- Value-added sales rise to €93.0 million
after €91.3 million in Q1 2003/4 - EBT increases from €7.4 million to €9.4 million
- FY 2004/5 EBT forecast to meet the 2003/4 level confirmed
Freudenstadt, 9 February 2005. schlott gruppe has confirmed its preliminary results for the first quarter (October to December) of the 2004/5 financial year ending September 30, 2005, as announced on January 26.
Earnings before taxes (EBT) increased substantially by 27.0 per cent to €9.4 million, after €7.4 million in the same period a year ago, calculated on a basis allowing comparability. Similarly, net profit for the period rose from €4.4 million to €5.6 million; earnings per share increased from €0.71 to €0.91.The solid earnings performance of the Group was driven by its print division. Within this context, schlott gruppe’s success within the marketplace proved to be one of the key contributing factors: buoyed by additional orders, value-added sales – a financial indicator which accounts for transitory material costs – rose yet again, up from €91.3 million in Q1 2003/4 to €93.0 million in Q1 2004/5. Based on the same portfolio of machinery, schlott gruppe was thus able to raise its overall level of capacity utilisation yet further. In addition, a significant proportion of earnings growth was attributable to a reduction in costs. Reported revenue declined from €160.5 million in Q1 2003/4 to €158.0 million in the first quarter of the current financial year.
The print business unit was able to push value-added sales upwards from €72.2 million to €73.8 million. As revenue beyond the break-even point is associated with high contribution margins, EBT rose exponentially from €7.9 million to €10.6 million, an increase of 34.2 per cent.
Business performance within the direct marketing unit showed signs of weakening in the course of the 2003/4 financial year. Despite this, the unit managed to generate value-added sales of €18.8 million in the first quarter of FY 2004/5, thus almost matching the figure of €19.1 million recorded in the first quarter of the preceding financial year. Following incisive realignment in 2003/4, direct marketing began the current financial year 2004/5 with a new operational structure. Based on its first-quarter results, this new formation has already proved extremely successful.
At €0.3 million, EBT generated within direct marketing was comparable to that registered in the fourth quarter of 2003/4. In a year-on-year comparison it clearly fell short of the €1.2 million posted in Q1 2003/4 – a direct result of additional expenses associated with restructuring. Furthermore, the loss posted by this unit for the first time since inception is also attributable to digital services activities incorporated into direct marketing.
The progression of business over the first quarter has been particularly encouraging for schlott gruppe. However, the company is adamant that this performance should not be seen as a basis for over-optimistic forecasts regarding the financial year as a whole, particularly as some of its major clients are currently refocusing their marketing strategies and the associated deployment of advertising media. In view of these not yet finalised advertising strategies the planning process for capacity utilisation at schlott gruppe is currently a somewhat more challenging task. Therefore, schlott gruppe has reaffirmed its FY 2004/5 forecast of EBT comparable with that posted in the preceding financial year, i.e. €25.6 million.
The second quarter, traditionally a period of subdued trading, has already produced output in excess of that achieved in the same period a year ago. The current situation is likely to become more transparent as the second quarter progresses. Further details will be released as soon as the company has more accurate data. In the medium term, schlott gruppe expects to benefit from the trend towards smaller publications rolled out at shorter intervals.
Notes to financial data:
Alongside “revenue/sales”, schlott gruppe uses so-called “value-added sales” as a financial indicator – both in its external communications 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 customers is not included in the accounts of schlott gruppe. In the 2003/4 financial year, the so-called paper provision ratio was 72.3 per cent. As a financial indicator, “value-added sales” eliminates fluctuations relating to paper supplied by customers, thus reflecting the actual sales performance.
The Group has categorised its activities into three business units: print, direct marketing and corporate services. Revenues and earnings generated by corporate services are derived solely from internal charging for services rendered as well as internal cost allocation. The results for the Group as a whole outlined above are derived from the print and direct marketing business units as well as the corporate services unit and consolidation effects.
All data communicated as part of this release has been presented in a manner that is conducive to comparability, i.e. goodwill amortisation accounted for in the previous year has been added to the results associated with that period on a pro-forma basis. All adjustments have been disclosed fully in the quarterly report.
Interim Report 1st quarter 2004/5
