Good start to the new financial year for TAKKT Group

Thu Apr 26, 2012 1:31am EDT

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Takkt AG / Good start to the new financial year for TAKKT Group . Processed and transmitted by Thomson Reuters ONE. The issuer is solely responsible for the content of this announcement.

Turnover and earnings at high level

Stuttgart, Germany, 26 April 2012. TAKKT Group's divisions began the new financial year with differing dynamics. TAKKT AMERICA benefited from the positive economic conditions, while TAKKT EUROPE felt the effects of the slowdown of the economic development in Europe. Overall, turnover increased by 4.4 percent and the EBITDA margin surpassed the very high previous level at 17.9 (2011: 17.1) percent due to lower advertising costs. For the current financial year, the TAKKT Management Board has reaffirmed its forecast for organic turnover growth of around two percent and the aimed-for EBITDA margin in the middle of the target corridor of 12 to 15 percent. The Group has tapped into additional growth in turnover and earnings by acquiring the US direct marketing company for display articles, GPA, which is not included in TAKKT's organic growth predictions.

Significant events in the first quarter of 2012

  • Organic turnover growth of 2.2 percent
  • EBITDA margin increased to 17.9 (17.1) percent
  • Earnings per share reach EUR 0.35 (0.31)
  • Total dividend of EUR 0.85 per share proposed for 2011
  • Acquisition of the US direct marketing company for display articles GPA
  • Start of web-only brand Certeo in France

In the first quarter of 2012, TAKKT Group generated consolidated turnover of EUR 222.8 (213.5) million, growing by 4.4 (14.9) percent. This increase was achieved despite the already very good level in the previous year. The strong business in North America was the main reason for this. The Group also benefited from the on average stronger US dollar against the euro. Adjusted for currency effects, turnover rose by 2.2 (12.5) percent. "As was already becoming clear at the end of the previous year, TAKKT AMERICA has replaced TAKKT EUROPE as the growth driver within the Group in the current financial year," commented Dr Felix A. Zimmermann, CEO of TAKKT AG. "While uncertainty dominated the economic situation in Europe, the economic development in North America picked up again. Once more, TAKKT benefited from the regional diversification of its activities." The growth recorded in the first three months was mainly due to a rise in average order value.

As anticipated, the gross profit margin of 43.0 (43.7) percent in the first three months of 2012 could not quite match the very high level seen in the previous year's quarter. This was primarily due to TAKKT AMERICA's higher share, which generally has a lower gross profit margin compared with TAKKT EUROPE, in consolidated turnover compared to the first quarter of 2011. Nevertheless, EBITDA (earnings before interest, taxes, depreciation and amortisation) rose to EUR 39.8 (36.6) million. The corresponding EBITDA margin was 17.9 (17.1) percent. This increase was the result of a one-time impact from changes in the timing of advertising expenses in TAKKT AMERICA's Plant Equipment Group (PEG). If PEG's advertising costs had remained unchanged, the Group's EBITDA margin would have been down slightly compared to the previous year's period. In addition to the structurally lower gross profit margin, this development is due to a lower utilisation of the mail order infrastructure in Europe.

The TAKKT cash flow - defined as the profit for the period plus depreciation and amortisation, impairment of non-current assets and deferred tax affecting profit - increased by 7.9 percent to EUR 28.6 (26.5) million. This corresponds to a cash flow margin of 12.8 (12.4) percent.

TAKKT EUROPE feels effects of economic slowdown
The clear slowdown in the European economic trend had a considerable impact on TAKKT EUROPE's turnover development in the first quarter of 2012. The division recorded a decrease of 1.8 percent to EUR 131.3 (133.7) million. TAKKT EUROPE was therefore responsible for 58.9 (62.6) percent of consolidated turnover. Adjusted for currency effects, the drop was 2.6 percent.

Order numbers fell slightly in the first three months of 2012. The average order value was roughly on the previous year's level. However, business developed differently, both between the Business Equipment Group (BEG) and the Office Equipment Group (OEG), as well as within each group. The BEG suffered a slight decrease in turnover but also showed clear variations in terms of its regional developments: Contrary to the trend, the course of business in Asia developed positively, while the business results in Southern Europe were unpleasant.

The OEG reported a decrease in turnover in the low double-digit percentage range. Following the repositioning of Topdeq in March 2011 as a high-quality supplier offering a wide range of additional services, order numbers continued to drop, as expected, due to the change in marketing strategy. By contrast, the average order value went up.

Overall, TAKKT EUROPE achieved EBITDA of EUR 30.4 (31.8) million in the first three months and was therefore an important source of earnings for the Group once again. Although the EBITDA margin was down slightly at 23.2 (23.8) percent, it remained at a very high level.

TAKKT AMERICA with good start
The TAKKT AMERICA division, consisting of the PEG, the Specialties Group (SPG) and the Office Equipment Group (OEG), increased its turnover by 14.6 percent to EUR 91.6 (79.9) million in the first quarter of 2012. TAKKT AMERICA contributed 41.1 (37.4) percent to consolidated turnover. This increase was due to the rise both in average order value and in order numbers. The on-average stronger US dollar against the euro also helped to increase turnover. Adjusted for currency effects, the growth amounted to 10.0 percent.

All three groups of the division developed pleasingly at the start of the year: The OEG took the lead, with good double-digit organic growth, the SPG also recorded a double-digit growth rate and the PEG achieved a single-digit rise in turnover.

EBITDA at TAKKT AMERICA came to EUR 12.0 (7.1) million in the first three months. This corresponds to an EBITDA margin of 13.1 (8.9) percent. Apart from better utilisation of the mail order infrastructure, this increase was attributable in particular to lower advertising expenses. The latter resulted from a seasonal shift of the catalogue printing at the PEG. However, even if advertising expenses had remained unchanged, TAKKT AMERICA's EBITDA margin would still have risen slightly. By contrast, the expected start-up losses of the European Hubert companies as well as of IndustrialSupplies.com and cateringplanet.com will continue to have a negative impact on earnings.

With effect from 01 April 2012, the TAKKT Group company K+K America Corporation acquired GPA, based in Rhode Island, USA. The new company will become part of TAKKT AMERICA's SPG. In 2011, GPA generated turnover of ca. USD 52 million and an EBITDA margin of around twenty percent. This makes GPA a leading B2B direct marketing specialist in the US display product category. Approx. eighty percent of turnover is generated online. Therefore, the acquisition is an ideal addition for TAKKT. Even after closing the transaction and paying out the proposed total dividend of 85 cents per share in May 2012, TAKKT will still have a very solid balance sheet structure with an equity ratio of more than forty percent.

Outlook for 2012 - forecast scenario remains intact
For the full-year of 2012, the TAKKT Management Board reaffirms its three forecast scenarios and its estimation of the middle scenario - with lower GDP growth in the main markets compared to 2011 - as the most likely one. According to the expectations at TAKKT, this would lead to an organic increase in turnover of around two percent and operational profitability in the middle of its own target corridor of 12 to 15 percent. "The current figures for various purchasing managers' indices (PMIs) suggest that business developments in the USA and Europe will also develop differently over the next few months" explained CFO Dr Claude Tomaszewski. "Through our various growth initiatives, we are continuing to proactively expand our business regardless of economic developments."

In February 2012, the web-only brand Certeo successfully commenced operations in France. TAKKT also launched its first customer-specific internet offering, eduquip24.de, at the end of the financial year 2011. Its target market is the adult education sector. Furthermore, the traditional multi-channel brands all over the Group will also develop and expand their offerings in 2012.

"In addition, with our recent takeover of GPA we have again taken another important step in further diversifying our portfolio towards future growth markets," concluded Tomaszewski.

Conference call
We invite you to directly address the Management Board with your questions. We will be hosting a conference call for this purpose at 15:00 (CEST) on 26 April 2012, during which we will be open to questions. To take part, please dial the following number: +49 69 201744-295 (access code: 779134#).

IFRS figures for TAKKT Group to the end of Q1 2012
(in EUR million)

 Q1 2012  Q1 2011  Change in percent
TAKKT Group turnover 222.8 213.5 4.4
Organic growth 2.2
TAKKT EUROPE 131.3 133.7 -1.8
TAKKT AMERICA 91.6 79.9 14.6
EBITDA 39.8 36.6 8.7
EBITDA margin 17.9 17.1  
EBIT 35.9 32.4 10.8
EBIT margin 16.1 15.2  
Profit before tax 34.5 30.5 13.1
Pre-tax profit margin 15.5 14.3  
TAKKT cash flow 28.6 26.5 7.9
TAKKT cash flow margin 12.8 12.4  

Company calendar
The figures for the first half-year of 2012 will be published on 31 July 2012. The Annual General Meeting will be held at the Forum Ludwigsburg on 08 May 2012.

Short profile of TAKKT AG
TAKKT is the leading B2B direct marketing specialist for business equipment in Europe and North America. The Group is represented with its brands in more than 25 countries. The product range of the TAKKT subsidiaries comprises some 175,000 products for the areas of business and warehouse equipment, classic and design-oriented office furniture and accessories, and supplies for retailers, the food service industry and the hotel market.

TAKKT Group employs some 1,900 staff, has around three million customers worldwide and distributes more than 45 million catalogues and mailings per year.

TAKKT AG is listed on the SDAX and was admitted to Deutsche Boerse's Prime Standard on 01 January 2003.

Contacts:
Dr Felix A. Zimmermann, CEO                                    Tel. +49 711 3465-8201
Dr Claude Tomaszewski, CFO                                     Tel. +49 711 3465-8207

Email: investor@takkt.de




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