Funkwerk overall on target in Q1

Kölleda/Thüringen, (PresseBox) - .
- Revenues of EUR 43.9m down on previous year (EUR 47.4m) due to product portfolio adjustments
- At EUR -2.9m, earnings at prior-year level despite increased advance performances
- Automotive Communication concluded framework contracts worth around EUR 100m
- New products set to launch

Funkwerk AG (ISIN DE0005753149) completed the first quarter of 2011 with sales down on the previous year, but overall on target. Based on the quarterly report published today, the specialist in professional information and communication technology for transport, industry and security generated revenues of EUR 43.9m (2010: EUR 47.4m). At EUR -2.9m, earnings (before interest and taxes), in contrast, exceeded the projections even despite considerable advance performances for new product developments and projects at prior-year level. The first quarter in Funkwerk's yearly cycle is typically the weakest in terms of sales. For the further course of the year, and more specifically in the latter half, Funkwerk therefore expects a rising trend in both sales and earnings, along with a positive turnaround.

'The sales trend in the first quarter of 2011 most notably shows the effect of adjustments to our product portfolio, which meant a number of low-margin products were discontinued in all business segments. Because of efficiency increases, however, Funkwerk was able to fully compensate the decline in sales in the operating result,' the management wrote in its quarterly report.

Business at Funkwerk in the first quarter of 2011 was also defined by the restrained investment propensity of international railway operators. 'The consolidation of public budgets is quite obviously taking precedence over investments. The acceleration in demand noticeable at the end of the previous financial year failed to continue in the first quarter. On the whole, sales and incoming business were marginally less than projected, but earnings proved better than predicted,' it says in the report.

New framework contracts with automobile industry worth over EUR 100m

On the whole, Funkwerk reported new order bookings of EUR 46.2m in the first three months. Based on sales, this results in a book-to-bill ratio of 1.05, an indication of increasing revenues in the coming quarters. At EUR 104.2m on the cutoff date at the end of March, the volume of orders ranged above the target figure.

This figure does not yet include new, multiyear framework contracts with leading automobile and lorry manufacturers worth almost EUR 100m in total, which the company's Automotive Communication segment was able to conclude in the first quarter; call-off points and the quantities to be delivered cannot as yet be specified in concrete terms. From 2013, these contracts will, however, lead to significant growth rates in this segment.

In the further course of the year, Funkwerk will focus on standardising and consolidating central functions. The aim here is, in a next step, to increase productivity and further reduce the company's structure costs.

Further growth potential through strategic cooperation and acquisitions

In Automotive Communication, securing new framework contracts and other specific business initiations present Funkwerk with considerable growth opportunities. The use of electronic interlocking systems also opens up a new market for cost-effective systems in the railway sector. In the medium term, Funkwerk expects its proprietary development Alister to gain a significant market share here. Funkwerk also follows the strategy of further expanding business involving components and standardised solutions and increasing the real net output ratio. The company will also need to standardise its key products and market these more widely through new partnerships. To this end and in order to push ahead with the internationalisation of its business, the company expects to conclude strategic cooperation agreements before the end of the year.

On the whole, the Executive Board sees opportunities again for Funkwerk to continue its organic growth after releasing new products and solutions which are expected to show effect in 2011 and 2012 and an improving cost structure. 'Over and above that, we are pursuing strategic options to focus on promising business activities,' the management writes in its forecast.

The full Q1 report for the 2011 financial year of Funkwerk AG is available on the Internet at www.funkwerk.com and on the website of Deutsche Börse.

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