to generate solid growth with an increase of 5.3% in revenues to EUR 34.3 million. Business in the Asia & Pacific region was affected by negative foreign exchange effects and the exit from magnetic technology; in addition, the region is also undergoing extensive restructuring. After a very weak first quarter in 2013/14, North America recorded revenue growth of 26.3% in the reporting quarter.

Higher investments in LED equipment
Investments in property, plant and equipment for various production facilities totalled EUR 14.2 million in the first quarter of 2014/15 (prior year: EUR 11.9 million). A substantial part of these investments was related to the production of LED volume products in Dornbirn.

Restructuring proceeding as planned
In connection with the transformation process for this lighting group, the management of Zumtobel Group AG has identified and in part implemented a number of necessary restructuring projects. The related measures in the Lighting Segment involve the combination of the sales organisations and the adjustment of production capacity. The restructuring projects in the Components Segment are related to the technology shift to LED and an increased focus on the core business. The special effects related to the restructuring amounted to EUR 10.0 million in the reporting quarter (prior year: EUR 6.9 million). These negative special effects were responsible for a decline in net profit to EUR 5.7 million in the first quarter of 2014/15 (prior year: EUR 6.7 million).

Workforce totals 7,206 full-time equivalents
The total number of employees in Zumtobel Group AG declined 1.2% below the level at the end of the 2013/14 financial year to 7,206 full-time equivalents, including contract workers and excluding apprentices, as of 30 July 2014 (30 April 2014: 7,291). At the Group level, structural reductions in the plants and sales were contrasted by a volume-related increase in the production area. The number of employees in Austria was reduced by 4.7% year-on-year. This decline resulted from the sale of Tridonic connection technology in Innsbruck and the exit from magnetic technology with the related shutdown of production in Fürstenfeld. The number of employees in Vorarlberg increased in comparison with the previous year: the workforce in Vorarlberg totalled 1,888 as of 31 July 2014 (full-time equivalents, including contract workers and excluding apprentices), which represents an increase of 91 FTE (plus 4.8%) over the level on 31 July 2013.

Management Board confirms outlook for 2014/15 financial year
Based on the continuing stable economic environment and the expected cost savings from the measures implemented to date, the Management Board confirms the previously communicated 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%). The necessary restructuring measures will result in negative special effects of approx. EUR 20 million on earnings during 2014/15. The first quarter results show that Zumtobel Group AG is also on the right course to gradually increase the adjusted EBIT margin from the current level of 3.8% to 8% to 10% by 2016/17.

Note:
The annual general meeting approved a change in the name of Zumtobel AG to Zumtobel Group AG. The change in the name was recorded in the commercial register and is now official. Please use this new name in your reporting.


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

Contact Investor Relations
Harald Albrecht
Head of Investor Relations
Tel. +43-(0)5572 509-1125
harald.albrecht@zumtobelgroup.com



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