- EBT 2004/5 in line with targets; net debt strongly reduced
- Turnaround of direct marketing unit achieved in Q4 2004/5
- BT 2005/6: forecast of €26 million driven mainly by improved efficiency levels
- Sale of heckel GmbH contributes to ongoing strategic concentration of service portfolio
Freudenstadt, 29 September 2005. Germany’s schlott gruppe will conclude its 2004/5 financial year ending September 30 in line with forecasts, generating earnings before taxes (EBT) comparable to last year’s total of €25.6 million. In doing so, the company confirms the sustainability of it’s high earnings level. Net debt was reduced strongly and above plan by around € 10 million compared to last year’s level of €195.6 million.
Despite the continued challenges facing the industry as a whole, schlott gruppe is expected to drive profits onwards and upwards in the coming 2005/6 financial year. The increase in earnings forecasted by the company is to be achieved principally by means of improved efficiency levels.Having been guided towards profitability in the fourth quarter of 2004/5 as intended, the direct marketing business unit will contribute to earnings growth in the coming financial year. Within this context, productivity levels within the area of direct marketing are to be enhanced yet further, the objective being to achieve an above-par EBT margin for the financial year as a whole.
As regards the print business unit, the industry-wide framework agreement negotiated in June 2005 provides an opportunity for increased flexibility within the area of employment and cost streamlining. For this purpose a number of company-specific agreements will have to be renegotiated. Further details of associated cost reductions will be available upon conclusion of these negotiations, which are currently underway and are likely to continue until the end of the calendar year. schlott gruppe is confident that the outcome will be favourable in terms of cost streamlining, with a number of measures probably being implemented gradually over several years.
In the more immediate future, new state-of-the-art printing equipment installed at the company’s Freudenstadt plant and coming into operation in autumn 2006 will give a substantial boost to efficiency levels. The replacement of two smaller machines, each featuring a printing width of 1.61 metres, with a high-performance rotary printing unit that has a web width of 3.64 metres constitutes a substantial improvement in efficiency for the Freudenstadt location and the Group as a whole. Furthermore, it has been agreed that benefits going beyond the levels set out in the collective wage deal will be scrapped for this location, thus resulting in further cost reductions. Construction work associated with the new and large equipment has already commenced, and the required changes to operational processes have been initiated.
In total, schlott gruppe is targeting an EBT of €26 million, or slightly higher, for the 2005/6 financial year. In the subsequent financial year, the positive effects expected in the two business units – as outlined above – are expected to come into full effect, resulting in a significant year-on-year increase in earnings before taxes – not taking into account additional impetus within the economy.
At schlott gruppe, the programme of continuous efficiency enhancement also encompasses ongoing strategic concentration of the service portfolio. In recent years, the German web offset market for long-grain and short-grain formats has drifted apart considerably. As a result, synergies between web offset printing in the long-grain web offset category on the one side and gravure printing, i.e. schlott gruppe’s core competence, on the other have been whittled away.
Therefore, schlott gruppe has sold its web offset subsidiary heckel GmbH to a strategic partner, a decision announced by the company today. Despite this move, schlott gruppe will continue to offer its customers an all-embracing range of services within the area of web offset printing at the company’s web offset facility in Lübeck, which is equipped with high-performance machinery for short-grain formats. The facility is to be further enhanced by the introduction of a new 48-page machine, which will come on stream towards the end of 2005.
