Pfleiderer benefits from improved market situation with rising utilization of production capacity – Possibility of moderate price increases – Agreement reached on key points in talks with banks
- Revenue in the first nine months of 2009 down by 23.2 percent compared with prior-year period to 1.0 billion euros
- EBITDA down by 41 percent to 105.5 million euros, EBITDA margin of 10.2 percent
- Strong growth in Eastern Europe once again in third quarter, stable business in North America
- First recovery tendencies in Western Europe, structural costs to be adjusted to market circumstances
Neumarkt, November 24, 2009 – MDAX-listed Pfleiderer AG (ISIN DE 0006764749) is able to report a revival of business in the third quarter of 2009, particularly in the regions of Eastern and Western Europe. Compared with the previous quarter, revenue in the period of July through September increased by 3.8 percent to 347.3 million euros. This increase is stronger than usual at this time of year and indicates a general revival of demand. Pfleiderer AG assumes that the recovery tendencies will continue in 2010, but it remains to be seen how strong and sustained the positive development is. This will not be apparent until the end of the first quarter of 2010.
In the reporting period of the first nine months of 2009, the Pfleiderer Group’s revenue fell by 23.2 percent compared with the prior-year period to 1,039.7 million euros. Exchange-rate effects reduced revenue by 43.9 million euros or three percent during the first nine months of this year. The strongest regional drop in revenue was of 37.3 percent in Eastern Europe, whereas we posted growth of 1.2 percent in North America. At 72.1 percent, the proportion of revenue generated outside Germany was at the same level as in the prior-year period. Thanks to low raw-material prices – in particular for glue, glue input materials and additives – and due to efficiency-improving actions and consistent cost reductions, the gross margin of 25.2 percent was very close to the level of the prior-year period (25.6 percent). The deteriorating order situation led to lower utilization of capacity in the plants, but this situation has now been improving in Western and Eastern Europe since September. At present, only the Gschwend plant is affected by short-time working.
Due to falling unit sales in the first nine months of 2009, selling expenses fell by 14.2 percent compared with the prior-year period to 149.4 million euros. Administrative expenses remained almost unchanged at 90.0 million euros (9M 2008: 90.6 million euros). EBITDA fell to 105.5 million euros from 179.7 million euros in the prior-year period. The EBITDA margin for the first nine months of this year was thus 10.2 percent. Exchange-rate effects reduced EBITDA by 6.2 million euros in the reporting period. EBIT fell by 77.8 percent to 19.4 million euros (9M 2008: 87.4 million euros). Depreciation and amortization totaled 86.2 million euros, including impairment charges of 5.7 million euros.
The net financial expense of 37.1 million euros was only slightly higher than the prior-year figure of 36.2 million euros, and reflects a reduction of 2.4 million euros in the net interest expense due to the generally low level of market interest rates as well as other financial expense of 2.1 million euros. The latter was primarily the result of non-operating charges of 9.8 million euros from the mark-to-market valuation on the interim balance sheet date of items denominated in foreign currencies, as well as gains on forward-exchange transactions of 6.4 million euros and gains on interest-rate hedges of 1.2 million euros. In the prior-year period, there was other financial income of 1.3 million euros.
The result of continuing operations before income taxes was thus a loss of 17.8 million euros, compared with a profit of 51.0 million euros for the prior-year period. There was a net loss for the period of 13.9 million euros, compared with a net profit of 32.6 million euros in the first nine months of 2008. After loss attributable to minority interests and the interest due to the hybrid bondholders, a loss for the first nine months of 24.6 million euros is attributable to the shareholders of Pfleiderer AG, compared with a profit of 16.5 million euros for 9M 2008. The basic and diluted loss per share amounted to 49 euro cents, compared with earnings per share of 32 euro cents in the prior-year period.
“Our nine-month figures are also still significantly affected by the economic and financial crisis. It is true that we now see a business revival, which became apparent in the middle of the third quarter and which exceeds the expected seasonal development. But at present, we cannot yet say with certainty how sustained this positive development of demand will be. In recent months, production capacities totaling 1.2 million cubic meters have been closed in Central Europe, so capacity utilization has improved again. This opens up new scope for some price increases, with which we intend to offset the expected increases in raw-material prices,” stated Hans H. Overdiek, CEO of Pfleiderer AG, at the presentation of the nine-month results.
The company assumes that the market in Western Europe will not return to its level of the years 2007/08 very quickly, even though a slight revival of business is currently apparent in this region. To further support the very successful measures that have already been initiated, Pfleiderer AG will therefore continue to streamline its organizational structure. Cost savings area expected to result also from the merging of activities, especially in the management of the business in Western Europe. This will be accompanied by further rationalization of the administrative functions. The number of persons employed by the Pfleiderer Group at September 30, 2009 was 4.9 percent lower than a year earlier at 5,636.
Significantly better capacity utilization in Western Europe again
For the first nine months of 2009, the Western Europe region reports a decrease in revenue of 25.4 percent compared with the prior-year period to 558.8 million euros, with export markets suffering more than domestic markets. Nine-month EBIT fell by 84.0 percent from 88.3 million euros to 14.1 million euros. The price fall for standard products continued for a large part of the reporting period. Western Europe developed positively towards the end of the third quarter, when orders received and thus also revenue increased significantly. Capacity utilization in the plants was thus at a satisfactory level; short-time work was applied at only one plant in Germany.
Eastern Europe posts significant growth in the third quarter
In Eastern Europe, Pfleiderer AG reports a revenue decline of 37.3 percent compared with the first nine months of last year to 199.8 million euros. Exchange-rate effects were responsible for 49.4 million euros or 15.5 percentage points of this reduction. Nine-month EBIT fell by 86.3 percent compared with the prior-year to 2.5 million euros. This was caused by the furniture industry, the most important customer sector in Eastern Europe, which suffered substantial revenue losses as a result of the financial mar-ket crisis. Falling prices were also a burden on the development of revenue and earnings. In Poland, the Group’s market position was further strengthened due to significant cost-reducing actions, whereas the demand situation in Russia was very difficult in the first half of the year. However, capacity utilization improved again significantly during the third quarter due to gains in market share. Compared with the second quarter, Eastern Europe posted significant growth of 26.3 percent in the third quarter.
Slight revenue growth in North America
North America continued its positive development. In this region, the Pfleiderer Group posted revenue growth of 1.2 percent to 314.9 million euros in the reporting period. EBIT amounted to plus 8.9 million euros, compared with minus 8.2 million euros in the prior-year period. The area of flooring was primarily responsible for the positive development; it has meanwhile increased its share of a shrinking market to more than 30 percent. The area of panels showed negative growth, however. But although the market contracted by 25 percent, unit sales by the Pfleiderer Group decreased by only 18 percent. The first signs of a recovery of the real-estate market have recently been apparent in the region.
Significantly lower volumes of capital expenditure at Pfleiderer
Total investment including advance payments made fell in the first nine months of 2009 by 37.5 percent compared with the prior-year period to 86.1 million euros. Of that total, 14.3 million euros was invested in the Western Europe region. 52.7 million euros was invested in North America, mainly for the development of the MDF plant in Moncure. In Eastern Europe, investment of 18.4 million euros was substantially a reflection of expenditure for the expansion of the MDF plant in Novgorod, Russia.
During the reporting period, operating activities resulted in a net cash out-flow of 26.3 million euros, compared with a net cash inflow of 142.9 million euros in the prior-year period. The main factors behind this development were the drop in EBIT of 68.1 million euros and the change in current liabilities (excluding financial debt) of 113.0 million euros. The latter is primarily due to a decrease in trade payables of 50.9 million euros as well as a decrease in debt-collection liabilities from factoring of 34.5 million euros. Equity increased by 3.6 percent to 685.0 million euros and the equity ratio at September 30, 2009 was 34.7 percent. Compared with the end of 2008, the Group’s net indebtedness increased from 635.5 million euros to 821.5 million euros, resulting in a gearing ratio (net debt in relation to equity) of 119.9 percent.
For the fourth quarter of 2009, Pfleiderer assumes that it will once again be able to increase its revenue slightly compared with the third quarter. For the full year, Pfleiderer anticipates revenue of approximately 1.4 billion euros.
Good progress with bank negotiations
In the context of the negotiations between Pfleiderer AG and its lending banks concerning future financing, the two sides have been able to reach agreement on the key points. With the exception of just a few banks, with which a few remaining points and details are being clarified, Pfleiderer’s financing partners have approved the results of the negotiations. The company assumes that negotiations on the remaining open points will also be successfully concluded in the next few days. The negotiated results will then be included in annexes to the agreements. Pfleiderer AG will provide information on the conclusion of the financing without delay.
Pfleiderer’s latest interim report and other information on the Group can be found on the company’s website at www.pfleiderer.com.
Key figures for the Pfleiderer Group as of September 30, 2009
| In millions of euros | Jan. 1 – Sept. 30, 2009 | Jan. 1 – Sept. 30, 2008 | July 1 - Sept. 30, 2009 | July 1 - Sept. 30, 2008 |
|---|---|---|---|---|
| Revenue | 1,039.7 | 1,353.3 | 347.3 | 436.4 |
| * International share (in percent) | 72.1 | 72.0 | 73.2 | 72.1 |
| EBITDA | 105.5 | 179.7 | 26.4 | 60.2 |
| * EBITDA margin (in percent) | 10.2 | 13.3 | 7.6 | 13.8 |
| EBIT | 19.4 | 87.4 | -3.2 | 32.6 |
| EBT from continuing operations | -17.8 | 51.0 | -14.1 | 28.1 |
| Profit/Loss for the period | -13.9 | 32.6 | -17.6 | 16.3 |
| Profit/Loss attributable to Pfleiderer shareholders | -24.6 | 16.5 | -21.8 | 11.2 |
| Earnings per share - basic (in euros) | -0.49 | 0.32 | -0.43 | 0.22 |
| Earnings per share - diluted (in euros) | -0.49 | 0.32 | -0.43 | 0.22 |
| Number of employees at end of period | 5,636 | 5,926 | 5,636 | 5,926 |
| * Germany | 2,470 | 2,588 | 2,470 | 2,588 |
| * Outside Germany | 3,166 | 3,338 | 3,166 | 3,338 |
| Average number of shares outstanding – basic | 50,682,642 | 50,814,054 | 50,682,642 | 50,814,054 |
| In millions of euros | September 30, 2009 | Dec. 31, 2008 | Change in % |
|---|---|---|---|
| Total assets | 1,971.9 | 1,887.5 | 4.5 |
| Equity | 685.0 | 710.9 | -3.6 |
| Equity ratio (in percent) | 34.7 | 37.7 | -8.0 |
| Net debt | 821.5 | 635.5 | 29.3 |
Contact persons:
PFLEIDERER AG, Neumarkt
Fabian Schiffer
Vice President Corporate Communciations
Tel.: + 49 (0)9181 / 28 - 8491
Fax: + 49 (0)9181 / 28 - 606
E-Mail: fabian.schiffer@pfleiderer.com
Lothar Sindel
Vice President Investor Relations
Tel.: + 49 (0)9181 - 28-8491
Fax: + 49 (0)9181 - 28-606
E-Mail: lothar.sindel@pfleiderer.com