2009 revenue down 42 percent / Earnings burdened by various non-recurring items / revenue growth expected in 2010 / margin target of 3 to 5 percent
Sassenberg/Frankfurt, March 9, 2010
The technotrans Group, too, was affected by the consequences of the global financial and economic crisis in the 2009 financial year. Revenue plunged by 42.0 percent, from € 141.7 million in the previous year to € 82.2 million. The downturn therefore achieved unprecedented force in the past financial year. The Technology segment was hit particularly hard, revenue for this area of business fell by 53.0 percent. As a result of the much bleaker economic prospects, orders for new printing presses were periodically down by more than 60 percent during the year, with difficult access to financing for this investment compounding the problem. An added headache for technotrans was the fact that some customers had built up substantial inventories in the course of the drupa year of 2008, and the slow process of moving these piled extra pressure on revenue. The decline in revenue for the Services segment was comparatively moderate at 11.7 percent.
The fall in revenue in the past financial year has inevitably had major consequences for the financial performance of the technotrans Group. Earnings are furthermore determined to a substantial degree by various non-recurring effects, both positive and negative. Earnings before interest and taxes (EBIT) for 2009 show a loss of € 11.9 million (previous year € 0.0 million). After elimination of the many non-recurring effects, EBIT would have amounted to around € -1.8 million.
Earnings without negative non-recurring effectsmill. €Earnings acc. to IFRS-11.9Restructuring-3.4Impairment on goodwil-2.4Impairment on fixed assets-1.7Settlement of patent dispute-3.7Sum negative non-recurring effects-11.2
The biggest burden to be absorbed was the compensation payment to a competitor, by means of which all patent infringement proceedings were brought to an end in 2009 by way of an out-of-court settlement. The second-biggest single item is the reduction for impairment of goodwill by € 2.4 million that was written off in full to reflect the changed market situation. The reduction for impairment of € 1.7 million on the property at the Gersthofen location represents the third-largest single item. In this case, the carrying amount was written down to the amount that could have been realised in the current market environment. The worldwide restructuring measures taken in the course of the financial year to bring the company in line with the market environment likewise diminished earnings by a further € 3.4 million in total. These financial burdens were partly offset by positive non-recurring effects of € 1.0 million.
A net result for the year of € -10.3 million is reported for 2009 (previous year € -2.9 million). This corresponds to earnings per share, for shares outstanding, of € -1.65 (previous year € -0.45). As a consequence shareholders will not receive a dividend for 2009.
“The 2009 financial year was characterized by exceptionally negative momentum. The 42 percent drop in revenue was the most extreme reversal in the history of the company,” says Henry Brickenkamp, Spokesman of the Board of Management. “In the course of the year the company has been adjusted to the lower level of revenue and we are confident of returning to profitability in the 2010 financial year. Nevertheless with an adjusted operating result of € -1.8 million we have not met our target of breaking even at this level for the full year and in retrospective to 2009 are not satisfied with our achievement.”
As at January 1, 2010 the technotrans Group had 625 employees, 186 fewer than at the end of 2008 and 206 fewer than at the end of 2007. In absolute terms the number of jobs shed was most acute in Germany, where the workforce was reduced by 105 employees, from 565 to 460. Relatively speaking, however, the consolidation process affected the international locations more, where the employee total fell by 81, from 246 to 165 employees.
Personnel expenses totaled € 32.0 million in 2009 (previous year € 41.6 million). Around € 2.2 million of the reduction amounting to almost € 10 million was attributable to savings realized through the introduction of short-time. Because certain capacity cutbacks had not yet achieved their full effect by the end of 2009, Management initially expects a further reduction in personnel expenses for the 2010 financial year, because then the headcount reduction initiated in 2009 will come to full effect.
The segments
The economic crisis hit the Technology segment especially hard. Revenue for this business area fell by 53.0 percent to € 48.8 million (previous year € 103.8 million). Pressure also came from the buildup of inventories at customers during the 2008 financial year, which created a lasting barrier to technotrans sales and in essence caused a situation where the downturn in revenue was much sharper than the market average.
The Technology segment posted earnings before interest and taxes (EBIT) of € -16.2 million in the past financial year (previous year €-4.3 million). Alongside the shortfall in revenue, this was substantially due to the non-recurring effects.
The Services segment, on the other hand, weathered the crisis fairly well but likewise experienced a fall in revenue of 11.7 percent to € 33.4 million (previous year € 37.8 million). EBIT for the Services segment amounted to € 4.2 million (previous year € 4.0 million) and therefore showed a slight improvement on the previous year, when the figure had already been diminished by restructuring measures. The operating margin amounted to 12.7 percent in 2009 (previous year 10.6 percent) and therefore returned to a satisfactory level.
Cash flow
On the basis of a net loss for the year of € -10.3 million (previous year € -2.8 million), the cash flow from operating activities before changes to net current assets totalled € -4.4 million (previous year € 12.5 million). Successful working capital management made a positive contribution totalling € 17.7 million to the development in cash flow; on the other hand the reduction of liabilities had a negative effect, including in particular the use of the provision for the settlement of the patent dispute (payment € 6.5 million).
Overall, the net cash from operating activities amounted to € 3.6 million. This positive operating cash flow was sufficient to cover investment spending (€ 1.2 million), and the free cash flow consequently amounted to € 2.4 million (previous year € 0.3 million). As expected, it therefore remained positive for the year as a whole. Cash and cash equivalents at year-end rose by € 3.3 million or 48 percent to € 10.3 million (previous year € 6.9 million).
The group’s net debt, in other words the ratio of interest-bearing liabilities less cash, was € 12.4 million at the reporting date and was therefore reduced by 29.4 percent compared with the previous year (€ 17.5 million). Gearing, in other words the ratio of net debt to equity, improved from 41.9 to 39.5 percent.
Outlook
Considerable uncertainty still surrounds the economic recovery worldwide in 2010. The management of technotrans still expects to see a tentative recovery in business during the current financial year, on the one hand based on the forecasts that predict a mild recovery in investment propensity at least in the second half of the financial year. On the other hand demand from the customers is expected to move back towards normal levels as they progress with reducing inventories; the falls in technotrans’ revenue should therefore move more closely in line with the general market trend. “A third aspect that prompts us to be cautiously optimistic is the fact that we succeeded in increasing our market shares during the crisis,” Henry Brickenkamp points out. “In addition we also have a large number of products in our range that have not yet been able to reach their full potential. Last but not least, the Ipex exhibition that will take place in May, held every four years mid-way through the drupa cycle, might be the turning point in the investment propensity of printers.”
Finance Director Dirk Engel outlines the targets for the financial year 2010: “For the above reasons, and taking into the uncertainty of the economic environment, we expect that the technotrans Group will be able to increase its revenue to around € 85 to 90 million in the 2010 financial year. This would represent growth of more than 5 percent.” Engel adds that because the signs of a lasting recovery are not yet sufficiently firm so he presently believes a figure towards the lower end of this range is more likely. “Our goal for the 2010 financial year is to return to sustained profitability. The measures we have been taking since 2008 should pave the way for an EBIT margin of at least 3 to 5 percent in the 2010 financial year.”
In addition the Management’s aim is to build up an additional basis for growth outside the printing industry over the next three to five years. “In the medium to long term, the underlying conditions in our core market do not permit the growth rates that we would consider adequate for the successful development of the company.. Therefore one important task for technotrans in 2010 will be to tap into additional applications outside the printing industry for its core skills.”
Note: Any forward-looking statements contained in this report represent our best judgment as to what will occur in the future. The Company's actual results could differ materially from those forecast, depending on a number of competitive and economic factors, some of which are and will be outside the control of the Company.
Dates: Publication of the Interim Report 1-3/2010 is scheduled for
May 4, 2010.
The Annual Shareholder Meeting will take place in Münster/Germany on May 6, 2010.
Securities: technotrans AG – ISIN DE000A0XYGA7 –
German Securities Identification No. WKN A0XYGA
Shortcut TTR1.DE
These press releases contain forward-looking statements which are based on assumptions and estimations by the management board of technotrans AG. Even though the management board is of the opinion, that those assumptions and estimations are realistic the future development and the projected results may deviate substantially from the forward-looking statements. Those deviations can be due to several factors including but not limited to changes in the macro-economic situation, in the exchange rates, in the interest rates and in the graphic arts industry. technotrans AG gives no warranty and does not assume the liability for any damages in case the future development and the projected results do not correspond with the forward looking statements.