Dornbirn, Austria – The 2018/19 transition year developed as expected for the Zumtobel Group. It was characterised by urgently required restructuring measures to stabilise the operating business and improve the Group’s profitability. This required fundamental strategic and organisational changes alongside targeted restructuring and cost-reduction measures in all areas.
„The 2018/19 financial year was a year of transition for the Zumtobel Group. We did our homework and, through the implementation of a restructuring course, improved profitability – which also means we met the guidance for this financial year. Now we are looking towards the future”, comments Zumtobel Group CEO Alfred Felder on the financial results and adds: „The 2019/20 financial year will be a period of transformation for the Zumtobel Group. We have put the past behind us and are on the way back to sustainable success. Our goal is to restart our growth course and further improve profitability.“
Decline in revenues due to weaker market environment, price pressure, political uncertainty and negative foreign exchange effects
Group revenues totalled EUR 1,162.0 million in 2018/19 (minus 2.9% year-on-year). The reasons for the decline included the aggressive price competition in the lighting industry and substantially lower revenues in Great Britain (roughly minus 11%). In Great Britain, revenue development has been negatively influenced by the BREXIT and the related reduction in orders for non-residential construction in that market. After an adjustment for foreign exchange effects – which resulted from the increase in the euro versus the Turkish lira, Australian dollar and Swedish krona – the year-on-year decline in revenues equalled 2.3%.
Year-on-year improvement in profitability: Outlook for FY 2018/19 delivered
Group EBIT adjusted for special effects rose by EUR 8.0 million to EUR 27.6 million in 2018/19, and the return on sales improved from 1.6% to 2.4%. We therefore met our goal for the 2018/19 financial year – which was to record a slight year-on-year improvement in Group EBIT (FY 2017/18: EUR 19.7 million). This improvement in the Group’s profitability resulted, above all, from the efficiency and cost savings measures introduced by the Management Board. Selling and administrative costs fell by a substantial EUR 30.1 million (minus 8.3%) in 2018/19.
Earnings negatively influenced by one-off costs for restructuring measures
The negative special effects of EUR 25.0 million which resulted from restructuring measures led to a loss of EUR 15.2 million for the 2018/19 financial year. However, the net loss was substantially reduced in comparison with FY 2017/18 (minus EUR 46.7 million). Restructuring costs are primarily related to the streamlining of the administrative and sales areas as well as the gradual shutdown of production at the components plant in Jennersdorf by November 2019. In view of the earnings development, the distribution of a dividend for the 2018/19 financial year is not planned.
Positive free cash flow and improvement in balance sheet structure
The growth in cash flow from operating activities and a lower level of investments supported an increase in free cash flow to EUR 3.4 million in 2018/19 (2017/18: minus EUR 23.9 million). The balance sheet structure was improved by a reduction in the balance sheet total to EUR 920.9 million during the past year (2017/18: EUR 986.1 million), which led to an increase in the equity ratio from 27.2% as of 30 April 2018 to 28.5% as of 30 April 2019. Net liabilities totalled EUR 148.7 million at the end of the 2018/19 financial year (2017/18: EUR 146.3 million), for an increase of EUR 2.4 million over the previous year.
Increase in revenues during Q4 2018/19 – new orientation shows positive results
Our fourth quarter results provide grounds for optimism over the 2019/20 financial year. For the first time in 13 quarters, the Zumtobel Group recorded an increase in revenues – this time with a plus of 3.4% to EUR 298.2 million.
Outlook for FY 2019/20 – medium-term goal confirmed
The Management Board of the Zumtobel Group sees 2019/20 as a year of transformation, in which the focus of activities will return to the continuous improvement of the operating business and growth – in spite of the weakening market environment. For the 2019/20 financial year, the Management Board expects a slight increase in revenues as well as an improvement in the adjusted EBIT margin to 3 to 5% (FY 2018/19: 2.4%). The medium-term goal to generate an EBIT margin of roughly 6% by the 2020/21 financial year remains intact.
FOCUS as the answer to revenue growth – consistent pursuit of strategy
In order to drive revenue growth, the Zumtobel Group intends to strengthen its positioning in the global lighting industry as part of its current reorientation. The strategy approved in September 2018 will be consistently pursued. Its goal for the Lighting Segment – with the core Zumtobel and Thorn brands – is to become the market leader in Europe with a focus on applications in industry, office & education, shop & retail and art & culture. Outdoor applications will concentrate on lighting for urban areas and roads as well as architectural lighting from the acdc brand. The Components Segment with its technology brand Tridonic will expand globally based on innovative hardware (drivers, LED modules) and software solutions for smart and integrated lighting and lighting systems. The Zumtobel Group will also increase its focus on the future field of digital lighting as well as services and turnkey solutions.
Head of Corporate Communications
+43 (0)5572 509 575
Head of Investor Relations
+43 (0)5572 509 1125