Significant impact of the economic crisis - business at Wincor Nixdorf declining after tough third quarter

(PresseBox) ( Paderborn, )
The continuing economic crisis has had an impact on Wincor Nixdorf AG's results in the first nine months of fiscal 2008/2009. The company, which specializes in IT solutions for bank branches and retail stores, posted net sales of 1,729 million euros, a decline of 1% over the previous year (1,738 million euros). Operating profit (EBITA) fell by 9% to 138 million euros (152 million euros) and the profit for the period by 6% to 87 million euros (93 million euros). The third quarter of the fiscal year left a significant mark in the results: net sales were 496 million euros and EBITA 35 million euros, a year-on-year decline of 11 percent in net sales and 31 percent in EBITA. This development does not come as a complete surprise to President and CEO Eckard Heidloff: "Slower growth at the end of the good first half had already made it clear that we would feel the effects of the global economic crisis."

As regards investment activity by Wincor Nixdorf's key clientele - retail banks and retailers -, Heidloff explained that the trend in the market was towards the deferral of proposed investments, in particular for replacement investments. This is reflected at Wincor Nixdorf, as in the whole market, by a continuous decline in hardware business: "We will have to get used to a shrinking hardware market for the duration of 2009." That this development did not affect Wincor Nixdorf's business as broadly as it could have demonstrates the strategic wisdom of the company's rigorous expansion of its software and services business.

Market trends continue to show increases in efficiency, optimization of cost structures and user-friendly processes, and end-to-end IT solution offers designed to deliver all this. Yet the course of business for the remainder of the year remains hard to predict, with the result that Wincor Nixdorf anticipates net sales for fiscal 2008/2009 to be slightly below the level of the previous year. Pressure on margins will have a negative impact on operating profit.

Group-wide realignment program launched

Wincor Nixdorf has launched the "ProFuture" program to prepare the company for a longer lasting crisis and also to position itself more strongly and sustainably for the post-crisis market. The program is intended to complement Wincor Nixdorf's existing and clearly effective measures for quickly reducing the company's own cost levels. The objective of the program and its future-oriented realignment of business activities is to boost the company's efficiency in core areas and enable further growth.

Development in the regions remains uneven

The company again performed heterogeneously in the regions in the first nine months of the fiscal year: net sales in Germany soared by 17% to 484 million euros (412 million euros), and as a result, business in Germany accounted for 28% (24%) of total net sales. Net sales in Germany in the third quarter were 149 million euros, up 3% year-on-year.

Net sales in the Europe region in the first three quarters were 805 million euros (921 million euros), a decline of 13% from the previous year's levels. Europe again contributed the largest share to the Group's total net sales: 47% (53%). Net sales in the region in the third quarter declined by 21% to 228 million euros (289 million euros).

Net sales growth in the Asia/Pacific/Africa region developed positively in the period under review, with an increase of 13% to 294 million euros (261 million euros). Net sales declined slightly by 1% when measured in USD. The region thus accounted for 17% (15%) of total net sales. Net sales in the region in the third quarter were down 5% at 75 million euros (79 million euros).

Business in the America region in the first nine months increased slightly by 1% to 146 million euros (144 million euros). As a result, this region still accounts for 8% of the Group's total net sales. Net sales in the third quarter rose to 44 million euros (42 million euros) or by 5% year-on-year.

Banking and Retail net sales decrease in the third quarter

Net sales from business with banks increased slightly in the first three quarters by 1% to 1,195 million euros (1,183 million euros). In the third quarter net sales declined by 10%. Net sales from business with retailers decreased in the period under review by 4% and amounted to 534 million euros (555 million euros), declining in the third quarter by 13%.

Broken down by business stream, net sales from hardware business declined year-on-year by 7% to 956 million euros (1,033 million euros). In contrast, software/services business recorded an increase of 10% to 773 million euros (705 million euros). As a result, hardware business accounted for 55% (59%) of total net sales. The share contributed by software/services business rose accordingly to 45% (41%).

The number of persons employed at the Group fell by 69 to 9,391 up to and including June 30, 2009 (September 30, 2008: 9,460).

This document contains forward-looking statements that are based on current estimates and assumptions made by the management of Wincor Nixdorf AG to the best of its knowledge. Such forward-looking statements are subject to risks and uncertainties, the non-occurrence or occurrence of which could cause the actual results - including the financial condition and profitability of Wincor Nixdorf - to differ materially from or be more negative than those expressed or implied by such forward-looking statements. This also applies to the forward-looking estimates and forecasts derived from third-party studies. Consequently, neither the Company nor its management can give any assurance regarding the future accuracy of the opinions set forth in this document or the actual occurrence of the predicted developments.
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