Earnings Release • May 15, 2009
Earnings Release
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Parrot - Press release - Q1 2009
Paris, May 15th, 2009 - 5:40 pm
| Consolidated accounts under IFRS - unaudited (€'000,000) | Q1 2008 | Q4 2008 | Q1 2009 |
|---|---|---|---|
| Revenues | 58.9 | 46.1 | 39.1 |
| of which, navigation products(1) | 4.0 | 2.7 | 1.7 |
| Gross operating margin | 31.7 | 21.4 | 18.2 |
| % of revenues | 53.7% | 46.3% | 46.5% |
| Income from ordinary operations | 10.8 | -2.3 | 0.1 |
| % of revenues | 18.4% | - | 0.2% |
| EBIT | 10.8 | -4.6 | 0.1 |
| % of revenues | 18.4% | - | 0.2% |
| Net income (Group share) | 8.3 | -3.1 | 0.4 |
| % of revenues | 14.1% | - | 1.2%% |
| Net earnings per share (€) | 0.63 | -0.24 | 0.03 |
| Diluted net earnings per share (€) | 0.52 | -0.23 | 0.03 |
| €'000,000, excluding net EPS | Mar 31, 2008 | Dec 31, 2008 |
Mar 31, 2009 |
| Net cash position (negative net debt) | 37.3 | 43.4 | 51.9 |
(1) Share of revenues from the contract for distributing navigation products in Spain.
As Henri Seydoux, Parrot's chairman, chief executive officer and founder, explains: "The first-quarter earnings confirmed Parrot's ability to rapidly and effectively adapt its business model in order to safeguard its profitability. In the current context, this still represents a delicate exercise, which we plan to pursue over the full year. At the same time, the new products released have, despite the economic environment, been very well received and in time, I am confident in the ability of our range to accompany the upturn in demand and consolidate the Group's leadership".
Set against the deterioration in the macroeconomic environment, and in light of the selective sales policy introduced by the Group since the crisis began, Parrot's revenues came to 39.1 million euros, down 33.6% on an annual basis and 15.2% in relation to Q4 2008.
Installed handsfree kit sales (65.2% of revenues), although down 38.2% on an annual basis, are up 3.5% in relation to Q4 2008. This segment is being buoyed by the level of sales maintained on the Group's historical flagship products (CK3x00), as well as the success achieved by the new products launched (MKi9x00). They accounted for 25% of revenues for the range, rewarding the marketing strategy launched in Q4.
Set against an unfavorable base effect, OEM product sales (13.1% of revenues) are continuing to reflect the destocking policies adopted by Parrot's long-standing clients. In Q1 2009, the OEM division introduced new products to the various clients acquired in 2008: sound automotive industrial players and original equipment manufacturers, whose orders are expected to pick up pace during the second half of the year.
Highly appreciated at the time of the end-of-year holidays, Plug&Play products (9.8% of revenues) show an annual growth rate of 38.1%. The poor performance in relation to Q4 is due to seasonal factors, and demand for these products remains strong.
The Multimedia range (3.3% of revenues) is continuing to benefit from the stock clearance policy. On this segment, the Group believes that it will be able to focus almost exclusively on the upscale Parrot By products as of the second half of 2009.
Sales are being affected by the widespread economic slowdown and are generally in line with the measures taken by the Group in its subsidiaries. The key elements for Q1 reflect:
The level of sales in Spain (36% of revenues), which did not deteriorate over the period. Excluding the navigation product distribution contract, revenue growth comes out at 4.8% in relation to the previous quarter.
The contraction in consumption, which has been particularly significant in the US (3.5% of revenues) where the subsidiary's headcount has therefore been halved. Parrot has also effectively limited its exposure to the closure of points of sale in the electronic retail sector (Circuit City) and among automobile specialists (Autobacs and independent fitters). Priority has been given to setting up distribution contracts with leading mobile telephony players and first-rate general retailers, particularly for Parrot By products.
Market conditions have deteriorated in the UK (7.7% of revenues). In addition, revenues have been affected by the sterling's fall and the restricted client credit policy adopted by Parrot.
Sales are continuing to grow in Germany (8.0% of revenues). Commercial performances notably reflect billing linked to the development of dedicated products for the new OEM clients acquired in this country over 2008.
For Q1 2009, Parrot recorded a gross margin of 46.5%. Without factoring in the contract for the distribution of navigation products in Spain, the gross margin on all Parrot products comes out at 48.1%. Margins have remained high, thanks in particular to the lower fall in the dollar and the favorable contribution by the product mix.
EBIT, at 0.1 million euros, has been brought back to breaking even. Over the period, spending was cut by -23.2% compared with Q4, in line with the Group's development plan:
R&D spending has been maintained at its historical level, representing 5.6 million euros (equivalent to Q4 2008), with a major focus on products that will be able to accompany the new generation of mobile handsets, driving its future growth;
Significant reduction in sales and marketing spending, which came to 8.6 million euros (compared with 13.7 million euros in Q4 2008 and 10.7 million euros in Q1 2008);
Ongoing moves to further strengthen control over general costs, which totaled 2.1 million euros (compared with 2.4 million euros for Q4 2008 and 2.7 million euros in Q1 2008);
Freeze on hires combined with a selective reduction in the workforce, bringing the average headcount down from 476 at December 31st, 2008 to 456 at March 31st. Since the start of the crisis, the total number of people employed by the Group (workforce and external providers) has been reduced by 11%.
Net income (Group share) came to 0.5 million euros, representing 0.03 euros per share for Q1, benefiting from the 0.3 K€ in tax income over the period.
Parrot is in a sound financial position, with 51.9 million euros in net cash at March 31st, 2009, compared with 43.4 million euros at December 31st, 2008. Net cash from operating activities totaled 9.5 million euros in Q1 2009. This change is due to cash generated by operations on the one hand (2.5 million euros), and the reimbursement of the research tax credit on the other. In terms of working capital, the good levels of inventories (-16%) and trade receivables (-12%) are being temporarily neutralized by the reduction in supplier lead-times.
Parrot does not have any debt and has 116.1 million euros in equity (compared with 114.9 million euros at December 31st, 2008), with 8,7 euros in net assets per share.
At the Board meeting on May 14th, 2009, Parrot's Directors, as authorized by the Combined General Meeting on June 11th, 2008, has decided to reduce Parrot's share capital as of May 14th, 2009 by cancelling 454,564 treasury shares, representing 3.40% of the capital.
This operation is immediately accretive for all of the Group's shareholders, with Parrot's capital now comprising 12,924,915 shares.
Over the short term, Parrot does not expect to see any significant change in demand, while earnings for the next quarter will once again reflect unfavorable elements for comparison. In light of the lack of visibility, combined with the volatility resulting from the current macroeconomic environment, the Group is maintaining its focus on the savings measures rolled out since the end of 2008.
While also maintaining its R&D efforts, Parrot is choosing to focus on developing new products that will accompany the latest generations of mobile handsets, the long-term trends linked to the development of mobility and the regulations governing the use of your phone when at the wheel. In this way, Parrot aims to maintain its technological lead and have a pipeline of innovative products when the crisis ends.
Furthermore, the current level of cash flow will enable the Group, as soon as the first tangible signs of an upturn in demand appear, to rapidly reactivate its sourcing capabilities and support its dynamic commercial development.
Parrot's General Shareholders' Meeting will be held at 8:30 am on June 18th, 2009. 2009 first-half earnings (ending June 30th) will be published after close of trading on July 31st, 2009.
Parrot, a global leader in wireless devices for mobile phones, stands on the cutting edge of innovation. The company was founded in 1994 by Henri Seydoux as part of his determination to drive the inevitable breakthrough of mobile phones into everyday life by creating high-quality, user-friendly wireless devices for easy living. Parrot has developed the most extensive range of hands-free kits on the market for cars, motorbikes and scooters, including wireless multimedia products geared towards audiovisual applications. In 2008, Parrot launched a new prestige line of high-end products bearing the hallmark of renowned artists. Parrot, headquartered in Paris, currently employs 450 people worldwide and generates 85% of its sales overseas. Parrot is listed on NYSE Euronext Paris since 2006.
www.parrot.com Eurolist C: FR0004038263 - PARRO
| % of revenues | Q1 2009 | Q4 2008 | Q1 2008 |
|---|---|---|---|
| France | 13.2% | 12.7% | 15.6% |
| Spain | 36.0% | 31.5% | 34.5% |
| UK | 7.7% | 10.2% | 8.0% |
| Netherlands and Belgium | 10.0% | 9.6% | 7.3% |
| Italy | 4.8% | 4.2% | 3.8% |
| Germany | 8.0% | 2.8% | 2.2% |
| Rest of Europe | 5.4% | 6.0% | 7.5% |
| US | 3.5% | 9.1% | 10.9% |
| Rest of world | 11.4% | 14.0% | 10.3% |
| % of revenues | Q1 2009 | Q4 2008 | Q1 2008 |
|---|---|---|---|
| Installed kits | 65.2% | 53.4% | 70.0% |
| OEM | 13.1% | 14.1% | 14.4% |
| Plug & Play | 9.8% | 15.3% | 4.7% |
| Multimedia | 3.3% | 6.1% | 1.2% |
| Other | 8.6% | 11.2% | 9.6% |
| €'000 | Q1 2009 | Q4 2008 | Q1 2008 |
|---|---|---|---|
| Revenues | 39,112 | 46,116 | 58,918 |
| Cost of sales | -20,908 | -24,749 | -27,259 |
| Gross margin | 18,204 | 21,367 | 31,660 |
| Gross margin as % of revenues | 46.5% | 46.3% | 53.7% |
| Research and development costs | -5,585 | -5,611 | 5,435 |
| % of revenues | 14.3% | 12.2% | 9.2% |
| Sales and marketing costs | -8,577 | -13,667 | 10,727 |
| % of revenues | 21.9% | 29.6% | 18.2% |
| General costs | -2,104 | -2,362 | 2,676 |
| % of revenues | 5.4% | 5.1% | 4.5% |
| Production and quality | -1,870 | - 1,986 | 1,995 |
| % of revenues | 4.8% | 4.3% | 3.4% |
| EBIT | 71 | -2,260 | 10,828 |
| % of revenues | 0.2% | -4.9% | 18.4% |
| Net financial income | 181 | 335 | 322 |
| Other financial income and expenses | -111 | -90 | -186 |
| Corporate income tax | 315 | 1,262 | -2,646 |
| Net income (Group share) | 456 | - 3,062 | 8,318 |
| % of revenues | 1.2% | -6.6% | 14.1% |
®The Bluetooth word mark and logos are owned by the Bluetooth SIG, Inc. and any use of such marks by Parrot S.A. is under license. Other trademarks and trade names are those of their respective owners. Tous droits réservés. Les marques PARROT figurant sur ce document sont la propriété exclusive de la société PARROT. Toutes les autres marques sont la propriété de leurs détenteurs respectifs et sont utilisées sous licence par la société PARROT
CONTACTS Analyst and investor relations – Press relations Marie Ein T: +33(0) 1 53 65 68 68 [email protected] 4/4
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