- Higher volumes in print division
- Consolidated EBT increases by 25% in Q2 to €2.0 million;
EBT for first half surges by 27% to €11.4 million - EBT forecast comparable to FY 2003/4 results reaffirmed
Freudenstadt, 26 April 2005. schlott gruppe once again achieved significant earnings growth in the second quarter (January to March) of the 2004/5 financial year. In doing so, the company also posted outstanding results for the first six months (October to March) of the 2004/5 financial year.
On the basis of preliminary figures, earnings before taxes (EBT) rose by 25 per cent to €2.0 million in the second quarter. In the same period last year, EBT – adjusted for goodwill amortisation of €1.3 million now no longer applicable – had stood at €1.6 million. In the first six months, EBT increased by 27 per cent to €11.4 million (6M 2003/4, comparable: €9.0 million).The solid earnings performance is attributable to higher printing volumes within the print division. Owing to extremely efficient internal processes and low variable costs, schlott gruppe is able to leverage high EBT contributions from increased throughput.
In the second quarter, the print division benefited from the new marketing concepts implemented by mail-order companies, which are currently stepping up their activities within the area of catalogue advertising both in terms of diversity and frequency. A slight upturn in frequency and print volumes has also been registered in other segments of the customer base.
Against this backdrop, value-added sales (an indicator adjusted for transitory material-related expenses) within the print division increased from €60.9 million in Q2 2003/4 to €62.8 million in the Q2 2004/5 and from €133.2 million in 6M 2003/4 to €136.5 million in 6M 2004/5. Compared with the second quarter of 2003/4, EBT rose from a comparable €2.2 million to €5.9 million in Q2 2004/5. Compared with the first six months of the 2003/4 financial year, it was propelled upwards from a comparable €10.1 million to €16.5 million.
The excellent performance within the print division more than compensated for the less than favourable situation in direct marketing. Within the direct marketing business unit, value-added sales declined to €15.5 million in the second quarter (Q2 2003/4: €18.2 million) and to €34.3 million in the first half (6M 2003/4: €37.3 million). Within this area, the loss before taxes was €2.4 million in the second quarter (Q2 2003/4, comparable: profit of €0.6 million). For the first six months, the loss stood at €2.1 million (6M 2003/4, comparable: profit of €1.8 million).
The results posted by the direct marketing unit are due to weaker than expected market conditions, coupled with more intense competition. In view of these circumstances, schlott gruppe initiated a number of measures aimed at returning the business unit to profitability. These measures extend beyond those already implemented as part of the recent optimisation programme. The latest turnaround package was associated with non-recurring charges that impacted bottom-line results for this unit in the second quarter.
At Group level, value-added sales amounted to €78.8 million in the second quarter (Q2 2003/4: €79.1 million); in the first half value-added sales totalled €171.8 million (6M 2003/4: €170.4 million). Reported revenue amounted to €138.2 million in the second quarter (Q2 2003/4: €133.1 million) and €296.2 million in the first six months (6M 2003/4: €293.6 million).
Having completed the first six months of the financial year, schlott gruppe is in a position to reinforce its annual forecast. To a large extent, previous uncertainties within this area, prompted mainly by the revised marketing strategies of major mail-order companies, have now been dispelled. Consistent capacity utilisation is expected for the current financial year.
The annual collective wage negotiations currently underway will also extend to the industry-wide framework agreement. Employer representatives are eager to improve cost structures within companies by introducing more flexible solutions and eliminating extra charges. These ideas have met with significant resistance on the part of the trade unions. It is yet to be seen which stance they will take during the negotiations and to what extent this will lead to an additional cost burden. Nevertheless, schlott gruppe confirms its previous EBT forecast comparable to that achieved in the preceding financial year, i.e. €25.6 million.
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 beyond the company’s sphere of influence. These fluctuations 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 business performance. The corporate services business unit, which pools internal service functions, as well as the effects of consolidation must be taken into account when assessing the results of the respective business units in relation to those applicable to the Group.
