Homag Group AG — Earnings Release 2008

Nov 14, 2008

News Details

Corporate | 14 November 2008 07:39

HOMAG Group AG looks set to close another record year

Homag Group AG / Quarter Results/Forecast

Release of a Corporate News, transmitted by DGAP - a company of EquityStory
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• Earnings high again in the third quarter of 2008
• Sales revenue and earnings up in the first nine months of 2008
• Management board sees the weaker market phase also as an opportunity

Schopfloch, November 14, 2008. Although the figures returned by HOMAG Group
AG in the third quarter of 2008 did not quite match the very good
prior-year level of their record year 2007, the key indicator profit after
tax was considerably higher. The global leader for plant and machinery for
the woodworking industry, which is listed on the SDAX, saw sales revenue
decrease slightly to EUR 211 million between July and September (prior
year: EUR 221 million). Total operating performance stood at EUR 210
million (prior year: EUR 223 million). In the third quarter of 2008, the
order intake dropped to EUR 140 million (prior year: EUR 158 million).
According to the Company’s spokesman Dr. Joachim Brenk this was due not
only to the slowing global economy, but also to the fact that LIGNA, the
succesful biennial industry trade show, had had such a positive impact on
the order situation in 2007. Relative to the more comparable last non-LIGNA
year 2006, the order intake increased by around 12 percent (2006: EUR 125
million). The same holds true for the order backlog which stood at EUR 245
million as of September 30, 2008 compared to EUR 321 million the prior year
and EUR 214 million at the end of the third quarter of 2006.

The CFO Andreas Hermann attributes the earnings of the third quarter to
various factors. The drop in total operating performance, in conjunction
with the percentage-of-completion method used, led to a cut-off related
drop in income of around EUR 2.5 million. Own work capitalized also dropped
compared to the comparable prior-year period by EUR 0.7 million and higher
raw materials prices also burdened earnings by EUR 1.1 million. Hermann:
'Without these factors, the third quarter of 2008 would have matched the
high earnings level of the prior-year quarter.' Owing to these factors,
EBITDA before employee participation expenses decreased between July and
September 2008 to EUR 25.3 million (prior year: EUR 29.6 million), while
EBT before employee participation expenses dropped to EUR 17.0 million
(prior year: EUR 20.9 million). To make the figures more comparable, the
IPO expenses of EUR 2.1 million have already been eliminated.

Due to the lower tax rate and in this case the inclusion of the IPO
expenses in the prior year, the net profit for the period before minority
interests increased 16 percent to EUR 10.2 million (prior year: EUR 8.8
million) and after minority interests by 19 percent to EUR 9.9 million
(prior year: EUR 8.3 million). This results in earnings per share of EUR
0.63 (prior year: EUR 0.53).

The headcount of the HOMAG Group at the end of the third quarter 2008 rose
compared to September 30, 2007 from 5,056 tod 5,404, thus at a somewhat
slower rate compared to the growth in sales revenue. New staff was hired in
particular at the German production companies WEEKE, HOMAG and BRANDT and
at our sales and service companies in the growth markets India and CIS.

First to third Quarter 2008
Group sales revenue in the first nine months of 2008 increased by 9 percent
to EUR 661 million (prior year: EUR 607 million) and total operating
performance rose to EUR 687 million (prior year: EUR 638 million). At EUR
541 million, the accumulated order intake of the first three quarters
remains unchanged on a high level compared to EUR 605 million in 2007 and
EUR 499 million in the more comparable last 'non-LIGNA year' 2006. Adjusted
for the IPO expenses of EUR 3.1 million in the prior year, EBITDA before
expenses from employee participation rose 6 percent in the first nine
months of 2008 to EUR 78.3 million (prior year: EUR 74.1 million). EBT
before expense from employee participation shows a plus of 8 percent to EUR
53.9 million (prior year: EUR 49.8 million). Taking the IPO expenses of the
prior year into account, however, the net profit for the period increased
45 percent to EUR 32.1 million before minority interests (prior year: EUR
22.2 million) and to EUR 29.9 million after minority interests (prior year:
EUR 20.5 million). This results in significantly higher earnings per share
of EUR 1.91 (prior year: EUR 1.38).

Outlook
Despite the difficult conditions prevailing in the meantime, the management
board of the HOMAG Group is confident that the Company will not only
largely meet the forecasts for 2008, but achieve an increase in sales
revenue of some 6 percent. According to CFO Hermann, the percentage growth
in EBITDA has been prevented merely by the increased share of sales revenue
generated by low-margin merchandise and targeted restructuring measures at
some locations in the fourth quarter entailing costs of EUR 3 million to 4
million. 'We therefore expected EBITDA to remain on the prior-year level
while the net income after minority interests is expected to rise by more
than 20 percent. Without the two extraordinary factors this figure would,
as announced, increase by 30 percent,' said Andreas Hermann. 'The HOMAG
Group therefore looks set to achieve another record year,' adds the
spokesman of the Company Brenk who sees in the weaker market phase and the
good state of the HOMAG Group good opportunities for strategic
acquisitions.

According to the management board, the Group is well prepared for what is
likely to be a more difficult 2009. Brenk: 'In recent years, we have become
significantly more flexible and can now quickly adjust our capacities to
meet market requirements.' In a weaker market environment – i.e. no
dramatic downswing – the Group expects to record sales revenue of almost
EUR 800 million, although the first half year of 2009 in particular is
likely to trail behind the record sales revenue in the first six months of
2008. The HOMAG Group wants to maintain the EBITDA margin before employee
participation expenses at about 10 percent in 2009, regardless of the cost
of the LIGNA trade show and the anticipated collectively bargained pay
rises.

Background information
With its 14 production companies worldwide, 21 group-owned sales and
service companies and approximately 60 exclusive sales partners, HOMAG
Group AG’s market position is excellent and its portfolio as a
comprehensive system supplier and technology partner makes it unique.
Backed by a workforce of more than 5,300 employees, the Company sees itself
as the leading global manufacturer for plant and machinery for the
woodworking industry for the production of furniture and construction
elements as well as prefabricated houses. The group also offers its
customers a wide range of services in related areas for production machines
and equipment. HOMAG Group AG shares have been trading on the Prime
Standard of the Frankfurt Stock Exchange since July 13, 2007 and were
listed on the SDAX of the German Stock Exchange on October 2007.

Disclaimers
This press release contains certain statements relating to the future.
Future-oriented statements are all those statements that do not pertain to
historical facts and events or expressions pertaining to the future such as
'believes', 'estimates', 'assumes', 'forecasts', 'intend', 'may', 'will',
'should' or similar expressions. Such future-oriented statements are
subject to risks and uncertainty since they relate to future events and are
based on current assumptions of the Company, which may not occur in the
future or may not occur in the anticipated form. The Company points out
that such future-oriented statements do not guarantee the future; actual
results including the financial position and the profitability of the HOMAG
Group as well as the development of economic and regulatory framework
conditions may deviate significantly (and prove unfavorable) from what is
expressly or implicitly assumed or described in these statements. Even if
the actual results of the HOMAG Group including the financial position and
profitability as well as the economic and regulatory framework conditions
should coincide with the future-oriented statements in this press release,
it cannot be guaranteed that the same will hold true in the
future.

HOMAG Group AG
Investor Relations
Simone Mueller
Phone: +49 7443 13-2034
simone.mueller@homag-group.com
www.homag-group.com

14.11.2008 Financial News transmitted by DGAP

Language: English
Issuer: Homag Group AG
Homagstr. 3-5
72296 Schopfloch
Deutschland
Phone: +49 (0)7443 / 13 - 0
Fax: +49 (0)7443 / 13 - 2300
E-mail: info@homag-group.de
Internet: www.homag-group.de
ISIN: DE0005297204
WKN: 529720
Indices: SDAX
Listed: Regulierter Markt in Frankfurt (Prime Standard); Freiverkehr
in Berlin, Hannover, Stuttgart, München, Hamburg, Düsseldorf

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