Dornbirn / Austria – As already communicated in its announcement of preliminary results, the international lighting corporation Zumtobel Group AG ended the 2014/15 financial year (1 May 2014 – 30 April 2015) with record revenues and significantly improved earnings. Revenues rose by 5.3% year-on-year to EUR 1,312.6 million in 2014/15 (Prior Year: EUR 1,246.8 million), which represents the highest level ever recorded in the Group’s history. Above all, this development was supported by fourth quarter revenue growth of 9.0%. The LED share of Group revenues equalled 49.8% for the reporting year (PY: 33.6%). This significant increase validates the Zumtobel Group’s strategy of targeted investment in the expansion of its innovative LED product portfolio.
Strategic realignment and targeted restructuring measures
For the Zumtobel Group, the 2014/15 financial year was an important period for strategic reorientation and the implementation of necessary restructuring measures. A new, strategic multi-brand approach allows the leveraging of growth and cost synergies in luminaire sales. To this end, in the reporting year the previously separate sales structures of Zumtobel and Thorn were merged to form a single sales organisation structured according to three sales channels: project business, end customer and wholesale.
On the production side, lighting plants previously dedicated to Zumtobel or Thorn were merged into a single global network. To improve capacity utilisation, the lighting plants in Landskrona (Sweden) and Tianjin (China) were closed and the production volumes transferred to the Group’s other plants. The workforce at the lighting plant in Lemgo (Germany) was informed of upcoming restructuring plans targeting improved competitiveness. As a consequence of the technology shift, the components plant in Ennenda (Switzerland) was closed and another plant in Auckland (New Zealand) was sold. The connecting clamp business based in Innsbruck (Austria) was also sold.
To take advantage of additional savings potential, the purchasing activities of both segments were integrated in a Group-wide purchasing function.
With the aim of strengthening its technology position, the Zumtobel Group continued to expand its research and development activities, focusing on LED efficiency and optics, sensors and controls, and software development and data management. This led to a year-on-year increase in R&D expenditures from EUR 71.8 million to EUR 79.0 million. Representing 6.0% of revenues, R&D expenditures reached a new high.
Growth and restructuring result in significant profitability gains
As a result of the increased revenues and the first positive effects from the restructuring measures, operating profit adjusted for special effects (adjusted EBIT) rose by 39.7% to EUR 66.5 million (PY: EUR 47.6 million). This represents a return on sales (adjusted EBIT margin) of 5.1% (PY: 3.8%). As expected, operating profit was reduced by negative special effects of EUR 25.4 million due to the restructuring measures. Following a loss in the prior year, Group net profit rose to EUR 11.9 million even though financial results experienced significant negative impacts, most notably due to the strengthening of the Swiss franc against the euro. At the Zumtobel Group AG annual general meeting on 24 July 2015, the Management Board and Supervisory Board will recommend payment of a dividend of EUR 0.22 per share (PY: EUR 0.18) based on the positive developments in the reporting year.
“These results impressively demonstrate that we are on the right course with the reorientation of the Zumtobel Group. The past year was an important year of transformation in which we strengthened our innovation power, adjusted our structural positioning in the sales area and improved the cost basis of our production. I am particularly pleased that we were able to see the first positive market effects of our multi-brand approach in the past year. We intend to continue this course and also see further opportunities to make the Zumtobel Group – with its three strong brands – one of the leading players in the international lighting industry”, affirmed Ulrich Schumacher, CEO of the Zumtobel Group, pleased with the progress made in the 2014/15 financial year.
Both segments contribute to revenue and earnings growth
Considered separately, positive developments can also be reported in each segment, with both the Lighting Segment and the Components Segment posting improved revenues and earnings. The Lighting Segment (Thorn / Zumtobel) benefited from an improved market environment in Europe, the initial positive effects of the new multi-brand sales structure and a strong increase in key account business. Revenues rose by 5.5% to EUR 989.9 million (PY: EUR 938.4 million), while adjusted EBIT increased by 66.3% to EUR 63.7 million.
The Components Segment (Tridonic) more than offset the declining demand for electronic ballasts and the revenues lost by the exit from the magnetic technology and connecting clamps business segments with an impressive increase in LED revenues (plus 79.6%). Overall, segment revenues increased by 2.4% to EUR 393.8 million (PY: EUR 384.5 million), while adjusted EBIT rose by 13.1% to EUR 28.4 million.
International workforce of 7,234 employees
On the balance-sheet date (30 April 2015) the Zumtobel Group employed 7,234 full-time equivalents (FTE) worldwide (including contract workers but excluding apprentices). This represents a slight year-on-year decrease of 0.8%. Restructuring measures resulted in reductions in staff, particularly in production and back office sales. Due to sound revenue growth, especially in the fourth quarter, the number of contract workers increased by 220 by the end of the reporting year.
As a result out of the sale of the connecting clamp business in Innsbruck, the number of employees in Austria decreased slightly to 2,355 FTE. At the Group headquarters in Dornbirn / Vorarlberg, there was a year-on-year increase in the number of employees from 1,880 to 2,060 FTE. In addition, 77 apprentices were also employed at that location.
Strategic focus in 2015/16 financial year
The wide-reaching restructuring carried out in 2014/15 created a solid foundation that will support further growth and the leveraging of cost synergies in the 2015/16 financial year. Important areas of focus will include the expansion of market share through multi-brand sales and the optimisation of the global operations network. In this context, there will also be a continuous evaluation of further opportunities to optimize structural costs. The Zumtobel Group is also investing specifically to develop its expertise and capacity in intelligent controls and data management, services and other innovative business models. In the future, lighting with its increasingly digital components will become more integrated in the Internet of Things (IoT). Consequently, at approximately 6 to 6.5% of revenues, R&D costs will be even higher in the coming years than in the 2014/15 reporting year, due in particular to expenses for software development.
Outlook: further revenue and earnings growth
In the European construction industry, signs show that trends have reversed in the direction of slight market growth. This positive turn has been reinforced by the shift to LED technology. The Management Board of the Zumtobel Group sees the Company in an outstanding position to reap above-average benefits from these growth impulses in the industry. Consequently, in the current 2015/16 financial year the Management Board expects an increase of approximately 5% in revenues and an adjusted EBIT of EUR 90 to 100 million. That also places the Zumtobel Group on target to gradually raise the adjusted EBIT margin to roughly 8-10% by 2016/17.
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