Gigaset AG publishes report on the first quarter of 2021

Bocholt, May 20, 2021- Gigaset AG (ISIN: DE0005156004), an internationally operating company in the area of communications technology, today published its report for the first quarter of 2021. It posted strong results in the opening quarter of the current fiscal year.  Revenue and earnings improved sharply compared with the same period of the previous year. EBITDA was also back in the black.

The company posted total revenue of €50.5 million (Q1 2020: €32.4 million) and earnings before interest, taxes, depreciation and amortization (EBITDA) of €1.6 million (Q1 2020: € –7.4 million) in the first quarter of 2021.

“We are also still feeling the impacts of the coronavirus pandemic,” says Thomas Schuchardt, CFO of Gigaset AG. “Nevertheless, the Phones, Smartphones and Professional segments performed very positively in the first quarter. Only the Smart Home segment remained heavily hit by the coronavirus pandemic. We believe we’re well-positioned moving ahead. In our view, B2B business still has great potential, while the strong increase in digitization in private and professional life offers us ample opportunities we intend to leverage uncompromisingly.” 

Performance by segments
In the mainly consumer-oriented Phones, Smartphones and Smart Home segments, revenue was €39.3 million, a sharp increase of 72.4% against 2020 (€22.8 million). In Professional business for B2B customers, the company generated revenue of €11.2 million, a rise of 16.7% over 2020 (€9.6 million).

In a market environment that remains challenging, revenue in the Phones segment is being bolstered in particular by the changes in everyday life caused by the continuing coronavirus pandemic, such as the greater shift to working from home. Demand for fixed-line telephony in conjunction with a growing trend toward online shopping has led to a sharp rise in revenue despite all the store closures. For example, revenue in the Phones segment in the first quarter of 2021 increased to €35.3 million (Q1 2020: €25.3 million) or by almost 40%. However, the company assumes that this very positive trend will level off again in the medium term.

The Smartphones segment was hit particularly hard last year by the measures to contain coronavirus in all sales markets. In the first quarter of 2020, product returns by retailers resulted in negative revenue of € –3.7 million. However, revenue in the first quarter of 2021 recovered significantly to €3.6 million – twice the figure for the first quarter of 2020. 

The situation in the Smart Home segment remains challenging. After doubling in the same period of the previous year (due to a new cooperation with a new partner in Switzerland), revenue in the first quarter of 2021 fell to €0.4 million (Q1 2020: €1.2 million). That is attributable to the fact that markets all in all are not trending as forecast by third parties, and that consumers are primarily buying smart home goods in the areas of convenience and entertainment. Smart TVs and robovacs, which are likewise included by market research institutes in their analyses, predominate compared with security or energy management solutions such as Gigaset offers.

The Professional segment is also making good headway again after the crisis year 2020. After enterprises had previously deferred projects and orders, catch-up effects in the first quarter were a factor that helped increase revenue by 16.7% to €11.2 million (Q1 2020: €9.6 million).

“By and large we feel positive about the current fiscal year,” states Klaus Weßing, CEO of Gigaset AG. “Thanks to the swift countermeasures we initiated and our large investments in our products, we laid the groundwork last year and created a good foundation for the company’s successful further development. As the figures we’ve presented demonstrate, we’ve got off to a good start in 2021. New products and key long-term partnerships, such as that with Unify Software and Solutions GmbH & Co. KG, will strengthen us further. We’ll continue to build on that in the course of 2021.”

Gigaset announced in December 2020 that it would be developing the next family of desktop phones for Unify. Licenses acquired as part of that also allow Gigaset to use the new products in its own portfolio. The agreement has a minimum term of five years starting with shipment of the first product in 2022. Gigaset expects to supply Unify and Gigaset’s direct customers with a total of more than five million phones.

The outlook in context
2021 still holds many opportunities and risks, and there is as yet no clear trend as to what will happen in 2021. The projections of a general recovery in the economy are all based on the common assumption that the pandemic will be suppressed quickly and successfully. 

If that is not the case or if the pandemic is suppressed successfully, but company bankruptcies increase sharply despite key government measures to help cushion its impact, such as the German Act to Mitigate the Consequences of the COVID-19 Pandemic under Civil, Insolvency and Criminal Procedure Law, which permitted temporarily suspension of the obligation to file for insolvency, there might be negative repercussions for private consumption by households. 

Gigaset believes that there will still be great uncertainty as regards the medium- and long-term effects of the pandemic in 2021. In view of this projection, Gigaset also continues to see itself significantly dependent on external factors beyond its control, in other words, decisions by governments to impose lockdowns or close businesses and borders, as well as the duration and further evolution of the pandemic itself. 

Moreover, full utilization of production capacities might not be able to be ensured as a result of existing shortages (such as for chipsets) on the procurement market. The challenge of procuring materials is one that is faced by Gigaset and many other industries. The company’s long-standing and established business relationships with partners will be an advantage here.

General statement by the Executive Board for 2021
Excluding a sudden and serious deterioration in the coronavirus pandemic, Gigaset anticipates the following financial performance, financial position and cash flow situation in the year 2021:

1. Compared with 2020, which was heavily impacted by coronavirus, a slight increase in revenue and EBITDA.

2. A positive free cash flow at the pre-coronavirus level, allowing for the planned operational business and necessary investments.

The complete report on the first quarter of 2021 can be found here.

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