Munich, September 25th, 2019 - Gigaset AG (ISIN: DE0005156004), an internationally operating company in the area of communications technology, today published its report for the second quarter and first half of 2019. According to the report, the company's revenue for the first six months changed to €107.1 million (previous year: €121.0 million). At the same time, Gigaset was able to significantly increase its gross profit margin as well as its operating and free cash flow.
"Margin quality and cash flow are two key factors for us. In the first half of 2019, we achieved another improvement here, proving that we were able to set up the company on a solid basis," says Thomas Schuchardt, CFO of Gigaset AG. "We are continuing to work on the digital transformation of the company and toward a holistic product eco-system. That's why we are primarily focusing on the medium and long-term development of the company and systematically developing our Professional, Smart Home and Smartphones business segments," adds Klaus Weßing, CEO of Gigaset AG.
Improvement of gross profit margin as well as operating and free cash flow
The result from core business before depreciation and amortization (EBITDA) changed in the first half of 2019 to €6.7 million (previous year: €7.7 million), the EBITDA margin (EBITDA in relation to revenue plus change in inventories of finished goods and work in progress) improved to 6.4% (previous year: 6.2%) due to strict cost management. Overall, operating cash flow and free cash flow improved significantly compared to the first half of 2018. In numbers, the operating free cash flow changed to minus €0.2 million (previous year minus €16.9 million) and the free cash flow to minus €6.8 million (previous year: minus €23 million).
Revenue by business segment
Revenue in the Phones business segment followed the continuing decline in the market, falling to €76.4 million in the first half of 2019 (previous year: €085.8 million). Gigaset nevertheless managed to maintain its market-leading position in Europe. The product focus is still on expanding the HX portfolio based on IP technology and addressing demographic issues of users.
With smartphones, Gigaset generated revenue of €4.2 million in the first half of 2019 (previous year: €5.4 million). The goal remains to expand the company's market position and further strengthen the portfolio. "We are confident that we will be able to achieve our overall sales target," says Thomas Schuchardt. "As usual, we expect the bulk of revenue at Christmas."
Revenue from smart home products is continuing to perform well. It rose to €1.6 million in the first half of the year (previous year: €1.4 million). The company sees further potential for its smart home products, whose range has been steadily expanded and now includes smart security, smart comfort and smart care.
Professional products generated €24.9 million in the first half of 2019 compared to €28.4 million in the same period of the previous year. Gigaset is driving forward the expansion of the product portfolio and its market position. Revenue in the Professional segment primarily comes from project business, which is not always evenly distributed over the year. Gigaset expects further revenue in the course of the year due to the newly introduced multi-cell N870IP Pro, which can also be used for large-scale installations in the enterprise sector.
Outlook for 2019
Gigaset is continuing the operational strategy it launched in 2016. The entrepreneurial focus is on expanding the product portfolio while securing core business. Accordingly, research, development and marketing expenses will increase to develop new products, enter markets and address new customer groups. "We are still in a marathon. The important thing is that we continue the positive trend of recent years and create a positive result at the end of the day. We will mobilize all forces to also achieve that this year, despite an increasingly negative economic climate," concludes Klaus Weßing.
In 2019, Gigaset intends to continue the operational strategy it launched in 2016. Its entrepreneurial focus is on expanding the product portfolio while securing its Phones business. Accordingly, there will be an increase in research and development expenditure, part of which will be compensated for by strict cost management.
With regard to compensating for the factored-in decline in the market at the Phones segment, which Gigaset aims to cushion by expanding its activities and growing revenue in the Smartphones, Smart Home and Professional segments, the company therefore expects for the current fiscal year 2019:
- A slight increase in revenue over 2018
- A sharp improvement in free cash flow and
- EBITDA at the level of the previous year
The complete report on the second quarter of 2019 can be downloaded from www.gigaset.ag.