Bocholt, September 16, 2021 - Gigaset AG (ISIN: DE0005156004), an international communications technology company, today published its report for the second quarter and first half of 2021. The gradual easing of government measures to combat the Corona pandemic, as well as the vaccination campaigns gaining momentum, led to a significant increase in revenues (+18.6%) and EBITDA in the second quarter. In the first half of 2021, Gigaset was thus able to increase revenue by a total of 34.6% and generate a clearly positive EBITDA.
Compared to the same period of the previous year, sales in Q2 2021 amounted to EUR 51.5 million (Q2 2020: EUR 43.5 million). Earnings before interest, taxes, depreciation and amortization (EBITDA) improved to EUR 2.7 million - compared to EUR -0.6 million in Q2 2020. Revenue in the first half of 2021 totalled EUR 102.0 million, compared to EUR 75.8 million in the same period of the previous year. The EBITDA for the entire first half of 2021 was also significantly higher than the previous year at EUR 4.2 million (H1 2020: EUR -8.0 million).
The Corona crisis and the associated effects are not yet over for us either," says Thomas Schuchardt, CFO of Gigaset AG. "The fact that all business areas from Phones, Smartphones, Smart Home to Professional developed positively in the second quarter of 2021 compared to the same period of the previous year is all the more pleasing and a great success at this time. All in all, we are therefore confident about the future. We want to consistently exploit the opportunities presented to us by accelerated digitization in both private and professional contexts for growth, but at the same time we must also face the challenge of material availability."
Growth opportunities through digitization
In the wake of the Corona crisis digitization has received an unexpected, strong push. Home office and remote work are becoming increasingly widespread and often require a large-scale adaptation of IT and telecommunications structures. This affects consumers and business customers alike. Gigaset is excellently positioned to support and benefit from these developments.
The effects of the Corona pandemic have led to a large shift in professional activities to the home office over the past year. In the market for DECT cordless phones, this has caused an unexpected, but probably only short-term boom. Gigaset expects the global market to decline in the long term and that price levels will continue to fall. The reasons for this are a saturated market, strong competition, and an ever-increasing volume of alternative communications technologies.
After the rapid growth of the smartphone market in the early 2010s, growth has slowed in recent years. In contrast, Gigaset was able to significantly increase the share of smartphones sold in the B2B segment. Gigaset sees one reason for this in the fact that business customers are looking for end-to-end solutions for their employees in the context of remote work. Gigaset - as the only provider of fixed-network and smartphones for B2C and B2B from a single source - offers precisely that.
Sales of smart home applications are likely to develop more cautiously than originally expected in the foreseeable future. Only in the comfort and entertainment segments did the Corona pandemic lead to an increase in demand, as people spent more time at home due to reduced mobility. Gigaset nevertheless expects to gain further market shares with its four application areas of security, energy, comfort and assistance for people in need of care.
In the field of business customer telephony, IP- and cloud-based solutions will continue to grow in importance according to Gigaset's estimates and will further displace traditional transmission technology, especially in Europe. However, the hardware required for corresponding calls will remain unaffected. As a manufacturer in the B2B segment with close ties to cloud partners, Gigaset will benefit from this.
Business performance by business area
Revenues in the Phones, Smartphones and Smart Home business areas, which are primarily geared towards private customers, amounted to EUR 79.2 million in the first half of 2021 - an increase of 36.1% compared to the same period of the previous year (H1 2020: EUR 58.2 million). In the professional segment revenue climbed to EUR 22.7 million, representing a year-on-year increase of 29.0% (H1 2020: EUR 17.6 million).
The market environment in the Phones segment remains challenging. However, business in this area is still benefiting in particular from the increased proportion of people working from home in the wake of the ongoing Corona pandemic. Demand for fixed-line phones has boosted sales significantly, especially in online retailing. As a result, sales of Phones increased by 24.0% year-on-year to EUR 70.3 million in the first half of 2021 (H1 2020: EUR 56.7 million).
The smartphones business unit is clearly recovering from the massive impact of the Corona crisis. After the already very successful first quarter, the revenue continued to grow in the second quarter. For the entire first half of 2021, it totaled EUR 8.2 million (H1 2020: EUR 0.2 million).
We are not satisfied with the current sales development in the smart home segment. In the first half of the year it amounted to EUR 0.8 million compared to EUR 1.3 million in the same period of the previous year. Gigaset sees two main reasons for this development: a market development that was not predicted by market researchers and the dominance of smart comfort and entertainment devices in these forecasts compared to the smart solutions offered by Gigaset in the areas of security or energy management.
In the Professional business unit, however, sales continued to develop positively. The main reason for this is likely to be catch-up effects due to the Corona-related postponement of projects and orders by customers. Sales in this area climbed to EUR 22.7 million in the first half of the year, compared to EUR 17.6 million in the same period of the previous year.
"After the crisis year 2020, we are very pleased with the good half-year figures," said Klaus Weßing, CEO of Gigaset AG. "They prove that we took the right measures and decisions in the face of the unprecedented Corona crisis. This has laid the foundation for the company's further positive development. Through continuous investments in innovative new products and the closely related digitization, as well as the successful conclusion of long-term cooperations, we will hold our own well in the market - I am convinced of that."
Explanatory notes on the outlook for 2021
There are still opportunities and risks for the current business year. How 2021 will develop in general and the recovery of the economy in particular is still unclear. The development is mainly dependent on the further course of the Corona pandemic.
The general economic recovery forecast by renowned economic research institutes is based on the assumption that the Corona pandemic can be successfully and quickly pushed back. If this is not successful, it could have a negative impact on private household consumption.
From Gigaset's perspective, there is still a great deal of uncertainty regarding the medium and long-term effects of the pandemic in 2021. In view of this projection, Gigaset continues to see itself as being largely dependent on external factors beyond its control - i.e. decisions by governments regarding curfews and business and border closures as well as the duration and further development of the pandemic itself.
The greatest uncertainty is in the area of material availability. It may not be possible to ensure constant utilization of production capacities due to the existing shortage on the procurement market, e.g. for chips. At present, there is no clear outlook for the future, particularly in the area of semiconductors. Gigaset, like many other industries, has to face this uncertainty in the procurement of materials. The long-standing and established business relationships with partners will be an advantage here.
Executive Board’s overall assessment for 2021
Barring a sudden, substantial worsening of the coronavirus pandemic, Gigaset expects the following development of financial position, cashflows and financial performance in the 2021 financial year:
- A modest increase in revenues and EBITDA over 2020, when the company’s performance was heavily impacted by the coronavirus;
- A positive free cashflow at the pre-coronavirus level with due regard to the planned development of operating activities and necessary investments.