Financial Numbers 2017: Gigaset on a profitable growth

Gigaset AG presents numbers for 2017 – outlook on 2018 positive

Operational strategy pays off: Gigaset on a profitable growth trajectory

Consolidated revenue rises by 4.0% to €293.3 million: New business segments increase revenue sharply

EBITDA of €25.3 million, up on the previous year despite higher marketing and development expenditure for new and future product segments

Positive outlook for 2018 as well: Yet another increase in revenue is forecast due to further expansion of the new Business Units

Gigaset AG (ISIN: DE0005156004), an internationally operating company in the area of communications technology, today published its 2017 Annual Report and has met expectations in relation to all key figures. Gigaset is on a profitable growth trajectory: It grew consolidated revenue by 4.0% to €293.3 million (2016: €281.9 million) and posted a result from core business before depreciation and amortization of €25.3 million (2016: €25.0 million).

“Our objective is to remain on our successful path in 2018 and to keep on inspiring our customers with our innovativeness in our familiar portfolio and in our new product segments,” said Klaus Weßing, CEO of Gigaset AG. “We’ll increasingly leverage the opportunities digitization offers in 2018, successfully tap new solutions in the fields of smart solutions and future communications for Gigaset, and expand our portfolio accordingly.”

New business segments increase revenue sharply

The business segments Business Customers and Mobile Devices performed highly positively in 2017. As a result, Gigaset was able to more than compensate for the decline in revenue from its core business of DECT cordless phones. In the still contracting telecommunications market, revenue from the Consumer Products Business Unit fell by 7.6% to €215.3 million (2016: €233.1 million). Moving ahead, the company intends to focus more strongly in this segment on IP phones, which are benefiting from the conversion of telephone networks to IP, as well as large-button phones and solutions for the elderly, which should grow in importance as a result of demographic change.

However, all the other Business Units performed positively: The Business Customers segment grew its revenue sharply by 26.5% to €55.3 million (2016: €43.7 million). IP-based systems, such as the Maxwell series, and cloud-based communications platforms are also to drive the segment’s growth in fiscal 2018. 

The strong increase in revenue at the Mobile Devices Business Unit to €20.6 million (2016: €3.2 million) underscores the correctness of the strategic decision to enter this market. Gigaset successfully expanded its smartphone range last year, complementing the first smartphone it conceptualized on its own – the GS160 – with the GS170, as well as the GS270 and GS370, and believes there is further significant potential for a smartphone portfolio in the low to mid-range price segment. 

Revenue at the Home Networks Business Unit increased by 10.5% to €2.1 million (2016: €1.9 million). Gigaset will continue to focus its smart home applications on the issues of security and integratability of its alarm systems in conjunction with other smart home services and sees good potential here in the medium term.

EBITDA of €25.3 million, up on the previous year despite higher marketing and development expenditure for new subject areas

The result from core business before depreciation and amortization was €25.3 million and so slightly above the level of 2016 (€25.0 million), despite higher marketing and development expenditure on the innovative product portfolio, especially for smartphones. Reductions in personnel and general administrative costs again had a positive impact on the cost base. 

Positive outlook for 2018: yet another increase in revenue expected due to further expansion of growth areas 

Gigaset is placing its focus on the reorientation of the Company also in 2018. This means gaining market share in the consumer business, expanding revenue in the Business Customer segment, further expanding the Company’s own smartphone business in the Mobile Devices segment and expanding Home Networks as well as additional new business segments such as Smart Care and Future Communications. Expenditures in the area of marketing and for capital expenditures will play a key role again also in 2018. The Group therefore expects the following for the financial year:

An increase in revenue compared with 2017 in the lower single-digit millions through the smartphone business and the expansion of the new business segments, whereby the expectation is for an increase in revenue in the mid-to-high millions in the Germany segment, declining revenue in the mid-millions in Europe, and an increase in the mid-to-high millions in the ‘Rest of World’ segment.

The Company expects earnings of the core business before depreciation and amortization of between EUR 20 million and EUR 28 million. The operating performance is characterized by further declining gross profits in the Consumer Products segment, rising gross profits in the Business Customer and Home Networks segments, and an expansion of expenses for development and marketing.

Due to the substantial capital expenditures and subsequent expenditures for the social compensation plan and amounts set aside for risks arising from prior-year tax audits, the Company expects a negative free cash flow in the mid-single-digit millions.

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