AI assistant
Green Earth Group NV — Earnings Release 2009
Mar 18, 2010
3830_iss_2010-03-18_23619a95-0e4a-4541-bdfa-5447c443ec57.pdf
Earnings Release
Open in viewerOpens in your device viewer
Press Release
- 2009 result negative due to one-off reorganisation costs
- Foundation laid for recovery in result
- Market share grows despite falling market
- Debt position further improved
- Roto Smeets Group concludes new financing arrangements
- Mr R.A.J. Huyzer elected chairman of the Supervisory Board
The Roto Smeets Group ended 2009 with a net loss of EUR 27.5 million. The results were strongly affected by one-off reorganisation costs (€ 21.1 million) due to the reorganisation announced in 2009, which will result in a cost reduction of at least € 30 million annually. These measures have laid a foundation for sharp recovery in the result, which will take place to some extent in 2010, and fully in 2011.
In a market in which advertising expenditure has dropped sharply on all fronts, Roto Smeets proved able to further increase its market share on the Western European print market.
Against this backdrop Roto Smeets Group managed to conclude a new financing arrangement. The debt position improved with EUR 7.3 million to EUR 64.4 million. Mr R.A.J. Huyzer was elected chairman of the Supervisory Board as of 1 January 2010.
A lookback at 2009
The market conditions in 2009 were extremely difficult. The recession prompted a drastic decline in advertising expenditure. This caused problems for our clients. As a result of this, paper volume in the Western European market declined by approximately 17%. This brought volume back to the level of 2001. This development prompted the overcapacity already in the market, estimated at between 10 and 20%, to grow by another 10 to 15%. All of this put even further pressure on the margins.
Despite these market conditions, the Roto Smeets Group managed to hold its ground in terms of volume. Roto Smeets Group' volume fell by "only" 6 %, resulting in an increase in the market share on the Western European market.
In order to adapt to the rapidly changing market circumstances, the Roto Smeets Group had to take strategic and radical measures in 2009 that involved significant reorganisation costs.
The decision to put an end to the 213-year history of Roto Smeets Utrecht was a radical one. The company will be definitely shut down on 1 June 2010. The substantial decline in capacity at Roto Smeets Etten had a significant effect on the size of the workforce at this gravure plant.
By setting further cost-saving reorganisations in motion at other parts of the group as well, a total of approximately 550 jobs will be cut, a 25% reduction in the workforce.
These measures led to an 8% decrease in capacity and will result in a cost reduction of at least € 30 million each year. The reorganisation costs of € 21.1 million are charged to the 2009 result. This radical reorganisation will be completed in mid 2010.
The measures to invest in new technology in order to remain technically and competitively fit even in these market conditions were strategic.
The changes effected within Marketing Communications in the past years ensure that this division will be able to hold its ground in the face of the difficult market conditions and further develop a broader offering of services.
2009 result
The 2009 result was strongly affected by the restructuring programme announced in May 2009.
The turnover from the continued business activities fell by € 32.1 million to € 415.4 million (2008: € 447.5 million) as a result of a decline in the circulation and size of magazines and the removal of publications from the market by clients.
Due to constant decline in volume and lower sales prices, value-added was € 20.3 million lower, at € 192.6 million (2008: € 212.9 million).
As a result of the restructuring programme, a sum of € 21.1 million was allocated to the reorganisation provision. Consequently the operating costs showed an increase of € 18.7 million to € 226.1 million (2008: € 207.4 million). The number of employees on the basis of FTEs fell from 2,189 at year-end 2008 to 1,962 at year-end 2009. In 2010 the remaining part of the reorganisation will be effected, which will bring the total reduction in FTEs as a result of the reorganisation to approximately 550.
EBITDA, including the costs of the restructuring, fell to - € 2.8 million (2008: € 37.2 million). The trend in the pressure on the margins that started in the past few years continued in 2009. The operating result (EBIT) fell to - € 33.0 million (2008: € 5.8 million). The Roto Smeets Group achieved a net result of - € 27.5 million for 2009, compared to € 1.3 million for 2008.
Cash flow from operating activities rose, despite the negative result, to € 29.1 million. The net investments in property, plant and equipment amounted to € 23.6 million (2008: € 23.0 million).
| x EUR million | 2009 | 2008 |
|---|---|---|
| Income | 415.4 | 447.5 |
| Value-added | 192.6 | 212.9 |
| EBITDA | -2.8 | 37.2 |
| Operating result (EBIT | -33.0 | 5.8 |
| Net result | -27.5 | 1.3 |
| Cash flow from operating activities | 29.1 | 12.8 |
| Risk-bearing debts (nett) | 64.4 | 71.7 |
| EBITDA/Value-added as % | -1.5% | 17.5% |
| Return on capital employed (ROCE) as % | -20.5% | 3.1% |
With an unchanged number of 3,290,275 issued ordinary shares, the loss per share comes to - € 8.30 (2008: € 0.41).
The reorganisation costs have been eliminated from the 2008 and 2009 figures in order to enable better comparison with 2008:
| x EUR million | 2009 | 2008 |
|---|---|---|
| Income | 415.4 | 447.5 |
| Value-added | 192.6 | 212.9 |
| EBITDA | 18.3 | 38.1 |
| Operating result (EBIT) | -11.9 | 6.7 |
| Net result | -11.7 | 2.0 |
Financing and covenants
At year-end 2009, the net debt fell by € 7.3 million compared to 2008, to € 64.4 million (year-end 2008: € 71.7 million). The company has a strong balance sheet with solvency of 39.2 % (year-end 2008: 45.2%), a debt / EBITDA (adjusted) ratio of 3.5 and an EBITDA (adjusted) / interest charges ratio of 5.5.
The Roto Smeets Group reached a new financing arrangement with its banks, which will be fully effected within the foreseeable future. This arrangement gives the Roto Smeets Group sufficient scope for action in the coming years with a total maximum facility of approximately € 110 million, depending on the amount of the accounts receivable. The covenant agreed is solvency of >30%.
Dividend
No dividend will be proposed for 2009 in view of the negative result.
Strategy
The Roto Smeets Group aspires to a leading position on the Western European market, whereby optimal service and value propositions for its clients and prospects are priorities, achieved through adequate marketing and an optimal product machinery fit. The Supervisory Board and Management Board will continue to strategically monitor the market so as to be able to properly analyse and adequately respond to any consolidation opportunities that may arise. The playing field has changed drastically in the last year however, which has limited the possibilities and made them more complex.
Within Marketing Communications we will also develop a broader assortment of services in line with the changing market of clients and prospects.
Outlook
The market conditions are not expected to improve. The Roto Smeets Group does not expect the industry to grow in 2010 compared to 2009 and does not expect overcapacity and problems with margins to be resolved in the coming years. The European authorities, employers and employees recognise that further measures will be necessary in the industry in the coming period, but also that this will take time, in view of the fact that the printing industry is extremely fragmented.
Although printing companies are currently in a poor to very poor condition, not much capacity has yet been removed from the market, which means that the pressure on the margins will continue unabated in 2010.
As such 2010 will once again be an extremely challenging year, with, thanks to all its measures, a strongly positioned Roto Smeets Group. In this context the measures mentioned above and related cost savings of at least € 30.0 million will contribute to some extent in 2010, and fully in 2011 and beyond, to a sharp recovery of the operating result.
Composition of the Supervisory Board
The Supervisory Board of the Roto Smeets Group announces that it has elected Mr R.A.J. Huyzer, member of the Supervisory Board since 18 June 2009, as chairman of the Supervisory Board.
Important dates in 2010:
Publication of 2009 Annual Report: 29 March 2010 Annual General Meeting of Shareholders: 28 April 2010 Q1 business update: 12 May 2010 Publication of semi-annual figures: 26 August 2010 Q3 business update: 10 November 2010
Roto Smeets Group NV Management Board
Deventer, 18 March 2010
More information: J.P. Caris, CEO Tel. +31 (0)570- 69 49 05
Supplementary information:
The figures in this press release are based on the finalised annual account for 2009, which will be presented to the Shareholders' General Meeting for approval. The figures in this press release have not been audited.
The annual report containing the complete figures for 2009 will be published on 29 March. The General Shareholders' Meeting will be held this year on Wednesday 28 April, commencing at 3 o'clock in the afternoon in the Rosarium, Amsterdam. The usual press reception will follow immediately afterwards. Ladies and gentlemen of the press may announce their intention to attend via [email protected]
In the event of any difference of interpretation, the Dutch original of this English translation shall apply throughout this Press release of Roto Smeets Group NV
Profile
The Roto Smeets Group NV is listed on NYSE Euronext Exchange with Amsterdam as market entry. The Roto Smeets Group is an organisation of service supply companies, transforming the clients' communications – with added value – into printed and multimedia products. The companies are clustered into two business lines:
Print Productions, providing efficient, full-service, rotary printing and Marketing Communications, ensuring the optimum facilitation of the client's own communications channels by means of effective, cross-media communications concepts.