• Gigaset
  • Figures for the 3rd quarter of 2016: Group reorganization taking effect – significant improvement in key figures

Figures for the 3rd quarter of 2016: Group reorganization taking effect – significant improvement in key figures

  • Result from core business before depreciation and amortization increases sharply to €12.3 million (Q3 2015: -€4.9 million)
  • Consolidated net loss for the year falls significantly to €0.4 million (Q3 2015: net loss of €14.7 million)
  • Consolidated revenue of €192.1 million (Q3 2015: €208.4 million)
  • Free cash flow improves by €11.4 million to minus €19.3 million (Q3 2015: minus €30.7 million)

Munich, November 18, 2016 - In December 2015, the Gigaset AG Executive Board adopted a far-reaching reorganization of the group, with the objective of putting the company on course for the market and competitive challenges in a changing market through various efficiency-enhancing, production and personnel measures. This involved the Executive Board pursuing a three-point plan aimed at returning Gigaset to profitable growth in the medium and long term. After the first six months of 2016, the Executive Board was able to announce that Gigaset was back in the black.

The key financial figures for Gigaset in the third quarter again underline the positive trend for the company. The result from core business before depreciation and amortization improved sharply to €12.3 million (Q3 2015: -€4.9 million), while the consolidated net loss for the year fell significantly by €14.3 million to €0.4 (Q3 2015: net loss of €14.7 million). The free cash flow improved by €11.4 million to minus €19.3 million (Q3 2015: minus €30.7 million)

“Although consolidated revenue is lower year on year due to the general market situation,” says Chief Financial Officer Hans-Henning Doerr, “positive trends can be seen from all key figures on the whole.” That was helped in particular by the decrease in personnel expenses before restructuring and in other expenses from core business. The restructuring program is thus having a successful impact, as planned, and giving us the freedom we need to position new products and solutions successfully.”

Total assets of €213.0 million
Revenue in the third quarter of fiscal 2016 decreased by 7.8% , but the gross profit only differs by 2.8%, because Gigaset considerably forewent revenues with negative gross profit. This overall divergence is mainly attributable to the decline in the market for cordless phones, which dropped again in the third quarter by 12.3% and in which Gigaset still holds a very good share of 33% in the EU 6. The group’s total assets at September 30, 2016, were around €213.0 million, a decline of approximately 3.7% over December 31, 2015.

Free cash flow improves by €11.4 million
In the past quarter, the Gigaset Group posted a cash flow from operating activities of minus €11.4 million (previous year: minus €21.3 million). There are seasonal reasons for the negative free cash flow in the third quarter. Despite a 7.8% decrease in revenue, the free cash flow improved year on year. This is mainly the result of the improved earnings situation, a lower increase in inventories for seasonal reasons, and a lower reduction in trade payables.

The cash flow from investing activities was minus €7.8 million, below the previous year’s figure of minus €9.3 million. The lion’s share of investments in the current and past fiscal year has been on non-current assets.

The free cash flow is thus minus €19.3 million compared to minus €30.7 million in the same period of the previous year.

Peformance by Business Units

Revenue in € million

Q3 2016

Q3 2015

Change

Consumer Products

157.9

168.4

-6.2 %

Business Customers

30.3

32.6

-7.1 %

Home Networks

1.2

2.7

-55.6 %

Mobile Products

2.9

4.7

-38.3 %

Total for Gigaset

192.2

208.4

-7.8 %

With a market share of 33% in terms of sales, Gigaset again underscored its premium position in the EU 6 in the third quarter of 2016, even though this market contracted overall by 12.3%. In France and the Netherlands the development runs counter to the overall trend and Gigaset could achieve a good market development here. The current market share is 29% in France and 40% in the Netherlands.

Business Customers had to deal with revenue declines at the largest customer. Nevertheless the trend in the further Business Customers Business is pleasing: It rose by 3% in the third quarter compared to same period of the previous year. This rise is attributable to a positive performance in the Netherlands and Germany. The return on sales also improved due to optimization of the product mix.

In the Home Networks Business Unit Gigaset elements grows as fast as the overall market for Smart Home Solutions and thus has been below expectations. The product positioning and market strategy are being geared to the issue of security and, together with the ongoing improvements in device software, cloud services and applications, are intended to ensure that customer needs are addressed even better. A 7% increase in registered users in the third quarter of 2016 can be taken as a positive approach of that.

Across all business unites the revenue decreased by 7.8%. However, the margin quality could be improved and the costs have been considerably reduced. Accordingly the result from core business before depreciation and amortization improved from minus €4.9 million to a positive result of €12.3 million.

“With a view on our forecasts and targets we are on course. As an important component for the success we implemented the restructuring measures successfully and began simultaneously to make our business more efficient and more profitable, states Chief Executive Officer Klaus Weßing. “Accordingly we also forecast that our key figures would be trending positively at the end of the year. We’re on course; the group’s reorganization is successful.”

Outlook
The company will continue its strategic realignment uncompromisingly. It expects the decline in the market for its core business to slow this year. Cordless phone business is still declining and so Gigaset is investing further in establishing new, promising business segments and product groups. These will make additional contributions to revenue, but they will not yet be able to compensate fully for the market-related decline in cordless phones this year. The Gigaset executive board increased the outlook for fiscal year 2016 due to the current developments.

 

  • A positive result before depreciation and amortization
  • An EBITDA in the amount of about €20.0 million and
  • A positive free cash flow of current business that is marginally negative only due to past years’ tax payments. 

In addition, Goldin Brand Ltd., Singapore, has so far not exercised its rights from the agreement to acquire trademarks and domain rights that was concluded in 2015 and has not yet paid the purchase price. The trademark and domain rights are the property of Gigaset until the purchase price is paid. Since the rights have not yet been transferred to the seller, Gigaset is also not reporting any income from the transaction for the fiscal year 2016. Accordingly, the proceeds will be recognized in the period in which both parties have exercised their rights and fulfilled their obligations.

Overview of the key figures

€ million

Jan. 1-Sept. 30, 2016

Jan. 1-Sept. 30, 2015[1]

Consolidated revenue

192.1

208.4

Result from core business before depreciation and amortization

12.3

-4.9

Result from core business after depreciation and amortization

-0.5

-20.5

Consolidated net loss for the year

-0.4

-14.7

Free cash flow

-19.2

-30.7

Diluted earnings per share in €

0.00

-0.11

€ million

Sept. 30, 2016

Dec. 31, 2015

Total assets

213.0

221.1

Consolidated equity

1.9

17.9

Equity ratio (in %)

0.9

8.1

Number of employees

837

1,270

 


[1] The figures for the previous year have been adjusted from the aspect of materiality and on the basis of the consolidated annual financial statements, since – as explained in the consolidated annual financial statements at December 31, 2015 – sale of the trademarks could not be finalized.

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