Business News
technotrans with quite start into the year of the drupa
Tuesday 06. May 2008 - revenue after three months on level with Q4 2007 / EBIT significantly better than Q 4 2007, but below previous year / net profit 1.7 million / more dynamic development expected for second half-year after the drupa
The beginning of financial 2008 was quiet as expected, maintaining the trend identified during the fourth quarter of last year. Revenue totalled 37.3 million, down 3.0 percent against the previous years first quarter ( 38.4 million). While the Services segment again achieved strong growth of 5.7 percent, in the run-up to drupa revenue of the Technology segment fell to 27.6 million (previous year 29.3 million; down 5.7 percent).
Despite the slight decline in revenue, the gross margin remained steady at the previous years 33.7 percent. Conversely, higher cost of sales and development costs meant that the operating result of 3.0 million did not reach the previous years level ( 4.0 million). As a consequence, the EBIT margin in the first quarter was only 8.1 percent. This does nevertheless mark a turn for the better overall, compared to the weak fourth quarter of the previous year (6.4 percent).
One key success in recent months was the fact, that a major end customer in Asia placed orders to equip 46 new printing presses with the new contex.c blanket cleaner. This event strongly reaffirms the strategy which the company has adopted.
After three months, the groups effective tax rate is 37.5 percent, resulting from the still low contributions to earnings from international subsidiaries. The net income for the first quarter was 1.7 million (previous year 2.2 million; down 23.0 percent). This corresponds to earnings per average share outstanding of 0.26 (previous year 0.33).
The number of employees in the group did not change materially during the first three months of the current financial year (at present: 823; at the 2007 year-end: 831, at the end of the previous-year quarter: 780). The major build-up of capacities seen last year – especially within Germany – has not been sustained in the same way.
The segments
After the first quarter 2008, Technology segment revenue of 27.6 million was around the level of fourth quarter 2007, and 5.7 percent down on the previous years first quarter ( 29.3 million). Our business as a supplier of printing press manufacturers made pleasing progress, benefiting from the ongoing process of consolidation in the supply industry. On the other hand, the nature of the business cycle meant that there was no repeat of the volume of major projects billed in the first quarter of last year.
The segment result was well up on the weak fourth quarter 2007 figure ( 0.7 million), though at 1.3 million was also well down on the previous year’s first quarter level ( 2.3 million; down 42.3 percent). The reasons for this were increased cost of sales and development costs, as well as the new product areas, whose structural costs – especially in terms of personnel cost – are not yet being covered by adequate revenue contributions. We do, however, expect these ratios to improve considerably in the course of the year.
The Services segment achieved a 5.7 percent increase in revenue in the first quarter, reaching 9.6 million (previous year 9.1 million). Installation revenue from the project business was slightly less than in the previous year, while the Technical Documentation division and the contributions to revenue by the international subsidiaries were highly satisfying.
The segment’s profitability also developed positively. EBIT of 1.5 million was at the previous years level, and represented a rate of return for the segment of 15.9 percent. While the Services segment accounted for just under 26 percent of total revenue, it contributed something over half of total earnings, thereby once again playing a strong role in stabilising the company as a whole.
“The temporary market slowdown is nothing unusual, as it reflects a degree of reluctance of printing companies worldwide to invest in the run-up to drupa,” says Heinz Harling, Chairman of the Board of Management. The world’s largest printing industry exhibition, which is held only every four years, will be taking place at the end of May 2008 in Düsseldorf. For two weeks, the city will once again become the focal point of the printing industry.
Outlook
“In conclusion, it can be stated that the current situation in the printing industry is still much better than the mood,” Henry Brickenkamp summarises. “With a view to the upcoming drupa show, which should deliver a boost in orders from the printing press manufacturers, we expect to see more dynamic progress of business in the second half of the year.”
Dirk Engel Chief Financial Director, adds: “Overall, market conditions and trends in the first quarter are broadly in line with our expectations for the current financial year. We are therefore holding firm to our forecast for financial 2008 published in March, indicating revenue of around 160 million, an EBIT margin of 10% and net profit for the year of around 10.5 million.”
People
Owing to the number of people now employed by the company, the composition of the Supervisory Board will change in accordance with the legal requirement in Germany of one-third employee representation after the upcoming Annual Shareholders Meeting. It will in future no longer be composed merely of shareholder representatives, but will comprise four shareholder representatives and two employee representatives. The election of employee representatives to serve on the Supervisory Board was held on April 21, 2008. Klaus Beike (Production Control) and Matthias Laudick (IT) were elected.
Assuming the planned move of Chairman Heinz Harling from the Board of Management to the Supervisory Board is approved, the Board of Management would in future comprise Henry Brickenkamp (Spokesman), Dirk Engel (Finance) and John Stacey (International Organisation). Joachim Simmroß (current Chairman), Andreas Harig and Hubert Oberscheidt are not standing for re-election to the Supervisory Board. We would like to express our thanks to them for their comments and advice – objectively critical, yet always benevolent – given as members of the Supervisory Board over the last 10 years since the company went public.