Business News
technotrans planning increased revenue and doubling of earnings in 2011
Wednesday 16. March 2011 - Revenue up by 4.5 percent in 2010 / earnings positive in all quarters as planned / revenue to reach 100 million in 2011 / doubling of EBIT to 6-7 million planned / 15 % of revenue from outside the printing industry
After a dramatic slump in revenue in the wake of the global economic crisis, the technotrans Groups business performance regained stability in 2010. Revenue reached 85.9 million overall, representing a rise of 4.5 % on the previous year ( 82.2 million). The incipient recovery was particularly clear-cut in the second half of the year in the Technology segment, which realised revenue growth of 5.3% for 2010 after a 53.0 % fall in revenue in 2009. Extensive measures to increase and stabilise profitability, coupled with the recovery in business, brought the company back into operating profitability. Whereas it had posted EBIT of -11.9 million in the previous year (a figure that included several negative non-recurring factors), EBIT for the 2010 financial year now reached 3.0 million despite further consolidation measures; this corresponds to an EBIT margin of 3.5 %.
“Over the past two years the economic crisis has had a profound impact on the company, but technotrans has now regained a firm footing. In parallel with over-coming the crisis, we have successfully paved the way for tapping extra revenue potential outside the printing industry, too. The takeover of Termotek AG is an initial, visible step; others will follow. The company therefore finds itself on the right path to return to former levels of revenue and earnings,” summed up Henry Brickenkamp, Spokesman of the Board of Management of technotrans AG, in his analysis of the current situation.
The earnings situation in 2010 was adversely affected by a variety of factors, including a redundancy plan necessitated by the transfer of the technical areas from Gersthofen ( 0.7 million) and a further reduction for impairment applied to the property there ( 0.2 million). These factors were partly counterbalanced by the reversal of provisions in the fourth quarter.
A consolidated net profit of 1.5 million is reported for the 2010 financial year (previous year -10.3 million), equivalent to earnings per outstanding share of 0.24 (previous year -1.65). The net profit for the financial year is netted against the accumulated loss of technotrans AG from previous years in view of the magnitude of the latter. Therefore no dividend will be distributed for 2010.
“As expected, we achieved the lower end of our 2010 target range for revenue and earnings. We are naturally not content with that. For 2011 and 2012, we expect to see a much more dynamic development and are confident that our activities beyond the scope of the printing industry will help us once again to become the genuine growth company that we perceive ourselves as,” added Brickenkamp.
At December 31, 2010 the technotrans Group had 623 employees, 2.4 % fewer than at the end of 2009. On the one hand following the takeover of Termotek at the start of 2011 and on the other hand as a result of the consolidation measures under way, the total will settle at around 650 for the entire group in the course of this year.
The segments
Revenue in the Technology segment rose by 5.3 % to 51.4 million in 2010 (previous year 48.8 million). Growth was driven by the emerging markets of Asia and South America, which fuelled demand mainly for smaller, less automated printing presses.
The measures initiated during the crisis to improve profitability began to have an effect in the 2010 financial year. Whereas EBIT had been deeply in the red in the previous year ( -16.2 million), revenue volume now remained relatively low and the year still ended with a loss of 2.6 million. This should likewise continue to improve in 2011 along with the planned rises in revenue.
The Services segment also improved its revenue year on year by 3.3 % to 34.5 million (previous year 33.4 million). Parts business turned in a satisfactory performance, whereas project business remained weak. gds AG, which is active in the area of Technical Documentation, likewise contributed towards growth.
Earnings for the segment benefited from slight revenue growth and the advantageous product mix, with the result that EBIT improved by 31.7 % to 5.6 million (previous year 4.2 million). This equates to an EBIT margin of 16.2 %, up from 12.7 % in the previous year.
Financial position
On the basis of a net profit for the year of 1.5 million (previous year -10.3 million), the cash flow from operating activities before changes to working capital totalled 6.6 million ( -4.4 million). The reduction in inventories and receivables further helped the development in the cash flow; on the other hand it was reduced by the slight downturn in liabilities and provisions.
Overall, the net cash from operating activities amounted to 7.4 million (previous year 3.6 million). This operating cash flow was sufficient to cover investment spending ( 1.3 million). The free cash flow amounted to 6.3 million (previous year 2.4 million), providing a sound basis for the company to finance its plans for growth initially from its own resources. Cash and cash equivalents at year-end rose by 2.8 million or 27.7 % to 13.1 million (previous year 10.3 million).
The groups net debt, in other words interest-bearing liabilities less cash, amounted to 5.9 million (previous year 12.4 million) at the reporting date. Gearing, that is to say the ratio of net debt to equity, improved to 17.4 % (previous year 39.5 %).
Outlook
For the 2011 financial year, the Board of Management is planning to increase revenue back up to around 100 million. Growth will be underpinned largely by the Technology segment because demand from the printing industry is gradually recovering. “Even assuming that the investment volume only recovers to 80 % of the pre-crisis level in the medium term, that still offers our company huge scope for growth as a systems supplier. A cyclical upswing would of course offer further opportunities,” commented Brickenkamp in assessing the prospects for core business. “Activities outside the printing industry, and more specifically the takeover of Termotek AG in 2011 and its consolidation from this year, will undoubtedly have a stronger impact on the growth of the technotrans Group.”
The Board of Management believes that a doubling of earnings is possible in the current year. “Our aim is to move significantly closer to former levels of margins in the 2011 financial year. Following an EBIT margin of 3.5 % last year, we initially aim to increase the operating result for 2011 to between six and seven percent,” commented Finance Director Dirk Engel. “For 2012 we will then prepare for getting the operating margins back up to the region of 10 % in the course of the year.”
As a technology and growth company, technotrans has already spent over a year working on various projects to tap additional revenue potential outside the printing industry. “We are pursuing this strategy in the conviction that the framework of the printing industry no longer offers sufficient potential for our growth ambitions in the short to medium term,” explained Brickenkamp. “We are expecting other applications to make further significant contributions to revenue from as early as 2012; these comprise on the one hand our own developments and on the other hand other potential acquisitions. This revenue growth would act as a springboard to pushing returns back up into double figures.”
Change on Supervisory Board
Manfred Bender, Chairman of the Board of Management of Pfeiffer Vacuum AG, has indicated his intention to surrender office with effect from the next Shareholders Meeting. The Board of Management and Supervisory Board would like to thank him for his support since 2006 and wish him every success for the future. The Board of Management and Supervisory Board are planning to propose to the Shareholders Meeting on May 12, 2011 that Helmut Ruwisch, Chairman of the Board of Management of Indus AG, be elected as his successor.
Note: Statements made in this report relating to future developments are based on our cautious estimate of future events. The actual performance of the company may differ substantially from that planned, as it depends on a large number of market-related and economic factors, some of which are beyond the companys control.