as expected first-quarter revenue fell to € 20.4 million / creditable earnings (EBIT) of € 0.9 million / net result on prior-year level / targets for the full year confirmed
The technotrans Group saw its first-quarter revenue fall by 15.5 percent to € 20.4 million (previous year € 24.1 million). The weak start to the new financial year was not in itself surprising and attributable to the low revenue from the two customers manroland and Kodak who had filed for bankruptcy or protection from creditors (Chapter 11) some months ago and to the restraint among printers in the run-up to the drupa. By contrast, the activities away from the printing industry, especially at Termotek AG and gds AG, continued to develop positively; however their scale meant that they were not yet able to offset the downturn in business from the printing industry.
Even on this lower level of revenue it proved possible to show a positive result. Earnings before interest and taxes (EBIT) reached a creditable € 0.9 million (previous year € 1.2 million), which corresponds to an EBIT margin of 4.3 percent (previous year 5.1 percent). Net income came to € 511 thousand, as in the previous year. This corresponds to unchanged earnings per share outstanding of € 0.08.
“We assumed that the positive impetus from the drupa exhibition and the normalization of business with these two customers later on in the year will help to compensate for the weak start to 2012“, says Spokesman of the Board of Management of technotrans AG.
Compared to the previous year, the number of employees within the technotrans Group continued to fall in the first quarter. This trend still reveals the impact of the consolidation measures initiated in 2010. At the March 31 reporting date the group employed 631 persons (previous year 678), comprising 480 (previous year 517) in Germany and 151 abroad (previous year 161).
The segments
The expected downturn in revenue at the start of the year had a particularly deep impact on the Technology segment. Compared with revenue of € 15.6 million in the prior-year quarter, the segment’s revenue in the first three months of the 2012 financial year reached only € 11.5 million, a fall of 26.2 percent.
The lower revenue naturally also adversely affected the result for the segment. Despite the temporary introduction of short-time at the start of the year, but also because of expenses for the drupa, it did not prove possible to keep the segment running at a profit. However the first-quarter loss of € -0.6 million (previous year € -0.2 million) was in line with expectations. The management is confident that the segment will once again return to profitability later on in the year, along with the anticipated rise in revenue, especially as Termotek’s profitability has likewise made good progress.
Revenue for the Services segment again edged up compared with the previous quarter to € 8.8 million (previous year € 8.5 million, +4.2 percent). This segment is benefiting from the trend towards modernising existing installations as a result of the reluctance to invest in new machinery. This development should continue throughout the year, with the activities outside the printing industry uncovering additional revenue potential.
The operating result for the segment again served to stabilise the performance of the company as a whole. This figure reached almost € 1.5 million (previous year € 1.4 million), and the EBIT margin was again a very good 16.6 percent. While classic service business benefited from the high level of capacity utilisation, the structural spending to pave the way for the further expansion of gds AG temporarily proved a burden because of the hiring of additional employees and the opening of a new location in South Germany.
Financial position
Based on a net income of € 0.5 million for the first quarter of the 2012 financial year, the cash flow from operating activities before changes in working capital totaled € 1.6 million (previous year € 2.3 million). While working capital in the prior-year quarter had been eroded by a total of € 1.7 million by such factors as the rising volume of business, in the first quarter of the current financial year the opposite happened and cash approaching € 2.1 million was released. Cash from operating activities therefore reached € 3.7 million after three months (previous year € 0.7 million). After deduction of interest and income tax payments, the net cash from operating activities for the period under review amounted to € 3.4 million (previous year € 0.5 million). In relation to revenue, this produced a cash flow ratio of 16.4 percent (previous year 2.0 percent).
The net cash employed for investing activities came to only € 0.1 million at March 31, 2012. In the corresponding period of the previous year a total of € 1.4 million was invested, comprising mainly the cash outflow for the purchase price component paid for the acquisition of the interest in Termotek AG (around € 1.0 million). At € 3.2 million, the free cash flow at the end of Q1 2012 was already very healthy (previous year € -0.9 million).
Cash and cash equivalents were up € 2.2 million at the end of the first quarter, at € 15.0 million. In conjunction with credit facilities available, cash and cash equivalents therefore continue to provide ample financial leeway for current business operations and the planned growth (both organic and through acquisitions).
Net debt, in other words interest-bearing liabilities less cash, has fallen to € 1.6 million (previous year € 9.2 million); the gearing ratio at the reporting date was only 4.4 percent.
Outlook
In planning for the 2012 financial year, management assumed there would be a subdued start to the year in view of the prevailing economic environment. The figures presented in this report confirm these assumptions. At the same time a steady improvement in business over the year was anticipated. As matters stand, the revenue target of € 90 to 95 million for the 2012 financial year is considered to be realistic.
Any exceptionally positive effects from the drupa have not been built into the plans. “Besides our own positive impressions from the exhibition we have gladly noted the content reviews by our large customers. The next months will reveal to which extent this will translate into additional business volume”, says Brickenkamp. “If our assumptions for 2012 should then prove to be too conservative, we will review our plans for 2012 as appropriate.“
Management is moreover confident that the planned moderate revenue growth over the coming quarters will be sufficient to achieve the target corridor of an EBIT-margin of 5 to 6 percent for this financial year. “The measures to adjust our operations in line with the lower volume of business proved effective in the first quarter, and even at that level of revenue we succeeded in achieving an EBIT margin of 4.3 percent”, says CFO Dirk Engel. “In particular for that reason, short-time has been terminated again from June 1, 2012.”
In addition, technotrans continues to make good progress with identifying applications for its technologies in other branches of industry. They will bring in their first small but noteworthy revenue contributions in 2012. Not only the growth market for laser applications, which is being increasingly accessed through the acquisition of Termotek AG and the partnership with KLH Kältetechnik GmbH, offers interesting potential. Also applications for the core skills in the machine tool sector have for some time provided an additional point of focus. Further concrete progress was made here: at the start of 2012 technotrans received a blanket order to equip the ULTRASONIC 10 and 20 machining centres of the company Sauer GmbH with the toolsmart. Numerous other projects in the machine tool industry and in metalworking, as well as in digital and flexographic printing, have currently reached very promising stages of development. “All in all, we therefore expect that we might even achieve our goal of 30 percent of revenue from outside the printing industry by as early as 2013”, Brickenkamp explains.