Dornbirn, Austria – In the third quarter of the current financial year (November 2013 to January 2014), the Zumtobel Group reported positive developments in both revenues and earnings: for the first time in seven quarters revenues returned to growth, rising 1.4% to EUR 292.4 million (previous year: EUR 288.4 million). Owing to the weak previous quarters Group revenues over nine months (= reporting period) still show a downturn of 2.2% to EUR 925.8 million (previous year: EUR 946.5 million).
LED revenues move ahead 45.1%
Energy-efficient LED technology remains the central revenue driver. This is illustrated by the Zumtobel Group’s continuing dynamic growth with innovative LED products: in the first nine months, LED reve-nues were up 45.1% to EUR 291.7 million (previous year: EUR 201.1 million). The LED share of Group revenues now stands at 31.5% (previous year: 21.2%).
Breakdown by segment: Positive developments at Lighting and Components
A breakdown by segment reveals positive developments in both the Lighting and Components segments. In the late cyclical Lighting Segment (Zumtobel/Thorn), there are growing signs of stabilisation in the market environment and in the European commercial construction sector in particular. While revenues for the reporting period fell 2.3% to EUR 696.0 million (previous year: EUR 712.0 million), the traditionally weak third quarter nevertheless generated 2.0% growth. Revenues in the Components Segment (Tridonic) matched the prior year level at EUR 287.6 million. Good progress in the development and sale of LED converters and LED modules successfully offset the sharp decline in demand for magnetic and electronic ballasts. As this shows, the market takes a very positive view of these innovative LED products.
Breakdown by region: Europe more stable; unsatisfactory developments elsewhere
Developments in the individual regions differed significantly during the first nine months. While the regions outside Europe in some cases recorded substantial revenue declines, development in Europe was slightly positive, above all in the third quarter. Revenues in the D/A/CH region (Germany, Austria, Switzerland) were somewhat lower than the previous year, although the Zumtobel brand posted modest growth in Germany and Switzerland. Group revenues in Eastern Europe and Northern Europe fell by 5.4% and 1.4% respectively. In Western Europe (Great Britain, France, Benelux), which is the strongest sales region, revenues showed slight growth despite negative foreign exchange effects, while Southern Europe posted a marked increase in revenues.
The development of revenues in the Middle East was sound, but Zumtobel and Thorn’s lighting business in Asia remained disappointing. The America region remained substantially below expectations but the third quarter brought a return to revenue growth. Revenues in Australia & New Zealand were weakened by slower business development and substantial negative foreign exchange effects.
Enhanced profitability in both segments
Profitability at the Zumtobel Group presents a very positive picture after the first nine months. Both Group EBIT adjusted for special effects (adj. EBIT) and net profit for the period showed a marked improvement compared to the prior-year period. In spite of the 2.2% decline in revenues, adj. EBIT rose by 45.8% to EUR 42.2 million (previous year: EUR 29.0 million). That represents an improvement in the return on sales from the operating business to 4.6% (previous year: 3.1%). Both segments benefited from the cost-cutting measures implemented in earlier quarters. The Lighting Segment also felt the positive effects of reduced material costs. At Tridonic the strong demand for LED products led to economies of scale at the production plants.
Negative special effects of EUR 14.5 million were recorded in the first nine months (previous year: EUR 3.7 million). These were mainly related to Tridonic’s exit from the magnetic ballast business. Even allowing for these special effects, EBIT improved by 26.8% to EUR 27.8 million (previous year: EUR 21.9 million). Net profit for the period reached EUR 12.1 million. This equates to a year-on-year improvement of 41.4% (previous year: EUR 8.5 million). Earnings per share thus totalled EUR 0.28 (previous year: EUR 0.22).
“In the last few months we have seen a gratifying improvement in earnings. Our new organisational structures will clear the way for a more entrepreneurial approach, as well as greater customer proximity and innovative power. We have already made great progress with the implementation of these new structures. Building on this, in the coming financial year we will be able to leverage many different synergies, leading to a marked improvement in our underlying costs and at the same time expanding the portfolio of innovative products and services for our customers,” said Ulrich Schumacher who became Zumtobel Group CEO in October 2013.
Slight increase in employee numbers
Compared to the balance-sheet date (30 April 2013) there has been a slight increase in the number of employees over the past nine months, with the headcount rising from 7,162 to 7,194 full-time employees, including contract workers but not including apprentices (plus 0.5%). The size of the workforce in Austria is slightly lower than on the balance-sheet date.
Outlook: cautious optimism
Given the latest positive signals from the third quarter, the Executive Board can look toward the coming months with cautious optimism, in spite of the continued limited visibility and the ongoing difficult market environment. For the current 2013/14 financial year (May 2013 to April 2014) the Board is expecting revenues at or slightly below the prior-year level of EUR 1,243.6 million and a substantial improvement in adjusted EBIT (2012/13: EUR 35.7 million).
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