Business News

technotrans has passed the nadir of the crisis

Friday 06. November 2009 - stabilisation expected following the drastic fall in revenue / Q3 results dominated by non-recurring effects / restructuring to be finalised by year-end / return to profitability expected for 2010

Revenue for the technotrans Group fell by 45.8 percent to • 18.9 (previous year 34.9) million. The company expects that the nadir of the current crisis had been reached during this period. In total revenue for the first nine months of 2009 reached • 62.6 million, representing a downturn of 40.7 percent on the previous year (• 105.6 million). “In fact the nadir was reached in August, largely due to printing press manufacturers shutting down for an extended vacation period as expected. This consequently had a particularly marked effect on the Technology segment,” said Henry Brickenkamp, Spokesman of the Board of Management of technotrans AG. “Business performance in September was already better; it was actually the strongest month of 2009 to date.”

Earnings for the third quarter were burdened by a number of non-recurring effects. The negative EBIT for the third quarter was just under • 4.5 million (previous year • +2.4 million). A major factor here, besides the revenue deficit, was the amount of • 2.8 million required over and above the sum set aside in the provisions for the out-of-court settlement in the patent dispute with Baldwin; the transfer of production operations from the USA and Gersthofen to Sassenberg, which will be completed by the end of the year, was a further drain on EBIT. Overall, the loss at EBIT level after nine months was • 6.5 million (previous year • +7.2 million). Management expects to be posting positive results for the next few months, therefore the loss is likely to fall by the end of the year

At September 30, the group numbered 666 employees, compared with 823 one year earlier (excluding temporary workers). The rate of decrease was much sharper internationally, at 29.8 percent, than in Germany (-14.4 percent). At the group’s biggest location, Sassenberg, short-time has been used since March 2009 as a means of adapting to the changing volume of orders and the company will most likely continue to retain this practice over the coming months.

The segments
As expected, the Technology segment suffered particularly from the extended vacation shutdowns at the major customers during the third quarter. With revenue amounting to • 10.9 million, the figure has fallen yet further from the previous quarters (• 14.2 and 12.0 million). Compared with the prior-year period (• 25.4 million), however, the rate of decrease is a drastic 57.0 percent. The total revenue generated in the first nine months of the year was therefore • 37.1 million, a fall of 51.9 percent on the previous year. At the turn of this year Management had already voiced the expectation that revenue for the Technology segment could be halved, as a result of which the company was primed accordingly.

As well as the extremely low revenue volume, the out-of-court settlement in the long-lasting patent dispute with a competitor had a major impact on the result for the segment in the third quarter. This non-recurring effect alone accounts for • 2.8 million of the quarterly loss of just under • 5.6 million. An overall loss at EBIT level of • 9.9 million was reported after nine months (previous year • +2.5 million).

Revenue for the Services segment of • 8.0 million in the third quarter was likewise slightly weaker (previous year • 9.5 million, -15.9 percent). This trend was spread fairly evenly over all areas. Revenue after nine months reached • 25.5 million, a drop of 10.2 percent on the prior-year period.

Despite the slight downturn in revenue in the third quarter, the Services segment was able to report a satisfactory level of profitability. The profit total of • 1.1 million represents a margin of 14.2 percent. At the nine-month mark, the result for the segment was • 3.3 million (previous year • 4.3 million, -23.0 percent).

Financial position
Despite the net result for the year to date of • -6.2 million after nine months (previous year • +3.9 million), cash flow performed well thanks to a successful working capital management approach. Cash from operating activities amounted to • 4.3 million at the reporting date (previous year: • 5.8 million). Without the effect of the out-of-court settlement in the patent dispute, the position for 2009 would have been even better.

After interest and taxes, the net cash from operating activities amounted to • 3.0 million, compared with • 3.4 million in the previous year. Free cash flow after nine months remained positive at • 1.7 million (previous year • -2.1 million), not least because of the reduced investment volume.

Cash of • 8.9 million was 28.5 percent up on the figure at the start of the year (• 7.6 million).

Outlook
As a supplier of standard equipment, technotrans realises the bulk of its revenue with the world’s leading printing press manufacturers. “We have been waiting – so far in vain – for a lasting recovery in orders from these customers,” said Henry Brickenkamp. “For 2009 as a whole, we continue to expect revenue in the order of just under • 85 million; as latterly expected, this is at the lower end of our original forecast scenarios for the current financial year.”

Management has been using the past few weeks and months to prime the structures for the new business conditions. “While we make any effort to make sure our market share grows rather than shrinks in the current environment, we are tentatively exploring niches in a variety of sectors that might offer us opportunities for demonstrating our core skills,” Brickenkamp explains. “technotrans already has a successful track record in such activities outside the printing industry and we want to use our resources in building on that success.” Management points out that realistically such activities cannot be expected to show significant results in the short term.

With a view to the next year CFO Dirk Engel said: “In the absence of any signs of a cyclical recovery in our industry, our plans for the short and medium term are based on a revenue level not significantly different to that of the 2009 financial year. Our measures to adjust to the new volume of business should achieve their full effect in 2010, with the result that we can once again expect a sensible level of profitability at operating level.”


Note: Any forward-looking statements contained in this report represent our best judgment as to what will occur in the future. The Company’s actual results could differ materially from those forecast, depending on a number of competitive and economic factors, some of which are and will be outside the control of the Company.