Francotyp-Postalia Holding AG — Earnings Release 2007

Nov 15, 2007

News Details

Corporate | 15 November 2007 06:34

Francotyp-Postalia Holding AG: Francotyp-Postalia Holding AG generates revenues of €33.9 million in the third quarter of 2007

Francotyp-Postalia Holding AG / Quarter Results/Quarter Results

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Birkenwerder, Germany, November 15, 2007

Francotyp-Postalia Holding AG generates revenues of €33.9 million in the
third quarter of 2007

• Strong growth in Mailstream business

• Mailroom business develops below expectations

• EBITDA of €5.9 million

• General market situation requires revision to outlook

Birkenwerder, Germany – Francotyp-Postalia Holding AG, a leading, globally
operating manufacturer of franking and inserting machines and a service
provider for the Mailstream market, recorded revenues of €33.9 million in
the third quarter of 2007, as opposed to €35.7 million in the same quarter
the year before. Revenues in the company’s traditional Mailroom business
(franking and inserting) totaled €31.7 million, revenues in the young,
high-growth Mailstream business line totaled €2.2 million. For the first
nine months of the year, Francotyp-Postalia Holding AG increased its
revenues to €108.9 million, as opposed to €107.3 million the year before.

Mailroom business: Growth in rentals

The industry-wide weakening of the U.S. market in recent months also
affected Francotyp-Postalia’s Mailroom business. Nevertheless, the company
increased its revenues in North America by 4.7% during the first nine
months of the current fiscal year, from US$36.0 million to US$37.7 million.
In Europe (excluding Germany), revenues declined moderately by 2.2% from
€35.8 million to €35.0 million. As expected, revenues in Germany for the
first nine months stood at a low level of €35.5 million, as opposed to
€37.9 million the year before due to the special effects of decertification
and new postage tables in 2006. However Francotyp-Postalia was able to
increase its revenues on the German market by one percent during the third
quarter of 2007.

The rental business developed on a highly positive note in the company’s
major markets. During the first nine months of the current fiscal year,
Francotyp-Postalia rented approximately 28% more machines than the year
before. The number of rental contracts rose by 24% in the United States,
and by a strong 78% in the United Kingdom, the most important European
growth market. While this success will result in a lower revenue
contribution in the near-term compared to direct sales , over the long term
it will increase the company’s recurring revenues stream.

Mailstream business: Strong pace of growth sustained

In its Mailstream business, which was established in late 2006,
Francotyp-Postalia Holding AG increased revenues by 62.2% during the first
nine months of the current fiscal year to €6.0 million. Mailstream business
includes consolidating and outsourcing outbound mail, as well as the
corresponding software. In the third quarter of 2007, freesort, which is
active in consolidation business, opened a further branch office in Hanover
and acquired Consol-D, a strong regional player in the Stuttgart area.

EBITDA impacted by weak U.S. dollar

In the third quarter of 2007, earnings before interest, taxes, depreciation
and amortization (EBITDA) totaled €5.9 million, as opposed to €7.1 million
for the corresponding period the year before. During the first nine months
of 2007, Francotyp-Postalia thus recorded an EBITDA of €21.7 million, which
represents a consolidated EBITDA margin of approximately 20%, compared to
€25.1 million for the same period the previous year.

In addition to weaker revenues in Mailroom business and the start-up costs
in Mailstream business, the company’s profitability was in particular
impacted by the declining dollar. Overall, Francotyp-Postalia anticipates a
negative effect on profitability of around €2 million for the current
fiscal year as a result of the weak U.S. dollar.

Outlook: General market situation necessitates revision

Given the results of the third quarter 2007 and assuming a continued
weakness of the dollar, Francotyp-Postalia is revising its forecasts for
the full 2007 fiscal year. Revenues in the Mailroom business are expected
to grow by somewhat less than 5% and the adjusted EBITDA is anticipated to
fall somewhat short of the previous year’s level, both before
currency-translation effects. The company continues to expect double-digit
revenue growth in its Mailstream business.

Following a weaker-than-anticipated course of business in the third quarter
of 2007, the increasing introduction of centormail in the United States, in
particular, gives rise to expectations for a stronger fourth quarter in the
Mailroom business. There should also be a rise in centormail unit sales in
the United Kingdom, as this product was brought to market at the end of the
third quarter.

In addition, the first measures under the '25 plus' program, which was
announced in connection with the presentation of the Semiannual Report, are
beginning to come to bear. In Canada, for example, productivity is being
optimized through a program aimed at greater efficiency. Another major
element of this program is to streamline sales and marketing operations in
Germany. In the United States, on the other hand, the aim is to strengthen
the sales and marketing network in order to be able to optimally utilize
the market potential in the B segment that will open up in 2008 as a result
of Phase IV of the decertification program.

Detailed comments on the first six months of the year are available at our
website:

http://www.francotyp.com/en/ir/FPH_Q3_2007_e.pdf

Should you have any questions, please contact:

Francotyp-Postalia Holding AG
Media Relations

Sabina Prueser
Telephone: +49 (0)3303 525 777
Telefax: +49 (0)3303 53 70 77 77
E-Mail: ir@francotyp.com

Postal address:
Triftweg 21-26
D-16547 Birkenwerder
Germany

About Francotyp-Postalia Holding AG

Francotyp-Postalia Holding AG can look back on a corporate history of over
80 years. The focus of business activities is developing, producing and
selling franking machines and selling inserting machines. These activities
in the Mailroom business generate a high level of recurring income, which
makes up more than 60 percent of group revenues. The engine of this
revenues stability is the 248,000 electronic franking machines installed
for customers which generate after-sales business. In Germany
Francotyp-Postalia is the market leader in the franking machine business
with a current market share of 45 percent. To the end of 2006, the global
market share was approximately 9 percent. The most important markets for
Francotyp-Postalia are Germany, the USA, the Netherlands and the UK.

In addition, in the Mailstream business, postal services are provided.
These include collection, sorting and consolidation of outgoing customer
post and electronic hybrid mail, something which is gaining in importance.
In the 2006 financial year (year end 31 December), with 939 employees, the
Francotyp-Postalia Group generated consolidated revenues of approximately
EUR 143 million* and EBITDA adjusted for non-recurring effects of
approximately EUR 32.2 million*, representing an EBITDA margin of
approximately 22 percent*.

*In the 2005 annual financial statements reported as pro forma figures due
to the first-time consolidation of the FP Group in its present form in
2005.

Contact:
Francotyp-Postalia Holding AG
Media Relations
Telefon: +49 (0)3303 525 777
Telefax: +49 (0)3303 53 70 77 77
E-Mail: pr@francotyp.com

15.11.2007 Financial News transmitted by DGAP

Language: English
Issuer: Francotyp-Postalia Holding AG
Triftweg 21-26
16547 Birkenwerder
Deutschland
Phone: +49 (0)3303 525 777
Fax: +49 (0)3303 53 70 77 77
E-mail: ir@francotyp.com
Internet: www.francotyp.com
ISIN: DE000FPH9000
WKN: FPH900
Listed: Regulierter Markt in Frankfurt (Prime Standard); Freiverkehr
in Berlin, Stuttgart, München, Düsseldorf

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