Promising start to october after a restrained 3rd quarter - euromicron expects sales to grow by around 10% in 2012
- Consolidated EBITDA of €18.2 million is virtually on a par with the previous year
- Consolidated sales increase by around 3% to €226.5 million
- Consolidated EBIT is €12.1 million (previous year: €14.9 million) after nonrecurring expense for integration
- New orders in the 3rd quarter rise to around €77 million despite project postponements
- The Executive Board remains optimistic about achieving the ambitious sales targets and expects operating income to be around the level of the previous year
Following the successful first two quarters, euromicron was also not able to avoid being impacted by the unexpected weak demand from just about all major sectors and the cooling down in investment in the German and European economy in the third quarter. The main causes of this included the huge downturn in the economic mood, which reached Germany's key industries at the beginning of September.
euromicron was prepared for this situation and, building on its solid economic foundation, continued in the third quarter to press ahead rigorously and successfully with integrating the company in the areas of structures, processes and personnel with an eye to the future.
Alongside this, euromicron worked to broaden the Group's expert workforce and, by acquiring RSR Datacom GmbH & Co. KG, signaled the start of its intention to start taking over smallish specialist companies so as to expand the group's competence and complement the integration phase from 2012 to 2014.
"We are embarking on the final quarter with optimism. After the weak patch in September, our operational business is at a stable level. The cash flow has been significantly improved. The strong level of new orders in October may well be an indicator of good end-of-year business, meaning our sales target of €330 to €345 million and earnings at last year's level should be achievable, provided the general economic conditions do not grow gloomier," said Dr. Willibald Späth, Chairman of the Executive Board.
euromicron's consolidated sales as of September 30, 2012, were €226.5 million, an increase of around 3% and even surpassing the exceptionally strong figure of €220.6 million for the same period of the previous year. Our consolidated revenues rose by 8% to EUR 234.6 million and supports our positive expectations for the last quarter.
EBITDA totaled €18.21 million (previous year: €18.99 million), almost on a comparable, significant double-digit level. Earnings before income and taxes (EBIT) were €12.1 million, around 20% below the exceptional strong figure of the previous year of €14.9 million, above all due to depreciation-related reasons. They were impacted in particular by non-recurring effects of the integration process that has now been underway for nine months, such as extra costs for IT/data processing, optimization of locations or personnel rationalization measures totaling approximately €2.5 million, which will however also enable the company to bring forward a cost-saving and sustainable development. The operating income of the associated companies at the balance sheet date in this difficult climate is also some 16% down on the previous year's exceptional €19.6 million. Net profit for the period fell from €7.8 million last year to €6.3 million and, in conjunction with the larger number of shares - around 1.5 million - compared with the same period of the previous year, resulted in lower undiluted earnings per share of €0.94 (previous year: €1.53).
Order situation at the Group
Despite the fact that investments and projects in the telecommunications sector were postponed, euromicron was able to increase new orders by €16 million to around €77 million in the third quarter. Nevertheless, the accumulated figure is below expectations and is approximately €225 million, lower than the previous year's record of €245.4 million. Order books are at €126 million, of which the majority is still in 2012 for processing.
Balance sheet structure
The euromicron Group's total assets at September 30, 2012, increased to €284.7 million, up by around €19 million from December 31, 2011 (€265.7 million).
Equity at September 20, 2012, is €118.8 million and, after payment of the total dividend of approximately €7.7 million, is around €1.4 million below the level at December 31, 2011. As in the previous year, the equity ratio at September 30, 2012, is thus temporarily at 41.7% due to the effects of the dividend payout (December 31, 2011: 45.2%).
euromicron's share performance was characterized by repeated volatility in the course of the third quarter of 2012, although the price always stayed at around a good level, for the most part above the €20 mark. The share began the second half of the year at the beginning of July 2012 at a price of €20.74 and by the end of the month had almost reached the €21 mark. Toward the end of the third quarter of 2012, the share was constantly above the €20 mark and even rose temporarily above €21, which was the occasion for many investors, even to get into the stock.
If the economic climate does not become gloomier by the end of the year, we assume that we will achieve our sales target of €330 to €345 million and post operating income, allowing for integration costs, at around the level of the previous year.
"After the surprising slump in September 2012, we expect to see most sectors stabilize at a low level for the rest of the year, which will make it possibly more difficult to make good the declines in income," says Späth.
In the remaining weeks, the company is consequently focusing on familiar sectors that are bucking the general negative market trend, such as customers from the healthcare, transportation and data center sectors. Moreover, euromicron continues to work intensively to integrate and professionalize the company further. To enable that, the ongoing continuous improvement process (CIP) will be strengthened further. The company also continues to focus on recruiting sufficiently qualified staff and ensuring they remain with the company long-term, as well as investing in new, innovative products and technologies. To expand the Group's competence in the ICT market and broaden its expert workforce, the company has also signaled its intention to start taking over smallish specialist companies, of which it is currently looking at three to four, which will be incorporated in the group if the result of this examination is positive.
"These measures, which we are undertaking to give the organization an increasingly professional setup, above all in the medium and long term, will do their but to help us achieve the previous year's performance by the end of the year. In view of the good new orders in October and the fact that many large projects are billed in the final quarter, we feel positive, in particular about achieving our sales target of €330 to €345 million. However, the time remaining in the final quarter of 2012 will probably not be sufficient to allow us to post the quality of earnings in 2012 we would like to achieve with a consolidated EBIT return in the 8% to 11% corridor, which we aim to accomplish again on a stable basis once the integration phase from 2012 to 2014 has been completed," explains Späth.
The growing number and quality of terminal devices is also impressive proof that, in the medium to long term, there will still be high demand in Germany for expansion of high-speed network infrastructures with integration of the relevant applications. "With a business model geared toward sustainable growth, our clear strategic orientation, our operational expertise and skills and a basis for financing that remains secure, we are excellently equipped to steer euromicron through the current market fluctuations, the uncertain situation as regards investment and the structural changes in the world of communications."
As a result, the company is ready - as soon as the necessary prerequisites and general conditions have been created for the urgently needed radical changes in all sectors, public agencies and budgets by policymakers and business - to actively accompany these developments so as to increase the company's value and ensure a return on its shareholders' capital.
You can find the Q3/2012 Interim Report as of November 9, 2012, on our homepage at http://www.euromicron.de/finanzberichte.
euromicron AG (www.euromicron.de) is an all-round solution provider for communications, transport, data and security networks. euromicron's network infrastructures integrate voice, video and data transport wirelessly, via copper cable and by means of fiber-optic technologies. euromicron builds its leading applications, such as security, control, healthcare or surveillance systems, on the basis of these cutting-edge network infrastructures. Founded on its expertise as a developer and producer of fiber-optic components, euromicron AG is a strongly growing, highly profitable group that is listed on the stock market, has a medium-sized character and focuses on operational growth, integration and further market penetration, internationalization and expansion.