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Cost cutting at HOMAG takes effect
- Order situation picks up in the second quarter of 2009
- Operating EBITDA already positive again
- Implementation of cost-cutting measures goes to plan
Compared to the first three months of 2009, the business development of HOMAG Group AG improved slightly again in the second quarter. The volume of business is, however, still a far cry from the same quarter of the prior year, although admittedly the situation was completely different at that time. The global leader for plant and machinery for the woodworking industry, which is listed on the SDAX, saw order intake increase in the second quarter of 2009 by 35 percent from EUR 75 million to EUR 101 million (prior year: EUR 169 million). CEO, Dr. Joachim Brenk, attributes the improved order situation above all "to the success of the Ligna, the industry's leading trade fair, in May at which our new developments attracted a great deal of attention". The order backlog also recovered somewhat, reaching EUR 161 million as of June 30, 2009 and thus almost the level of year-end 2008 (EUR 164 million) (June 30, 2008: EUR 276 million). Sales revenue in the second quarter of 2009 amounted to EUR 122 million compared to EUR 119 million in the first quarter of 2009 and EUR 223 million between April and June 2008.
According to the management board, the implementation of the measures to cut costs and adjust capacities initiated by the company as soon as the first signs of the crisis became apparent are progressing as planned. The costs for personnel, contract workers and other operating expenses were reduced by a further EUR 32 million in the second quarter, bringing the total reduction in costs in the first half of 2009 (including the costs in proportion to sales revenue) to more than EUR 56 million. Between April and June 2009, headcount dropped by around 250 employees and since September 30, 2008 by around 500 to 4,905 employees as of June 30, 2009 excluding BENZ GmbH Werkzeugsysteme in which a majority shareholding was acquired at the beginning of 2009 or 5,136 employees including them. Since September 2008, around 330 contract workers have been laid off in addition to that. The extraordinary expense for these restructuring measures/non-recurring effects amounted to EUR 7.3 million in the second quarter.
The success of this cost-cutting drive is already reflected in the positive EBITDA recorded in the second quarter of EUR 4.9 million (prior year: EUR 22.5 million) before this extraordinary expense and after employee participation. After extraordinary expense and before employee participation, EBITDA amounts to EUR -4.1 million (prior year: EUR 25.2 million). EBT before extraordinary expense and after employee participation amounts to EUR -3.3 million (prior year: EUR 14.7 million). The net profit for the period after minority interests comes to EUR -7.7 million (prior year: EUR 8.8 million), and earnings per share of EUR -0.50 (prior year: EUR 0.56).
First half of 2009
The half-year comparison clearly shows just how dramatically the market situation has changed since the first half year of 2008 when there was still no sign of the economic crisis in the mechanical engineering industry. The HOMAG Group’s sales revenue in the first half year 2009 stood at EUR 241 million (prior year: EUR 450 million) while order intake stood at EUR 176 million (prior year: EUR 401 million). EBITDA before the extraordinary expense and after employee participation amounted to EUR 2.9 million (prior year: EUR 48.0 million), while it comes to EUR -8.5 million (prior year: EUR 53.0 million) after extraordinary expense and before employee participation. EBT before extraordinary expense and after employee participation amounts to EUR -14.2 million (prior year: EUR 31.8 million). The net profit for the period after minority interests dropped to EUR -18.8 million (prior year: EUR 20.1 million), and leads to earnings per share of EUR -1.20 (prior year: EUR 1.28).
As the difficult market situation persists, the management board of the HOMAG Group still expects 2009 to be a weak fiscal year and anticipates a drop in sales of up to 40 percent. Thanks to huge cost savings, the management board assumes that EBIT before extraordinary expenses will be positive for the second half of 2009. Due to the slow start to the year, the EBIT for the whole year is however expected to be slightly negative.
According to CEO Brenk, the main goal of the Group in 2009 is to calibrate capacity to the changed market and order situation. "Having initiated measures at an early stage, by early 2010 we will have reduced personnel capacity including contract workers and subsidized temporary layoffs by around 1,400 jobs compared to the peak headcount in the third quarter 2008. We are therefore very well prepared to cater for the volume of business anticipated for the future."
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