Business News

schlott gruppe: Q1 2007/8 in line with forecasts

Wednesday 23. January 2008 - Start to financial year meets expectations Price levels develop as anticipated; reductions from previous year lead to decline in VAS and EBT as expected Cost streamlining programme in progress; sub-projects implemented

As part of its financial results press conference and analysts’ meeting, schlott gruppe will today present its annual report for the 2006/7 financial year and comment in detail on the company’s performance. The results for the financial year ended September 30, 2007, were released on January 11, 2008, following the Supervisory Board meeting convened for the purpose of adopting the financial statements.

In addition, schlott gruppe will today announce its preliminary results for the first quarter of the 2007/8 financial year. Within this context, the consolidated figures are to be presented on a comparable basis, i.e. the direct marketing unit, which was disposed of effective from July 31, 2007, and was thus still part of the Group in the first quarter of 2006/7, will be presented as discontinued operations with regard to the preceding year, in accordance with IFRS 5, with data being adjusted accordingly.

In the first quarter of the current financial year business performance at schlott gruppe as well as the general price situation within the industry as a whole were in line with forecasts. In contrast to the same quarter a year ago, however, the anticipated price reductions forced upon the market over the course of the last financial year impacted on the Group’s first-quarter results.

As a consequence, value-added sales at Group level receded from €69.3 million in the first quarter of 2006/7 to €65.2 million in Q1 2007/8. Overall, capacity utilisation at schlott gruppe remained satisfactory. Revenue increased to €127.5 million, up from €122.4 million. This was attributable mainly to the consolidation of biegelaar and its particular business structure: in contrast to the first quarter of 2006/7, when biegelaar had only been part of the consolidated group for a period of two months, the Dutch-based printer was consolidated for the full three months in the first quarter of 2007/8. However, the impact on schlott gruppe’s other key financial indicators is minimal.

As anticipated, pricing pressures witnessed throughout the printing industry over the course of last year led to a decline in earnings before taxes (EBT) from €8.5 million in Q1 2006/7 to €3.1 million in the first quarter of 2007/8. These figures do not yet include effects from the cost reduction programme currently being implemented by the company.

The print business unit generated value-added sales of €64.2 million in the first quarter of 2007/8, compared with €68.2 million in the same period a year ago. EBT amounted to €4.1 million, after €9.1 million in the first quarter of the previous financial year. At €0.3 million, the loss before taxes incurred by the corporate services unit was significantly lower than the loss of €1.1 million posted a year ago. This was attributable to factors relating to the balance sheet date.

The first quarter saw the launch of schlott gruppe’s cost reduction programme, scheduled for a period of three years. The programme has already been implemented at the Group’s gravure printing facility in Freudenstadt, producing a sustained reduction in costs of two million euros per annum.

The remaining measures within the overall package are to be executed as scheduled, the aim being to rein back annual expenses within the Group by a double-digit amount in the million-euro range. This will partially offset recent price erosion and anticipated further price-related pressures as early as the current financial year. As announced, the total expense attributable to the cost reduction programme will amount to €15 million in the 2007/8 financial year.

Against the backdrop of a challenging market environment, schlott gruppe has begun the 2007/8 financial year with an encouraging performance according to plan. In line with expectations, the Group has achieved pre-tax profits that are well above par, thus laying the foundations for break-even EBT before one-off charges, as forecast for the annual period as a whole. The measures relating to the cost reduction programme will be explained in detail at today’s events.

schlott gruppe’s report for the first quarter of FY 2007/8 is to be published on February 6, 2008.