· Decline in sales of 22 percent slight improvement over first quarter
· Drop in earnings primarily due to difficult market environment in
Technology and market opening and development costs in Logistics
· Positive POA trends in EPS Processing
· Second quarter sales in Technology segment up on first quarter
· Still no sales in Logistics business segment, but search for investors in full
swing
· Results prediction for 2009/10 currently still slightly negative, turnaround
planned for 2010/11
As a result of the general economic situation, the first half of the 2009/10 fiscal year showed a marked decline from the previous year's results for the first six months despite initial positive signals. The drop in sales in the EPS Processing business segment was primarily due to the lower article prices caused by falling 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 – particularly in the first quarter – the results for the Technology business segment also fell short of the previous year's level. The Logistics business segment did not yet generate any income in the period under review. In total, sales were down around 22.2 percent to €39.2 million (PY: €50.4 million). The operating profit (EBIT) fell to minus €2.19 million (PY: minus €0.25 million) and the profit on ordinary activities (POA) improved slightly to minus €3.17 million (PY: minus €3.42 million).
|
Sales and Earnings Trends |
1st Half Year |
1st Half Year |
Change in % |
|
Sales |
50.4 |
39.2 |
-22 |
|
EPS Processing business segment |
42.8 |
34.0 |
-21 |
|
Technology business segment |
7.5 |
5.2 |
-31 |
|
Logistics business segment |
0.0 |
0.0 |
- |
|
Other activities |
0.1 |
0.0 |
-100 |
|
EBIT |
-0.25 |
-2.19 |
- |
|
EPS Processing business segment |
1.76 |
1.25 |
-29 |
|
Technology business segment |
-0.92 |
-1.60 |
- |
|
Logistics business segment |
-1.09 |
-1.85 |
- |
|
Other activities |
0.00 |
0.00 |
- |
|
POA |
-3.42 |
-3.17 |
- |
|
EPS Processing business segment |
-0.90 |
0.68 |
- |
|
Technology business segment |
-1.42 |
-1.82 |
- |
|
Logistics business segment |
-1.10 |
-2.03 |
- |
|
Other activities |
0.00 |
0.00 |
- |
|
Employees (annual average) |
716 |
631 |
-12 |
Profit after tax dropped to minus €3.3 million (PY: minus €2.79 million) and the balance sheet loss was minus €3.19 million (June 30, 2009: €0.11 million).
The equity ratio declined to 9.5 percent (June 30, 2009: 12.6 percent).
In the period under review, the cash flow from operating activities was €1.54 million (PY: €6.61 million).
At the reporting date December 31, 2009, the HIRSCH Servo Group employed 608 people (PY: 682). Due to the extensive cost cutting program, the payroll dropped to 631 on average for the year (PY: 716).
With the aim of ensuring the HIRSCH Servo Group's liquidity, investments in the first half of the current fiscal year were considerably lower at €0.9 million than in the same period the previous year (PY: €1.8 million).
Business Segment Development in First Half of 2009/10
The EPS Processing business segment with the two divisions EPS Packaging and EPS Insulation reported a 21 percent drop in sales to €34.0 million for the period under review (PY: €42.8 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. In addition, the number of units sold was lower than in the equivalent period last year. A cost-cutting program in the operating companies had a beneficial effect on earnings, which was however reduced by one-time restructuring costs in HIRSCH Servo AG. EBIT fell to €1.25 million (PY: €1.76 million). The improvement in POA to €0.68 million (PY: minus €0.9 million) was mainly due to the higher financial result of €2.1 million, although positive exchange rate differences compared with the first half of the previous year accounted for €1.3 million of the figure. Furthermore, interest expenses were lower than in the same period last year.
Sales in the Technology business segment were down 31 percent in the first half of the year to €5.2 million (PY: €7.5 million). The slump in the sales figures is the result of customers' great reluctance to invest – particularly in the first quarter – and the generally problematical funding situation in the capital markets. In the second quarter, the figures picked up to a slight extent. Thanks to the cost-cutting program introduced last year and the lower interest expenses compared with the same period the previous year, the impact of the lower turnover on earnings was not as high as would otherwise have been expected. EBIT totaled minus €1.6 million for the period (PY: minus €0.92 million) and POA minus €1.82 million (PY: minus €1.42 million). Effective July 1, 2009, HIRSCH USA Inc., a wholly owned subsidiary of HIRSCH Maschinenbau GmbH, was also included in the HIRSCH Servo Group's consolidated companies.
The Logistics business segment did not yet generate any income in the first half of fiscal 2009/10. GGB-Global Green Built GmbH reported that nothing came of a contract signed in November with a view to setting up a joint venture with one of the largest building companies in Egypt, Alexandria Construction Company (part of TMG Holding). As a result, sales are no longer expected from this project. Widespread decline in the global transport industry led to delays for Global Green Pallets GmbH. For the two "green" companies in the HIRSCH Servo Group – GGB-Global Green Built GmbH and Global Green Pallets GmbH – the search for investors will therefore play a major role in future growth over the coming months. EBIT totaled minus €1.85 million for the period (PY: minus €1.09 million) and the POA was minus €2.03 million (PY: minus €1.1 million).
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 report for the first half year 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 half-year report was not completely audited or reviewed by the auditor.
Announcement Regarding 1st Half-Year 2009/10 Report
The report for the first half of 2009/10 from July 1, 2009 to December 31, 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 May 28, 2010 when the results for the third quarter 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 Marlene Wieland, Phone: +43 4277 2211-126, Fax ext.: 370, E-mail: marlene.wieland@hirsch-gruppe.com, www.hirsch-gruppe.com