- H1 EBT amounts to €11.1m compared with €11.4m last year due to adverse market conditions and large-scale investment
- At €152.1m, VAS for H1 falls short of 2004/5 adjusted total of €163.7m
- H1 is on target in terms of achieving annual forecast of EBT growth to just above €26m
Freudenstadt, 26 April 2006 – schlott gruppe has today announced its preliminary results for the second quarter and the first half as at March 31 of FY 2005/6. The second quarter, which is generally considered to be the weakest period in the company's financial year, was affected by particularly sluggish demand and considerable pressure on prices. schlott gruppe, however, managed to strongly restrict the impact of these adverse market conditions to earnings before taxes (EBT), having implemented a fast-track programme of cost streamlining.
In the second quarter of 2005/6, the Group recorded value-added sales (VAS) of €69.1 million, compared with €75.0 million in the same period a year ago. The comparable figure for 2004/5 was adjusted by €3.8 million to take into account the disposal of web offset subsidiary heckel GmbH at the beginning of the current financial year. EBT totalled €1.3 million, compared with €2.0 million. The sale of heckel was not associated with any significant effects on earnings. Revenue amounted to €118.6 million, as opposed to an adjusted figure of €127.9 million for the same period a year ago. In the first six months, VAS totalled €152.1 million, compared with adjusted €163.7 million in the first half of 2004/5. Earnings before taxes stood at €11.1 million, after €11.4 million a year ago. Revenue for the first half amounted to €259.7 million, as opposed to an adjusted total of €275.5 million in H1 2004/5.VAS for the print business unit amounted to €54.4 million in the second quarter of the current financial year, compared with an adjusted figure of €58.9 million in the same period a year ago. EBT totalled €3.3 million, after €5.8 million in the preceding year. In the first half, VAS amounted to €120.4 million, compared with €128.5 million (adjusted), while EBT totalled €13.8 million, which contrasts with the figure of €16.4 million posted for the same period a year ago.
As forecast and announced, earnings performance within this business unit was thus less buoyant than in previous periods. Alongside market-related effects, this situation was also attributable to non-recurring costs associated with capital expenditure on a new web offset printing machine for the company's Lübeck plant as well as a new rotary printing unit to be deployed at the Freudenstadt location.
In contrast, the direct marketing business unit achieved a significant improvement in EBT, which rose from minus €2.4 million to minus €0.9 million in the second quarter, driven mainly by more favourable cost structures. VAS for the second quarter stood at €14.2 million, compared with a figure of €15.5 million recorded a year ago. In the first half, VAS amounted to €30.5 million, compared with €34.3 million in Q2 2004/5, while EBT stood at minus €0.7 million, as opposed to minus €2.1 million.
The corporate services unit contributed to earnings performance at Group level, recording an improvement of the EBT from minus €1.1 million to minus €0.9 million in Q2 and a considerable improvement in the first half, from minus €2.5 million in H1 2004/5 to minus €1.6 million in the first half of the current financial year. Overall, schlott gruppe remained within the target range in terms of meeting its annual forecast. The VAS target for FY 2005/6 remains unchanged at over €315 million – comparable to the level recorded in FY 2004/5, adjusted for the disposal of heckel –, while EBT is expected to rise just above €26 million (FY 2004/5: €25.9 million). The report for the second quarter and first half of FY 2005/6 will be published on May 10, 2006.
As already outlined on earlier occasions, the investment in machinery for the Freudenstadt plant will result in considerable cost reductions, which are expected to reflect fully in earnings in the 2006/7 financial year. At the same time, the new industry-wide framework agreement will gradually take effect. In conjunction with continued earnings improvements within the area of direct marketing, schlott gruppe is confident that the above-mentioned factors will contribute towards a tangible enhancement of bottom-line results in the coming financial year.
Notes to financial data:
Alongside "revenue/sales", schlott gruppe uses so-called "value-added sales" (VAS) 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 2004/5 financial year, the so-called paper provision ratio stood at 73.2 per cent. As a financial indicator, “value-added sales” (VAS) 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.
