Zumtobel Group AG

Restructuring shows effect and leads to improvement in profitability despite difficult market environment

Business news for the stock market

Dornbirn (pta007/05.03.2019/07:30) - The first nine months of the 2018/19 financial year were characterised by urgently required restructuring measures to stabilise the business and improve profitability.

"The realignment of the Zumtobel Group is progressing. We implemented a range of measures in the first three quarters to strengthen revenues and earnings. Despite an increasingly intense global competition and the related decline in earnings, we successfully improved our profitability," comments Zumtobel Group CEO Alfred Felder on the results of the first three quarters.

"We are also pleased to report that the on-going ramp-up of the lighting and components plant in Nis, Serbia, which started production during last September, is proceeding as planned. The next step will be to transform Nis into a fully operational plant with a high degree of vertical integration in order to improve our competitive position and increase our flexibility to react to the changing demands of our core markets," Alfred Felder outlines the tasks of the coming months.

Difficult market environment, political uncertainty and negative foreign exchange effects lead to decline in revenues
Group revenues totalled EUR 863.8 million in the first three quarters of 2018/19 (minus 4.9% compared with the previous year). After an adjustment for foreign exchange effects - which resulted from the increase in the euro versus the Turkish lira, Australian dollar and Swedish krona - revenues declined by 3.8%. Further reasons for the decline included the intense price competition in the lighting industry and substantially lower revenues in Great Britain (roughly minus 14%), the Zumtobel Group's most important single market. Revenue development in Great Britain has been negatively influenced by the still uncertain outcome of the BREXIT-negotiations and the resulting decline in orders for the non-residential construction sector in that market.

Reduction of fixed costs supports improvement in profitability
Group EBIT adjusted for special effects rose to EUR 23.9 million in the first three quarters of 2018/19 (Q1-Q3 2017/18: EUR 20.5 million), and the return on sales improved from 2.3% to 2.8%. The improvement in the Group's profitability resulted, above all, from the efficiency and cost savings measures which were introduced by the Management Board. Selling and administrative costs fell by a substantial EUR 21.9 million (minus 8%) year-on-year during the reporting period.