Leifheit Aktiengesellschaft: Leifheit expects stable turnover for full year 2017
DGAP-News: Leifheit Aktiengesellschaft / Key word(s): Quarterly / Interim Statement/9-month figures
Leifheit expects stable turnover for full year 2017
- At EUR 177.5 million, Group turnover down slightly year on year
Nassau, 9 November 2017 - The Leifheit Group is reporting a slight drop in turnover of 1.1% to EUR 177.5 million for the first three quarters of 2017. Turnover stood at EUR 179.5 million in the same period in 2016. Although the Group managed to make up for the first quarter's shortfall in the second quarter of 2017, the third quarter saw weaker-than-expected development. Brand Business generated nearly unchanged turnover on par with the previous year, whereas Volume Business recorded a decline.
The Group's domestic business continued growing strongly in the first nine months of 2017, with turnover rising 3.8% to EUR 77.2 million. Foreign business was characterised by a sharp increase of 9.4% to EUR 19.3 million in the Eastern European growth market. In particular, the Czech Republic, Poland and Ukraine posted double-digit growth rates. However, this growth was unable to compensate for the drop in turnover in Central Europe, the largest foreign target region, where turnover fell by 7.2% to EUR 74.6 million. All told, turnover outside Germany stood at EUR 100.3 million, following EUR 105.1 million in the first nine months of 2016. The foreign share of total turnover fell by 2.1 percentage points to 56.5% on account of growth in the Group's domestic market (Germany) and declines in foreign business.
Sights still set on stable ordinary dividend
"It is our firm belief that the strategic measures in place since 2015 and the recent reorganisation of our sales activities will put us back on a sustained profitable course for growth. Even though lacklustre turnover in some key foreign markets has had an impact on earnings, the good development in our domestic market, Germany, underscores the continued success of our 'Leifheit 2020' strategy. Based on the forecast business development, we will continue our shareholder-oriented dividend policy and propose in early 2018 an ordinary dividend that is on par with the most recently distributed ordinary dividend," said Thomas Radke, Chairman of the Board of Management of Leifheit AG.
The slight drop in turnover also had an impact on comprehensive income. Following EUR 84.9 million in the same period in 2016, gross profit fell by 3.5% to EUR 82.0 million in the first three quarters of 2017. The decline mainly resulted from a lack of contribution margins due to lower turnover. At 46.2%, the gross margin was accordingly 1.1 percentage points lower year on year. In the first nine months of 2017, EBIT fell by EUR 4.4 million to EUR 11.3 million due to a lack of contribution margins from turnover, non-recurring expenses for the restructuring of sales activities and the depreciation of the US dollar, along with the corresponding negative foreign currency effects. As a result, the Leifheit Group's net result for the period after taxes fell from EUR 10.2 million in the first nine months of 2016 to EUR 7.4 million in the first nine months of 2017.
Brand Business remains stable
Brand Business is the Leifheit Group's larger and strategically more important segment. It encompasses the business activities involving Leifheit and Soehnle branded products and is the focal point of the "Leifheit 2020" long-term growth strategy. Turnover in Brand Business in the first nine months of 2017 stood at EUR 149.6 million, almost on par with the level seen in the first nine months of 2016 (EUR 150.4 million). Brand Business therefore accounted for a 84.3% share of Group turnover (previous year: 83.8%). Growth in the cleaning and laundry care product categories developed in line with the expectations. By contrast, Leifheit recorded a drop in turnover in the kitchen and wellbeing product categories. Turnover grew by 5.3% in the e-commerce sales channel in the reporting period.
Volume Business falls short of expectations
Volume Business, the substantially smaller segment of the Leifheit Group, encompasses the subsidiaries Herby and Birambeau, as well as project business. It is clearly geared towards profitability. At EUR 27.9 million, the segment's turnover was down 4.1% year on year in the first three quarters of 2017 (2016: EUR 29.1 million). While turnover more than doubled in Germany as a result of special offers, the high-volume target regions Central Europe and the US posted a decline in turnover.
Turnover and earnings forecast adjusted
In the light of the business performance observed until then and negative foreign currency effects Leifheit adjusted its forecast for the financial year 2017 mid of September. Against the background of the business development in September and October and the updated plans for the remaining weeks of the year, Leifheit now expects a Group turnover on previous year's level. In September the Group assumed a growth rate slightly below its previous forecast of 3.5 to 4.5 %. In the Brand Business Leifheit now anticipates a slight increase, for the smaller and more volatile Volume Business the Group expects a turnover below previous year's level.
At the beginning of the financial year Leifheit planned earnings before interest and taxes (EBIT) on previous year's level (EUR 22.1 million), considering account non-recurring expenses for the re-organisation of sales activities in Brand Business. In the context of the adjustment mid of September the Group assumed EBIT to be lower by EUR 1 million to EUR 2.5 million. Based on the current turnover forecast and the negative foreign currency effects Leifheit now expects EBIT to be lower by EUR 2 million to EUR 3 million compared to the initial forecast.
Additional information can be found in the financial report for the period ending 30 September 2017, available at http://financial-reports.leifheit-group.com.
Leifheit AG, founded in 1959, is one of the leading European brand suppliers of household items. The company stands for high quality, innovative products with great utility and functional design in the sectors of cleaning, laundry care, kitchen goods and wellbeing. Leifheit and Soehnle are among the best-known brands in Germany. In addition to the Brand Business, Leifheit AG operates in the service-oriented Volume Business via its French subsidiaries Birambeau and Herby. The Leifheit Group and its international branches combined have around 1,100 employees. More information on Leifheit is available online at www.leifheit-group.com, www.leifheit.de, www.soehnle.de.
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