Quarterly Report • May 8, 2009
Quarterly Report
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REPORT ON THE FIRST QUARTER OF 2009
| 1 – 3 / 2009 | 1 – 3 / 2008 | Deviation in% 1 – 12 / 2008 | ||
|---|---|---|---|---|
| Summary income statement (EUR m) | ||||
| Revenue | 109.4 | 158.2 | -30.9 % | 645.4 |
| EBITDA | -3.9 | 11.6 | -133.7 % | 42.8 |
| ROS (EBITDA / revenue) | -3.6 % | 7.3 % | -148.7 % | 6.6 % |
| Earnings before interest and tax (EBIT) | -8.0 | 7.8 | -202.1 % | 22.7 |
| Profit on ordinary activities (POA) | -9.2 | 6.4 | -242.8 % | 17.1 |
| Profit/loss after tax | -9.1 | 4.4 | -306.0 % | 11.5 |
| Operating profit before working capital changes | -5.3 | 8.1 | -165.0 % | 32.4 |
| Free Cash flow | -5.2 | -3.7 | -40.7 % | -1.0 |
| Summary balance sheet (EUR m) | ||||
| Non-current assets | 148.4 | 148.2 | 0.1 % | 150.8 |
| Current assets | 171.5 | 186.3 | -7.9 % | 174.3 |
| Debt | 228.1 | 235.8 | -3.2 % | 223.1 |
| Equity | 91.8 | 98.7 | -7.0 % | 102.1 |
| Equity ratio in % | 28.7 % | 29.5% | -2.7 % | 31.4 % |
| Investment (additions to non-current assets) | 2.6 | 5.5 | -52.0 % | 27.1 |
| as % of revenue | 2.4% | 3.5 % | -30.6 % | 4.2 % |
| Average head count | 2,877 | 3,438 | -16.3 % | 3,327 |
| Per employee ratios (in EUR '000) | ||||
| Revenue | 38.0 | 46.0 | -17.4 % | 194.0 |
| EBIT | -2.8 | 2.3 | -222.0 % | 6.8 |
| Operating profit before working capital changes | -1.8 | 2.4 | -177.7 % | 9.8 |
| Shares in issue | 9,434,990 | 9,434,990 | 0.0 % | 9,434,990 |
| Treasury shares | -261,390 | -261,390 | 0.0 % | -261,390 |
| Shares in circulation | 9,173,600 | 9,173,600 | 0.0 % | 9,173,600 |
| Per share ratios (in EUR) | ||||
| EBITDA | -0.4 | 1.3 | -133.7 % | 4.7 |
| EBIT | -0.9 | 0.9 | -202.1 % | 2.5 |
| Profit/loss after tax | -1.0 | 0.5 | -306.0 % | 1.3 |
| Operating profit before working capital changes | -0.6 | 0.9 | -165.0 % | 3.5 |
| Free Cash flow | -0.6 | -0.4 | -40.7 % | -0.1 |
| Equity | 10.0 | 10.8 | -7.0 % | 11.1 |
| Share price | ||||
| Year end | 5.50 | 18.04 | -69.5 % | 6.58 |
| High | 7.00 | 22.88 | -69.4 % | 22.88 |
| Low | 5.00 | 17.00 | -70.6 % | 5.00 |
| Dividend and bonus 1) | 0.0 |
Although we were quick to respond to the economic crisis with a raft of cost cutting measures — including laying off about 700 agency and permanent staff by the end of March 2009 and conserving liquidity (investment freeze) — results for the first quarter of this year reflect both restructuring costs and low volume.
While revenue slumped by 59% in the Automotive Components Division, it was up by 6% in the Wholesale Plumbing Supplies Division and by all of 40% in the Industrial Honeycomb Division.
Results for the first quarter of 2009 reflect the impact of the crisis on the Automotive Components Division. Revenue was down by EUR 48.8m year on year to EUR 109.4 million (m). EBIT was negative by EUR 8.0m (Q1 2008: EUR +7.8m), and EBITDA fell EUR 15.5m short of the comparative figure at EUR -3.9m.
The deterioration in revenue and earnings is entirely explained by plunging demand for the Automotive Components Division's products. The Wholesale Plumbing Supplies and Industrial Honeycomb divisions together registered revenue growth of EUR 7.4m and an improvement in EBIT of EUR 0.5m.
Compared with 31 December 2008, total assets slipped by EUR 5.3m to EUR 319.9m. This decline reflects reductions in inventories and trade receivables. Equity contracted by EUR 10.3m to EUR 91.8m, lowering the equity ratio from 31.4% to 28.7%.
The commercial vehicle market is currently one of the areas hardest hit by the economic crisis. Production declines in the various market segments range between 40–90%, and average some 65%. This trend is being driven by collapsing exports and unwinding of inventories of commercial vehicles. At about 40%, the contraction in demand in the EU is
less dramatic than the current drop in output.
We expect only a modest improvement in the market situation, and see our production shrinking by about 60% year on year over 2009 as a whole.
The meltdown in commercial vehicle manufacturing, which has affected the heavy truck segment especially severely, is explained by the cumulative impact of a number of factors:
The effects of the crisis have yet to reach the market for sanitary and heating products in Austria. This market is showing moderate growth, with renovation and heating leading the way. Future performance will largely depend on the impact of the economic crisis on building starts, and the effects of the economic stimulus programmes on the construction sector.
The demand situation in Industrial Honeycombs is almost diametrically opposed to that in the other two divisions. Orders for new equipment and replacement parts are up in Europe and the USA. The main growth driver is the Asian market — especially China, where the effects of new environmental legislation have now fully kicked in, and are expected to fuel sustained growth.
The crisis that has engulfed the Automotive Components Division has led to a 59% decrease in revenue. The falloff in revenue ranges from 40–90%, depending on the customer and product segment involved. The first quarter operating loss of EUR 8.5m corresponds to a year-on-year deterioration in EBIT of EUR 16.7m. Divisional EBITDA was negative by EUR 5.9m. Pressure on liquidity from the operating loss was cushioned by action to run down inventories and optimise working capital, as well as an almost complete halt to the investment programme.
We began adjusting capacity at the start of the fourth quarter of 2008. Apart from laying off about 700 employees — mainly agency staff — the division has responded to the crisis by drawing down flextime credit balances and holiday entitlements, introducing short time working and, to a limited extent, downsizing permanent workforces at all its plants.
The magnitude of the collapse in demand has made structural changes unavoidable. These have included the partial closure of an air reservoir production site in France (Styria Elesfrance S.A.S. in St. Avold), the shutdown of most of the trapezoidal spring manufacturing operations at our Serbian plant (Styria Gibnjara Kraljevo ) and partial closure of the Slovenian facility (Styria Vzmeti d.o.o.) after mothballing of the parabolic spring capacity there.
Further steps to reduce capacity will be needed, and implementation will begin in the second quarter. At the same time major savings will be realised by restructuring central corporate service functions, flattening management hierarchies and taking other action to reduce fixed costs across the division.
Some of the cost reduction and capacity adjustment actions have given rise to one-time restructuring charges, while the positive effects will be lagged, and will positively impact results progressively. Lower fixed costs will be noticeable in the second quarter, but the full effect will not be felt until the fourth quarter of 2009.
Management expects realignment of the Automotive Components Division to be completed by early 2010.
A 20% pay cut has been negotiated with senior executives in the Automotive Components Division (about 40 individuals) as a contribution to recovery in 2009.
Not only has the crisis yet to impact the Wholesale Plumbing Supplies Division, but we increased our share of a stable market in the first quarter, posting 6% revenue growth despite an unusually severe winter. Our success in gaining market shares in the face of some aggressive price competition, especially in the sanitary segment, and strict cost discipline meant that earnings growth significantly outpaced revenue. The addition of heating supplies to the product portfolio in 2008 has boosted growth, as demand in this market segment has been particularly robust.
Last year the division continued to add pick-up stores and Bäderparadies bathroom showrooms to its retail network, focusing on extending its footprint in western Austria. Completion of a logistics centre in Salzburg and a sales outlet in Innsbruck will give us access to additional markets.
The construction market is being supported by ongoing projects and increased investment in renovation. Our customers are set for good capacity utilisation over the next few months. During the second half we expect a stimulus from public sector construction and rehabilitation projects.
Revenue growth of 40% in the first quarter, full capacity utilisation and record order intake made the catalyst business a mainstay of the Frauenthal Group. Thanks to the capacity expansion programme completed in 2008 we were able to claim a disproportionate share of market growth.
The recent strengthening in the dollar exchange rate has increased our competitiveness in the USA, and strong demand has buoyed prices.
We are managing the effects of the operating losses incurred during the restructuring phase in the Automotive Components Division by placing increased reliance on internal financing (adjustment of working capital) and taking a restrictive approach to investment. The Group has sufficient liquidity and access to finance to sustain it while it adjusts to the changed operating environment.
Forecasts for the Automotive Components Division are only possible within relatively broad ranges. We are looking for a very modest recovery in the commercial vehicle sector in the second half. This scenario is probable — though by no means certain — due to the likelihood that the inventory run-down will have been completed by then.
Market conditions point to a moderate increase in revenue for the Wholesale Plumbing Supplies Division in 2009, and continued rapid growth can safely be predicted for the Industrial Honeycombs Division.
In the light of timely restructuring and capacity adjustment together with action to conserve liquidity we are confident of limiting the damage to the Group from the adverse trading environment. We expect to be able to break even on the basis of a substantial long-term drop in volume in the Automotive Components Division.
Our prime objective is to emerge from the current crisis structurally stronger than before. By no means all of our competitors will achieve this.
We are forecasting negative consolidated EBIT for 2009 as a whole, but expect at least to achieve breakeven on the EBITDA measure.
Vienna, May 2009
Frauenthal Holding AG
The Executive Board
The interim report of Frauenthal Holding AG (Frauenthal Group) for the three months ended 31 March 2009 has been drawn up in accordance with International Financial Reporting Standard IAS 34, Interim Financial Reporting. The consolidated interim financial statements as at 31 March 2009 are unaudited and have not been reviewed by an independent auditor.
The number of companies included in consolidation has not changed since 31 December 2008. The interim report for the first quarter of 2009 thus comprises the results of the parent, Frauenthal Holding AG, and of 27 subsidiaries which it controls, and in which it or one of its subsidiaries holds a majority of the voting rights.
The accounting policies used to prepare the financial statements for the year ended 31 December 2008 have been applied without change to the first quarter of 2009.
The main differences between the policies applied and the provisions of the Austrian Business Code (UGB) lie in the use of the percentage of completion (PoC) method to value construction contracts, in the treatment of deferred tax and the amortisation of goodwill, and in the calculation of provisions for employee benefit obligations.
The Frauenthal Group's Automotive Components Division has been severely affected by the economic crisis, causing consolidated IFRS revenue for the first quarter of 2009 to decline by EUR 48.8m or 30.9% year on year, to EUR 109,4m. The collapse in demand for the division's products brought a EUR 55m year-on-year fall in firstquarter segment revenue. The other two segments recorded revenue gains. Continued brisk construction and renovation activity helped the Wholesale Plumbing Supplies Division to a revenue gain of EUR 3m as compared to the first quarter of 2008. Revenue in the Industrial
Honeycomb Division advanced by EUR 4.4m due to growing demand for power station catalysts.
The EU area accounted for 88% of total revenue, the USA for 8% and the rest of the world for 4%.
Group EBITDA for the first quarter of 2009 was negative by EUR 3.9m — EUR 15.5m worse than the comparative figure in 2008.
Negative EBITDA of EUR 5.9m in the Automotive Components Division represented a deterioration of EUR 16.6m compared to the like period in 2008. Positive earnings contributions from the other two divisions were insufficient to compensate for these losses. In the Wholesale Plumbing Supplies Division earnings rose more sharply than revenue, with EBITDA up by EUR 0.5m year on year. The Industrial Honeycomb Division returned a EUR 0.2m increase in EBITDA.
On the basis of the loss attributable to equity holders of the parent of EUR 8,065,000 (Q1 2008: EUR +3,981,000) and an average of 9,173,600 shares in circulation (Q1 2008: 9,173,600), both the basic and the diluted loss per share was EUR 0.88 (Q1 2008: EPS EUR +0.43).
Sales and earnings are subject to seasonal fluctuations in all divisions, meaning that extrapolations of quarterly results do not yield reliable forecasts of results for the year as a whole.
The Group's total assets diminished by 1.7% from their level at balance sheet date 2008 (31 December 2008: EUR 325.2m) to stand at EUR 319.9m. The decline was largely due to lower trade receivables and inventory drawdowns in response to weak demand in the Automotive Components Division. The equity ratio decreased from 31.4% to 28.7%. The introduction of an ABS system by a major truck manufacturer increased receivables in the Automotive Components Division by EUR 9.7m as at 31 March 2009.
The reduction in non-current assets reflects lower investment (EUR 2.6m) in the first quarter, as well as impairment losses.
Operating profit before working capital changes — a performance measure effectively uninfluenced by non-cash income — fell by EUR 13.4m year on year, turning negative by EUR 5.3m. The operating loss before working capital changes arose from the consolidated loss of EUR 9.1m and the change in long-term provisions.
The lower revenue recorded by Automotive Components and the increase in working capital in the first quarter of the year led to negative cash flows from operating activities of EUR 2,966,000 (Q1 2008: EUR +1,810,000).
Investment in the first three months totalled EUR 2.6m (Q1 2008: EUR 5.5m). Investment was sharply reduced because the main priority for the Automotive Components Division was conserving liquidity. Investments amounting to EUR 1.2m related to projects initiated in 2008. In 2008 some EUR 3.8m was invested in expanding capacity. The Wholesale Plumbing Supplies Division invested EUR 1.4m (Q1 2008: EUR 1.4m) in new construction projects and the vehicle fleet.
The Frauenthal Group employed an average of 2,877 people in the first quarter of 2009 (Q1 2008: 3,438). The headcount figure for the quarter is the first to show the impact of workforce downsizing due to capacity adjustments in the Automotive Components Division.
Frauenthal has been listed on the Vienna Stock Exchange prime market since 23 July 2007. In the first quarter of the current year our share price performance reflected the gloomy economic situation, falling steadily from EUR 6.60 at year-end 2008 to EUR 5.50 at the end of the first quarter.
For more information on our share price performance visit our website at www.frauenthal.at.
The following changes in the composition of the Executive Board have occurred since the first quarter of 2008. The previous chairman of the Executive Board, Winfried Braumann resigned on 15 March 2008. On 25 September 2008 Martin Sailer joined the board, taking charge of corporate service functions including finance and the Industrial Honeycomb Division; he was appointed for 18 months. The Supervisory Board accepted Michael Ostermann's resignation from the Executive Board and the termination of his contract with effect from 31 December 2008. He was responsible for Automotive Components and Industrial Honeycomb divisions. Hans-Peter Moser now heads Automotive Components and Wholesale Plumbing Supplies.
The Executive Board hereby declares that to the best of its knowledge the interim report of the Frauenthal Group for the first quarter of 2009, prepared in accordance with International Financial Reporting Standards (IFRS), to the maximum extent possible gives a true and fair view of the assets, finances and earnings of the companies included in consolidation. The operating review likewise as far as possible gives a true and fair view of the assets, finances and earnings of the Frauenthal Group, and provides information on the course of business, and the potential impact of present and future risks on the Group's business activities.
Vienna, 8 May 2009
Frauenthal Holding AG
The Executive Board
Hans-Peter Moser Member of the Executive Board
Martin Sailer Deputy member of the Executive Board
| EUR '000 31 Mar. 2009 |
31 Dec. 2008 | |
|---|---|---|
| Assets | ||
| Non-current assets | ||
| Intangible assets | 41,711 | 42,038 |
| Property, plant and equipment | 84,548 | 86,801 |
| Investments in associates | 690 | 690 |
| Other financial assets | 1,319 | 1,319 |
| Deferred tax assets | 20,107 | 19,977 |
| 148,375 | 150,825 | |
| Current assets | ||
| Inventories | 81,282 | 83,645 |
| Trade receivables | 57,597 | 60,016 |
| Other assets | 9,021 | 13,893 |
| Available-for-sale investments | 479 | 479 |
| Cash and cash equivalents | 23,170 | 16,302 |
| 171,549 | 174,335 | |
| Total assets | 319,924 | 325,160 |
| EUR '000 31 Mar. 2009 |
31 Dec. 2008 | |
| Equity and liabilities | ||
| Equity | ||
| Share capital | 9,435 | 9,435 |
| Capital reserves | 21,093 | 21,093 |
| Retained earnings | 67,408 | 55,560 |
| Translation reserve | -2,390 | -1,937 |
| Other reserves | 359 | 359 |
| Own shares | -396 | -396 |
| Minority interest | 4,375 | 6,159 |
| Profit for the year | -8,065 | 11,848 |
| 91,819 | 102,121 | |
| Non-current liabilities | ||
| Bond | 70,000 | 70,000 |
| Bank borrowings | 19,919 | 8,262 |
| Other liabilities | 3,251 | 3,373 |
| Provisions for termination benefits | 9,746 | 9,685 |
| Provisions for pensions | 9,744 | 9,746 |
| Provisions for deferred tax | 2,362 | 2,453 |
| Other long-term provisions | 9,046 | 9,170 |
| 124,068 | 112,689 | |
| Current liabilities | ||
| Bond | 2,053 | 1,375 |
| Bank borrowings | 29,514 | 29,775 |
| Trade payables | 42,661 | 49,757 |
| Other liabilities | 27,117 | 27,538 |
| Tax provisions | 450 | 672 |
| Other short-term provisions | 2,242 | 1,233 |
| 104,037 | 110,350 | |
| Total equity and liabilities | 319,924 | 325,160 |
| Equity | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| Capital | Retained | Translation | Other | Treasury | Net | equity holders attributable to |
Minority | ||||
| EUR '000 | Share capital | reserve | earnings | reserve | reserves | shares | profit/loss | of the parent | interests | Total equity | |
| At 1 Jan. 2008 | 9,435 | 21,093 | 39,890 | -132 | 0 | -396 | 17,505 | 87,395 | 6,604 | 93,999 | |
| Consolidated net profit for 2007 | 17,505 | -17,505 | 0 | 0 | |||||||
| Consolidated net profit for 2008 | 11,848 | 11,848 | -349 | 11,499 | |||||||
| Dividends | -1,835 | -1,835 | -280 | -2,115 | |||||||
| Exchange differences on | |||||||||||
| translating foreign operations | |||||||||||
| and change in minority interests | -1,805 | -1,805 | 184 | -1,621 | |||||||
| Direct changes in equity | |||||||||||
| Cash Flow Hedges | 479 | 479 | 479 | ||||||||
| Deferred taxes | -120 | -120 | -120 | ||||||||
| At 31 Dec. 2008 = 1 Jan. 2009 | 9,435 | 21,093 | 55,560 | -1,937 | 359 | -396 | 11,848 | 95,962 | 6,159 | 102,121 | |
| Consolidated net profit for 2008 | 11,848 | -11,848 | 0 | 0 | |||||||
| Consolidated net profit for 1-3/2009 | -8,065 | -8,065 | -1,002 | -9,067 | |||||||
| Exchange differences on | |||||||||||
| translating foreign operations | |||||||||||
| and change in minority interests | -453 | -453 | -782 | -1,235 | |||||||
| Mar. 2009 At 31 |
9,435 | 21,093 | 67,408 | -2,390 | 359 | -396 | -8,065 | 87,444 | 4,375 | 91,819 |
Statement of changes in equity
| EUR '000 | 1-3 / 2009 | 1-3 / 2008 |
|---|---|---|
| Revenue | 109,386 | 158,204 |
| Changes in inventories of finished goods and work in progress | -3,046 | 1,761 |
| Work performed by the entity and capitalised | .0 | . 164 |
| Other operating income | 1,780 | 1,838 |
| Raw material and consumables used | -70,565 | -99,945 |
| Staff costs | -26,993 | -33,424 |
| Depreciation, amortisation and impairment | -4,075 | -3,781 |
| Other operating expenses | -14,470 | -16,996 |
| Profit from operations | -7,983 | 7,821 |
| Interest income | .73 | .37 |
| Interest expense | -1,248 | -1,452 |
| Other finance income | .000 | .07 |
| Net finance costs | -1,175 | -1,408 |
| Profit before tax | -9,158 | 6,413 |
| Income tax expense | -131 | -1,773 |
| Change in deferred tax | 222 | -239 |
| Profit after tax | -9,067 | 4,401 |
| Attributable to minority interests | 1,002 | -420 |
| Attributable to equity holders of the parent | -8,065 | 3,981 |
| EUR '000 | 1-3 / 2009 | 1-3 / 2008 | |
|---|---|---|---|
| Net profit/loss before minority interests | -9,067 | 4,401 | |
| Depreciation and amortisation of non-current assets | 4,075 | 3,781 | |
| Gains on disposal of non-current assets | .0 | -1 | |
| Losses on disposal of non-current assets | .014 | 0 | |
| Change in deferred tax | -130 | 267 | |
| Change in long-term provisions | -156 . | -297 | |
| Reversal of negative goodwill on consolidation | .000 | -60 | |
| Operating profit before working capital changes | -5,264 | 8,091 | |
| Change in inventories | 2,363 | -3,978 | |
| Change in trade receivables | 2,418 | -8,086 | |
| Change in other receivables | 4,841 | -3,480 | |
| Change in short-term provisions | 787 | 2,568 | |
| Change in trade payables | -7,586 | 1,593 | |
| Change in liabilities to Group companies | 0. -118 | -236 | |
| Change in other liabilities | -303 | 5,308 | |
| Translation related changes | -104 . | 30 | |
| Net cash from operating activities | -2,966 | 1,810 | |
| Investments in non-current assets | -2,647 | -5,518 | |
| Proceeds from sale of non-current assets | .7 | 21 | |
| Proceeds from investment grants | 369 | 0 | |
| Proceeds from repayment of loans | .031 | 44 | |
| Changes arising on consolidation | .00 | -28 | |
| Net cash used in investing activities | -2,240 | -5,481 | |
| Change in financial liabilities | 12,074 | 2,912 | |
| Net cash from financing activities | 12,074 | 2,912 | |
| Change in cash and cash equivalents | 6,868 | -759 | |
| Cash and cash equivalents at beginning of period | 16,302 | 10,218 | |
| Cash and cash equivalents at end of period | 23,170 | 9,459 |
Status as of 31 March 2009
| 22 Apr. 2009 | Publication of annual results for 2008 |
|---|---|
| 08 May 2009 | Annual results press conference |
| 08 May 2009 | Publication of the interim report on the first quarter of 2009 |
| 14 May 2009 | 20th Annual General Meeting |
| 19 May 2009 | Ex-dividend date |
| 12 Aug. 2009 | Publication of interim report on the first half of 2009 |
| 11 Nov. 2009 | Publication of the interim report on the third quarter of 2009 |
Investor Relations Officer: Erika Hochrieser
Investors' hotline: +43(0) 1 505 42 06
E-mail: [email protected]
Website: www.frauenthal.at
Vienna Stock Exchange: Prime Market
Symbol: FKA
ISIN: AT 0000762406 (shares)
Bloomberg-code: FKA AV
Reuters-code: FKAV.V1
Market capitalisation: EUR 49.6 (30 Dec. 2008)
Vienna Stock Exchange: Listing on the Vienna Stock Exchange official market
Symbol: FKA
ISIN: AT 0000492749 (bonds)
In addition to detailed information on Group companies, our website offers downloads of quarterly reports, AGM documents, press releases, stock exchange announcements, product photographs, and the latest annual report in German and English.
Prinz-Eugen-Straße 30/4a, A-1040 Vienna, tel.: +43(0) 1 505 42 06, fax: +43(0) 1 505 42 06-33 E-mail: [email protected], www.frauenthal.at
fischer enterprises werbe gmbh, Schottenfeldgasse 60 / 33L, A-1070 Vienna tel.: +43(0) 1 524 84 24, fax: +43(0) 1 524 84 24-25, e-mail: [email protected], www.fce.at
fischer enterprises werbe gmbh
In the interests of readability editorial changes have been made to this annual report (including the colour scheme and layout). The original can be viewed at the Company's headquarters.
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