- Improved sales and results
- Profit on ordinary activities for first time since fourth quarter 2006/07
- Higher sales in EPS Processing
- Strong first quarter sales in Technology segment
- Outlook unchanged from today's perspective, turnaround planned for 2010/11
In the first quarter of fiscal 2010/11 , the improvement seen in the economic environment during the last quarter of the previous business year was reflected in substantially better capacity utilization than the same period the previous year, both in the EPS Processing and Technology business segments .
The economic upswing observed translated into increased demand from customers, particularly in the Packaging division, both for household appliances and electronic devices. As a result, capacity utilization in the packaging companies is now about at the 2008 level. The Insulation division also succeeded in introducing initial price increases in certain regional markets.
Recent recovery in the EPS Packaging division has resulted in our customers being more willing to invest again in the Technology segment.
As the two business segments Technology and EPS Processing have taken over the Logistics division's activities, they have succeeded in cutting costs considerably.
In total, sales were up around 27 percent to €25.1 million (PY: €19.7 million). The operating profit (EBIT) improved to €0.78 million (PY: minus €0.91 million) while the profit on ordinary activities (POA) was €0.23 million (PY: minus €1.31 million).
|
Sales and Earnings Trends |
1st Quarter |
1st Quarter |
Change in % |
|
Sales |
19.7 |
25.1 |
27 |
|
EPS Processing business segment |
18.0 |
21.3 |
18 |
|
Technology business segment |
1.7 |
3.8 |
122 |
|
Logistics business segment |
0.0 |
0.0 |
- |
|
Other activities |
0.0 |
0.0 |
- |
|
EBIT |
-0.91 |
0.78 |
- |
|
EPS Processing business segment |
0.75 |
1.42 |
89 |
|
Technology business segment |
-0.74 |
-0.50 |
- |
|
Logistics business segment |
-0.92 |
-0.13 |
- |
|
Other activities |
0.00 |
0.00 |
- |
|
POA |
-1.31 |
0.23 |
- |
|
EPS Processing business segment |
0.51 |
1.04 |
104 |
|
Technology business segment |
-0.85 |
-0.62 |
- |
|
Logistics business segment |
-0.97 |
-0.18 |
- |
|
Other activities |
0.00 |
0.00 |
- |
|
Employees (annual average) |
645 |
621 |
-4 |
Profit after tax rose to €0.10 million (PY: minus €1.33 million) and the balance sheet loss was minus €6.03 million (June 30, 2010: minus €6.13 million).
The equity ratio increased to 5.9 percent (June 30, 2010: 5.6 percent).
At the reporting date September 30, 2010, the HIRSCH Servo Group employed 638 people (PY: 636). The payroll fell to 621 on average for the year (PY: 645).
The investments in the first quarter of the current fiscal year totaled €0.4 million (PY: €0.3 million). Primarily aiming to ensure liquidity, we will also be restricting investing activities over the remaining business year.
Business segment development in 1st Quarter 2010/11
The EPS Processing business segment with the two divisions EPS Packaging and EPS Insulation reported an 18 percent increase in sales to €21.3 million for the period under review (PY: €18.0 million). This is firstly due to the rise in sales prices because of higher raw material prices than in the previous year and secondly to greater volumes, especially in the Packaging division. The EBIT grew to €1.42 million (PY: €0.75 million) and the POA to €1.04 million (PY: €0.51 million).
In the Technology business segment sales in the first quarter of the 2010/11 fiscal year climbed to €3.8 million (PY: €1.7 million). As restructuring costs still have to be paid, the increase in sales did not have a proportional impact on the results. The EBIT totaled minus €0.5 million for the period (PY: minus €0.74 million) and POA improved to minus €0.62 million (PY: minus €0.85 million).
Integrating the Logistics business segment into the EPS Processing and Technology segments on June 30, 2010 led to cost savings and therefore a reduction in the negative operating profit (EBIT) for the first quarter of the current fiscal year to minus €0.13 million (PY: minus €0.92 million). The POA was minus €0.18 million (PY: minus €0.97 million).
Outlook
In the EPS Processing business segment, we expect demand to continue to recover and the market situation to improve during the current business year. The Packaging division in particular is currently registering a rise in demand from existing customers and therefore an improvement in capacity utilization.
As there appears to be a general improvement in the economic environment, the positive trend can be expected to continue in the Technology business segment. Testifying to the encouraging trends was the highly successful response to the plastics trade show held from October 27 through November 3, 2010. It resulted in a large number of orders being signed during what is the most important fair for the industry.
In the period under review, we agreed with our most important banks to prolong the existing standstill period, which means that we can defer repaying long-term loans until June 30, 2011 and short-term loans until December 31, 2011. We have therefore adjusted the dates for the financial liabilities shown as at September 30, 2010 to the new standstill period.
Having prolonged the standstill period with our most important banks and aiming for improved business development compared with the previous year, we trust there will be adequate liquidity until the end of the fiscal year from today's perspective.
To implement the HIRSCH Servo Group values to a greater extent, we are intending to take action that will strengthen the capital base in the course of the business year, subject to approval at the Annual General Meeting.
Given the improved economic environment and the cost savings achieved, the company expects to see a turnaround in the 2010/11 fiscal year.
Changes did not occur in the contingent liabilities and contingent claims shown in the 2009/10 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 2009/10 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 quarterly report was not reviewed by the auditor.
Announcement Regarding 1st Quarter 2010/11 Report
The report for the first quarter 2010/11 from July 1, 2010 to September 30, 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 February 25, 2011 when the results for the first half year 2010/11 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