Zumtobel AG full-year results for 2010/11
Double-digit rise in revenues confirms return to growth
In the 2010/11 financial year (01 May 2010 to 30 April 2011) the Zumtobel Group benefited strongly from the improved economic conditions and posted a 10.2% increase in Group revenues, which totalled EUR 1,228.2 million (prior year: EUR 1,114.6 million). Along with the positive business environment, two other factors that drove the internationally active lighting group’s growth were the trend towards energy-efficient lighting systems and the technology shift from conventional light sources to LEDs.
The positive impact of revenue growth was also reflected in the Group’s earnings position. Adjusted for special effects, operating profit (adjusted EBIT) rose by EUR 27.0 million or 52.4% to EUR 78.4 million (PY: EUR 51.4 million). This equates to an improvement in adjusted EBIT margin to 6.4% (PY: 4.6%). Net profit for the year reached a sound EUR 51.3 million, following a substantial loss of EUR 69.8 million in the previous year, mainly as a result of an impairment charge to goodwill. For Zumtobel AG shareholders, this means that earnings per share reached EUR 1.19 in 2010/11 (PY: EUR -1.64).
The rising volume of business was also coupled with additional working capital requirements. The resulting cash outflows and a high level of capital expenditure had a negative effect on free cash flow which, however, was still slightly positive at EUR 4.8 million for the reporting year (PY: EUR 36.8 million). The balance sheet structure of the Zumtobel Group remains solid. The equity ratio improved from 35.0% to 37.1% in 2010/11. The positive development of operating earnings reduced the debt coverage ratio (net debt divided by EBITDA) from 1.63 to 1.11.
Based on the company’s sound operational development, the Management Board recommended to the Supervisory Board and thus to the Annual General Meeting to increase the dividend from EUR 0.15 to EUR 0.50 for the 2010/11 financial year.
As indicated in the new medium-term strategy that was presented at the end of April 2011, the Zumtobel Group is now targeting a global growth course. This includes the goal of generating average organic growth of approx. 10% per year by 2014/15. Plans call for one-third of Group revenues to be achieved with LED products by 2014/15 (LED share in 2010/11: 8.2%). To reach these goals, the Zumtobel Group will be making substantial upfront investments in selling activities and the development of new products. Due to these high investments, the improvement in earnings will only be gradual. The medium-term plans envisage steadily increasing the adjusted EBIT margin to over 10% by 2014/15. Consequently, while the Management Board is expecting revenues to increase by roughly 10% for the 2011/12 financial year, the adjusted EBIT margin is expected to improve only slightly against the 6.4% reported in 2010/11 due to the upfront investments.
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