Earnings Release • Nov 6, 2009
Earnings Release
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Corporate | 6 November 2009 07:30
Funkwerk expects cost savings of over EUR10m in 2010
Funkwerk AG / Quarter Results
06.11.2009
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The issuer / publisher is solely responsible for the content of this announcement.
Kölleda, 6 November 2009. After a slump in foreign business, Funkwerk AG
(ISIN DE0005753149) has announced further measures by the end of the year
to achieve cost savings of over EUR10m for 2010. 'The economic recovery is
slow to materialise, so that we do not expect business to revive until the
latter half of 2010. Consequently, we have implemented a company-wide
fitness programme to set the stage again for a positive business and
earnings trend in the coming year,' the Executive Board said in its
nine-month report published today for the company listed in the Prime
Standard of Deutsche Börse.
As already announced in an ad hoc release on 16 October, business at the
specialist in professional information and communication technology was
defined by a continuing difficult economic environment without signs of
recovery in the third quarter of 2009 and by a significant decrease in
foreign business. A major project already in the preparation phase, worth
around EUR30m, needed to be terminated at short notice. Meanwhile, the
crisis in the automobile supplier sector including after-sales market
continued to be a key detrimental factor for Funkwerk in the third quarter,
along with the investment restraint of transport companies and the
industry.
Crisis in auto markets and continuing investment restraint in transport
sector leave their mark
Contrary to projections, both the revenues and incoming orders declined
between July and the end of September. At EUR54.0m, sales remained behind
the prior-year figure (EUR71.9m) by almost 25%. Revenues generated in the
first nine months thus totalled EUR167.9m (2008: EUR203.3m), which
corresponds to a decline of 17.4%. More pronounced still was the decline in
incoming orders. In the first nine months, Funkwerk booked new orders worth
EUR164.8m, which is some 27% less than in the previous year (EUR224.1m).
These trends necessitated a correction of Funkwerk's business projections
for 2009. 'All risks and further restructuring costs considered, we now
expect group sales to reduce to around EUR230m by year-end (2008:
EUR290.2m) and a loss before interest and taxes (EBIT) of up to EUR-19m
(2008: EUR+2.5m),' the Executive Board wrote in its nine-month report.
The restructuring programme alone, which has already been initiated and
largely implemented, will burden earnings in the current financial year by
around EUR10m, some EUR5m of which were already posted in the third-quarter
accounts, the remainder will be charged against earnings in the fourth
quarter. From 2010, however, this will be opposite permanent cost savings
of over EUR10m p.a.
Sources of loss eliminated - further reduction of personnel
In consideration of the restructuring costs, the loss before interest and
taxes in the third quarter of 2009 increased by EUR-9.6m to EUR-15.5m,
influenced in part by exchange losses (Algerian dinar, not convertible) of
around EUR2m. In the previous year, Funkwerk had still generated an
operating profit of EUR2.5m in the same period. The group loss after the
first three quarters of fiscal 2009 thus totalled EUR-12.2m (2008:
EUR+1.3m).
The ongoing set of measures is now showing initial effects: The strict cost
and spending discipline produced a positive operating cash flow in the
third quarter. In the fourth quarter, Funkwerk will likely be able to get
out of the red in operations - without the restructuring costs.
In addition, Funkwerk has started introducing a comprehensive fitness
programme which will be implemented by the end of the year to
systematically eliminate sources of loss and concentrate its business
activities. Further measures initiated are to improve its transparency, and
with it, its risk management. All these measures will also result in a
reduction of personnel from currently over 1,500 to around 1,400 by
year-end.
Business trend by segment
The Automotive Communication segment (AC, communication equipment for
vehicles) is currently undergoing a fundamental adjustment process
necessitated by the slump in automobile markets worldwide. While the
downturn on the whole slowed in the third quarter, segment revenues in the
first three quarters declined by 48% to around EUR21m (2008: EUR40.4m). In
2010, Funkwerk expects to see business in this segment stabilise slightly
with balanced earnings contributions.
The continuing export weakness in the third quarter and the failure of a
major project announced in the property protection sector to materialise
significantly impaired the previously stable business trend of Security
Communication (SC, personal security, video monitoring and property
protection). On the whole, revenues of SC in the first nine months totalled
EUR43.1m and thus remained well below the prior-year figure (EUR55.4m). In
the medium term, Funkwerk expects this segment return to significant
growth, as the need for intelligent solutions for the protection of people,
buildings, public places and objects is steadily growing.
Business in Funkwerk's strongest segment in terms of sales - Traffic &
Control Communication (TCC, communication, management and information
systems for transport, logistics and industry) - also failed to recover as
anticipated in the third quarter. After the first nine months of 2009,
segment revenues totalled EUR79.2m, which is 7% less than in the previous
year (EUR85.2m).
Enterprise Communication (EC, network and telecommunication solutions for
companies) is a segment in which restructuring measures have already been
completed successfully and sales are increasing again. After the first
three quarters of the financial year, EC thus improved its sales figure by
over 10% on the previous year, up from EUR22.2m in 2008 to EUR24.7m.
Prospects: Stabilisation in 2010 - growth from 2011
On the whole, the continued poor booking of new orders specifically in
foreign business shows that the general crisis has now also hit Funkwerk
and that a recovery is slow to set in, the Executive Board wrote in its
outlook. The opportunities resulting from the various state aid measures
introduced to boost the economy and revive the investment activity have not
become manifest yet and are not likely to affect sales and earnings until
next year. 'Against this background, the fourth quarter of 2009 will
primarily be defined by the implementation and conclusion of our current
restructuring and fitness programme. This will lead to permanent cost
savings of over EUR10m in 2010 and to a stabilisation of our business trend
with a turnaround to set the stage for a fresh, growth-oriented forward
strategy from 2011.'
The Q3 report is available on our website (www.funkwerk.com)
Funkwerk AG
Im Funkwerk 5
D-99625 Kölleda/Thüringen
Jörg Reichenbach
Investor Relations
Telefon: 0 36 35/6 00 -3 46
Fax: 0 36 35/6 00 -5 07
[email protected]
Sebastian Brunner
communications+consulting
Tel.: 0175/5604673
[email protected]
06.11.2009 Financial News distributed by DGAP. Media archive at www.dgap-medientreff.de and www.dgap.de
Language: English
Company: Funkwerk AG
Im Funkwerk 5
99625 Kölleda
Deutschland
Phone: +49 (0)3635 600 0
Fax: +49 (0)3635 600 507
E-mail: [email protected]
Internet: www.funkwerk.com
ISIN: DE0005753149
WKN: 575314
Listed: Regulierter Markt in Frankfurt (Prime Standard); Freiverkehr
in Berlin, Düsseldorf, München, Hamburg, Stuttgart
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