Earnings Release • Feb 14, 2011
Earnings Release
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Key third-quarter developments:
In the third quarter of the 2010/2011 fiscal year, Holland Colours realized 15% higher sales than in the same period last year. Foreign exchange rate effects positively influenced turnover development by approximately 5% in the quarter, particularly as a result of the US dollar's strength.
Thanks to higher sales and despite a slightly lower gross margin and a rise in operating costs, Holland Colours was able to close the quarter with a slightly positive net result, which is an improvement of the slightly negative result of the same period last year.
Since the first quarter of this financial year, the availability of raw materials has been under pressure as a result of which purchase prices have risen sharply and inventory of more critical raw materials has been increased. We were unable to pass on the entire increase in raw materials prices to sales prices for end products. Relative gross margin was therefore slightly lower over the last quarter than in the comparable period last year.
In the third quarter, operating costs were about 11% higher than a year ago. This increase partly results from the provision for the profit-sharing plan and for foreign exchange rate effects.
The Building & Construction focus market showed a marked increase in turnover in the third quarter relative to the same period last year. This increase was almost entirely owing to the Division Americas. The Division Europe saw lower sales, partly as a result of the early start of winter.
The Packaging market also enjoyed a marked increase of turnover. This increase mainly came from the Division Europe where sales to India, the Middle East and Africa have risen. On the other hand, we are still facing strong competition, which particularly affects sales developments in America and Western Europe.
The Silicones & Elastomers focus market realized a considerable increase in turnover compared with the third quarter of last year. All divisions contributed to this growth, but all to a different degree. The largest relative growth was realized in Asia, while the absolute increase was highest in Europe.
Exclusive of foreign exchange rate effects, sales in both the Division Europe and the Division Americas showed a limited growth in the third quarter versus the same period last year. The Division Asia realized a considerably higher growth over the quarter, partly owing to a higher turnover in trade products.
As of 1 December 2010, the sales and service activities of the Division Europe have been integrated in Holland Colours Apeldoorn BV, which is now subsequently known as Holland Colours Europe BV. This change has simplified the administrative processes within the Division.
At the end of December, working capital was much higher than last fiscal year. This development is only partially explained by the higher level of activity and foreign exchange rate effects. Higher inventories, resulting partly from the scarcity on the raw materials market, are also playing an important role. Despite the increase in working capital, the Total Debt / EBITDA ratio stayed comfortably within the bandwidth agreed with the bank. We also complied with the other covenants agreed with the bank.
Although the third quarter showed an improvement relative to last year, we expect the net result in the fourth quarter to turn out lower than the fourth quarter of last year, mainly as a result of the continuing pressure on the prices of raw materials. Barring unforeseen events, Holland Colours still expects to realize a higher turnover in the second half of this fiscal year versus the same period of the previous financial year. Partly as a result of higher raw materials prices and a
provision for the profit-share plan of € 0.4 million, the net result in the second half year is expected to be somewhat lower than in the same period last year. The results for the 2010/2011 financial year will be announced to the market on Monday May 30, 2011.
Apeldoorn, February 14 2010
Bernard van Schaik Jeroen Straathof Tineke Veldhuis - Hagedoorn
Bernard van Schaik President Telephone: +31 (55) 2680700
Holland Colours was founded in 1979 and has been listed on the NYSE Euronext Amsterdam Stock
Exchange since 1989. It is an independent Dutch corporation with offices in North America and Mexico, Europe and Asia. Holland Colours makes products for colouring synthetic materials, the main products being Holcobatch and Holcoprill. Both these products have the advantage of being free flowing, dust-free, and very easy to dose. Furthermore, Holland Colours makes pastes for colouring silicones, elastomers, PET packaging and other applications.
Holland Colours concentrates worldwide on three focus markets:
Around 85% of turnover is realized in these three markets.
Virtually the entire production is generated by our four principal plants in the Netherlands, Hungary, the United States and Indonesia.
Holland Colours is organized in three regional divisions that operate as profit centers in each specific region: Europe (including the Middle East and Africa), Americas and Asia. The global turnover distribution is Europe 60%, Americas 30% and Asia 10%.
| May 30, 2011 exchange) |
Publication of the 2010/2011 results (before opening of the stock |
|---|---|
| July 11, 2011 | General Meeting of Shareholders at 1:30 p.m. at the offices of the corporation |
| Augustus 17, 2011 | Trading update (after stock-exchange close) |
| November 3, 2011 | Publication of the 2011/2012 half-yearly figures (after stock-exchange close) |
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