revenue stabilises at around € 20 mill. / positive earnings, EBIT margin at 3.2 percent / further rebound expected in FY 2010
The technotrans Group posted revenue of € 19.8 million in the first quarter of the new financial year. Although this is 14.5 percent down on the prior-year first quarter (€ 23.2 million), it represents a slight improvement on the fourth quarter of 2009 (€ 19.6 million). Business was initially very slow at the start of the new year and the Technology segment in particular felt the impact of this effect, with its Q1 revenue still falling short of expectations. However, business picked up as the weeks went by, with the result that the quarter as a whole proved to be relatively satisfactory, among other things thanks to comparatively strong Services business.
The cost-cutting measures have significantly lowered the break-even point. The company is therefore able to report figures consistently in the black in the first quarter of 2010. The gross margin is once again at an acceptable level of 32.7 percent; gross profit has benefited in particular from the product mix and the improved costs framework in the first quarter. Distribution costs, administrative expenses and development costs have been cut considerably year on year. The operating result (EBIT) is thus € 624 thousand (previous year € -891 thousand), equivalent to an EBIT margin of 3.2 percent. Net income after three months was € 320 thousand (previous year € -1.2 million), equivalent to earnings per share (average number of shares outstanding) of € 0.05 (previous year € -0.19).
At the reporting date of March 31, 2010 the technotrans Group employed a total of 616 persons, 113 or 16.9 percent fewer than at the corresponding point of the previous year. Not least as a result of the transfer of production to Sassenberg, the cutbacks in the international workforce of -22.8 percent were more trenchant than in Germany (-12.5 percent). Personnel levels are still slightly too high in relation to the current revenue level, therefore short-time is used as a means of adjusting to the prevailing volume of business and this practice is expected to retain over the next few months.
The segments
Revenue of € 11.2 million for the Technology segment for the first three months falls well short of the prior-year quarter's level (€ 14.2 million, -21.4 percent) and is also down slightly on the fourth quarter of 2009 (€ 11.7 million). The extended plant shutdowns at our major customers at the start of the year resulted in an extremely hesitant start to the financial year. Despite a marked improvement in subsequent months, over the quarter as a whole it was not possible to compensate for this shortfall both year on year and compared with the target for the period.
The Q1 result for the segment was still negative at € -651 thousand. Alongside low revenue, this was also due in part to the product mix. Management expects that the segment's loss will shrink if revenue grows as expected.
The Services segment posted revenue of € 8.6 million, an improvement on the previous two quarters but still 4.2 percent down on the corresponding quarter of the previous year (€ 9.0 million). Technical Documentation again accounted for a sizeable portion of expanding service business, especially following the successful market entry of gds AG in Switzerland.
Profitability progressed well and the result for the segment of just under € 1.3 million (previous year € 1.1 million) reached a satisfactory level. This represents a rate of return for the segment of 14.6 percent.
Financial position
Based on a net profit of € 320 thousand for the first-quarter period, the cash flow from operating activities before changes in net current assets totaled € 1.4 million (€ -176 thousand). Net cash from operating activities totaled € 2.1 million (previous year € 5.5 million). The free cash flow for the first quarter is again positive at more than € 1.8 million.
Whereas it had been possible to release around € 7.5 million in cash and cash equivalents from receivables and inventories in the prior-year period, in the first three months of the new financial year it proved necessary to finance working capital to the tune of € 0.8 million. Mainly for that reason, cash and cash equivalents at the end of the quarter of € 11.7 million were a good € 1.0 million up on the first quarter of 2009 (previous year € 10.7 million) and also above the 2009 year-end level (€ 10.2 million).
Net debt continued to fall to € 10.5 million (end of 2009: € 12.4 million). Gearing at the reporting date was 32.8 percent.
Outlook
Demand from the printing industry continues to paint a very mixed picture worldwide. While the recovery in the Asian region has taken on comparatively firm contours, the crisis has not yet been definitively overcome in traditionally developed industrial nations. It requires considerable optimism to assume that there will be an economic upturn in the remainder of the year.
“For those reasons, our revenue target for the current financial year is exposed to a number of risks”, says Henry Brickenkamp, Spokesman of the Board of Management of technotrans AG. “All the same, we continue to perceive an array of opportunities over and above the direct impact of economic developments. For some product lines, inventories at our customers now appear to have been run down to the extent that their order volume is returning to normal. The latest announcements by printing press manufacturers furthermore point to a slight revival in their business. Projects for the new cleaning systems and spray dampening systems are making good progress, and we likewise expect demand for them to rise in the future. Last but not least, this year we expect "technotrans industrial system solutions" – new markets away from the printing industry – to make minor but ground-breaking revenue contributions.”
“Besides our focus towards the printing industry we have established a small team striving towards new applications for our technologies”, Brickenkamp explains. “The aim behind this initiative is to cement technotrans' long-term growth. We are determined to generate a substantial portion of revenue outside the printing industry in three to five years' time.” A large number of potential application areas are currently being investigated to identify which markets offer technotrans the best prospects for successfully capitalising on these core skills. “But it will take some time to evaluate the opportunities identified, plan the next moves and then start to realise results.”
With regards to the earnings targets for fiscal year 2010 Dirk Engel, CFO of technotrans, is confident. “Following on from the low revenue in the first quarter, we believe there are good prospects of achieving our goal of returning to sustained profitability in the 2010 financial year. The break-even point was already successfully lowered during the crisis, allowing us to turn a profit even on the low first-quarter revenue. If business should pick up further in the course of the year – and we expect that it will – a corresponding improvement in results should be possible.”
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 1-6/2010 is scheduled for August 10, 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.