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Zumtobel Group AG: Zumtobel Group doubles operating profit

Dornbirn (pta009/25.06.2020/07:30 UTC+2) The Zumtobel Group reached several important milestones during the 2019/20 financial year in spite of the noticeable effects of the Covid-19 pandemic. After two years of losses, the company is again generating solid earnings. Adjusted Group EBIT nearly doubled to EUR 53.9 million despite a slight decline in revenues due to the Covid-19 crisis.

"The improvement in earnings shows that we are on the right course and can now enjoy the first fruits of the strategy we have consistently followed since 2018", emphasised Alfred Felder, CEO of the Zumtobel Group. "The Zumtobel Group now has a considerably stronger position, which represents an advantage, especially under the current exceptional circumstances." However, the company has been in an extreme situation since the beginning of March due to the global spread of Covid-19. "We reacted quickly to the decline in revenues and put effective crisis management in place. Our central goal at the present time is to steer the company safely through the crisis", added Felder.

Operating profit doubles despite decline in revenues
The Zumtobel Group generated revenue growth of 1.5% up to and including February, meaning the first 10 months of 2019/20, but the worldwide restrictions to contain the pandemic led to a year-on-year decline of 2.6% to EUR 1,131.3 million (FX-adjusted: minus 3.1%) for the full financial year. The Group's most important markets - Great Britain, France and Italy - were particularly hard hit by the crisis. The Lighting segment, in particular, was faced with a foreign exchange-adjusted revenue decline of 3.8%. However, the results for 2019/20 clearly show the positive effects from the continued pursuit of restructuring measures which also included the reorganisation of sales in the European core markets.

Revenue growth was substantially slowed by the recent crisis, but the company reached an important milestone in the development of operating profit: Group EBIT, adjusted for special effects, rose by 95% to EUR 53.9 million in 2019/20 (2018/19: EUR 27.6 million). The adjusted EBIT margin increased from 2.4% to 4.8% and now lies at the upper end of the forecast 3% to 5% target range. The earnings improvement was also achieved by successful cost savings measures; for example, selling and administrative costs were reduced by 5.6% during the past financial year.

Substantial profit confirms successful reorganisation
The Zumtobel Group recorded a substantial profit after two years of losses. Net profit rose by nearly EUR 30 million to EUR 14.5 million in 2019/20 despite negative special effects of EUR 18.8 million (2018/19: EUR 25.0 million), which were mainly related to restructuring costs for the implementation of the new strategy.

After two years without dividends, the Zumtobel Group wants shareholders to participate again in the successful development of the past financial year. The Management Board will therefore recommend a dividend of 10 euro cents per share for the 2019/20 financial year to the Supervisory Board and subsequently to the Annual General Meeting.

Clearly positive free cash flow
Given the positive development of earnings during the reporting year, higher cash flow from operating results and a reduction in investment activity led to a significant improvement in free cash flow from EUR 3.8 million in the previous year to EUR 53.3 million. The balance sheet total rose to EUR 994.8 million (2018/19: EUR 920.9 million) due to the initial application of IFRS 16, and the equity ratio subsequently declined from 28.5% as of 30 April 2019 to 28.2% at the end of the reporting year. Net liabilities totalled EUR 165.7 million as of 30 April 2020 (2018/19: EUR 148.7 million) and - also due to the initial application of IFRS 16 - were EUR 17.0 million higher than the previous year.

Forward with a clear FOCUS
The Management Board of the Zumtobel Group continued to work on the systematic implementation of the FOCUS strategy in 2019/20. The three core brands - Zumtobel, Thorn and Tridonic - were substantially strengthened and sales activities were positioned even closer to customers. The goal was, and is, to establish the Zumtobel Group as the market leader for luminaires in Europe. Administrative costs were also reduced during the past year through a cutback in central functions, and the product portfolio was streamlined. In addition, the systematic optimisation of operating processes led to a decline in production costs.

Management has strengthened the competitive ability of the Zumtobel Group step by step and created the basis for the development of additional market opportunities. This strategy will also be consistently pursued in the future, even though the current focus is on overcoming the effects of the Corona pandemic.

Currently no guidance for 2020/21
In view of the visible negative effects of Covid-19 on the global economy, the Management Board sees 2020/21 as a "year of trials in the midst of a worldwide crisis". The primary challenge is to master the negative effects of the most severe economic crisis in decades.

At the same time, the Management Board intends to use this time to strengthen the basis for future profitable growth. Together with the second management level, the Management Board is working to identify opportunities for further cost savings in all functional areas and directing efforts towards the development of new and innovative lighting generations. The Zumtobel Group's goal is to return as quickly as possible to the sound operating development recorded before the start of the Covid-19 pandemic.

The Corona pandemic has triggered an economic downturn whose extent and duration are currently difficult to estimate. Consequently, the Management Board will not issue any guidance on the development of revenues and earnings in 2020/21 at the present time.


Emitter: Zumtobel Group AG
Höchster Straße 8
6850 Dornbirn
Contact Person: Emanuel Hagspiel
Phone: +43 5572 509 1125
ISIN(s): AT0000837307 (Share)
Stock Exchange(s): Vienna Stock Exchange (Official Trade)