Zumtobel AG nine-month report (May 2012 – January 2013)

Weak business environment impacts on Zumtobel Group, but structural adjustment measures take effect

• Continued dynamic growth with LED products (plus 55.4%)
• Group revenues fade by 1.8% to EUR 946.5 million (prior year: EUR 964.2 million)
• Adjusted EBIT totals EUR 29.5 million (adj. EBIT margin: 3.1%; prior year: 3.5%)
• Adj. EBIT in Q3 higher than in prior year due to structural adjustment measures
• Sound positive free cash flow of EUR 19.2 million (prior year: minus EUR 19.6 million)
• Outlook: Management Board issues adjusted guidance

Dornbirn, Austria, 8-3-2013 — /europawire.eu/ — Against the backdrop of a difficult economic environment that deteriorated further during the third quarter, the Zumtobel Group posted a 1.8% downturn in nine-month revenues in the 2012/13 financial year. Group revenues totalled EUR 946.5 million (prior year: EUR 964.2 million). Revenues from the sale of innovative LED products at the lighting group showed further strong growth, moving ahead 55.4% against the prior-year period to EUR 201.1 million (prior year: EUR 129.4 million). As a result, the share of Group revenues accounted for by LED products rose from 13.4% to 21.2%.

Cost savings reflected in improved third-quarter earnings
Adjusted Group EBIT declined 13.3% to EUR 29.5 million in the first three quarters of 2012/13 (prior year: EUR 34.1 million). The adjusted EBIT margin fell to 3.1% (prior year: 3.5%). This development is largely attributable to the negative effects of the technology shift, as well as to market-related lower capacity utilisation at the plants. In the traditionally weak third quarter (November to January) the development of earnings was much better than in the prior-year period, with adj. EBIT totalling EUR minus 3.1 million (prior year: EUR minus 9.6 million). This reflected the initial impact of the structural adjustment measures introduced at the Group, including reductions in the workforce as well as in selling and marketing expenses. Net profit for the period stood at EUR 9.7 million (prior year: EUR 18.9 million). This equates to earnings per share of EUR 0.25 (prior year: EUR 0.44).

“In a difficult business environment, we are continuing our strategy of making targeted investments in the expansion of our innovative product portfolio to ensure that we are ideally positioned during the technology shift to LEDs. Confirmation of this course of action is provided by the outstanding increase in revenues and progressive improvement of earnings in the LED product segment. Given the weak state of the market, we need to be just as targeted in the adaptation of our cost structures. In this respect, we introduced initial measures several months back, the results of which can be seen in the third quarter. Our task now is to rigorously maintain this course,” said Zumtobel Group CEO Harald Sommerer.

Major differences in business development by segment
The development of business differed substantially by segment. In the Lighting Segment (Zumtobel / Thorn) revenues remained nearly unchanged and totalled EUR 712.0 million for the reporting period (prior year: EUR 712.4 million). However, there was a further weakening in momentum in the third quarter, related above all to the Thorn brand. Increased destocking by wholesalers and cost-cutting in the public sector were the main reasons for this development. Nevertheless, and in spite of higher development expenditures and a higher proportion of LED-based revenues, the Lighting Segment returned improved operating earnings.

In the Components Segment (Tridonic) by contrast, nine-month revenues showed a 7.3% downturn, falling to EUR 288.1 million (prior year: EUR 310.9 million). Progress in the sale of LED components was still unable to offset the market-related as well as the structural declines in demand for conventional components. With plants operating below capacity and continuing pressure on prices, the Components Segment had to contend with a marked drop in earnings compared to the prior-year period, even though restructuring measures brought about a substantial reduction in the breakeven threshold.

Regional development: slight downturn in Europe, growth in America
In the D/A/CH region (Germany, Austria, Switzerland), revenues showed a slight 0.6% downturn in the reporting period due to unsatisfactory development in Germany. Revenues in Northern Europe were also down by 1.6% on account of a very weak third quarter (minus 13.0%). In Eastern Europe, significant declines in the Components Segment led to a 2.8% drop in revenues. Western Europe, which is the strongest sales region in the Zumtobel Group, was able to match the prior-year level (plus 0.9%). Revenues in Southern Europe fell by 6.9% as a result of market weakness. In sum, European revenues showed a slight 0.9% decline.
Revenues in Asia were down 2.2% following a sharp drop in the Components Segment in the Middle East during the first three quarters. The Lighting Segment reported positive revenue development in Asia. In the America region revenue growth amounted to 16.6%. Business in Australia & New Zealand recorded a decline of 14.4%, above all as a result of a sharp downturn in the Components Segment.

Employee numbers down 1.6% in the first nine months
Compared to 30 April 2012, the number of employees fell from 7,456 to the current level of 7,336 full-time equivalent employees − including contract workers but not including apprentices (minus 1.6%). This was due to adaptations in the workforce at Thorn and Tridonic. In the same context, the workforce in Austria has been slightly reduced by 30 employees to its current level of 2,409 full-time equivalent employees.

Positive development of working capital and free cash flow continues
The reporting period also brought further improvements in working capital and free cash flow. Notable progress was made on inventory and receivables management in both the Lighting and Components segments during recent quarters. In comparison with 31 January 2012, working capital fell from 20.7% to 17.0% of rolling 12-month revenues. This led to clearly positive free cash flow of EUR 19.2 million (prior year: minus EUR 19.6 million).

Balance sheet structure remains solid
The quality of the balance sheet structure remains nearly unchanged. The equity ratio increased slightly from 35.8% on 30 April 2012 to 37.2%. Net liabilities declined by EUR 1.3 million since the beginning of the current financial year to EUR 140.1 million (prior year: EUR 183.4 million), so that gearing – the ratio of net liabilities to equity – showed a slight improvement from 38.2% on 30 April 2012 to 38.0%.

Outlook: Adjusted guidance due to the weak revenue development
The macroeconomic environment has been shaped by negative developments during the course of the year. Above all in Europe, the key market for the Zumtobel Group, there are no signs of an easing in economic tensions and visibility remains very low. There is also a real danger that the recent elections in Italy will further intensify the Euro crisis. Against the backdrop of growing forecast uncertainty and negative growth momentum in the third quarter, the Management Board has adjusted the Group’s targets for the full 2012/13 financial year and does not expect that Group revenues or adjusted EBIT for 2012/13 will reach the prior-year levels.

Media contact
Astrid Kühn-Ulrich
Head of Corporate Communications
Tel. +43-(0)5572 509-1570
astrid.kuehn@zumtobel.com

Investor relations
Harald Albrecht
Head of Investor Relations
Tel. +43-(0)5572 509-1125
harald.albrecht@zumtobel.com