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Zumtobel Group posts dynamic second-quarter growth



· Revenues increase 7.0% in second quarter
· Two-digit EBIT margin
· Net profit moves ahead 106%
· Further growth in revenues and earnings anticipated for full financial year 2006/07

Dornbirn, Austria – In the second quarter (August to October) of the 2006/07 financial year, the Zumtobel Group reported a further increase in the pace of growth over what was already a highly satisfactory growth rate in the first quarter. All key financial indicators improved, some of them substantially*. For example, revenues in the reporting period moved ahead 7% to EUR 321 million, operating EBIT increased 10% to EUR 36.3 million, and net profit (supported by extraordinary income) rose by no less than 106% to EUR 35.6 million. On account of the positive development of revenues at the Group, the workforce has increased by 176 since April 30, 2006 to 7,358 full-time employees. The Zumtobel Group is confident of being able to post further increases in both revenues and earnings in the second half of the financial year.

Zumtobel Group CEO, Andreas J. Ludwig, is highly satisfied with developments in the second quarter: “The Zumtobel Group was again able to step up the pace of growth in the second quarter. This applies not only to revenues but above all to earnings. Our EBIT margin was into double digits in percentage terms. We also took important steps to optimise our structures; steps that will help us stay on course for growth in the long term as well.”

Focused growth strategy proves its worth
The development of the key financial indicators in the second quarter proves that the Zumtobel Group’s growth initiatives are on the right track. The Group’s focus on new technologies and its geographical expansion into the growth regions of Asia and Eastern Europe are reflected in exceptional growth rates. Group revenues for the second quarter totalled EUR 321.1 million, which represents an increase of 7.0% over the comparable prior year figure. The more dynamic pace of growth is illustrated by a comparison with the previous quarter, when the growth rate stood at 6.4%. In regional terms, increases of 43.1% in Eastern Europe and 49.0% in Asia stood out among the positive overall development of revenues. With regard to the revenues of the two divisions, both the lighting division with the Zumtobel and Thorn brands (+3.7% to EUR 241.6 million), and the TridonicAtco division (+14.0% to EUR 97.1 million) reported good progress. The performance of TridonicAtco reflects both a marked increase in unit sales and the ongoing replacement of magnetic ballasts with new electronic ballasts, as well as higher sales margins owing to developments in raw material prices. As anticipated, and as in previous reporting periods, the new LED technologies indicated their extensive growth potential as revenues moved ahead 35%. Cumulative first-half revenues for the Zumtobel Group totalled
EUR 625.6 million, 6.7% higher than in the comparable prior year period.

Two-digit EBIT margin in second quarter
Earnings at the Zumtobel Group outpaced the increase in revenues. Adjusted operating EBIT for the Group as a whole improved by almost 10.0% to EUR 36.3 million. The Zumtobel Group clearly attained its goal of reaching an EBIT margin well into two digits – supported by seasonal factors – reporting an adjusted margin of 11.3% in the second quarter, following on from 9.9% in the first quarter. The positive effects of the IPO and the resultant reduction in Group debt are reflected in a significant improvement in financial results. The Zumtobel Group thus reported profit before tax of EUR 32.0 million in the second quarter, an increase of almost 50% over the comparable prior year period. Net profit was also influenced by non-recurring income of EUR 8.7 million from the sale of the non-core activities of the Group’s Airfield Lighting business. As a result, the Zumtobel Group posted a 106% increase in profits, which totalled EUR 35.6 million after taxes and minority interests. In cumulative terms, in the first half year the Group posted an increase of EUR 6.7 million in adjusted operating EBIT, which totalled EUR 66.5 million. First-half profit before tax moved ahead EUR 17.1 million against the prior year period to stand at EUR 51.2 million, while net profit – assisted by the above-mentioned extraordinary income – increased by no less than EUR 32.8 million to a total of EUR 63.2 million.

Substantial increase in equity yield
As a result of the positive development of business and the capital increase in the course of the IPO, since the beginning of the financial year the Group’s equity yield has increased from 20.7% to 38.7% (October 31, 2006).

Effective restructuring bears fruit
In the second quarter, the Zumtobel Group continued its unremitting efforts to optimise corporate structures. On the one hand, the transfer of production activities to the Group’s Romanian plant in Curtici was successfully realized. On the other hand, through the sale of its Airfield Lighting business the Group strengthened its focus on core competencies. In addition, the Zumtobel Group also improved its position in the high-growth Chinese market. Following the acquisition in November of the 30 % minority holding, the company is now the sole owner of its former joint venture in China. The growing importance of China was revealed in the third quarter when the Group obtained its largest single order to date from the Asian region. Group subsidiary Thorn Asia won the lighting contract for one of the largest infrastructural projects in China – the expansion of Beijing Airport. The order is worth at least EUR 3 million.

Another initiative triggered during the reporting period was the LITE project. This concerns the optimisation of the Zumtobel Group’s existing real estate portfolio and the sale of non-essential property. While this led to a slight one-time negative impact on earnings in the second quarter, by the end of the 2007/08 financial year the Group is expecting the LITE project to generate cash proceeds of at least EUR 30 million and an extraordinary effect on EBIT of more than EUR 20 million. A relatively small portion of these funds will accrue to the Group in the current third quarter of this financial year. The resultant enhanced liquidity will be available for new generic and external growth, and further reduction of net debt.

Positive prospect for financial year as a whole
The very good developments in the second quarter have lent further strength to the Group’s positive view of the financial year as a whole. The company is convinced that it can step up both revenues and earnings in the second half year as well, compared to the prior year period. However, the Executive Board of Zumtobel AG is expecting to see some fade in second-half growth rates compared to the first half year. The Board also points out that the current third quarter covering the winter season is traditionally the weakest of the year. After a very successful first half year, the Zumtobel Group is now much closer to attaining its goal of an EBIT margin of over 9% in this financial year. If the current favourable economic forecasts prove accurate, the Group will be targeting a two-digit EBIT margin for the 2007/08 financial year.



* Figures for the reporting period and prior periods are adjusted for the sale of the airfield activities.


Key Performance Indicators, Zumtobel Group (in EUR millions):
(First half: May 1 – October 31)

  2nd Quarter 2005/06   2nd Quarter 2006/07 Change
Revenues 300.1 321.1 +7.0% 
Adjusted operating EBIT (1) 33.0 36.3 +10.0% 
EBIT (reported 32.6 35.0 +7.3% 
Profit before tax 21.4 32.0 +49.4% 
Net profit (2) 17.3 35.6 +106.1% 
Earnings per share (EUR) (3) 0.47 0.80 +70.2%
Operating EBIT in % of revenues (4) 11.0% 11.3% +30bp
  1st Half Year 2005/06 1st Half Year 2006/07  Change
Revenues 586.3 625.6 +6.7% 
Adjusted operating EBIT (1) 59.9 66.5 +11.1% 
EBIT (reported) 53.2 65.3 +22.7% 
Profit before tax 34.1 51.2 +50.2% 
Net profit (2) 30.4 63.2 +107.9% 
Earnings per share (EUR) (3) 0.83 1.44 +73.5%
Operating EBIT in % of revenues (4) 10.2% 10.6% +40bp

   1st Half Year  2005/06  1st Half Year 2006/07
Total assets






Net debt



Equity yield



Cash Flow from operation activities



Capital expenditure



Employees (full-time)



(1) Profit before financial results and income taxes
(2) After minority interests
(3) Non-diluted, related to 36.8 million shares in circulation on Oct. 31, 2005 and 44.0 million shares on Oct. 31, 2006.
(4) Adjusting operating EBIT divided by revenues

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The Zumtobel Group – global market leader in the lighting industry

The Zumtobel Group, based in Dornbirn in the Vorarlberg region of Austria, is one of the few global players in the lighting industry. The Group, which started life as Elektrogeräte und Kunstharzpresswerk W. Zumtobel KG in 1950, today employs a workforce of 7,200 and concluded the financial year 2005/06 with net revenues of EUR 1,184.2 million. Under the leadership of its Executive Board of Dr. Andreas J. Ludwig (CEO) and Thomas Spitzenpfeil (CFO), the Group today comprises two subgroups. Zumtobel Lighting Division, the luminaire business, includes the Thorn and Zumtobel brands along with their shared production network, International Lighting Technologies. The TridonicAtco Division handles the lighting components side of the business. The financial year of the Zumtobel Group commences on May 1 and ends on April 30.



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