• Drop in sales and earnings
• Lower raw material prices hit turnover in EPS Processing
• Seasonally weak turnover in Technology segment
• Joint venture contract signed for construction project in Egypt
• Although moderate rise in demand, results predicted for 2009/10 currently
still slightly negative
As a result of the general economic situation, the first quarter of the 2009/10 fiscal year showed a marked decline from the previous year's results for the quarter despite initial positive signals. The drop in sales in the EPS Processing business segment was primarily due to the decreased article prices caused by lower raw material prices and the higher than average sales revenue for the same period the previous year. Because of customers' continuing reluctance to invest and the generally problematical funding situation on the capital markets, the results for the Technology business segment also fell short of the previous year's level. The Logistics business segment, which is strongly affected by developments in the building industry and the global transport sector, did not yet generate any income in the period under review. In total, sales were down around 29% to €19.7 million (PY: €27.6 million). The operating profit (EBIT) fell to minus €0.91 million (PY: €0.68 million) and the profit on ordinary activities (POA) to minus €1.31 million (PY: minus €0.5 million).
|
Sales and Earnings Trends |
1st Quarter |
1st Quarter |
Change in % |
|
Sales |
27.6 |
19.7 |
-29 |
|
EPS Processing business segment |
24.1 |
18.0 |
-25 |
|
Technology business segment |
3.5 |
1.7 |
-51 |
|
Logistics business segment |
0.0 |
0.0 |
- |
|
Other activities |
0.0 |
0.0 |
- |
|
EBIT |
0.68 |
-0.91 |
- |
|
EPS Processing business segment |
1.66 |
0.75 |
-55 |
|
Technology business segment |
-0.58 |
-0.74 |
- |
|
Logistics business segment |
-0.41 |
-0.92 |
- |
|
Other activities |
0.00 |
0.00 |
- |
|
POA |
-0.50 |
-1.31 |
- |
|
EPS Processing business segment |
0.74 |
0.51 |
-31 |
|
Technology business segment |
-0.81 |
-0.85 |
- |
|
Logistics business segment |
-0.43 |
-0.97 |
- |
|
Other activities |
0.00 |
0.00 |
- |
|
Employees (annual average) |
725 |
645 |
-11 |
Profit after tax dropped to minus €1.33 million (PY: minus €0.33 million) and the balance sheet loss was minus €1.22 million (June 30, 2009: €0.11 million).
The equity ratio declined to 11.2% (June 30, 2009: 12.6%).
In the period under review, the cash flow from operating activities was €0.01 million (PY: €1.96 million).
At the reporting date September 30, 2009, the HIRSCH Servo Group employed 636 people (PY: 736). Due to the extensive cost cutting program, the payroll dropped to 645 on average for the year (PY: 725).
With the aim of ensuring the HIRSCH Servo Group's liquidity, investments in the first quarter of the current fiscal year were considerably lower at €0.3 million than in the same period the previous year (PY: €1.1 million).
Business segment development in 1st Quarter 2009/10
The EPS Processing business segment with the two divisions EPS Packaging and EPS Insulation reported a 25% drop in sales to €18.0 million for the period under review (PY: €24.1 million). What mainly accounted for this was a decrease in article prices caused by lower raw material prices and the higher than average sales revenues for the same period the previous year. The EBIT fell to €0.75 million (PY: €1.66 million) and the POA to €0.51 million (PY: €0.74 million).
Sales in the Technology business segment were down some 51% in the typically weak first quarter to €1.7 million (PY: €3.5 million). The slump in the sales figures is the result of customers' continuing reluctance to invest and the generally problematical funding situation on the capital markets. Thanks to the cost-cutting program introduced the previous year, the impact of the lower turnover on earnings was not nearly as high as would otherwise have been expected. The EBIT totaled minus €0.74 million for the period (PY: minus €0.58 million), while the POA remained virtually constant at minus €0.85 million (PY: minus €0.81 million).
The Logistics business segment did not yet generate any income for the first quarter of fiscal 2009/10. GGB-Global Green Built GmbH reported that a contract was signed with a view to setting up a joint venture with one of the largest building companies in Egypt, Alexandria Construction Company, which belongs to TMG Holding. Holding a 40% share in the joint venture, GGB-Global Green Built GmbH will mainly be responsible for producing EPS insulating concrete forms (ICFs) and providing technical support. In the third quarter of the current fiscal year, mobile manufacturing plants in Cairo will start to produce EPS ICFs for building ecological and earthquake-proof apartment blocks. This joint venture means that GGB-Global Green Built GmbH will be involved in what is currently one of the largest construction projects in the Middle East, which will provide impetus for the future development of this economical and eco-friendly construction method. Widespread decline in the global transport industry led to delays for Global Green Pallets GmbH. EBIT totaled minus €0.92 million for the period (PY: minus €0.41 million) and the POA was minus €0.97 million (PY: minus €0.43 million). The planned changes in the structure of the two companies will have a positive effect on the cost structure of the Logistics business segment.
Outlook
On the basis of the current moderate rise in demand and even if the global economy becomes more stable again, the Management is still anticipating slightly negative results for the 2009/10 fiscal year due to the restructuring costs. The focus for the current business year will primarily be on ensuring liquidity. To push the growth planned in the Logistics business segment, investors will be sought for the two companies GGB-Global Green Built GmbH and Global Green Pallets GmbH.
Once the measures in the restructuring concept have been implemented, the turnaround should also be achieved by 2010/11.
With its four business segments, EPS Packaging, EPS Insulation, Technology and Logistics, the HIRSCH Servo Group has great potential for saving energy and is therefore strategically very well placed for the future.
Changes did not occur in the contingent liabilities and contingent claims shown in the 2008/09 annual report.
The quarterly report meets the requirements of IAS 34. In addition, the same accounting practices and valuation methods were used as for the 2008/09 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 quarterly report was not reviewed by the auditor.
Announcement Regarding 1st Quarter 2009/10 Report
The report for the first quarter 2009/10 from July 1, 2009 to September 30, 2009 can be downloaded from www.hirsch-gruppe.com and is also available from HIRSCH Servo AG, 9555 Glanegg Nr. 58, Austria or UniCredit Bank Austria AG, Schottengasse 6-8, 1010 Vienna, Austria.
The next date on the financial calendar is February 26, 2010 when the results for the first half year 2009/10 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, Phone: +43 4277 2211-312,
Fax ext.: 370, E-mail: michaela.promberger@hirsch-gruppe.com, www.hirsch-gruppe.com