• EBIT and POA down, but cash flow virtually doubled
• EPS Processing still on a growth curve
• Customers' reluctance to invest slowing Technology business segment
• Financial crisis delaying project business
• Lower results predicted, positive EBIT expected from today's perspective
The HIRSCH Servo Group has announced higher turnover for the first half year of 2008/09 than in the first half of fiscal 2007/08, despite the difficult market conditions. The EPS Processing business segment in particular succeeded in continuing its growth curve, achieving higher sales and an improvement in operating profit (EBIT). Towards the end of the second quarter, the Technology business segment felt the effects of customers' reluctance to invest due to the financial crisis and the ensuing uncertainty, with the result that the revenue figures showed negative trends in this area. The Logistics business segment did not yet generate any income in the first half year. Sales were up about 7% to 50.4 MEUR (previous year: 47.3 MEUR), which is the highest half year turnover in the company's 37-year history. The operating profit (EBIT) fell in total to -0.25 MEUR (PY: 0.64 MEUR) and the profit on ordinary activities (POA) to -3.42 MEUR (PY: -1.47 MEUR).
|
Profit and sales trends |
1st half year |
1st half year |
Change in % |
|
Sales |
47.3 |
50.4 |
7 |
|
EPS Processing business segment |
39.0 |
42.8 |
10 |
|
Technology business segment |
8.2 |
7.5 |
-9 |
|
Logistics business segment |
0.0 |
0.0 |
- |
|
Other activities |
0.1 |
0.1 |
- |
|
EBIT |
0.64 |
-0.25 |
- |
|
EPS Processing business segment |
1.75 |
1.76 |
0.6 |
|
Technology business segment |
-0.98 |
-0.92 |
- |
|
Logistics business segment |
-0.13 |
-1.09 |
- |
|
Other activities |
0.00 |
0.00 |
- |
|
POA |
-1.47 |
-3.42 |
- |
|
EPS Processing business segment |
-0.06 |
-0.90 |
- |
|
Technology business segment |
-1.23 |
-1.42 |
- |
|
Logistics business segment |
-0.18 |
-1.10 |
- |
|
Other activities |
0.00 |
0.00 |
- |
|
Employees (annual average) |
718 |
716 |
-0.3 |
The profit after tax was down to -2.79 MEUR (PY: -1.13 MEUR) and the balance sheet profit declined to 8.10 MEUR (June 30, 2008: 11.36 MEUR).
The equity ratio dropped to 20.9% (June 30, 2008: 23.0%).
In the period under review, cash flow from operating activities of 6.6 MEUR (PY: 3.4 MEUR) was achieved.
At the reporting date December 31, 2008, the HIRSCH Servo Group employed 682 people (PY: 714). The annual average fell to 716 (PY: 718 people). The reduction in staff is the result of temporary capacity adjustments and part of an extensive cost cutting program.
In view of the global economic downturn, maintaining liquidity is top priority. The HIRSCH Servo Group therefore invested 1.8 MEUR in the period under review, which was substantially less than in the same period the previous year (PY: 6.7 MEUR). Investments focused on expansion of the Slovakian plant scheduled for completion in March. A merger of the Slovakian company HIRSCH Porozell s.r.o. with Polyform s.r.o. will go ahead on July 1 in a bid to minimize costs.
Business segment development in 1st Half Year 2008/09
In the EPS Processing business segment with the two divisions EPS Packaging and EPS Insulation, sales increased by around 10% to 42.8 MEUR (PY: 39.0 MEUR), despite market growth slowing in Eastern Europe. This can be attributed to past investments and process improvements. EBIT remained virtually unchanged from the same period the previous year at 1.76 MEUR (PY: 1.75 MEUR). The POA fell to -0.90 MEUR (PY: -0.06 MEUR), primarily due to 1.2 MEUR exchange losses.
Sales in the Technology business segment were down some 9% in the typically weak first half year to 7.5 MEUR (PY: 8.2 MEUR). The crisis in the financial markets caused uncertainty among customers faster than expected and, as a result, they are tending to postpone planned investments. EBIT improved slightly to -0.92 MEUR (PY: -0.98 MEUR), while the POA was down to
-1.42 MEUR (PY: -1.23 MEUR).
The Logistics business segment with the two product groups Satellite Plants and Pallet Activities did not yet generate any income in the period under review. Given the funding problems, there are not currently any signs of recovery, particularly as far as large-scale projects are concerned, and not even among contracts that have already been signed.
The segment expects Global Green Built GmbH, which supplies mobile manufacturing plants and also provides additional services, to win contracts in the medium term from the existing project inquiries. The same applies to the automatic plastic pallet production plants which the company started marketing at the end of 2008. From today's perspective, however, the break-even point cannot yet be predicted.
Outlook
Given the global economic downturn and customers' reluctance to buy as a result, the Management has been forced to reduce the figure of 5.0 MEUR predicted for EBIT at the beginning of the current 2008/09 business year. They always explicitly stated that the forecasts are subject to risks caused by the financial crisis, which could lead to the actual results differing from the predictions. Developments up to June 30 are difficult to predict because of the continuing generally difficult market conditions and the resultant postponement of a major project. However, from today's perspective, the Management expects to post positive EBIT.
HIRSCH sees itself as a group of companies with four business segments, EPS Packaging, EPS Insulation, Technology and Logistics, which all have great potential for saving energy. They are also strategically well positioned internationally, making them well placed to ride out the recession.
In connection with the contingent liabilities of 1.4 MEUR shown in the 2007/08 annual report and arising from legal action by the seller of a Polish plant, a settlement of 140 TEUR was agreed. This settlement payment is included in the results for the first half year. Other changes did not occur in the contingent liabilities and contingent claims shown in the 2007/08 annual report.
The half year report meets the requirements of IAS 34. In addition, the same accounting practices and valuation methods were used as for the 2007/08 annual report.
No events of particular significance occurred after the reporting date that would have led to a different portrayal of the net assets, financial position and results of operations.
The half year report was not checked by the auditor.
Announcement regarding 1st Half Year 2008/09 Report
The report for the first half year of 2008/09 from July 1, 2008 to December 31, 2008 can be downloaded from www.hirsch-gruppe.com from Friday, February 27, 2009 and is also available from HIRSCH Servo AG, 9555 Glanegg Nr. 58, Austria or Bank Austria Creditanstalt AG, Vordere Zollamtstrasse 13, 1030 Vienna, Austria.
The next date on the financial calendar is May 29, 2009 when the results for the third quarter 2008/09 will be announced.
*The HIRSCH Servo Group is the EPS specialist on the Vienna Stock Exchange with manufacturing facilities in Austria, Hungary, Poland, Slovakia, Italy and Romania. EPS products (EPS stands for expandable polystyrene and is better known under the brand name of Porozell®) support a variety of functions, including energy savings, as well as sustainable and eco-friendly growth. Their wide-ranging applications cover packaging, shape-molded parts, building insulation, modular boards for underfloor heating, construction blocks, Thermozell® lightweight concrete products and transport pallets.
For further information, please contact Michaela Promberger, Tel: +43 4277 2211-312,
Fax: +43 4277 2211-370, E-mail: michaela.promberger@hirsch-gruppe.com,
www.hirsch-gruppe.com