- First-quarter business performance in line with expectations
- Annual guidance forecast reaffirmed
- First signs of structural market changes
Freudenstadt, February 6, 2008. schlott gruppe has today published its first-quarter report (October to December 2007) for the 2007/8 financial year, confirming fully the preliminary financial results already communicated by the company.
The consolidated figures relating to the Group's latest quarterly report are presented on a comparable basis, i.e. the direct marketing unit, which was disposed of effective from July 31, 2007, and was thus still part of the Group in the first quarter of 2006/7, is presented as discontinued operations with regard to the preceding year, in accordance with IFRS 5, with data having been adjusted accordingly.
schlott gruppe developed in line with expectations over the course of the first quarter of the new financial year, thus providing a solid basis from which to pursue and achieve the Group's annual targets. The year-on-year decline in value-added sales (VAS) and earnings before taxes (EBT) remained within the projected parameters, as it was attributable mainly to price reductions faced by the company over the course of the previous financial year.
Overall, value-added sales at Group level receded from €69.3 million in the first quarter of 2006/7 to €65.2 million in Q1 2007/8. However, capacity utilisation at schlott gruppe remained satisfactory. Revenue increased to €127.5 million, up from €122.4 million. This reflects the lower paper-provision ratio within the Group as a whole. In other words, the Group purchased a larger amount of paper and invoiced the appropriate quantities to its customers, but this had no effect on VAS or EBT.
As anticipated, EBT for the first quarter of 2007/8 receded from €8.5 million in the same period a year ago to €3.2 million in the period under review, mainly as a result of price reductions implemented over the course of the financial year just ended, which came into full effect. Post-tax profit amounted to €2.1 million, after €10 million from continued operations in the same period a year ago. Earnings per share contracted to €0.33, down from €1.60. The previous year figure includes a positive effect from the capitalisation of corporate tax claims of €5 million, however. These figures do not yet include expenses from the cost reduction programme currently being implemented by the company.
The print business unit generated value-added sales of €64.2 million in the first quarter of 2007/8, compared with €68.2 million in the same period a year ago. EBT amounted to €4.1 million, after €9.1 million in the first quarter of the previous financial year. At €0.3 million, the loss before taxes incurred by the corporate services unit was significantly lower than the loss of €1.0 million posted a year ago.
The first quarter saw the launch of schlott gruppe's cost reduction programme, scheduled for a period of three years. These measures are to be executed as scheduled, the aim being to rein back annual expenses within the Group by a double-digit amount in the million-euro range. In implementing this action plan, schlott gruppe will offset – in part as early as the current financial year – the recent price reductions faced by the company as well as the projected contraction of prices. As announced, the total expense attributable to the cost reduction programme will amount to approx. €15 million in the 2007/8 financial year. The company remains confident that EBT (before the aforemen-tioned non-recurring expenses) for the full 2007/8 financial year will reach break-even.
The market in which schlott gruppe operates continues to be extremely challenging. However, the company has been encouraged by the more stable market trends witnessed in recent months. Demand remains satisfactory and the price levels to be achieved within the marketplace have been developing in line with expectations. What is more, the sector as a whole has become increasingly dynamic: beyond M&A activities within the industry there is also evidence to suggest that over-capacities will be scaled down. schlott gruppe, too, is contributing to market streamlining by decommissioning machinery no longer considered viable and thus reducing capacity levels.
There is good reason for optimism that the industry as a whole will find an appropriate balance between demand for printed items and the supply of printing capacity. schlott gruppe will remain a leading player within the European printing industry and will continue to shape market structures in years to come. The current cost reduction programme has been designed to strengthen the company and provide a launch pad for market expansion. The programme has been communicated in the balance sheet press- and analyst conference at the end of January 2008 and is discussed in the quarterly financial report released today, which is available on the company’s web site under www.schlottgruppe.de.
Notes to financial data:
Alongside "revenue/sales", schlott gruppe uses so-called "value-added sales" (VAS) as a financial indicator – both in its external communica-tions and as part of its internal controlling mechanisms. Revenue is subject to fluctuations that are attributable to the volume of paper supplied by customers as raw material for certain projects. In contrast to paper purchased directly by the company, paper supplied by custom-ers is not included in the accounts of schlott gruppe. In the 2006/7 financial year, the so-called paper provision ratio stood at 72.5 per cent. As a financial indicator, "value-added sales" eliminates fluctua-tions relating to paper supplied by customers, thus reflecting the actual sales performance.
