- Pricing pressures within print and loss from direct marketing activities in Scandinavia prompt year-on-year fall in consolidated EBT from €14.5 million to €12.2 million
- Group value-added sales recede to €218.7 million after €234.2 million (adjusted) a year ago
- Extended depreciation periods in compliance with IAS 16 applied for the first time, as announced
Freudenstadt, August 9, 2006. schlott gruppe confirmed its preliminary results announced on 24 July 2006 as part of today's publication of its interim report for the third quarter (April to June) and the first nine months (October to June) of the 2005/6 financial year. Thus, consolidated earnings before taxes (EBT) for the first nine months amounted to €12.2 million, compared with €14.5 million for the same period a year ago. EBT stood at €1.2 million at the end of the third quarter of FY 2005/6, as opposed to €3.1 million a year ago. The positive effect of longer depreciation periods on earnings, as accounted for in accordance with IAS 16, was equivalent to €3.4 million – which corresponds to 9/12 of the total annual amount of €4.5 million.
Group value-added sales (VAS) for the nine-month period of 2005/6 totalled €218.7 million, compared with €234.2 million for the same period a year ago. The comparative figure for FY 2004/5 has been adjusted for the deconsolidation of heckel at the beginning of the current financial year. In the third quarter of the current financial year VAS stood at €66.6 million, after an adjusted €70.5 million. Revenue totalled €108.2 million in the third quarter (compared with €108.3 million, adjusted, a year ago), while revenue for the nine-month period amounted to €367.9 million (compared with €383.9 million, adjusted, a year ago).Net profit attributable to the shareholders of schlott gruppe was €7.5 million in the first nine months of FY 2005/6, in comparison with €8.4 million a year ago, while net profit for the third quarter of the current financial year stood at €0.7 million, after €1.4 million in Q3 2004/5. Within this context, heckel had no significant effect on earnings in the preceding financial year. Earnings per share (EPS) totalled €1.21 at the end of the first nine months, compared with €1.35 a year ago. EPS for Q3 2005/6 stood at €0.11, after €0.23 in the same period a year ago.
As outlined in the corporate news release concerning the Group's preliminary results, the decline in value-added sales and earnings was due to more intense pricing pressures within the area of gravure printing as well as the losses incurred by the Scandinavian subsidiary meiller lithorex.
Within the print segment, value-added sales for the first nine months of the current financial year totalled 174.1 million, compared with €185.1 million, adjusted, in the same period a year ago. Value-added sales for Q3 2005/6 stood at €53.7 million, in contrast to €56.7 million in the preceding year. Lower prices were the principal reason for the decline recorded over the first nine months – and the sole reason in the third quarter –, prompted in particular by difficult market conditions in the mail-order catalogue business.
Volumes fell to 390.2 thousand tonnes in the first nine months, down from 399.7 thousand tonnes, adjusted, in the same period a year ago, and rose to 121.1 thousand tonnes in the third quarter, up from 116.2 thousand tonnes in Q3 2004/5; the third quarter of 2004/5 had been adversely affected by production shortfalls due to industrial action. Pricing pressures were also reflected in segment EBT. After the first nine months EBT stood at €18.2 million, as opposed to €21.5 million a year ago, while Q3 2005/6 produced earnings before taxes of €4.4 million, down from €5.0 million in the previous year. The effect of IAS 16 on earnings, as outlined above, was €2.9 million.
Within the direct marketing segment value-added sales for the first nine months of 2005/6 totalled €42.9 million, compared with €47.2 million a year ago, while VAS for the third quarter amounted to €12.4 million, which was only a slight decline compared with the figure of €12.9 million posted in Q3 2004/5. The segment loss before taxes was €2.8 million in the first nine months, compared with a loss of €4.4 million a year ago, and €2.1 million in the third quarter, in contrast to a loss of €2.3 million in Q3 2004/5. Within this context, the positive effect on earnings associated with IAS 16 was equivalent to €0.5 million.
Performance in direct marketing is currently bifurcated: while operations in Germany and the Czech Republic are now developing according to plan and will close the financial year 2005/6 clearly in positive territory, the Group's activities in Scandinavia produced considerable losses.
At operating level, schlott gruppe is anticipating a decline in EBT from €25.9 million a year ago to €20 million in FY 2005/6 as a whole, as already outlined on previous occasions. Value-added sales are expected to total a solid €300 million, compared with €320 million in FY 2004/5.
In addition, reported EBT will be impacted by two exceptional factors: the costs for restructuring the Group's Scandinavian direct marketing activities are likely to amount to approx. €2.6 million. As a result of these measures, no further encumbrances on earnings are expected within this area. In parallel, the extension of depreciation periods on property, plant and equipment, in accordance with IAS 16, will produce a positive effect on earnings equivalent to €4.5 million. Taking into account these two non-operational factors, reported EBT is forecast at €22 million.
As already announced, schlott gruppe anticipates that earnings will grow to a solid €25 million as early as the coming financial year, after €22 million in FY 2005/6. This planned increase is attributable to higher operating income and the absence of non-recurring restructuring costs announced for 2005/6 with regard to direct marketing activities in Scandinavia. The required extension of depreciation periods in compliance with IAS 16 has been accounted for to the same extent both in the current and the coming financial year.
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 2004/5 financial year, the so-called paper provision ratio was 73.2 per cent. As a financial indicator, “value-added sales” eliminates fluctuations relating to paper supplied by customers, thus reflecting the actual business performance.
Interim Report 3rd quarter 2005/6
