• Sales down 13.5 percent but positive trends in third quarter
• Drop in earnings mainly due to comprehensive restructuring measures
• Third quarter turnover up 14 percent over previous year in EPS Processing and up
7 percent in Technology segment
• Restructuring in Logistics business segment
• Results predicted for 2009/10 still negative, appropriate provisions made for risks
First to Third Quarter 2009/10
The third quarter of the 2009/10 fiscal year showed very positive sales trends. As the general economic situation has now slightly improved, the EPS Processing business segment posted a 14 percent increase in turnover for the third quarter. The Technology business segment achieved 7 percent higher sales in the third quarter despite the generally problematical funding situation in the capital markets and the fact that customers are only slowly recovering from their reluctance to buy machinery. The Logistics business segment generated slight income in the period under review. Total sales were 13.5 percent down in the first three quarters to €57.4 million (PY: €66.4 million). The operating profit (EBIT) fell to minus €5.89 million (PY: minus €1.94 million) and the profit on ordinary activities (POA) to minus €7.28 million (PY: minus €6.44 million).
|
Sales and Earnings Trends |
Quarters 1-3 |
Quarters 1-3 |
Change in % |
|
Sales |
66.4 |
57.4 |
-14 |
|
EPS Processing business segment |
56.1 |
49.2 |
-12 |
|
Technology business segment |
10.3 |
8.2 |
-20 |
|
Logistics business segment |
0.0 |
0.0 |
- |
|
Other activities |
0.1 |
0.0 |
-100 |
|
EBIT |
-1.94 |
-5.89 |
- |
|
EPS Processing business segment |
1.44 |
0.86 |
-40 |
|
Technology business segment |
-1.75 |
-3.89 |
- |
|
Logistics business segment |
-1.63 |
-2.87 |
- |
|
Other activities |
0.00 |
0.00 |
- |
|
POA |
-6.44 |
-7.28 |
- |
|
EPS Processing business segment |
-2.40 |
0.17 |
- |
|
Technology business segment |
-2.40 |
-4.28 |
- |
|
Logistics business segment |
-1.64 |
-3.17 |
- |
|
Other activities |
0.00 |
0.00 |
- |
|
Employees (annual average) |
705 |
616 |
-13 |
Profit after tax dropped to minus €7.38 million (PY: minus €5.71 million) and the balance sheet loss was minus €7.3 million (June 30, 2009: €0.11 million).
The equity ratio declined to 5.0 percent (June 30, 2009: 12.6 percent).
In the period under review, the cash flow from operating activities was €2.87 million (PY: €9.1 million).
At the reporting date March 31, 2010, the HIRSCH Servo Group employed 605 people (PY: 658) due to the extensive cost cutting program. The payroll fell to 616 on average for the year (PY: 705).
With the aim of ensuring the HIRSCH Servo Group's liquidity, investments in the first three quarters of the current fiscal year were considerably lower at €1.3 million than in the same period the previous year (PY: €5.4 million).
Business Segment Development in the First Three Quarters 2009/10
The EPS Processing business segment with the two divisions EPS Packaging and EPS Insulation announced sales revenue of €49.2 million for the first three quarters (PY: €56.1 million), which is a decline of €6.9 million or 12 percent. What mainly accounted for the drop in turnover was a decrease in sales prices caused by lower raw materials prices than in the same period the previous year. Despite lower sales, the cost-cutting measures led to higher EBIT in the operating companies than last year. Higher exchange rate differences amounting to €2.1 million and lower interest expenses totaling €1.1 million than in the same period the previous year also led to positive effects in the financial result. One-time restructuring costs that were primarily reflected in legal and consulting costs for HIRSCH Servo however also impacted the result for the EPS Processing business segment. EBIT dropped to €0.86 million (PY: €1.44 million) and POA was €0.17 million (PY: minus €2.4 million).
In the Technology business segment sales for the first three quarters were down roughly 20 percent to €8.2 million (PY: €10.3 million). The 7 percent higher sales for the third quarter of the period under review than the previous year and the orders on hand for the fourth quarter would indicate improved trends in the current fiscal year. EBIT totaled minus €3.89 million for the first three quarters (PY: minus €1.75 million) and POA minus €4.28 million (PY: minus €2.4 million).
The Logistics business segment only generated slight income in the first three quarters of fiscal year 2009/10. The two companies in the Logistics segment, GGB-Global Green Built GmbH and Global Green Pallets GmbH, reported EBIT of minus €2.87 million for the period under review (PY: minus €1.63 million) and POA of minus €3.17 million (PY: minus €1.64 million).
Outlook
The EPS Processing business segment continued to show constant growth as the markets stabilized, indicating positive results as at June 30, 2010.
In the Technology business segment, positive trends for the operating result are also to be seen. The high delivery rate and rise in contribution margins for the machines would suggest positive developments for the fourth quarter. In addition, adjustments to the value of receivables and valuations of the inventories enabled appropriate provisions to be made for risks, which will ensure that future results are not compromised.
The search for investors in the two companies GGB-Global Green Built GmbH and Global Green Pallets GmbH was not successful, with the result that planned project sales could not yet be achieved. In an effort to move forward with the restructuring process, the HIRSCH Servo Group's Management and Supervisory Boards decided to reorganize the two project companies. The existing project investments will be spun off, the valuable assets (e.g. licenses and trademark rights, etc.) transferred to other group companies, and the production facilities used in the EPS sector. The project companies will be closed or merged.
Given that final restructuring measures are required and still have to be implemented, Management is assuming the results will be more negative than anticipated. Provisions for risks have however been made. The focus for the current fiscal year will continue to be on ensuring liquidity.
The HIRSCH Servo Group with its business segments and extensive product range 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 third quarter 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 balance sheet date that would have led to a different portrayal of the net assets, financial position and results of operations.
The third-quarter report was not completely audited or reviewed by the auditor.
Announcement Regarding 3rd Quarter 2009/10 Report
The report for the first nine months of 2009/10 from July 1, 2009 to March 31, 2010 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 October 29, 2010 when the results for fiscal 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.: 170, E-mail: marlene.wieland@hirsch-gruppe.com, www.hirsch-gruppe.com