Earnings Release • Aug 23, 2007
Earnings Release
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Corporate | 23 August 2007 07:40
ARQUES raises plan targets for 2007 and publishes preliminary forecast for 2008
ARQUES Industries AG / Forecast/Quarter Results
Release of a Corporate News, transmitted by DGAP - a company of EquityStory
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The issuer / publisher is solely responsible for the content of this announcement.
ARQUES raises plan targets for 2007 and publishes preliminary forecast for
2008
Starnberg, August 23, 2007. In consideration of the business developments
in the first six months of 2007 and those that have already occurred in the
third quarter to date, ARQUES Industries AG (ISIN DE0005156004) is raising
its plan targets for the current business year. The Group’s consolidated
revenues for the first six months of 2007 amounted to EUR 628.9 million,
148% higher than the corresponding year-ago figure, and its consolidated
EBITDA (earnings before interest, taxes, depreciation and amortization)
amounted to EUR 50.8 million, 3.2% higher than the corresponding year-ago
figure. All together, ARQUES acquired seven companies, with combined
annualized revenues of EUR 310 million, in the first half of 2007. In the
second half of the year so far, the Group’s acquisition activities
increased substantially again, both in terms of the number of transactions
and the size of the acquired companies. ARQUES has made a total of five
acquisitions in the third quarter to date, as well as two profitable
company sales (SKW Metallurgie and SKS Stakusit). The enterprise values of
the portfolio companies ('net asset values') rose to EUR 500.7 million.
Dynamic growth forecast for 2007 and 2008
In consideration of the business developments in the first six months of
2007, the company acquisitions and sales that have already been effected in
the third quarter to date and the acquisitions that have been announced so
far, ARQUES is compelled to raise its full-year revenue forecast for 2007
from EUR 1.5 billion to more than EUR 2 billion and its full-year EBITDA
forecast for 2007 from EUR 180 million to EUR 200 million, for now.
For 2008, the company anticipates revenues of EUR 5.1 billion and EBITDA of
EUR 275 million. (Originally, revenues of EUR 2 billion had been planned
for 2008). These plan figures are based on the continuing increase in the
company’s acquisition activities, which are being fueled by the growth of
the Group’s established foreign subsidiaries, the further expansion of the
Acquisitions Department in Starnberg, the formation of additional foreign
subsidiaries, the continually increasing average size of acquired companies
and the favorable competition environment. The plan figures are also based
on concrete exit plans, which cannot yet be publicly disclosed because they
are still confidential.
Due to the high volume of transactions, the revenues for the first six
months of 2007 were nearly 150% higher than the year-ago figure
In the time between July 1, 2006 and June 30, 2007, ARQUES acquired twelve
companies, sold one company and deconsolidated one other. For that reason,
the consolidated revenues for the first half of 2007, at EUR 628.9 million,
were 148% higher than the corresponding year-ago figure. Including the
additional acquisitions and company sales that have occurred in the
meantime, the Group’s annualized revenues (including Actebis) are
approximately EUR 3.65 billion. ARQUES had originally set a plan target of
EUR 2 billion for the full year 2007.
The Executive Board Chairman of ARQUES Industries AG, Dr. Martin
Vorderwülbecke, had this to say: 'ARQUES picked up the tempo of
acquisitions and exit activities in 2007. So far this year, we have
acquired twelve companies, including one with annual revenues of more than
one billion euros (the first acquisition of this size), and sold three
companies. Our business model is sound. We are largely insulated from the
adverse effects of business cycles and financial market trends. In
consideration of the transactions that have been effected, we are raising
our full-year revenue target to more than EUR 2 billion and our full-year
EBITDA target to EUR 200 million. Based on concrete projects in the
pipeline, we can already provide a preliminary forecast for 2008, when we
expect to generate revenues of EUR 5.1 billion and EBITDA of EUR 275
million.'
EBITDA improvement over the first six months of 2006
The earnings performance in the first six months of 2007 was typical of the
ARQUES business model. Due to the high volume of acquisitions, the Group’s
revenues increased substantially. As can be expected under the ARQUES
business model, the operating results of the newly acquired companies were
burdened by the typical start-up losses and restructuring expenses. The
combined start-up losses of all the companies acquired in 2007 amounted to
more than EUR 7 million, in line with expectations. The EBITDA for the
six-month period ended June 30, 2007 amounted to EUR 50.8 million, higher
than the corresponding year-ago figure of EUR 49.2 million. The EBITDA for
the second quarter amounted to EUR 17.9 million, lower than the
corresponding year-ago figure of EUR 26.1 million. Due to the higher level
of total assets (+87% over the corresponding figure at June 30, 2006), the
consolidated depreciation, amortization and impairments were accordingly
higher as well, with the result that the EBIT of EUR 35.1 million was less
than the corresponding year-ago figure of EUR 42.9 million and the pretax
profit of EUR 32.8 million was less than the corresponding year-ago figure
of EUR 43.0 million. The consolidated net profit was EUR 30.0 million and
the earnings per share (diluted) amounted to EUR 1.15 (year-ago figure: EUR
1.73).
The figures for the first six months of 2007 do not yet include the company
sales of SKW Stahlmetallurgie (sale proceeds of approximately EUR 82
million) and SKS Stakusit (sale price of approximately EUR 17 million), nor
the acquisition-related income from the Actebis transaction. These
transactions will be recognized in the current third quarter. Also, the
present figures do not yet include the effects of the recently announced
acquisition of a large automotive supplier.
Free cash flow reflective of strong growth and working capital accumulation
The balance sheet structure and cash flow performance were reflective of
the sharply higher number of subsidiaries, as well as the dividend payment
and the capital increase conducted in June. At the end of the first six
months of 2007, the total assets amounted to EUR 891.3 million, 34% higher
than the year-end 2006 figure of EUR 665.3 million. The equity ratio, at
38.5% for the Group and 72.1% for the holding company, was still quite
solid (year-end 2006: 41.3%). The combined total enterprise value of all
the Group’s portfolio companies ('net asset value') rose from EUR 310.5
million at year-end 2006 to EUR 500.7 million at August 15, 2007. This
value is 47% higher than the last published value of EUR 340.6 million
(March 31, 2007). This value is not the same as the carrying amounts of the
portfolio companies on the ARQUES balance sheet (which are much lower). At
EUR -15.8 million, the net cash flow for the first six months of 2007 was
heavily affected by the capital investments in the working capital of the
subsidiaries (especially in inventories and receivables financing), which
amounted to EUR 25 million. On balance, the Group’s cash and cash
equivalents increased from EUR 92.0 million at year-end 2006 to EUR 105.1
million at June 30, 2007.
ARQUES stands to benefit from recent developments in the capital markets
As a result of the problems roiling the financial and credit markets,
ARQUES believes that private equity firms will find it difficult in the
future to borrow funds to finance the acquisition of companies. ARQUES, on
the other hand, traditionally chooses not to borrow for the purpose of
financing its acquisitions. Therefore, ARQUES believes that large corporate
groups will increasingly look for transaction security when seeking to sell
their subsidiaries that are in need of restructuring. ARQUES conducts
acquisitions with its own funds and personnel and is not dependent on board
approvals or debt financing. Therefore, it is especially well suited as a
partner for secure transactions involving the sale of subsidiaries in
difficult situations.
Dr. Martin Vorderwülbecke said 'I am extremely satisfied with the business
developments in 2007 to date. With regard to acquisitions, ARQUES has
received a sharply higher number of inquiries regarding the acquisition of
larger companies and is also conducting numerous negotiations regarding
company sales as well ('exit activities'). In this respect, our practice of
giving preference to strategic investors, as opposed to financial
investors, is paying dividends for us. We can only benefit from the credit
tightening that is currently in the news. Some of our subsidiaries will
report surprising successes in 2008.'
The complete interim report can be found at the company’s website
www.arques.de.
About ARQUES Industries AG:
ARQUES Industries AG Starnberg (www.arques.de) is a turnaround specialist
that actively seeks to acquire and restructure companies in crisis
situations, enabling them, with the help of the ARQUES management team, to
become competitive, profitable companies. ARQUES revitalizes the value
creation potential of its portfolio companies to the benefit of all their
stakeholders, while exercising the social responsibility that comes with
such a role. ARQUES is always seeking to identify undervalued companies
that are on the edge of failing, but exhibit strong value creation
potential, and to master complex corporate structures and crisis
situations. The shares of ARQUES Industries AG are traded on the Prime
Standard segment of the Frankfurt Stock Exchange under the symbol 'AQU'
(ISIN: DE0005156004) and have been included in the SDAX index since
September 29, 2005.
Contact:
ARQUES Industries AG
Investor Relations & Corporate Communication
Anke Lüdemann, CEFA/CIIA
E-mail: [email protected]
Public Relations
Christian Schneider
E-mail: [email protected]
Tel.: +49 (0) 8151 /651 0
23.08.2007 Financial News transmitted by DGAP
Language: English
Issuer: ARQUES Industries AG
Münchner Str. 15a
82319 Starnberg
Deutschland
Phone: +49 (0)8151 651-0
Fax: +49 (0)8151 651- 500
E-mail: [email protected]
Internet: www.arques.de
ISIN: DE0005156004
WKN: 515600
Indices: SDAX
Listed: Geregelter Markt in Frankfurt (Prime Standard); Freiverkehr
in Berlin, Hamburg, Düsseldorf, München, Stuttgart
End of News DGAP News-Service
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