Zumtobel Group AG

Profitability impacted by revenue declines and intense price competition

Public disclosure of inside information according to article 17 MAR

Dornbirn (pta010/28.06.2018/07:30) - The 2017/18 financial year was not only characterised by key strategic steps to improve the competitive position of the Zumtobel Group, but also a reduction in the Group's profitability attributable to a substantial decline in revenues and intense price competition.

Revenues impacted by negative currency effects
The Zumtobel Group recorded a year-on-year decline of 8.2% in revenues to EUR 1,196.5 million for 2017/18 in a challenging industry environment (2016/17: EUR 1,303.9 million). Revenue development was influenced by substantial negative currency translation effects of EUR 31.5 million, above all from the appreciation of the euro versus the British pound and the Swiss franc. After an adjustment for currency translation effects, revenues declined by 5.8% in 2017/18. An analysis by region shows a particularly strong decline of more than 20% in Great Britain, the most important market for the Zumtobel Group. The LED share of Group revenues increased from 73.6% to 79.6% over the twelve-month period.

Significant decline in profitability
The 2017/18 financial year was characterised by key strategic steps to improve the competitive position of the Zumtobel Group. Important milestones to support profitability over the medium-term included the start of construction on a new plant in Serbia in July 2017, closure for the sale of the Zumtobel Group plant in Les Andelys (France) in October 2017, and the decision to gradually transfer parts of the components production to Serbia in the coming years. However, these long-term steps and recently implemented cost-reduction measures were unable to prevent a reduction in Group EBIT adjusted for special effects to EUR 19.7 million (2016/17: EUR 72.4 million). The drop in the Group's profitability during the reporting year is attributable above all to a substantial decline in revenues as well as very aggressive price competition. Consequently, net profit fell from EUR 25.2 million in the previous year to minus EUR 46.7 million in 2017/18.

As a result of the lower cash flow generated by the operating business and increased investment activity, free cash flow dropped to minus EUR 23.9 million (2016/17: plus EUR 69.4 million) in the reporting year, while net debt rose by EUR 55.3 million to EUR 146.3 million as of 30 April 2018. In view of the substantially weaker operating development, no distribution of dividends is planned for the 2017/18 financial year.