Dornbirn (pta007/04.12.2018/07:30) - The first six months of the 2018/19 financial year were marked by strategic milestones for the repositioning of the Zumtobel Group. The continuous ramp-up of our plant in Nis, Serbia, to strengthen the global production network and the ongoing implementation of restructuring, efficiency improvement and cost saving measures represent important steps to improve our profitability over the medium-term.
"We are on the right track to make the company shine again. During the first half of our 2018/19 financial year, we managed to improve profitability despite declining revenues," says Alfred Felder, CEO Zumtobel Group, and adds, "However, we have not reached a competitive cost base yet. Therefore, we will continue to push measures to strengthen our competitiveness throughout the Group in order to generate profitable growth in the long-term."
In addition to improving the cost base and in line with the strategic repositioning, the Zumtobel Group relies on Services and Turnkey Solutions as the driver of future growth, on the components business as a response to intelligent lighting systems as well as on strong core brands for a clear positioning in focus markets and applications.
Decline in revenues due to price competition, foreign exchange effects and BREXIT
Group revenues totalled EUR 595.1 million in the first half-year of 2018/19 (minus 4.7% compared with the previous year). After an adjustment for foreign exchange effects - which resulted from the increase of the euro versus the Swiss franc, Turkish lira and British pound - revenues declined by 3.2%. Further reasons for this decline are the intense price competition in the lighting industry and substantially lower revenues in Great Britain (roughly minus 15%), the Zumtobel Group's most important single market. In Great Britain, the development of revenues is negatively impacted by the uncertain outcome of the BREXIT negotiations as well as the resulting decline in incoming orders in the British non-residential construction sector.
Efficiency and cost saving measures show effect: profitability improved
The measures introduced by the new Management Board for the strategic repositioning resulted in an improved earnings situation despite a decline in revenues in the first half-year of 2018/19. This development is primarily attributable to a significantly streamlined management team and strict cost management. Adjusted Group EBIT increased by 22% to EUR 24.8 million (H1 2017/18: EUR 20.3 million). Net profit for the period improved by 14.3% compared with the first half of 2017/18 to EUR 8.8 million.
Outlook financial year 2018/19 & medium-term goal
The Management Board of the Zumtobel Group considers 2018/19 as a year of transition and confirms the previously issued guidance. In view of the ongoing low visibility as well as the generally intensive price competition in the lighting industry and numerous macroeconomic issues (e.g. BREXIT, trade conflicts), a statement on the development of revenues in the second half-year is connected with substantial uncertainty. For the full year of 2018/19, adjusted Group EBIT is expected to improve slightly year-on-year (FY 2017/18: EUR 19.7 million). The company has set a medium-term target to generate an EBIT margin of approx. 6% by the 2020/21 financial year.