DGAP-News

Powerland AG: Market environment puts pressure on Powerland Group / profitability improved significantly

DGAP-News: Powerland AG / Key word(s): Half Year Results
Powerland AG: Market environment puts pressure on Powerland Group /
profitability improved significantly

31.08.2015 / 09:51

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Frankfurt/Main, 31 August 2015 - Against the background of a challenging
market environment, Powerland AG generated Group revenues of EUR 60.6
million in the first half year of 2015. This corresponds to a decrease of
36% compared to the last year's figure. In the three-month-period from
April to June, sales amounted to EUR 30.6 million (-45%). Both the Luxury
as well as the Casual segment played a major part in contributing to this
development: Revenues in the Luxury segment were down 27% to EUR 47.8
million in the first half year 2015, whereas in the Casual Segment,
revenues of EUR 12.8 million were generated (-56%).
At EUR 8.5 million, Group EBIT decreased by 26% as against the first half
year of 2014 due to the decrease in sales as well as in gross profit. EBIT
margin improved from 12.1% to 14.0%. With respect to the second quarter,
the margin even improved by 3.7 percentage points to 17.6%.
Net profit of Powerland Group came in at EUR 5.6 million, representing a
31% decrease compared to H1 2014. Based on 15 million shares, this figure
is equivalent to earnings per share of EUR 0.37 (-32%).

Cash and cash equivalents went up from EUR 8.7 million at year-end 2014 to
EUR 24.0 million as at 30 June 2015. The increase is mainly due to higher
net borrowings while cash generated from operations was negative at EUR
-2.8 million.
Operation-wise, the Powerland Group launched its new product series and is
constantly enhancing its online and offline brand awareness. Despite the
achievements, Powerland faces substantial challenges: As the Chinese
economy slows down and the competition in the Luxury segment becomes
increasingly intensive, Powerland has to lower down unit selling prices and
offer deeper discounts for distributors; at the same time, the price war in
the casual segment remains unchanged.

Consequently, Powerland maintains its conservative outlook about 2015.
Group revenue is expected to decline substantially due to weakening demand
from home and abroad. Although Powerland will close down more stores and
implement more cost-effective marketing campaigns so as to reduce operating
expenses, group EBIT will fall as well because of a sharp top-line decline.
Meanwhile, Powerland will continue to adopt a stringent working capital