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Zumtobel Group AG
Quarterly Report • Sep 3, 2019
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Quarterly Report
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Q1 2019/20
Interim Report (May - July 2019)
Overview of the First Quarter 2019/20
| Key Data in EUR million | Q1 2019/20 | Q1 2018/19 | Change in % |
|---|---|---|---|
| Revenues | 296.4 | 293.1 | 1.1 |
| EBITDA | 30.9 | 20.9 | 47.3 |
| as a % of revenues | 10.4 | 7.1 | |
| Adjusted EBIT | 15.8 | 10.0 | 58.4 |
| as a % of revenues | 5.3 | 3.4 | |
| EBIT | 15.4 | 7.3 | >100 |
| as a % of revenues | 5.2 | 2.5 | |
| Net profit for the period | 10.9 | 2.8 | >100 |
| as a % of revenues | 3.7 | 1.0 | |
| Cash flow from operating results | 30.8 | 21.0 | 46.5 |
| Investments | 10.4 | 15.5 | (32.7) |
| 31 July 2019 | 30 April 2019 | Change in % | |
| Total assets | 990.8 | 920.9 | 7.6 |
| Equity | 274.7 | 262.8 | 4.5 |
| Equity ratio in % | 27.7 | 28.5 | |
| Net debt | 199.1 | 148.7 | 33.9 |
| Headcount incl. contract worker (full-time equivalent) | 5,915 | 5,878 | 0.6 |
Note: The new standard IFRS 16 was initially applied in 2019/20. The main effects are as follows: EBITDA plus EUR 4.0 million, net profit minus EUR 0.1 million, increase in net liabilities/balance sheet total plus EUR 50.1 million
Development of business by quarter
Revenues (in EUR million)
Adjusted EBIT
Letter to Shareholders
Dear Shareholders,
The first quarter of the 2019/20 financial year has shown that we are back on the right track. We have successfully continued the growth course which began in the fourth quarter of the past financial year and closed the first three months of 2019/20 with a solid improvement in earnings:
Slight increase in revenues
The ZUMTOBEL Group recorded a slight increase of 1.1% in revenues to EUR 296.4 million in the first quarter of 2019/20. This positive development was supported, above all, by the core markets in our DACH region with revenue growth of 5.6%.
Solid improvement in earnings
Group EBIT, adjusted for special effects, rose by 58.4% year-on-year to EUR 15.8 million and led to an increase in the adjusted return on sales from 3.4% to 5.3%. The positive development of the Group's profitability was based on the slight growth in sales combined with cost savings. These factors led to an improvement in net profit from EUR 2.8 million to EUR 10.9 million.
We now want to continue this positive trend over the coming months, despite the growing weakness in the market environment. Our goal for the 2019/20 financial year is to generate moderate growth and a further improvement in our profitability.
Alfred Felder Chief Executive Officer (CEO)
Alfred Felder
Group Management Report
Development of revenues in the first quarter 2019/20
- >> Group revenues rise by 1.1% (FX-adjusted plus 0.9%)
- >> Lighting Segment revenues slightly higher year-on-year (plus 1.4%)
- >> Components Segment at prior year level (minus 0.1%)
FX-adjusted increase of 0.9% in revenues
In the first three months of the 2019/20 financial year (1 May 2019 to 31 July 2019), Group revenues rose by 1.1% year-on-year to EUR 296.4 million (previous year: EUR 293.1 million). Revenue development was influenced by positive currency translation effects of EUR 0.5 million which resulted primarily from the decline in the euro versus the Swiss franc and the US dollar. A contrary factor was the increase in the euro versus the Turkish lira. After an adjustment for these effects, the increase in revenues equalled 0.9%.
| Segment development in EUR million | Q1 2019/20 | Q1 2018/19 | Change in % | FX adjusted in % |
|---|---|---|---|---|
| Lighting Segment | 222.6 | 219.5 | 1.4 | 0.9 |
| Components Segment | 89.3 | 89.4 | (0.1) | 0.6 |
| Reconciliation | (15.4) | (15.7) | (1.9) | |
| Zumtobel Group | 296.4 | 293.1 | 1.1 | 0.9 |
Lighting Segment: FX-adjusted revenues 0.9% over prior year
Components Segment: FX-adjusted revenues 0.6% over prior year
In the Lighting Segment, the positive revenue trend from the fourth quarter of the previous year continued despite growing weakness in the market environment. Revenues in this segment rose by 1.4% to EUR 222.6 million during the reporting period (previous year: EUR 219.5 million).
Revenues in the Components Segment fell by 0.1% in the first quarter of 2019/20, but increased slightly by 0.6% after foreign exchange adjustments. The development of revenues was negatively influenced by the devaluation of the Turkish lira versus the euro and by a decline in the demand for components from the Lighting Segment.
Distribution of regional revenues
| Revenues in EUR million | Q1 2019/20 | Change in % | in % of Group |
|---|---|---|---|
| D/A/CH | 92.9 | 5.6 | 31.3 |
| Northern Europe | 61.8 | (1.9) | 20.9 |
| Benelux & Eastern Europe | 46.1 | 2.1 | 15.5 |
| Southern Europe | 47.3 | (3.1) | 15.9 |
| Asia & Pacific | 30.3 | 0.7 | 10.2 |
| Middle East & Africa | 11.0 | (13.3) | 3.7 |
| Americas | 7.1 | 29.2 | 2.4 |
| Total | 296.4 | 1.1 | 100.0 |
Satisfactory revenue development in DACH and USA
There were substantial regional differences in the development of revenues during the first three months of 2019/20, but the growth trend from the fourth quarter of the previous year was generally confirmed. In particular, the core markets in the DACH region recorded a sound increase of EUR 4.9 million in revenues. Revenue growth was also supported by Asia and the USA as well as the countries in Eastern Europe, while business development in the Middle Eastern countries remained below expectations.
Development of earnings in the first quarter 2019/20
- >> Positive earnings development supported by slight revenue growth
- >> Fixed costs favourably influenced by efficiency improvement and savings measures
- >> Adjusted Group EBIT rises to EUR 15.8 million
Group EBIT adjusted for special effects rose to EUR 15.8 million in the first three months of 2019/20 (Q1 2018/19: EUR 10.0 million). This was reflected in a corresponding increase in the return on sales from 3.4% to 5.3%. The improvement in the Group's profitability during the reporting period is attributable to the Lighting Segment, where cost savings combined with moderate revenue growth led to an increase in earnings. Adjusted EBIT rose from EUR 8.1 million to EUR 13.5 million in the Lighting Segment and equalled EUR 6.4 million (Q1 2018/19: EUR 8.1 million) in the Components Segment.
Adjusted Group EBIT rises to EUR 15.8 million
Reduction of development costs
The gross profit margin (after development costs) for the Zumtobel Group rose to 32.3% in the first three months of 2019/20 (previous year: 31.9%). Development costs included in the cost of goods sold fell by EUR 1.6 million to EUR 15.0 million (Q1 2018/19: EUR 16.6 million).
| Income statement in EUR million | Q1 2019/20 | Q1 2018/19 | Change in % |
|---|---|---|---|
| Revenues | 296.4 | 293.1 | 1.1 |
| Cost of goods sold | (200.8) | (199.7) | 0.5 |
| Gross profit | 95.6 | 93.4 | 2.4 |
| as a % of revenues | 32.3 | 31.9 | |
| SG&A expenses adjusted for special effects | (79.8) | (83.4) | (4.3) |
| Adjusted EBIT | 15.8 | 10.0 | 58.4 |
| as a % of revenues | 5.3 | 3.4 | |
| Special effects | (0.4) | (2.7) | 84.9 |
| EBIT | 15.4 | 7.3 | >100 |
| as a % of revenues | 5.2 | 2.5 | |
| Financial results | (1.8) | (2.8) | 35.4 |
| Profit before tax | 13.6 | 4.4 | >100 |
| Income taxes | (2.7) | (1.6) | 64.9 |
| Net profit for the period | 10.9 | 2.8 | >100 |
| Earnings per share (in EUR) | 0.25 | 0.06 | >100 |
Note: EBITDA (EBIT plus depreciation and amortisation) amounted to EUR 30.9 million in the first quarter of 2019/20.
The efficiency improvement and cost savings measures implemented in spring 2018 led to a reduction in selling and administrative expenses during the reporting period. Selling expenses (incl. research) fell by EUR 0.3 million to EUR 73.9 million (Q1 2018/19: EUR 74.2 million) and administrative expenses declined by EUR 3.1 million to EUR 7.6 million (Q1 2018/19: EUR 10.7 million). This reduction was supported, above all, by the substantial streamlining of the management team and strict cost management. Other operating results, excluding special effects, were slightly higher at EUR 1.7 million (Q1 2018/19: EUR 1.5 million).
Negative special effects of EUR 0.4 million were recorded in the first quarter of 2019/20 (Q1 2018/19: EUR 2.7 million) and are related primarily to costs for the adjustment of the global plant network. In addition, the sale of plant and equipment and the chip-on-board business at the components plant in Jennersdorf led to non-recurring income.
Substantial decline in selling and administrative costs
Negative special effects from transformation process
Improvement in financial results
Financial results improved by EUR 1.0 million year-on-year to minus EUR 1.8 million (Q1 2018/19: minus EUR 2.8 million). Interest expense is attributable primarily to the current credit agreement and to finance leases. Other financial income and expenses totalled EUR 0.1 million (Q1 2018/19: minus EUR 1.2 million) and include the interest expense on pension obligations as well as the income and expenses resulting from the high volatility on foreign exchange markets and the related exchange rate fluctuations.
Profit before tax amounted to EUR 13.6 million for the reporting period (Q1 2018/19: EUR 4.4 million), and income taxes totalled EUR 2.7 million (Q1 2018/19: EUR 1.6 million). As a result, net profit rose to EUR 10.9 million (Q1 2018/19: EUR 2.8 million). Earnings per share for the shareholders of Zumtobel Group AG (basic EPS based on 43.1 million shares) equalled EUR 0.25 (Q1 2018/19: EUR 0.06).
Cash flow and asset position
The renewed improvement in profitability led to a year-on-year increase in cash flow from operating results from EUR 21.0 million to EUR 30.8 million.
Working capital was further optimised during the reporting period, with a reduction of EUR 19.9 million below the level on 31 July 2018 to EUR 175.8 million as of 31 July 2019. As a percent of rolling 12-month revenues, working capital declined from 16.7% auf 15.1% year-on-year. Cash flow from operating activities therefore increased from EUR 8.3 million to EUR 19.6 million in the first quarter of 2019/20. Cash outflows from the changes in other operating positions totalled EUR 6.9 million (Q1 2018/19: cash outflows of EUR 3.4 million). Positive development of working capital
Cash flow from investing activities was at minus EUR 9.7 million (Q1 2018/19: minus EUR 14.5 million) in the reporting period. Investment volume declined to EUR 10.4 million (Q1 2018/19: EUR 15.5 million). Included here are investments for capitalised development costs of EUR 3.9 million (Q1 2018/19: EUR 3.2 million). Free cash flow rose to EUR 9.9 million in the reporting period (Q1 2018/19: minus EUR 6.2 million), primarily due to the higher cash flow from operating activities. Free cash flow at plus EUR 9.9 million
| Balance sheet data in EUR million | 31 July 2019 | 30 April 2019 |
|---|---|---|
| Total assets | 990.8 | 920.9 |
| Net debt | 199.1 | 148.7 |
| Equity | 274.7 | 262.8 |
| Equity ratio in % | 27.7 | 28.5 |
| Gearing in % | 72.5 | 56.6 |
| Investments | 10.4 | 66.2 |
| Working capital | 175.8 | 172.8 |
| As a % of rolling 12-month revenues | 15.1 | 14.9 |
Solid balance sheet structure
The balance sheet structure has remained nearly unchanged since 30 April 2019. The equity ratio equalled 27.7% as of 31 July 2019. Net debt rose by EUR 50.4 million to EUR 199.1 million at the end of the reporting period, chiefly due to an increase of EUR 50.1 million in lease liabilities following the initial application of IFRS 16. Consequently, gearing – the ratio of net debt to equity – deteriorated from 56.6% to 72.5%.
Outlook
- >> Cautious optimism for the 2019/20 financial year
- >> Guidance and medium-term goal confirmed
The Management Board of the ZUMTOBEL Group expects a slight increase in revenues as well as an improvement in the adjusted EBIT margin to 3 to 5% for the full 2019/20 financial year (2018/19 financial year: 2.4%). The medium-term goal remains intact to reach an EBIT margin of roughly 6% by 2020/21.
Dornbirn, 3 September 2019
The Management Board
Alfred Felder Thomas Tschol Bernard Motzko
Chief Executive Officer (CEO) Chief Financial Officer (CFO) Chief Operating Officer (COO)
Zumtobel Group AG has adjusted the scope of the interim reports due to the changed requirements of the "Prime Market Rules" of the Vienna Stock Exchange for first and third quarter interim reporting. Financial information presented in the interim report for the first quarter of 2019/20 is fundamentally based on the same accounting and valuation methods underlying the consolidated financial statements of the Zumtobel Group AG for the 2018/19 financial year, with the exception from first time application of IFRS 16 Leases. IFRS 16 was initially applied for the financial year 2019/20.
Consolidated Income Statement
| in TEUR | Q1 2019/20 | Q1 2018/19 | Change in % |
|---|---|---|---|
| Revenues | 296.391 | 293.109 | 1,1 |
| Cost of goods sold | -200.769 | -199.708 | 0,5 |
| Gross profit | 95.622 | 93.401 | 2,4 |
| as a % of revenues | 32,3 | 31,9 | |
| Selling expenses | -73.853 | -74.194 | -0,5 |
| Administrative expenses | -7.613 | -10.740 | -29,1 |
| Other operating income | 2.199 | 1.525 | 44,2 |
| thereof special effects | 412 | 0 | |
| Other operating expenses | -943 | -2.738 | -65,6 |
| thereof special effects | -826 | -2.738 | -69,8 |
| Operating profit | 15.412 | 7.254 | >100 |
| as a % of revenues | 5,2 | 2,5 | |
| Interest expense | -1.955 | -2.077 | -5,9 |
| Interest income | 77 | 143 | -46,2 |
| Other financial income and expenses | 56 | -1.235 | >100 |
| Result from companies accounted for at-equity | 0 | 348 | -100,0 |
| Financial results | -1.822 | -2.821 | 35,4 |
| as a % of revenues | -0,6 | -1,0 | |
| Profit before tax | 13.590 | 4.433 | >100 |
| Income taxes | -2.705 | -1.640 | 64,9 |
| Net profit for the period | 10.885 | 2.793 | >100 |
| as a % of revenues | 3,7 | 1,0 | |
| thereof due to non-controlling interests | -7 | -58 | 88,2 |
| thereof due to shareholders of the parent company | 10.892 | 2.851 | >100 |
| Average number of shares outstanding – basic (in 1,000 pcs.) | 43.147 | 43.147 | |
| Average number of shares outstanding – diluted (in 1,000 pcs.) | 43.147 | 43.147 | |
| Earnings per share (in EUR) | |||
| Earnings per share (diluted and basic) | 0,25 | 0,06 |
Consolidated Balance Sheet
| in TEUR | 31 July 2019 | in % | 30 April 2019 | in % |
|---|---|---|---|---|
| Goodwill | 189.302 | 19,1 | 190.299 | 20,7 |
| Other intangible assets | 50.697 | 5,1 | 50.179 | 5,4 |
| Property, plant and equipment | 277.674 | 28,0 | 232.690 | 25,3 |
| Financial assets accounted for at equity | 3.863 | 0,4 | 3.863 | 0,4 |
| Financial assets | 997 | 0,1 | 993 | 0,1 |
| Other assets | 3.895 | 0,4 | 4.145 | 0,5 |
| Deferred taxes | 23.839 | 2,4 | 25.487 | 2,8 |
| Non-current assets | 550.267 | 55,5 | 507.656 | 55,2 |
| Inventories | 178.414 | 18,0 | 174.827 | 19,0 |
| Trade receivables | 160.045 | 16,2 | 162.829 | 17,7 |
| Financial assets | 1.810 | 0,2 | 700 | 0,1 |
| Other assets | 46.510 | 4,7 | 37.566 | 3,9 |
| Liquid funds | 53.762 | 5,4 | 37.332 | 4,1 |
| Current assets | 440.541 | 44,5 | 413.254 | 44,8 |
| ASSETS | 990.808 | 100,0 | 920.910 | 100,0 |
| Share capital | 108.750 | 11,0 | 108.750 | 11,8 |
| Additional paid-in capital | 335.316 | 33,8 | 335.316 | 36,4 |
| reserves | -181.911 | -18,4 | -167.687 | -18,2 |
| Net profit for the period | 10.892 | 1,1 | -15.267 | -1,7 |
| Capital attributed to shareholders of the parent company | 273.047 | 27,5 | 261.112 | 28,3 |
| Capital attributed to non-controlling interests | 1.669 | 0,2 | 1.666 | 0,2 |
| Equity | 274.716 | 27,7 | 262.778 | 28,5 |
| Provisions for pensions | 79.247 | 8,0 | 81.752 | 8,9 |
| Provisions for severance compensation | 47.720 | 4,8 | 47.479 | 5,2 |
| Provisions for other employee benefits | 9.849 | 1,0 | 9.671 | 1,1 |
| Other provisions | 10.380 | 1,0 | 10.580 | 1,1 |
| Borrowings | 187.267 | 19,0 | 126.167 | 13,7 |
| Other liabilities | 558 | 0,1 | 634 | 0,1 |
| Deferred taxes | 2.714 | 0,3 | 2.583 | 0,3 |
| Non-current liabilities | 337.735 | 34,2 | 278.866 | 30,4 |
| Provisions for taxes | 24.042 | 2,4 | 23.421 | 2,5 |
| Other provisions | 36.796 | 3,7 | 41.839 | 4,5 |
| Borrowings | 65.606 | 6,6 | 59.877 | 6,5 |
| Trade payables | 129.243 | 13,0 | 137.397 | 14,9 |
| Other liabilities | 122.670 | 12,4 | 116.732 | 12,7 |
| Current liabilities | 378.357 | 38,1 | 379.266 | 41,1 |
| EQUITY AND LIABILITIES | 990.808 | 100,0 | 920.910 | 100,0 |
Consolidated Cash Flow Statement
| in TEUR | Q1 2019/20 | Q1 2018/19 |
|---|---|---|
| Profit before tax | 13.590 | 4.433 |
| Depreciation and amortisation | 15.440 | 13.683 |
| Gain/loss on the disposal of property, plant and equipment and intangible assets | -25 | 102 |
| Other non-cash financial results | -78 | 1.233 |
| Interest incom | ||
| e/ Interest expense | 1.899 | 1.934 |
| Share of profit or loss in companies accounted for at equity | 0 | -348 |
| Cash flow from operating results | 30.826 | 21.037 |
| Inventories | -5.688 | -10.012 |
| Trade receivables | 3.804 | -1.175 |
| Trade payables | -6.832 | -2.703 |
| Prepayments received | 5.075 | 5.529 |
| Change in working capital | -3.641 | -8.361 |
| Non-current provisions | -542 | -528 |
| Current provisions | -4.887 | 5.112 |
| Other assets | -8.781 | -3.404 |
| Other liabilities | 7.290 | -4.560 |
| Change in other operating items | -6.920 | -3.380 |
| Income taxes paid | -669 | -964 |
| Cash flow from operating activities | 19.596 | 8.332 |
| Cash inflows from the disposal of property, plant and equipment and other intangible assets | 614 | 167 |
| Cash outflows for the purchase of property, plant and equipment and other intangible assets | -10.403 | -15.465 |
| Change in non-current and current financial assets | 45 | 754 |
| Cash flow from investing activities | -9.744 | -14.544 |
| FREE CASH FLOW | 9.852 | -6.212 |
| Cash proceeds from non-current and current borrowings | 39.680 | 6.496 |
| Cash repayments of non-current and current borrowings | -25.000 | -5.000 |
| Interest paid | -1.793 | -2.041 |
| Interest received | 82 | 143 |
| Cash flow from financing activities | 12.969 | -402 |
| CHANGE IN CASH AND CASH EQUIVALENTS | 22.821 | -6.614 |
| Cash and cash equivalents at the beginning of the year | 19.605 | 72.446 |
| Cash and cash equivalents at the end of the year | 42.818 | 65.943 |
| Effects of exchange rate changes on cash and cash equivalents | 392 | 111 |
| Change absolute | 22.821 | -6.614 |
Service
Financial Calendar
Report on the First Quarter 2019/20 (1 May 2019 - 31 July 2019) 3 September 2019 Report on the First Half-year 2019/20 (1 May 2019 - 31 October 2019) 3 December 2019 Report on the First Three Quarters 2019/20 (1 May 2019 - 31 January 2020) 3 March 2020
Contact Information
Investor Relations Press / Corporate Communication Emanuel Hagspiel Marina Konrad-Märk Head of Investor Relations Head of Corporate Communications Telephone +43 (0)5572 509-1125 Telephon +43 (0)5572 509-575
E-Mail [email protected] E-Mail [email protected]
Financial Reports
Our financial reports are available in English and German for download under: http://www.zumtobelgroup.com.
More Information
on Zumtobel Group AG and our brands can be found on the Internet under:
www.zumtobelgroup.com www.zumtobel.com www.thornlighting.com www.tridonic.com www.acdclighting.co.uk
Imprint
Publisher: Zumtobel Group AG, Investor Relations, Emanuel Hagspiel Coordination Financials: Bernhard Chromy Translation: Donna Schiller-Margolis Copyright: Zumtobel Group AG 2019 Produced in-house with FIRE.sys
Disclaimer
This quarterly financial report includes statements on future developments, which are based on information available at the present time and involve risks and uncertainties that could cause the results realised at a later date to vary from these forward-looking statements. These statements on future developments are not to be under-stood as guarantees. On the contrary, future developments and results are dependent on a wide range of factors and connected with various risks and incalculable events. Moreover, they are based on assumptions that may prove to be incorrect. Included here, for example, are unforeseeable changes in the political, economic and business environment, especially in the regions where the Zumtobel Group operates, as well as the competitive situation, interest rates and foreign exchange rates, technological developments and other risks and incalculable events. Other risks may arise as a result of price developments, unforeseeable events in the operating environments of acquired companies or Group companies as well as ongoing cost optimisation programmes. The Zumtobel Group does not plan to update these forward-looking statements. This interim financial report is also presented in English, but only the German text is binding.