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CEAG Posts Moderate Business Performance in First Half of 2008
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| 08/13/2008 |
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| CEAG Posts Moderate Business Performance in First Half of 2008 |
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Consolidated revenues and unit sales down
Consolidated net profit of EUR 10.8 million boosted by the sale of the FMP business unit
FPS business unit repeats the good prior-year EBIT margin of over 6%
Ostbevern, Germany, August 13, 2008 – CEAG, manufacturer of high-quality FRIWO brand power supplies and chargers, reports moderate business performance for the first half of 2008. Unit sales, revenues and earnings were down on the same period in 2007. This is due in particular to the fall in unit sales in the IT and communications markets as well as to currency effects from the continued rise of the euro against the US dollar. Growth in other market segments, which was pleasing at times, was not able to cushion the decrease.
Adjusted for currency effects, revenues in the first six months of 2008 were 3.0% short of the corresponding prior-year figure. For the continuing business unit, FPS, earnings before interest and taxes (EBIT) matched the good level of the prior year, net of currency effects.
Sale of FMP Completed
With CEAG AG having agreed to sell the FRIWO Mobile Power (FMP) business unit to a subsidiary of Flextronics International Ltd., Singapore, on February 7, 2008, the transaction was completed on May 7, 2008. The final purchase price came to approx. EUR 56.2 million.
Unit Sales
The CEAG Group sold 14.2 million devices in the first six months of 2008, 4.8% fewer than in the prior-year period (15.0 million units). The decline is chiefly attributable to weaker demand from the IT and communications segments which was evident, for example, in customers delaying and postponing projects. It should be noted in this regard that FPS reported unusually strong growth in the first half of 2007 compared to the prior year.
In the second quarter, unit sales stood at 6.9 million units (second quarter of 2007:
7.2 million units, down 4.8%).
Revenues and Earnings
The Group posted revenues of EUR 38.9 million in the first six months – down 11.1% on the first half of 2007 (EUR 43.7 million). The main reasons for the drop are the lower unit sales and the further rise of the euro against the US dollar. Adjusted for currency effects, revenues were 3.0% down against the first half of 2007.
In the second quarter, revenues came to EUR 19.0 million (second quarter of 2007: EUR 20.8 million, down 8.4%).
The CEAG Group generated earnings before interest and taxes (EBIT) of EUR 1.4 million for the first half of 2008 compared with EUR 1.8 million in the same prior-year period. Net of currency effects, EBIT was on a par with the prior year.
In the first six months, FPS generated EBIT of EUR 2.5 million (prior-year period: EUR 2.9 million). After six months, the holding company’s EBIT amounted to -EUR 1.1 million, exactly the same figure as in the first half of 2007.
Consolidated net profit for the first six months came to EUR 10.8 million. In the same prior-year period it came to EUR 3.6 million. The high profit includes the net profit from discontinued operations of EUR 9.4 million (first half of 2007: EUR 1.6 million). This result comprises FMP’s activities until its sale on May 7, 2008 and the gain on sale of the business unit.
Outlook for 2008
The Management Board expects the overall economic conditions to deteriorate further over the course of the year as a result of the clouding over of the global economy. On the cost side, persistently high raw materials, energy and wage costs are expected. A halt in the appreciation of the euro is not currently on the horizon.
The development of revenues and earnings depends to a large extent on the factors shaping exchange rates as well as on market and cost aspects. If, for example, the EUR/USD exchange rate should persist at its present high level, it looks as though consolidated revenues and consolidated EBIT will fall short of the prior-year figures for 2008 as a whole. The loss of domestic tax loss carryforwards will increase tax liabilities in 2008 and thus
impinge on consolidated net profit in comparison to the prior year.
Moreover, the Group’s results of operation, financial position and net assets in the current year will be substantially influenced by the sale of the FMP business unit. We intend to distribute a major slice of the sales proceeds to our shareholders. To this end, a proposal will be made to the annual shareholders’ meeting of August 21, 2008 to distribute a dividend of EUR 4.00 per share. If this proposal is approved, EUR 30.8 million would be payable on August 22, 2008.
The complete half-yearly financial report as of June 30, 2008 can be downloaded from the Company’s website at www.ceag-ag.com.
More information:
CEAG AG
Ms. Gudrun Richter
Investor Relations
Tel.: +49 – 2532 – 81 158
E-mail: richter@friwo.de
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