Quarterly Report • Aug 13, 2008
Quarterly Report
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Half-year Financial Report of the Jenoptik Group For the months January to June 2008.
| Figures in million euros | Jan. – June 2008 | Jan.– June 2007 ** | Change in % | Apr. – June 2008 | Apr.–June 2007 ** | Change in % |
|---|---|---|---|---|---|---|
| Sales | 264.5 | 253.7 | 4.3 | 135.3 | 124.9 | 8.3 |
| Lasers & Optical Systems | 107.6 | 110.0 | – 2.2 | 53.0 | 51.7 | 2.5 |
| Metrology | 53.9 | 56.2 | – 4.1 | 28.0 | 26.5 | 5.7 |
| Defense & Civil Systems | 100.7 | 85.3 | 18.1 | 53.1 | 45.7 | 16.2 |
| Other* | 2.3 | 2.2 | 4.5 | 1.2 | 1.0 | 20.0 |
| EBITDA | 30.7 | 29.4 | 4.4 | 14.3 | 12.5 | 14.4 |
| Lasers & Optical Systems | 19.8 | 20.8 | – 4.8 | 9.1 | 9.6 | – 5.2 |
| Metrology | 0.8 | 4.0 | – 80.0 | 1.2 | 0.7 | 71.4 |
| Defense & Civil Systems | 8.7 | 5.4 | 61.1 | 4.6 | 2.8 | 64.3 |
| Other* | 1.4 | – 0.8 | ++ | – 0.6 | – 0.6 | 0.0 |
| EBIT | 16.1 | 13.1 | 22.9 | 6.9 | 4.1 | 68.3 |
| Lasers & Optical Systems | 12.1 | 12.3 | – 1.6 | 4.9 | 5.2 | – 5.8 |
| Metrology | – 1.0 | 2.8 | ++ | 0.1 | 0.1 | 0.0 |
| Defense & Civil Systems | 5.4 | 2.0 | ++ | 2.9 | 1.0 | ++ |
| Other* | – 0.4 | – 4.0 | 90.0 | – 1.0 | – 2.2 | 54.5 |
| EBIT margin (EBIT as % of sales) | 6.1 | 5.2 | 5.1 | 3.3 | ||
| Lasers & Optical Systems | 11.2 | 11.2 | 9.2 | 10.1 | ||
| Metrology | – 1.9 | 5.0 | 0.4 | 0.4 | ||
| Defense & Civil Systems | 5.4 | 2.3 | 5.5 | 2.2 | ||
| Other* | –17.4 | – 181.8 | – 83.3 | – 220.0 | ||
| Earnings before tax | 8.3 | 0.4 | ++ | 3.9 | – 2.4 | ++ |
| Earnings after tax | 6.3 | 0.6 | ++ | 3.1 | – 2.1 | ++ |
| Order intake | 267.6 | 252.4 | 6.0 | 128.8 | 111.5 | 15.5 |
| Lasers & Optical Systems | 112.5 | 116.7 | – 3.6 | 45.9 | 51.4 | – 10.7 |
| Metrology | 65.8 | 56.0 | 17.5 | 34.6 | 25.9 | 33.6 |
| Defense & Civil Systems | 87.0 | 78.4 | 11.0 | 47.3 | 32.7 | 44.6 |
| Other* | 2.3 | 1.3 | 76.9 | 1.0 | 1.5 | – 33.3 |
| June 30, 2008 | Dec. 31, 2007 | June 30, 2007 | ||||
| Order backlog | 441.4 | 439.5 | 435.1 | |||
| Lasers & Optical Systems | 82.5 | 77.6 | 85.7 | |||
| Metrology | 41.3 | 30.0 | 29.2 | |||
| Defense & Civil Systems | 318.2 | 332.5 | 321.5 | |||
| Other* | – 0.6 | – 0.6 | –1.3 | |||
| Employees (incl. trainees) | 3,397 | 3,436 | 3,338 | |||
| Lasers & Optical Systems | 1,423 | 1,431 | 1,359 |
* Other includes holding, real estate, consolidation.
Metrology
Other*
Defense & Civil Systems
** The segment reporting published a year ago for the second quarter cannot be compared with the current segment reporting as the new segments are based on a different composition of the operational business.
863 1,079 63
839 1,080 60
825 1,086 63
As an integrated optoelectronics group Jenoptik has had a new organizational structure in place since January 1, 2008: the entire operational business has been combined into the five divisions of Optical Sys tems, Lasers & Material Processing, Industrial Metrolo gy, Traffic Solutions plus Defense & Civil Systems. The laser & optics business is based on comprehensive knowhow in the field of optoelectronics, an enabling technology for the system businesses in the three other divisions.
The Group's worldwide clients are primarily companies which operate in the global semiconductor and semiconductor equipment industry, the automobile and automotive supplier industry, medical technology, security and defense technology, the aerospace industry, technology companies as well as the public sector. JENOPTIK AG, a listed company, does not have any operating business of its own.
The five divisions are combined into the Lasers & Optical Systems, Metrology and Defense & Civil Systems segments and consequently reflect the new segment re porting system of the Jenoptik Group which has been in place since the 1st quarter 2008.
The Jenoptik share essentially showed a lateral movement in difficult capital market conditions during the 1st half-year 2008 and therefore outperformed the benchmark indices, the Dax and TecDax, which both recorded marked losses in the comparison period. Despite the recent, strong, positive development of the Jenoptik share, starting from its low of 3.78 euros in mid March 2008, it was unable to return to the level of 6.07 euros reached at the beginning of January 2008 and ended trading on the Xetra on June 30, 2008 at 5.53 euros.
The Jenoptik Technology Days at the end of May was attended by around 20 analysts and journalists from Germany and abroad who were seeking to find out more about current Group developments and to hold direct talks with the members of Jenoptik's Executive Board and Management. In addition to road shows in Frankfurt and London plus the annual analysts' conference to announce the annual results, Jenoptik also showcased itself at the analysts' conference held at Optatec in June in Frankfurt/Main.
The Annual General Meeting of JENOPTIK AG held on June 5, 2008 in Weimar elected four new members to the Supervisory Board. Rudolf Humer, Chairman of the Supervisory Board of ECE European City Estates AG,
Hinterbrühl/Austria, was unanimously elected Chairman of the Supervisory Board at the first meeting of the newly-comprised Supervisory Board which followed the Jenoptik Annual General Meeting. The other new mem bers of the Supervisory Board are: Christian Humer, Chairman of the Executive Board of ECE European City Estates AG, Hinterbrühl/Austria, Mag. Heinrich Reimitz, Member of the Executive Board of ECE European City Estates AG, plus Dr. Lothar Meyer, former Chairman of the Executive Board of ERGO Versicherungsgruppe AG.
According to the OECD the global economy is losing impetus. As a result of rising commodity prices and turbulence on the financial markets the OECD has now reduced the growth forecasts for its member states for 2008 from the original figure of 2.3 percent to 1.8 percent. According to the provisional economic outlook of June 2008, most OECD national economies are now faced with several quarters of weak growth. There is also no quick end in sight to the high levels of inflation.
Following a weak 1st half-year the US economy will stagnate over the remainder of the year. Corporate investment has also fallen in the 1st quarter 2008. Exports by contrast, according to the OECD, have re mained relatively robust as they are generally benefiting from the weak dollar and expansion of global trade.
The high pace of economic growth achieved by the Chinese economy in 2007 slowed further in the 1st quarter 2008 under the influence of falling net exports. Domestic demand remained high due to rising wages and salaries - despite rising consumer prices, particularly amongst foods. In the view of the OECD competitiveness will slowly reduce as a result of rising wages and prices, experts therefore continue to predict a soft land ing by the Chinese economy.
The economy within the euro region has performed well by contrast according to the OECD. There was a slight pick-up in the pace of growth in the 1st half year, not least as a result of the surprising strengths of the German and, to a lesser extent, the French economy. However, export growth was held back by the rise in the value of the euro.
In June 2008 the OECD and the DIW had announced a further increase in the growth forecasts for the German economy. Based on a strong 1st quarter by the German economy the latest growth forecasts for the full year 2008 issued in the summer by various institutes were of rates between 2.2 and 2.5 percent. Over recent weeks however the prospects for the German economy have become significantly more uncertain. For example, in July 2008 the IfO Business Climate Index fell sharper than at any time since the terrorist attacks on September 11, 2001. According to initial forecasts, exports have also reduced slightly over recent weeks but are being helped by a high level of demand from growth regions such as Brazil, Russia, India and China. Economic experts are critical about the plans for reducing taxes which would have to be financed through loans.
| June 30, 2008 | June 30, 2007 | |
|---|---|---|
| Net profit in TEUR | 4,757 | -626 |
| Weight. average number of outst. shares | 52,034,651 | 52,032,176 |
| Earnings per share in euros | 0.09 | – 0.01 |
| Dilution effect* in TEUR | 1,129 | 941 |
| Weight. average number of outst. shares** | 56,918,070 | 56,915,595 |
| Earnings per share in euros** | 0.09 | – 0.01 |
Earnings per share represent the net profit divided by the weighted average number of shares outstanding. In calculating the diluted earnings per share the dilution effects are accounted for in determining the weighted average number of shares outstanding. The weighted average number of outstanding shares is adjusted for the effect of the options granted in the convertible bond assuming all options are exer cised. The diluted earnings per share were reduced to the lower un diluted earnings per share.
* After taking deferred taxes into account. ** diluted
The forecasts of development by the individual Jenoptik sectors for the year 2007 and the first half-year 2008 have by and large been proven accurate except for the development of the semiconductor industry.
According to the sector association Spectaris 2008 has got off to a good start for German companies in the optical technologies area. Following a hefty 13 percent rise in sales to 22.3 billion euros in 2007 by the companies in the optical technologies industry branch, the first months of the current year have reaffirmed the growth trend. Spectaris anticipates growth in sales of approx. 9 percent for 2008.
The global semiconductor market continues to show a differentiated picture. Although chip sales worldwide rose by 5.4 percent compared with the same period in 2007, following its original forecast figure of 7.7 percent the Semiconductor Industry Association (SIA) now anticipates a markedly lower industry growth of 4.3 percent for 2008 as a whole. The main reason for this is said to be the continuing downward pressure on memory chip prices. As a result of overall weaker glob al economic activity manufacturers have delayed new Fab projects; forecasts for the level of investment in new Fabs and Fab equipment are sharply lower than the figure for 2007. This trend is expected to continue in particular for the 2nd half-year 2008.
Forecasts for the industrial laser sector are also positive. The sectors which are providing the driving force for
this and putting their faith in the further development of laser technology are the automotive industry, with the demand for increasingly more lightweight materials, the photovoltaics as well as the semiconductor industry. New potential applications are being created in the field of medical technology in line with increasingly shorter pulse frequencies which provide for more protective treatment, e.g. for eyes. The trend away from treatment towards early diagnosis would also be impossible without new laser processes.
One area of increasing importance to Jenoptik is the photovoltaics market which continued to enjoy a strong pick-up in the 1st half-year 2008. The planned reduction of 8-9 percent in German subsidies was far less than the 30 percent which had been originally planned. The reasons for the boom in photovoltaics are the continuing high level of oil prices plus falling costs for the manufacture of solar cells as a result of new production methods, facilitated by, amongst others, Jenoptik laser systems. Over the next three years the German solar industry alone intends to invest around seven billion euros in new plants and therefore speed up the pace of innovation even further.
The automotive market is not doing well so far. Although new registrations in Germany have increased by 4 percent, but this is against the background of an extremely low level in the previous year as a result of the increase in Value Added Tax. The number of new registrations in North America has dropped – by around 10 percent in the 1st half-year 2008 and is therefore at its lowest level in ten years. The reason for that are in particular high fuel prices that increase the
demand for fuel-saving and environment-friendly vehicles. The associated new developments of engine concepts are increasing the demand for greater preci sion in industrial metrology.
According to VDMA the development of the machine construction business reflected the shaky state of the global economy. This sector, which has been on an upward trend for four years, reported its first fall in orders in May 2008. However, growth in the sector for the full year 2008 is forecast to be approx. 5 percent. Robotics, assembly and handling technology, which form part of the automation technology area, as well as industrial imaging, can look forward to a rise in sales of 13 percent to 8.9 billion euros. Growth in the sector for 2008 is forecast at 9 percent. The basis for this development is said to be the increasing trend towards system solutions in all areas of machine construction.
After a three-year period of high numbers of aircraft orders the international aviation sector has order books up to record levels. However, falling margins in air travel are signaling an end to the boom. The international aviation organization IATA (International Transport Organization) has already reduced its earn ings forecasts for 2008 for the entire sector for the third time and now expects airlines to generally post losses. Aircraft manufacturers do however anticipate a soft economic landing thanks to their full order books. The position of front runner held by Airbus and Boeing will be attacked by manufacturers of regional aircraft, primarily from Russia, China and Japan who are forcing their way onto the market with the launch of new models. New technologies are also driving the aviation
sector. These could provide a boost to growth for the Jenoptik Defense & Civil Systems division as well as to the Optical Systems and Industrial Metrology divisions.
For the aerospace industry 2008 will be a year with the launch of numerous missions. The strong demand in particular from the telecommunications sector and the area of Earth observation, both for civil as well as military purposes, is providing a general boost. Missions involving participation by Jenoptik: in the 1st half-year 2008 the docking of the ESA "Jules Verne" unmanned transport vehicle with the ISS, the NASA GLAST scientific mission, the commissioning of the SAR-Lupe system by the German Army as well as the commencement of the private sector RapidEye Earth observation system planned for August of this year.
The demand for security and defense technology remains unabated. Military expenditure worldwide in creased by 6 percent to a total of approx. 850 billion euros in 2007 according to information from the Stockholm-based Institute for Peace Research (SIPRI). The USA accounted for more than half of the expenditure, followed well behind by Great Britain and China. Eastern European states posted the highest growth rates. Sector experts increasingly expect the armaments markets which had previously been 'hermetically sealed', such as that of the USA, to become more 'permeable'. European suppliers will be among the beneficiaries of this development.
Important note: The details on the three segments in the reporting on the earnings situation and in the segment reporting – despite having similar names – cannot be compared with the figures published in the quarterly report for the previous year. Details on the report in the previous year's period are shown in this report in each case in brackets and in the summary on the inside front cover as well as on p. 29 of this quarterly report.
Development of sales. At 264.5 million euros in the 1st half-year 2008 the Jenoptik Group posted a 4.3 per cent increase in sales compared with the same period in the previous year (prev. year 253.7 million euros). The main driving force behind this development was the Defense & Civil Systems division which in creased its sales in the reporting period by 18.1 percent. The other two segments posted sales slightly below the figures for the same period in the previous year, since the loss of sales as a result of disinvestments and the weaker dollar rate had a stronger impact here than in the Defense & Civil Systems division. Following the stagnation of Group sales in the 1st quarter the effects mentioned above were more than compensated for in the 2nd quarter due to a sales increase of 8.3 percent compared with the same quarter in the previous year.
Exports accounted for approx. 56 percent of sales (prev. year almost 60 percent). The slight fall in foreign sales – as in the 1st quarter 2008 – is attributable to a
change in the sales mix since the Defense & Civil Sys tems segment primarily generates its sales in Germany. The Group's key export region is Europe, followed by the USA and Asia.
Earnings development. In the half-year just past the Jenoptik Group achieved a strong rise in key figures on results. Jenoptik is displaying a new quality of results, from the Group EBIT to the net interest and investment result, through to the net profit. The sustained improve ment in the quality of the earnings is the result of measures within the framework of the Group's strategic reorientation: of the disposal of loss-making marginal business activities, the focus on growth areas, a stronger sales orientation as well as the new financing structure following the repayment of the high-yield bond at the end of 2007.
The result from operating activities before interest and taxes (EBIT) showed an increase of 22.9 percent and consequently a clear rise disproportionately higher than the 4.3 percent growth in sales to 16.1 million euros (prev. year 13.1 million euros). In this context a leap in results achieved by the Defense & Civil Systems segment compensated for the anticipated still negative EBIT posted by the Metrology segment, which reported – as planned - a small positive result in the 2nd quarter compared with the loss in the 1st quarter. The Lasers & Optical Systems segment achived the high level of the previous year. In addition, the substantially lower capitalization of development costs as well as costs of
| Sales | in million euros | ||
|---|---|---|---|
| 1.1. to 30.6.2008 |
1.1. to 30.6.2007 |
Change | |
| Total | 264.5 | 253.7 | 4.3 % |
| Lasers & Optical Systems | 107.6 | 110.0 | – 2.2 % |
| Metrology | 53.9 | 56.2 | – 4.1 % |
| Defense & Civil Systems | 100.7 | 85.3 | 18.1 % |
| Other | 2.3 | 2.2 | 4.5 % |
| EBIT | in million euros | ||
|---|---|---|---|
| 1.1. to 30.6.2008 |
1.1. to 30.6.2007 |
Change | |
| Total | 16.1 | 13.1 | 22.9 % |
| Lasers & Optical Systems | 12.1 | 12.3 | – 1.6 % |
| Metrology | –1.0 | 2.8 | –135.7 % |
| Defense & Civil Systems | 5.4 | 2.0 | 170.0 % |
| Other | – 0.4 | – 4.0 | 90.0 % |
around 1 million euros result ing from the weak US dollar were compensated. You will find de tailed informa tion on the development of the segments from p. 14 of this report.
The EBIT of Other areas (holding company, real estate and consolidation) improved to minus 0.4 million euros (prev. year minus 4.0 million euros). This was aided by a positive effect in the sum of 1.8 million euros arising from the termination of the finance lease for a large property in the 1st quarter. This item was included in other operating income in the sum of 10.0 million euros (prev. year 8.5 million euros). Other operating income did not contain any further significantly larger or one-off effects. Other operating expenses in the sum of 7.7 million euros (prev. year 8.0 million euros) include 1 million euros for the liquidation of a smaller company, effective in the 2nd quarter.
As a result of lower depreciation than in the same period for the previous year earnings before interest, taxes, depreciation and amortization (EBITDA) increased by just 4 percent to 30.7 million euros (prev. year 29.4 million euros).
The further development towards becoming a focused, profitably growing technology group was also particularly reflected in the marked reduction in the burden on the financial result which posted an overall improvement of 4.8 million euros and therefore by 38 percent to minus 7.8 million euros (prev. year minus 12.6 mil lion euros). There was a significant increase in both the net interest and investment result following the consis tent disposal of businesses which had no prospects of
future success for the Group, development themes as well as an improvement in the financing structures.
The effects of the early repayment of the bond in November 2007 are reflected in the net interest result. This improved by 4 million euros to minus 6.1 million euros compared with minus 10.0 million euros in the 1st half-year of the previous year. Interest income in the sum of 1.4 million euros (prev. year 3.6 million euros) was offset by interest expenses in the sum of 7.5 million euros (prev. year 13.6 million euros).
The investment result, which improved to minus 1.7 million euros (prev. year minus 2.7 million euros), showed the effects of the Group's consistent focus on its profitable core business. Over recent months Jenoptik has disposed of loss-making marginal business activities, including the joint venture Xtreme technol ogies which had a negative impact on the investment result in the previous year and in the 1st quarter 2008. Zenteris GmbH also had a negative impact on the investment result. Jenoptik had already sold its majority stake in 2007; the remaining 24.9 percent has now been written off in full. With effect from the 2nd halfyear 2008 the Jenoptik investment result will therefore essentially only continue to be characterized by the joint venture with Trumpf for the promising development of fiber laser systems.
As a result of the improvement in the EBIT and the financial result Jenoptik posted earnings before tax of 8.3 million euros (prev. year 0.4 million euros). As a result of the improvement in earnings income taxes increased to 1.0 million euros (prev. year 0.6 million
| Order intake | in million euros | |||
|---|---|---|---|---|
| 1.1. to 30.6.2008 |
1.1. to 30.6.2007 |
Change | ||
| Total | 267.6 | 252.4 | 6.0 % | Total |
| Lasers & Optical Systems | 112.5 | 116.7 | – 3.6 % | |
| Metrology | 65.8 | 56.0 | 17.5 % | |
| Defense & Civil Systems | 87.0 | 78.4 | 11.0 % | |
| Other | 2.3 | 1.3 | 76.9 % |
| Order backlog | in million euros | ||
|---|---|---|---|
| 30.6.2008 | 31.12.2007 | Change | |
| Total | 441.4 | 439.5 | 0.4 % |
| Lasers & Optical Systems | 82.5 | 77.6 | 6.3 % |
| Metrology | 41.3 | 30.0 | 37.7 % |
| Defense & Civil Systems | 318.2 | 332.5 | – 4.3 % |
| Other | – 0.6 | – 0.6 | 0.0 % |
euros). After showing a deferred tax income of 0.7 mil lion euros in the same period for the previous year, in the 1st half-year 2008 Jenoptik incurred a deferred tax expense of 0.9 million euros, producing earnings after tax of 6.3 million euros (prev. year 0.6 million euros).
Order book situation. Despite a slowdown in the semiconductor equipment market and the businesses given up the Jenoptik Group successfully increased its order intakes in the 1st half-year 2008. The 6 percent rise to 267.6 million euros (prev. year 252.4 million euros) was attri butable to the Defense & Civil Systems and Metro lo gy segments which for latter – in addition to a strong order intake by the Industrial Metrology division – is also due to a slight pick-up in international demand in the Traffic Solutions division particularly since May 2008. The stagnation in the Lasers & Optical Systems segment resulted from a drop in the order volume from the semiconductor sector. The order backlog of the Jenoptik Group, at 441.4 million euros, was at the same level as at the end of 2007 (Dec. 31, 2007 439.5 million euros).
Cost of sales. Cost of sales increased at 5.6 percent at a slightly higher rate in proportion to the growth in sales, to 188.0 million euros (prev. year 178.1 million euros). The gross sales margin, at 28.9 percent, was accordingly just below the figure for the previous year (prev. year 29.8 percent). Cost of sales include, in accordance with IFRS, the developments on behalf of customers which are not shown under research and development expenses. Here, the Defense & Civil
Systems segment, which reported the strongest sales growth in the 1st half year 2008, has the highest share of customer-financed development costs.
At 15.3 million euros research and development expenses were 11.6 percent lower than in the same period for the previous year (prev. year 17.3 million euros). The R+D expenses of those companies sold by Jenoptik in the 2nd half-year 2007 and beginning of 2008 and which are now deconsolidated are not in cluded any more. Furthermore, depreciation on devel opment costs in the sum of 1.1 million euros in the 1st half-year 2008 was below the figure for the same period in the previous year (prev. year 1.3 million euros).
The R+D expenses in the sum of 15.3 million euros represent an R+D quota of 5.8 percent (prev. year 6.8 percent). After including research and development on behalf of customers which is shown under cost of sales, the R+D quota amounts to approx. 9 percent. In addition, the development theme of fiber laser systems is not shown under R+D expenses but in the investment result.
Selling expenses increased to 28.4 million euros and therefore by 13.1 percent (prev. year 25.1 million euros), reflecting the increased closeness to the customer and markets and consequently an expansion in the direct distribution channels in conjunction with the Group's reorientation.
By contrast, there was a significant reduction in general administrative expenses. These totaled 18.9 million
| R+D expenses | in million euros | ||
|---|---|---|---|
| 1.1. to 30.6.2008 |
1.1. to 30.6.2007 |
Change | |
| Total | 15.3 | 17.3 | – 11.6 % |
| Lasers & Optical Systems | 8.9 | 8.9 | 0.0 % |
| Metrology | 5.2 | 5.4 | – 3.7 % |
| Defense & Civil Systems | 3.0 | 4.4 | – 31.8 % |
| Other | – 1.8 | – 1.4 | – 28.6 % |
| Employees (incl. trainees) | ||
|---|---|---|
| , 30.6.2008 |
31.12.2007 | Change | |
|---|---|---|---|
| Total | 3,397 | 3,436 | – 1.1 % |
| Lasers & Optical Systems | 1,423 | 1,431 | – 0.6 % |
| Metrology | 825 | 863 | – 4.4 % |
| Defense & Civil Systems | 1,086 | 1,080 | 0.6 % |
| Other | 63 | 63 | 0.0 % |
euros and therefore corresponded to 7.1 percent of sales (prev. year 20.7 million euros or 8.2 percent of sales). The reduction is the outcome of both a system of targeted cost management which has been pursued by all areas of the company since 2007 and for which a number of projects aimed at reducing costs through out the Group had been defined.
Employees and management. As at June 30, 2008 the Jenoptik Group employed a total of 3.397 personnel, slightly fewer than as at the end of 2007 (Dec. 31, 2007: 3,436 employees) despite the increase in sales. 511 employees and therefore 15 percent of the workforce are employed abroad. The Lasers & Optical Systems seg ment reported a slight fall in its number of employees as a result of the deconsolidation of LDT Laser Display Technology GmbH. There was a marked reduction in the number of employees in the Metrolo gy segment, primarily following the worldwide restructuring. In the Defense & Civil Systems segment the number of employees increased at a rate proportionat e ly lower to the strong growth in business. For more detailed information on the development of the number of employees see the segment reporting from page 14.
The financing structure of the Jenoptik Group continues to be orientated towards the long-term. Switching between long and short-term liabilities within the 1st halfyear resulted from the termination of a finance lease agreement for real estate during the 1st quarter 2008 itself. This is the first step towards the planned sale of a property which is not used by the Group itself and therefore not required for operating purposes to further reduce the debt of the Group. The share of long-term financial liabilities as of June 30, 2008 fell as a result by 9.2 percentage points to 68.7 percent (as at Dec. 31, 2007: 77.9 percent) since the long-term finance lease was replaced by short-term financial liabilities (see also explanatory note on page 13).
There was no change in the net debt in connection with the switching in the financing structure. The figure as at June 30, 2008 was 192.0 million euros and therefore at the same level as at the end of 2007 (Dec. 31, 2007: 191.7 million euros). This showed an improvement compared with net debt of 199.0 million euros as of the end of the 1st quarter 2008. During the course of the 2nd quarter 2008 cash inflows were used to repay short-term loans.
Investments in intangible and tangible assets totaled 10.2 million euros (prev. year 14.1 million euros). The marked reduction of 27.7 percent is primarily the result of the reduction in the capitalization of development costs and consequently a significantly lower level of investment in intangible assets in the sum of 2.8 million euros (prev. year 5.8 million euros). This reduces future depreciation risks. Another reason for the sharp fall in investment in intangible assets is the companies Zen te ris and LDT which have now been deconsolidated and whose capitalizations are no longer included. Invest ments in tangible assets totaled 7.4 million euros (prev. year 8.3 million euros) and were therefore just below the level for the previous year. The main items of invest ment were technical equipment and machines as well
| Net debt | in million euros | ||
|---|---|---|---|
| 30.6.2008 | 31.12.2007 | 30.6.2007 | |
| Total | – 192.0 | – 191.7 | – 207.2 |
| Securities | 2.3 | 2.2 | 2.4 |
| Cash and cash equivalents | 12.3 | 13.8 | 150.6 |
| Non-current financial liabilities | 141.9 | 161.8 | 283.0 |
| Current financial liabilities | 64.7 | 45.9 | 77.2 |
as office equipment. There was virtually no investment in real estate or investment properties in the 1st halfyear 2008. Depreciation of tangible assets in the total sum of 11.4 million euros (prev. year 12.2 million euros) therefore exceeded the total amount of investments. The cash and cash equivalent flows in the analysis of cash flows in the year 2008 are fully comparable with those of the previous year.
The cash flow from operating activities totaled 16.5 million euros (prev. year 21.9 million euros). The main reasons for the reduction in the cash flow compared with the previous year are the stronger increase in the working capital during the year and the reduction in other liabilities, in particular as a result of sales tax payments following the high sales in the 4th quarter 2007.
The operating result before working capital changes, at 31.3 million euros, was slightly above the level for the previous year (prev. year 29.0 million euros). However, the Jenoptik Group posted a marked increase in earnings before tax compared with the same period in the previous year which was also characterized by improvements in the net interest and investment result which will be eliminated in the cash flow from operating activities and lead to an improvement in the cash flow from the investing and/or financ ing activities.
The cash flow from investing activities totaled minus 5.3 million euros (prev. year minus 14.4 million euros) and was essentially characterized by the payments for investments in tangible assets. Receipts from disposals of tangible assets are derived mainly from the sale of smaller properties not required for operating purposes. The cash flow from financing activities totaled minus 12.1 million euros (prev. year minus 10.8 million euros). The payments arising from finance lease and the receipts derived from the take-up of loans are primarily attributable to the termination of a real estate finance lease. This liabilities swap is the first step towards the disposal of this property. The cash flow from financing activities was also characterized by the change in the group financing in the sum of 6.1 million euros as well as by interest payments in the sum of 2.5 million euros.
Balance sheet analysis. The balance sheet total, at 695.6 million euros, remained virtually unchanged compared with the end of 2007 (Dec. 31, 2007: 697.3 million euros).
Non-current assets fell by 7.4 million euros to 380.3 million euros, primarily due to the reduction in tangible assets, to 170.4 million euros (Dec. 31, 2007: 175.9 million euros). The figure was lower both as a result of the sale of smaller properties as well as due to the fact that depreciation exceeded the amount of in vestment. There were virtually no changes in intangible assets. Financial assets at 24.1 million euros, which include shares in associated companies, also remained virtually the same (Dec. 31, 2007: 24.8 million euros).
Current assets rose by 5.7 million euros to 315.3 million euros (Dec. 31, 2007: 309.6 million euros). The main reason for this is the 12.7 million euro rise in in ven to ries to 186.8 million euros (Dec. 31, 2007: 174.1 million euros). This increase is attributable on the one side to the expansion of the business and on the other to the 4th quarter of a fiscal year which is traditionally a
stronger period for sales which results in increased receivables and simultaneously lower inventory levels at the end of a fiscal year due to the qualifying date. Receivables and other assets correspondingly reduced during the course of the 1st half-year by 5.6 million euros to 113.9 million euros (Dec. 31, 2007: 119.5 million euros). There were no changes in securities. Cash and cash equivalents showed a slight reduction of 1.5 million euros to 12.3 million euros (Dec. 31, 2007: 13.8 million euros) due mainly to the repayment of a liability to an associated company in the 1st quarter 2008.
The Jenoptik Group shareholders' equity increased by nearly 5 million euros as a result of the net profit for the half-year, to 285.8 million euros (Dec. 31, 2007: 280.9 million euros). As the balance sheet total re mained almost unchanged the shareholders' equity ratio rose from 40.3 percent as of end 2007 to the new figure of 41.1 percent.
Shifting between non-current and current liabilities of the Group was carried out following the termination of the finance lease for a larger property in the 1st quarter 2008. In preparation for the sale Jenoptik had converted the financing for the property that was not used for its own purposes, to interim financing by way of current financial liabilities. Non-current financial liabilities consequently reported a significant fall of nearly 20 million euros to 141.9 million euros (Dec. 31, 2007: 161.8 million euros). Current financial liabilities by contrast increased by 18.8 million euros to 64.7 million euros (Dec. 31, 2007: 45.9 million euros).
Purchases and sales of companies. With the sale of businesses that are not part of Jenoptik's focus, the Group streamlined its portfolio in the 1st half-year 2008 just past and consistently terminated themes of a non-strategic nature: the EUV beam source and laser display technology. In May Jenoptik sold its entire shareholding in Xtreme technologies to the Japanese Ushio Group. Ushio had previously held a 50 percent stake in the research company. The withdrawal from the development business which had a negative effect on the investment result of the Jenoptik Group in 2007, had been taken into account in the 2007 financial statements. The 2007 financial statements also took account of the sale of the majority holding in LDT Laser Display Tech nology GmbH, Jena, in which Jenop tik now has a 49 percent stake and which is therefore no longer consolidated. Since May 2008 51 percent of the shares have been held by Rheinmetall Defence. The company's employees were taken on by Rheinmetall. This share sale will have no material affect on the statement of income or the consolidated balance sheet in the current fiscal year except for the loss of sales in the mid single figure million euro range. There were no acquisition of companies in the 1st half-year 2008.
For information on assets and liabilities not included in the balance sheet we refer to the details in the 2007 annual report on page 70 as well as to the details on guarantees in the opportunities and risk report con tained in the 2007 annual report from page 88.
Important note: The segment reporting published a year ago on the 1st half-year 2007 cannot be com pared with the current segment reporting since the new segments
are based on a different composition of the operating business. The key comparison figures of the 1st halfyear 2007 for the segments are stated in the text, the tables below as well as on page 2 of this quarterly report.
The Laser & Optical Systems segment performed well in the 1st half-year 2008 in difficult market conditions. Sales and results were maintained at almost the same high level as in the previous year which had been preceded by a number of periods during which double figure growth rates were achieved. The 2nd quarter was characterized in particular by a continuing slowdown in the global semiconductor industry.
The segment reported sales in the sum of 107.6 million euros compared with 110.0 million euros in the 1st half-year 2007, a slight fall of 2.2 percent following the deconsolidation of LDT Laser Display Technology GmbH. The segment's result from operating activities (EBIT) came in at 12.1 million euros and was therefore maintained at the same high level as in the previous year's period (prev. year 12.3 million euros).
Order book situation. The order intake, at 112.5 million euros, showed a slight reduction as against the 1st half-year 2007 (prev. year 116.7 million euros) primarily due to weaker demand for high performance optics for the semiconductor industry. The order backlog increased to 82.5 million euros (as at Dec. 31, 2007: 77.6 million euros) as a result of the order intakes which slightly ex ceeded the sales volume with a book-to-bill rate of 1.05.
The number of employees in the segment reduced slightly to 1,423 in comparison with the end of 2007 (as at Dec. 31, 2007: 1,431). This was due to the deconsolidation of LDT Laser Display Technology GmbH. In addition, capacities were adapted by reducing temporary personnel and overtime work.
In the Digital Imaging business unit of the Optical Systems division the collaboration with Leica Camera AG was intensified. In June 2008 the two companies concluded a cooperation agreement in which they agreed to seek long-term collaboration in the development, integration, manufacture as well as supply of sub-assemblies for digital imaging, comprising opto electronics and software. Jenoptik and Leica have already been working together for a number of years in the areas of digital technology and optoelectronics. June this year also saw the premiere of the new digital
| Lasers & Optical Systems Segment | in million euros | |||
|---|---|---|---|---|
| 30.6.2008 | 30.6.2007 | Change | ||
| Sales | 107.6 | 110.0 | – 2.2 % | |
| EBIT | 12.1 | 12.3 | – 1.6 % | |
| Order intake | 112.5 | 116.7 | – 3.6 % | |
| Order backlog | 82.5 | 85.7 | – 3.7 % | |
| Employees | 1,423 | 1,359 | 4.7 % |
ProgRes® microscopy camera at the CONTROL 2008 trade fair, expanding the camera family through the addition of a model with a 7 mega pixel resolution and very fast live image. With the ProgRes® C7 Jenoptik offers a highly versatile camera for image documenta tion and analysis in the areas of material sciences, quality assurance, pathology and life science.
In the Lasers & Material Processing division in the 1st half-year 2008 Jenoptik continued to concentrate on its core business and disposed of its majority holding in the laser display business. Rheinmetall Defence acquired 51 percent of the shares in LDT Laser Display Technolo gy GmbH from the Jenoptik Group which consequently transferred the majority holding in this business to its key customer. The transaction had already been taken into account, to a large extent, in the 2007 annual financial statements.
The Laser Processing Systems business unit established itself in the photovoltaics market in the 1st half-year 2008. Jenoptik is now also supplying complete produc tion lines for thin-film solar cells, also to Asia. Systems supplied to its customers in the 2nd quarter include new R+D facilities for the further development of thinfilm solar cells - both on a glass substrate and, in fu ture, on flexible base materials. Jenoptik and its solar customers are therefore intensifying their collaboration as this gives the solar cell manufacturers the opportunity to test both new and specific production processes as well as to further develop and consequently optimize existing production lines without any break in produc tion. Jenoptik is therefore supporting its customers in
the actual formulation of future manufacturing and processing technologies.
The JENOPTIK-VOTAN™ G Semi laser system for Thermal Laser Beam Separation, particularly of wafers, (TLS dicing) gained recognition as one of the most important developments in the semiconductor sector. In July Jenoptik won the "Best of West" award present ed in San Francisco by the global semiconductor sector association SEMI. From a total of more than 200 new products which had been presented at the SEMICON West trade fair, leading representives from science and industry and a panel of journalists had previously short listed the eight most important product and process innovations in the added-value chain of the global semiconductor industry. The criteria included the ex pected impact of the innovation on the sector as well as the importance of the innovative performance.
In celebrating the 15th anniversary of the diode laser activities, in April the Group looked back over a history of successes. Today, Jenoptik is a quality leader and on of the top suppliers worldwide of industrial high-power diode lasers with long service life and maximum reliability and has progressed from being a supplier of products for laser research to successful mass produc tion of products for industrial use.
The Metrology segment reported positive earnings contributions in the 2nd quarter. In the Industrial Metrology division the successful completion of the integration of Hommelwerke and Etamic at the key sites in the USA and France and other major integra tion projects were completed. Particularly in the 2nd quarter 2008, following twelve difficult months, the Traffic Solutions division can now look back once again on rising order intakes for traffic monitoring equipment. This can be seen in particular in the order intake for the 2nd quarter 2008 (see page 2).
Sales of the Metrology segment on a six month basis totaled 53.9 million euros, representing a slight 4.1 per cent fall (prev. year 56.2 million euros). The con tinuing reasons for this were the lack of contributions to sales resulting from the weak order intake of the Traffic Solutions division during 2007 and in the 1st quarter 2008. The growth in sales posted by the segment in the 2nd quarter 2008 was un able to compensate for this.
There was a similar picture with the development of the segment EBIT which although still just in negative territory at minus 1.0 million euros (prev. year 2.8 mil lion euros) on a half-year basis, had already been turned into a small positive result during the 2nd quarter 2008. The 1st quarter in the previous year conti n ued to be characterized by a good contribution from the Traffic Solutions division in terms of sales and therefore results.
Order book situation. The segment posted a marked rise of 17.5 percent in comparison with the same period in the previous year, to 65.8 million euros (prev. year 56.0 million euros). This corresponds to a book-tobill rate of 1.22. There was a corresponding strong rise in the segment's order backlog. As of end June 2008 this totaled 41.3 million euros (as at Dec. 31, 2007: 30.0 million euros). Both – the Industrial Metrology division as well as the Traffic Solutions division – increased the order intake, in particular in the 2nd quarter 2008.
There was a reduction in the number of employees in the segment as of June 30, 2008 of 38 to a new total of 825 employees (as at Dec. 31, 2007: 863). This is the result of the amalgamation of the sites and restructuring in France within the Industrial Metrology division which essentially completed the merger of Hommel werke with the Etamic Group, acquired in mid 2006, during the 1st half-year 2008 just past. There was also a reduction in the number of employees in the Traffic Solutions division in conjunction with adjustments following the low order intake in 2007.
The Industrial Metrology division reported a positive development particularly in the 2nd quarter, despite the continuing weakness of the US dollar. Sales and earnings increased, with earnings showing a stronger growth. It benefited to an increased extent from its new global position as a systems provider which is able to deliver all measurement tasks under one roof. Benefits are to be found both in the division's comprehensive technology portfolio as well as in the cost structures.
| Metrology Segment | in million euros | ||
|---|---|---|---|
| 30.6.2008 | 30.6.2007 | Change | |
| Sales | 53.9 | 56.2 | – 4.1 % |
| EBIT | – 1.0 | 2.8 | –135.7 % |
| Order intake | 65.8 | 56.0 | 17.5 % |
| Order backlog | 41.3 | 29.2 | 41.4 % |
| Employees | 825 | 839 | – 1.7 % |
The global presence as well as the know-how in all aspects relating to various measurement technologies and tasks were just two of the key factors in its success in winning a major order from Continental AG. The order covers the complex testing of seven different components for a new truck diesel injection system which is being manufactured in the USA. Jenoptik will be fitting test systems to the entire production line and some of the test areas and during the course of this year installing both optical, pneumatic and tactile measurement machinery and systems. All areas of Industrial Metrology will participate in the order. In the USA the Industrial Metrology division operates a production facility and sales office in Detroit, the center for the automobile industry, employing nearly 100 personnel.
The Group has now also had a direct presence in the growth market of India since June 2008 through a joint venture under Jenoptik leadership. All sales activities of the Industrial Metrology division have been amalgamated and invested in HOMMEL-ETAMIC Metrology India Pvt. Ltd, with registered offices in Bangalore. The company, in which Jenoptik is the majority shareholder, was founded together with Francis Klein, the leading Indian company and longstanding sales partner of the Etamic Group acquired in 2006. This makes the Industrial Metrology division the frontrunner within the Jenoptik Group for the development of the Indian market. Additional Jenoptik divisions are to follow.
The Traffic Solutions division can look back in particular to an improved 2nd quarter which saw a return to an increase in international orders for traffic safety
systems. However, the success of the division will also continue to depend on the sustainability of this pick-up in the equipment business and on whether it succeeds in winning major international orders for the Traffic Service Providing business. The Jenoptik Group is con tinuing to strongly expand this new area of business in North America – another reason why the division has not yet returned to profitability. Following the entry into the North American market in 2007 the business model will be expanded to other international regions. Jenoptik is currently participating in a number of tenders for international major projects, particularly in Asia and Eastern Europe.
In the 1st half-year 2008 the segment posted the highest growth rates in sales and earnings. This growth was experienced by all of the business units of the segment. The Optronics business unit, which has seen a return to a marked pick-up in its business following a weak period in the previous year, also posted an increase. The Mechatronics and Sensor Systems business units also significantly expanded their activities and won a number of important international orders.
The segment posted an 18.1 percent increase in sales to 100.7 million euros (prev. year 85.3 million euros). The EBIT developed at a clearly higher rate in propor tion to the rise in sales, enabling the segment to record a leap in earnings for the 1st half-year, to 5.4 million euros (prev. year 2.0 million euros). All three of the business units contributed towards the strong rise in sales and earnings.
Order book situation. The segment reported an increase of 11.0 percent in its order intake to 87.0 million euros (prev. year 78.4 million euros). The order intake can fluctuate significantly from period to period as this in part entails the issue of long-term major orders, making a comparison on a quarterly or half-yearly basis more difficult. The order backlog, at 318.2 million euros, was below the level as of end 2007 (as at Dec. 31, 2007: 332.5 million euros) as a result of the high level of sales, and accounted for nearly three-quarters of the Group's entire backlog.
As a result of the marked expansion of the business there was also a slight increase in the number of employees in the segment, at a lower rate proportional to the increase in sales. As of June 30, 2008 the Defense & Civil Systems segment employed a total of 1,086 personnel, (as at Dec. 31, 2007: 1,079).
The Defense & Civil Systems division showcased itself on a joint basis for the first time at the Eurosatory 2008 trade fair in June. Amongst the innovations on display were the expanded thermal image observation system for the infantry soldier of the future, various laser and infrared sensors as well as components for military vehicles.
The Mechatronics business unit succeeded in winning a series order for generators. The business unit was also awarded several important orders in the 1st half-year 2008, including from Switzerland for the supply of water-cooled generators for the two new types of armored personnel carriers.
For the Optronics business unit 2008 is a year that will see the launch of numerous and various missions which will use systems produced in Jena. The beginn ing of April was a first in space for the rendezvous and docking sensors. They enabled the successful docking of the first ATV (Automated Transfer Vehicle) "Jules Verne" of the European Space Agency ESA with the International Space Station ISS. Jenoptik is the basic supplier for rendezvous sensors both for the transport vehicles of the European Space Agency as well as for
| Defense & Civil Systems Segment | in million euros | ||
|---|---|---|---|
| 30.6.2008 | 30.6.2007 | Change | |
| Sales | 100.7 | 85.3 | 18.1 % |
| EBIT | 5.4 | 2.0 | 170.0 % |
| Order intake | 87.0 | 78.4 | 11.0 % |
| Order backlog | 318.2 | 321.5 | –1.0 % |
| Employees | 1,086 | 1,080 | 0.6 % |
the Japanese missions. Further impetus was also given to Galileo, the important European project. Jenoptik is supplying three solar sensors for the positioning control on the 2nd test satellite, the task of which now is to verify technical details. August this year will see the start of RapidEye, the major private sector project which is being equipped with space cameras by Jenoptik. The Group sees this as an important reference project for the resultant successful entry into the area of satellite camera technology. In addition to other systems, the Spaceborne scanner was showcased at the ILA International Air Show in Berlin in June of this year.
The Sensor Systems business unit expanded its strategic sales partnership in the area of thermography and IR cameras with InfraTec. One of the elements of the agreement is a comprehensive contract to supply thermography cameras, with an order value in the upper single digit million euro range.
There were no events of special importance occurring after the end of the period covered by the report. Details on individual developments in the current 3rd quarter 2008 have already been dealt with within the framework of the previous reporting.
Within the framework of the opportunities and risk report we refer to the comprehensive details contained on Pages 82 to 91 of the Jenoptik Annual Report published at the end of March 2008.
The risk arising from the sale of M+W Zander in May 2006 has reduced further in 2008, particularly with regard to the provision of guarantees. A special guar antee for an AMD project in the sum of 46.8 million euros, which was still in place as of the year end, has been returned early. Other existing guarantees reduced further – from 7.6 million euros to the new figure of just 0.6 million euros. The total volume of guarantees for M+W Zander has therefore reduced from 54.3 mil lion euros to 0.6 million euros as of June 30, this year.
The risk arising from the dependency upon individual suppliers, particularly in the procurement of special components, has increased in one specific case. As the result of insufficient quantities and the poor quality of one special component which Jenoptik purchases from an external manufacturer, one of the products in the Laser & Optical Systems segment experienced delivery delays. Countermeasures were introduced during the course of the 2nd quarter 2008.
During the course of the 1st half-year there has been deterioration in the economic framework conditions affecting the overall business development. For example, the combination of continuingly increasing commodity and energy prices plus a further weakening of the US dollar has given rise to significantly greater pessimism about economic forecasts as at today's date than had still been the case at the beginning of 2008.
This applies in particular to the global semiconductor market, for which the growth forecast for global chip sales was substantially reduced (see page 6 of this report). Over the last months the significant downturn of the equipment market for the semiconductor indus try confirmed. The SEMI industry association now expects a 20 percent decrease in sales for 2008 follow ing a 6 percent sales increase still in 2007. The risk for Jenoptik particularly in the Optical Systems division is that a significant deterioration in the economic activity of the sector, accompanied by a drastic cutback in the order intakes for equipment manufacturers, will result in a loss of sales and consequently a reduction in the EBIT.
There have been no other changes in the risks des cribed in the Annual Report during the 1st half-year 2008 and up to the editorial closing date of this report.
The Jenoptik Group intends to continue generating profitable growth. The focus of Jenoptik's further devel opment will be on
The Group's new organizational structure which took effect from January 1, 2008 fulfils the basic requirement to achieve these objectives. The structure is more customer and market-oriented than in the past, pro viding for synergies within the Group. All divisions and business units are optimizing their structures and processes on the basis of the new Group structure. This comprehensive process, which is being supported by active change management, began in the Group during the 2nd half-year 2007 and has been continued on the level of the new divisions since the beginning of 2008.
The amalgamation of the IT and procurement activities throughout the Group has begun in the Shared Service Center. The rolling strategy process, implemented in
2007, will be carried over to the divisions in 2008. A group-wide Innovation Management System will come into effect from the 2nd half-year 2008.
We are seeing a firming up of the predictions for a marked slowdown in the global economic climate. In its most recent update on the World Economic Out look, the International Monetary Fund (IMF) spoke about a significant reduction in global economic growth during the 2nd half of 2008 and a moderate recovery in 2009.
The early indicators particularly for the German economy, which had continued to buck the general economy trend in the 1st half-year 2008, including the latest business climate indices, point to an imminent and clear downward trend. Experts had for some time already been predicting a markedly lower growth rate for 2009 than 2008. The growth forecasts by individual institutions for global economic growth next year currently range between 1.0 and 1.4 percent.
The global semiconductor industry showed signs of weakness in the 2nd quarter 2008 which in 2008 affects in particular the equipment manufacturers in the industry. According the statements of SEMI the market is to recover again in 2009. Following a reduc tion by 20 percent in the 2008, global sales of the equipment manufacturers are then to rise again. For the global equipment market of the semiconductor
industry SEMI forecasts a 13 percent growth in 2009 and 6 percent in 2010.
For the details on the future development of other key sectors of key importance to Jenoptik we refer to the reports on page 6 and 7 of this report which in part also contain statements on future predictions, whereby it is impossible or very difficult to dispute the link between them and details on the development of the sector in the 1st half-year 2008 and in the 2007 fiscal year.
With the strategic realignment, accompanied by a more streamlined management structure and a cultural change throughout the Group, we have created the conditions for value-retaining and sustainable growth.
Our medium-term objective is to become a global leader in optoelectronics. We see potential for our innovative products particularly abroad. On the sector side the focuses of the market development lie, amongst other things, in the photovoltaics industry and in laser material processing of wafers, glass and ceramics as well as in Service Providing in the Traffic Solutions division.
The forecasts for these sectors and others in which we are positioned, are positive.
However, the further worsening general economic pros pects make reliable predictions almost impossible. The following forecasts are therefore based on the assumption that the overall economic climate in the 2nd half-year 2008 experiences no significant deterioration or does not actually suffer a collapse.
Jenoptik reaffirms the statements issued in spring this year regarding the forecast for sales and earnings for the full year 2008 for the Group as a whole. Group sales in 2008 are expected to surpass 550 million euros.
The 2008 Group operating result is expected to in crease to between 37 and 40 million euros. This figure already takes into account a marked reduction in the capitalization of development costs compared with the years 2006 and 2007.
The Jenoptik Group will benefit from the positive devel opment of the Defense & Civil Systems segment which is showing stronger growth than had originally been forecast.
The weakening of the semiconductor equipment market will affect the Lasers & Optical Systems segment.
In the Metrology segment the weak order intake in 2007 reported by the Traffic Solutions division will continue to partially impact on the earnings situation in 2008 which will not yet be able to repeat the quality of earnings achieved in 2006 and the years prior to that.
Here, the winning of major orders will have an effect on achieving the Group targets. However, since May this year Traffic Solutions is reporting higher order intakes again, which will contribute to sales and earnings from the 2nd half year 2008. The expansion of the international Traffic Service Providing business in the USA and other regions continues to incur high costs.
The increase in the earnings before tax in 2008 will be significantly higher in proportion to the operating result. In addition to the increase in the operating result we expect a marked reduction in interest expenses and consequently an improvement of between 11 and 14 million euros in the net interest result. We already saw the signs of a corresponding positive trend in the 1st half-year 2008.
Based on an increase in earnings before tax we anticipate a marked reduction in the tax quota compared with the previous year. A one-off non-cash expense arising from the 2008 corporate tax reform had to be recorded in the fiscal year just past.
On the subject of our long-term objectives and the outlook for the current fiscal year we refer to the de tailed information from page 92 in the 2007 Annual Report published at the end of March 2008.
| in TEUR | 1.1. – 30.6. 2008 | 1.1. – 30.6. 2007 |
|---|---|---|
| Sales | 264,453 | 253,743 |
| Cost of sales | 188,041 | 178,055 |
| Gross profit | 76,412 | 75,688 |
| Research and development expenses | 15,281 | 17,252 |
| Selling expenses | 28,432 | 25,075 |
| General administrative expenses | 18,908 | 20,715 |
| Other operating income | 10,014 | 8,461 |
| Other operating expenses | 7,721 | 8,026 |
| Result from operating activities | 16,084 | 13,081 |
| Result from investments in associated companies | – 290 | – 2,008 |
| Result from other investments | – 1,457 | – 690 |
| Interest income | 1,407 | 3,638 |
| Interest expenses | 7,493 | 13,578 |
| Financial result | – 7,833 | – 12,638 |
| Earnings before tax | 8,251 | 443 |
| Income taxes | 1,008 | 573 |
| Deferred taxes | 929 | – 686 |
| Earnings after tax | 6,314 | 556 |
| Minority interests' share of profit/loss | 1,557 | 1,182 |
| Net profit | 4,757 | – 626 |
| Earnings per share in euros | 0.09 | – 0.01 |
| Earnings per share (diluted) in euros | 0.09 | – 0.01 |
| June 30, 2008 | Dec. 31, 2007 | Change |
|---|---|---|
| 380,313 | 387,711 | – 7,398 |
| 87,897 | 88,314 | – 417 |
| 170,361 | 175,873 | – 5,512 |
| 35,102 | 35,992 | – 890 |
| 1,433 | 847 | 586 |
| 22,627 | 23,931 | – 1,304 |
| 11,360 | 10,821 | 539 |
| 51,533 | 51,933 | – 400 |
| 315,274 | 309,615 | 5,659 |
| 186,816 | 174,099 | 12,717 |
| 113,881 | 119,502 | – 5,621 |
| 2,284 | 2,222 | 62 |
| 12,293 | 13,792 | – 1,499 |
| 695,587 | 697,326 | – 1,739 |
| in TEUR | June 30, 2008 | Dec. 31, 2007 | Change |
|---|---|---|---|
| Shareholders' equity | 285,823 | 280,924 | 4,899 |
| Subscribed capital | 135,290 | 135,290 | 0 |
| Capital reserves | 186,726 | 186,726 | 0 |
| Other reserves | – 58,867 | – 62,726 | 3,859 |
| Own shares | 22,674 | 21,634 | 1,040 |
| Non-current liabilities | 190,220 | 208,788 | – 18,568 |
| Pension provisions | 6,448 | 6,404 | 44 |
| Other non-current provisions | 24,320 | 22,046 | 2,274 |
| Non-current financial liabilities | 141,861 | 161,755 | – 19,894 |
| Other non-current liabilities | 14,467 | 15,195 | – 728 |
| Deferred tax liabilities | 3,124 | 3,388 | – 264 |
| Current liabilities | 219,544 | 207,614 | 11,930 |
| Tax provisions | 1,341 | 1,085 | 256 |
| Other current provisions | 34,707 | 39,907 | – 5,200 |
| Current financial liabilities | 64,739 | 45,918 | 18,821 |
| Other current liabilities | 118,757 | 120,704 | – 1,947 |
| Total shareholders' equity | 695,587 | 697,326 | – 1,739 |
| in TEUR | Subscribed capital |
Capital reserve |
|---|---|---|
| Balance as at 01.01.2007 | 135,290 | 186,726 |
| Valuation of financial instruments | ||
| Currency differences | ||
| Changes in value recorded in shareholders' equity |
||
| Earnings after tax | ||
| Sum of earnings after tax and changes in value not impacting income |
||
| Dividend payments | ||
| Change in consolidated companies | ||
| Other changes | ||
| Balance as at 30.06.2007 | 135,290 | 186,726 |
| Balance as at 01.01.2008 | 135,290 | 186,726 |
| Valuation of financial instruments | ||
| Currency differences | ||
| Changes in value recorded in shareholders' equity |
||
| Earnings after tax | ||
| Sum of earnings after tax and changes in value not impacting income |
||
| Dividend payments | ||
| Balance as at 30.06.2008 | 135,290 | 186,726 |
| Reserves | |||||
|---|---|---|---|---|---|
| Minority interests Total |
Own shares | Cumulative currency differences |
Hedging | Fair value measurement |
Cumulated profit |
| 22,585 299,364 |
– 47 | – 1,404 | 3,958 | 9,143 | – 56,887 |
| 8,293 | – 89 | 8,382 | |||
| – 165 | – 82 | – 83 | |||
| 8,128 | – 82 | – 89 | 8,382 | – 83 | |
| 1,182 555 |
– 627 | ||||
| 1,182 8,683 |
– 82 | – 89 | 8,382 | – 710 | |
| – 58 – 58 |
|||||
| – 940 – 940 |
|||||
| – 122 | 47 | – 169 | |||
| 22,769 306,927 |
0 | –1,486 | 3,869 | 17,525 | – 57,766 |
| 21,634 280,924 |
0 | –3,399 | 6,229 | – 6 | – 65,550 |
| 212 | 991 | – 779 | |||
| – 1,110 | – 1,064 | – 46 | |||
| – 898 | – 1,064 | 991 | – 779 | – 46 | |
| 1,557 6,314 |
4,757 | ||||
| 1,557 5,416 |
– 1,064 | 991 | – 779 | 4,711 | |
| – 517 – 517 |
|||||
| 22,674 285,823 |
0 | –4,463 | 7,220 | – 785 | – 60,839 |
Consolidated statement of cash flows.
| in TEUR | 1.1. to 30.6. 2008 | 1.1. to 30.6. 2007 |
|---|---|---|
| Earnings before tax | 8,251 | 443 |
| Interest | 6,086 | 9,939 |
| Depreciation / write up | 16,226 | 16,272 |
| Profit on disposal of fixed assets | – 68 | – 62 |
| Other non-cash expenses / income | 833 | 2,452 |
| Operating profit / loss before working capital changes | 31,328 | 29,044 |
| Increase / decrease in provisions | – 5,615 | – 7,559 |
| Increase / decrease in working capital | – 6,254 | – 1,420 |
| Increase / decrease in other assets and liabilities | – 2,254 | 2,175 |
| Cash flow from / used in operating activities before income taxes | 17,205 | 22,240 |
| Income taxes paid | – 748 | – 302 |
| Cash flow from / used in operating activities | 16,457 | 21,938 |
| Receipts from disposal of intangible assets | 142 | 18 |
| Payments for investments in intangible assets | – 2,844 | – 5,803 |
| Receipts from disposal of tangible assets | 3,416 | 791 |
| Payments for investments in tangible assets | – 7,384 | – 7,960 |
| Receipts from disposal of financial assets | 3,002 | 535 |
| Payments for investments in financial assets | – 2,664 | – 2,712 |
| Payments for acquisition of consolidated companies | 42 | – 2,432 |
| Interest received | 997 | 3,202 |
| Cash flow from / used in investing activities | – 5,293 | – 14,361 |
| Payments to minority shareholders | – 517 | 0 |
| Receipts from issue of bonds and loans | 11,339 | 5,239 |
| Repayments of bonds and loans | – 3,256 | – 7,992 |
| Repayments for finance leases | – 11,012 | – 832 |
| Change in group financing | – 6,139 | 2,222 |
| Interest paid | – 2,534 | – 9,408 |
| Cash flow from / used in investing activities | – 12,119 | – 10,771 |
| Change in cash and cash equivalents | – 955 | – 3,194 |
| Foreign currency translation changes in cash and cash equivalents | – 544 | – 24 |
| Cash and cash equivalents at the beginning of the period | 13,792 | 153,840* |
| Cash and cash equivalents at the end of the period | 12,293 | 150,622* |
* including restricted cash of 143,200 TEUR.
January 1 – June 30, 2008 (previous year's figures in brackets)
| in TEUR | Lasers & Opti cal Systems |
Metrology | Defense & Civil Systems |
Other | Group |
|---|---|---|---|---|---|
| Sales | 107,636 | 53,857 | 100,672 | 2,288 | 264,453 |
| (109,998) | (56,196) | (85,338) | (2,211) | (253,743) | |
| of which Germany | 36,593 | 20,701 | 57,481 | 2,429 | 117,204 |
| (32,398) | (20,858) | (46,379) | (2,382) | (102,017) | |
| European Union | 36,288 | 12,083 | 23,917 | 0 | 72,288 |
| (41,028) | (16,317) | (23,265) | (0) | (80,610) | |
| Other Europe | 2,782 | 3,495 | 8,952 | 0 | 15,229 |
| (2,731) | (2,606) | (8,805) | (0) | (14,142) | |
| NAFTA | 16,298 | 8,792 | 4,610 | – 141 | 29,559 |
| (17,892) | (7,388) | (3,221) | (– 171) | (28,330) | |
| South East Asia/Pacific | 7,660 | 7,335 | 4,788 | 0 | 19,783 |
| (8,001) | (5,403) | (3,496) | (0) | (16,900) | |
| Other | 8,015 | 1,451 | 924 | 0 | 10,390 |
| (7,948) | (3,624) | (172) | (0) | (11,744) | |
| Operating result (EBIT) | 12,067 | – 987 | 5,430 | –426 | 16,084 |
| (12,250) | (2,806) | (2,024) | (–3,999) | (13,081) | |
| Earnings before interest, taxes, depreciation and | 19,793 | 791 | 8,706 | 1,379 | 30,669 |
| amortization (EBITDA) | (20,811) | (4,022) | (5,417) | (– 897) | (29,353) |
| Result from investments in associated | –290 | 0 | 0 | 0 | – 290 |
| companies | (– 2,008) | (0) | (0) | (0) | (– 2,008) |
| Research and development expenses | 8,860 | 5,198 | 2,963 | – 1,740 | 15,281 |
| (8,890) | (5,447) | (4,358) | (– 1,443) | (17,252) | |
| Tangible assets, investment properties and | 110,751 | 19,970 | 39,189 | 123,450 | 293,360 |
| intangible asstes* | (118,452) | (20,421) | (40,124) | (121,182) | (300,179) |
| Investments excluding company acquisitions | 5,326 | 1,929 | 2,946 | 27 | 10,228 |
| (8,066) | (2,996) | (3,053) | (21) | (14,136) | |
| Depreciation and amortization | 7,726 | 1,778 | 3,276 | 1,805 | 14,585 |
| (8,561) | (1,216) | (3,393) | (3,102) | (16,272) | |
| Employees | 1,378 | 806 | 1,045 | 62 | 3,291 |
| (without trainees) | (1,312) | (818) | (1,048) | (60) | (3,238) |
* Previous year figures as at December 31, 2007.
The consolidated financial statements were prepared in accordance with the International Financial Reporting Standards (IFRS) published by the International Accounting Standards Board (IASB) and the interpreta tion of these standards by the International Financial Reporting Interpretations Committee (IFRIC). The consolidated financial statements of JENOPTIK AG have been prepared in accordance with § 315a HGB (German Commercial Code) in line with the rules of the IASB with an exemption from preparation of consolidated financial statements under HGB. At the same time the consolidated financial statements and group management report are in line with the European Union Directive on Consolidated Accounting.
In the consolidated interim report (Half year financial report) as at June 30, 2008, prepared on the basis of the Inter na tion al Accounting Standard (IAS) 34 "Interim Repor ting", the same accounting methods were used as in the consolidated financial statements for the fiscal year 2007. These were prepared in accordance with the Interna tional Financial Reporting Standards (IFRS) which have to be applied for reasons of comparison within the European Union. These methods are published in dividually and described in detail in the Notes to the Annual Report 2007. The Annual Report can be called up on the Internet at www.jenoptik.com, on the Investors page under the heading Accounts & Reports.
The interim report was prepared in the group currency of the Euro and the figures are stated in TEUR unless specified otherwise.
The interim management report and the condensed financial statements have neither been audited in accord. with §317 HGB nor reviewed by a person qualified to audit financial statements.
In addition to JENOPTIK AG, the consolidated financial statements include 18 (prev. year 18) domestic and 10 (prev. year 10) foreign companies fully consolidated. In accordance with IAS 31 "Interests in Joint Ventures" 1 (prev. year 1) joint venture company is included in the quarterly report proportionally at 50 percent and, under IAS 28 "Interests in Associates" 2 (prev. year 3) domestic associated companies are shown at equity. In the first half year 2008 a major change in the companies included in consolidation was the sale of the majority shareholding in one company which is now shown as an investment. In addition, shares in a domestic associated company were sold.
A receivable to a related person was paid in the first half of the year. In addition, the Jenoptik Group had no business transactions with related parties.
| Tangible assets | in TEUR | |
|---|---|---|
| 30.6.2008 | 31.12.2007 | |
| Land and buildings | 95,962 | 97,264 |
| Technical equipment and machines | 45,631 | 48,121 |
| Other equipment, factory and office | ||
| equipment | 22,714 | 24,578 |
| On-account payments and construction in | ||
| progress | 6,054 | 5,910 |
| 170,361 | 175,873 | |
| Inventories | in TEUR | |
| 30.6.2008 | 31.12.2007 | |
| Raw materials and supplies | 56,306 | 52,043 |
| Work in progress | 105,342 | 99,037 |
| Finished goods and merchandise | 21,029 | 18,704 |
| On-account payments | 4,139 | 4,315 |
| 186,816 | 174,099 |
| Accounts receivable and other assets | in TEUR | |
|---|---|---|
| 30.6.2008 | 31.12.2007 | |
| Trade accounts receivable | 86,201 | 93,715 |
| Receivables from construction contracts | 3,525 | 1,673 |
| Receivables from non-consolidated | ||
| affiliated companies | 3,158 | 4,325 |
| Receivables from participating interests | 2,593 | 3,105 |
| Other assets | 18,404 | 16,684 |
| 113,881 | 119,502 |
| Non-current financial liabilities | in TEUR | |
|---|---|---|
| 30.6.2008 | 31.12.2007 | |
| Long-term bonds | 61,659 | 60,854 |
| Non-current | ||
| bank liabilities | 75,690 | 76,061 |
| Non-current liabilities from | ||
| finance leases | 4,512 | 24,840 |
| 141,861 | 161,755 |
| Current financial liabilities | in TEUR | |
|---|---|---|
| 30.6.2008 | 31.12.2007 | |
| Bank liabilities | 63,414 | 43,797 |
| Liabilities from finance leases | 1,325 | 2,121 |
| 64,739 | 45,918 |
| Other current liabilities | in TEUR | |
|---|---|---|
| 30.6.2008 | 31.12.2007 | |
| Liabilities from on-account payments | ||
| received | 32,852 | 26,930 |
| Trade accounts payable | 43,970 | 44,849 |
| Liabilities from construction contracts | 4,179 | 8,014 |
| Liabilities to affiliated companies | 1,499 | 3,276 |
| Liabilities to participating interests | 2,708 | 5,628 |
| Other current liabilities | 33,549 | 32,007 |
| 118,757 | 120,704 |
The current declarations under § 161 AktG (German Stock Corporation Act) by the Executive Board and Supervisory Board relating to the German Corporate Governance Code have been made available to the shareholders at all times via the JENOPTIK AG Internet site. The declaration can also be viewed at JENOPTIK AG.
JENOPTIK AG and the one or the other of its group companies are involved in several legal or arbitration proceedings. If these could have a substantial effect on the Group's economic situation, these are described in the consolidated financial statements of Jenoptik for the year 2007. At present there is one proceeding.
There were no events of special importance occurring after the period covered by the interim report.
To the best of our knowledge, and in accordance with the applied principles for interim financial reporting, the interim consolidated financial statements give a true and fair view of the assets, liabilities, financial position and profit or loss of the Group, and the inter im management report of the Group includes a fair review of the development and performance of the business and the position of the Group, together with a description of the principal opportunities and risks associated with the expected development of the Group for the remaining months of the fiscal year.
Jena, August 2008
Dr. Michael Mertin Frank Einhellinger Chairman of the Executive Board Executive Board Member
August 13, 2008 Interim report on the first half 2008 of the Jenoptik-Group
November 11, 2008 Interim report on the first nine months 2008 of the Jenoptik Group
March 2009 Annual report 2008 of the Jenoptik Group
Investor Relations Sabine Barnekow Phone +49 (0) 3641 65-2156 Fax +49 (0) 3641 65-2484 E-mail [email protected]
Katrin Lauterbach Phone +49 (0) 3641 65-2255 Fax +49 (0) 3641 65-2484 E-mail [email protected]
These and other publications of Jenoptik are available at
In case of differences of opinion the German text shall prevail.
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