Financial and economic crisis leaves its mark on HOMAG Group AG / Ad hoc announcement

Substantial special effects burden the fourth quarter of 2008 | Net profit for 2008 after minority interests close to prior-year level

The financial and economic crisis has had a direct impact on the HOMAG Group AG’s business development sooner than originally expected. Based on preliminary figures, this was manifested in the fourth quarter of 2008 in a decrease in order intake of 46 percent to EUR 77 million (prior year: EUR 142 million). Owing to this weak order intake, there were significantly fewer plants in production as of December 31 than in the comparable prior-year quarter. This combined with the percentage-of-completion (PoC) method applied – i.e. the revenue recognition method – resulted in a considerable decrease in sales revenue in the fourth quarter due to the cut-off date. In addition, the period between October and December 2008 was marked by other substantial special effects that have influenced sales revenue and earnings. For instance, numerous currencies including the pound sterling, the Brazilian real, the Polish zloty, the Australian dollar and the Canadian dollar depreciated by as much as 22 percent in the fourth quarter compared to the third quarter of 2008. The currency translation of sales revenue in these countries resulted in an additional burden on sales.

The HOMAG Group AG’s management board thus currently expects sales revenue for the full year 2008 of EUR 856 million (prior year: EUR 837 million). Based on these preliminary figures, order intake stands at EUR 618 million (prior year: EUR 747 million), while order backlog as of December 31, 2008 came to about EUR 164 million (prior year: EUR 255 million) including the figures for BENZ GmbH Werkzeugsysteme, in which the Company acquired a majority holding as of January 1, 2009.

The special effects that burden the earnings for 2008 include exchange rate losses in excess of EUR 4 million attributable to the devaluation of numerous currencies as well as negative effects of a comparable magnitude from the application of the PoC method – i.e. revenue recognition. In addition, the restructuring measures and non-recurring costs at some sites in the fourth quarter that had already been announced resulted in extraordinary expenses of some EUR 4 million. At present, this translates to EBITDA before employee participation expenses in the region of EUR 91 million (prior year: EUR 100.1 million after IPO costs). In light of the favorable tax rate and the improved interest result, however, the management board expects a net profit for year after minority interests comparable to that of the prior year (EUR 32 million). Had it not been for the aforementioned special effects, the Company would have reached its targeted 30 percent increase in net profit after minority interests. As regards net liabilities to banks of EUR 79 million as of December 31, 2008, the figure was better than expected, despite the adverse special effects. Net liabilities to banks stood at almost EUR 95 million as of the end of the third quarter of 2008.

The 2009 forecast issued by the HOMAG Group at the start of November 2008 which anticipated a decrease in sales revenue to EUR 800 million was based on the premise that there would not be a dramatic slowdown. In the interim, however, the economic crisis has proven to be severe and, according to the management board, investment reticence has intensified further. As a result, the entire industry faces a serious slowdown. A scenario with a more pronounced drop in sales has thus become realistic. Due to the extremely uncertain conditions prevailing at present, a more detailed forecast is not possible, and the management board would rather wait until after the LIGNA, the industry’s leading trade show, which will be held in May.

Following the challenging start to the year, the management board anticipates a weak first and second quarter, and points out that negative results cannot be ruled out in individual quarters. However, a significant net profit is targeted for fiscal 2009, since the HOMAG Group is well prepared for a significant downturn.

The results of the fiscal year 2008 of HOMAG Group AG will be published in greater detail at the press briefing on the annual results scheduled for March 31, 2008.



Disclaimers
This announcement contains certain statements relating to the future. Future-oriented statements are all those statements that do not pertain to historical facts and events or expressions pertaining to the future such as "believes”, "estimates”, "assumes”, "forecasts”, "intend”, "may”, "will”, "should” or similar expressions. Such future-oriented statements are subject to risks and uncertainty since they relate to future events and are based on current assumptions of the Company, which may not occur in the future or may not occur in the anticipated form. The Company points out that such future-oriented statements do not guarantee the future; actual results including the financial position and the profitability of the HOMAG Group as well as the development of economic and regulatory framework conditions may deviate significantly (and prove unfavorable) from what is expressly or implicitly assumed or described in these statements. Even if the actual results of the HOMAG Group including the financial position and profitability as well as the economic and regulatory framework conditions should coincide with the future-oriented statements in this announcement, it cannot be guaranteed that the same will hold true in the future.

 

Back to List

Any questions?
We are at your service!

Stiles Machinery, Inc.

+1 616 698 75 00 info(at)stilesmachinery.com Contact form