Revenue rises by 13.2 percent in 2011 / EBIT improves by 57.7 percent to € 4.8 mill. / cautious expectations for the first half of 2012 / outlook: swift expansion of revenue share outside the printing industry to 30% / co-operation with KLH increases footprint in the laser industry
The technotrans group returned to a growth pathway in the 2011 financial year. Revenue rose by 13.2 percent to € 97.3 million (previous year € 85.9 million). This increase owed much to Termotek AG, the newest member company of the technotrans group and a specialist supplier of cooling systems for lasers; technotrans acquired this company in January 2011. The continuing moderate recovery in the printing industry in the first half of 2011 also contributed towards the good performance, though this effect was virtually cancelled out by the unfavourable conditions in the second half.
The group’s financial performance improved in 2011. The third quarter saw the EBIT margin reach 7.5 percent, its best level since the start of 2008. On the other hand the insolvency of manroland AG, the second-largest customer, left deep scars on the fourth-quarter earnings figures. At the time of manroland AG’s filing for insolvency, the technotrans Group had net receivables from the former amounting to some € 1.3 million and consequently the EBIT margin for the full year was pushed down to 4.9 percent.
“Excluding the non-recurring effect of the necessary impairment of receivables from manroland AG, the margin would have reached 6.3 percent”, explains Henry Brickenkamp, Spokesman of the Board of Management. “In view of the more difficult economic environment, the actual business operations were nevertheless almost in line with our expectations.”
The net profit for the 2011 financial year doubled compared with the previous year (€ 1.5 million) to € 3.0 million. Earnings per share, for shares outstanding, are therefore € 0.47 (previous year € 0.24). In the interest of the future growth of the company management proposes to distribute no dividend for fiscal year 2011.
The employee total in the technotrans Group on December 31, 2011 was 637 (previous year 623).
The segments
The Technology segment benefited considerably from the takeover of Termotek AG. Revenue for the segment reached € 61.7 million (previous year € 51.4 million), with a growth rate of 20.0 percent. The modest recovery in demand from the printing industry in the first half of 2011 temporarily had the desired effect. However, the reversal of fortunes in the second half due to less a favourable business environment almost entirely cancelled out this earlier progress. Especially in the final months of the year, demand for printing presses and therefore for technotrans products was markedly down.
The operating result continued to improve as planned in the course of the year, but non-recurring effects in particular from the insolvency of manroland AG ultimately had a significant negative impact on the financial performance. For that reason among others, earnings before interest and taxes (EBIT) reached only € -0.9 million (previous year € -2.6 million), in an abrupt reversal from the segment’s return to positive territory after the first nine months of 2011.
The Services segment continued to grow slowly but surely in 2011. Revenue rose by 3.2 percent to € 35.6 million (previous year € 34.5 million). One of the key factors in this development was our subsidiary gds AG, which provides services and software for technical documentation. Classic service business, on the other hand, remained mainly flat.
Earnings for the Services segment showed still a slight improvement on the already very good prior-year figure, rising 1.7 percent to € 5.7 million (previous year € 5.6 million). This equates to an EBIT margin of 16.0 percent, compared with 16.2 percent in the previous year. gds AG also contributed towards this positive development.
Financial Position
On the basis of a net income for the year of € 3.0 million (previous year € 1.5 million), the cash flow from operating activities before changes to working capital totalled € 8.1 million (previous year € 6.6 million). Overall, the net cash from operating activities amounted to € 5.9 million (previous year € 7.4 million). This positive operating cash flow was sufficient to cover both investment spending (€ 1.3 million) and the interest acquired (€ 1.0 million). The free cash flow amounted to € 3.6 million (previous year € 6.3 million). As expected, it therefore developed positively over the year as a whole.
Cash and cash equivalents as at the end of the year remained almost constant at € 12.8 million (previous year € 13.1 million).
The group’s net debt, in other words interest-bearing liabilities less cash, now amounted to € 4.9 million (previous year € 5.8 million) at the reporting date. Gearing, as the ratio of net debt to equity, improved to 13.1 percent (previous year 17.4 percent).
New Markets
For some time now technotrans is pursuing a number of promising projects in order to apply the core skills of the company to other areas of the industry. The aim is to generate 30 percent of the revenue outside the printing industry in three years’ time at the latest. With the takeover of Termotek AG in 2011, technotrans has gained a foothold in an interesting growth market for laser applications.
In addition the technotrans Group and KLH Kältetechnik GmbH have concluded a cooperation agreement. KLH Kältetechnik, a company belonging to the Selck Group and based in Bad Doberan (Mecklenburg-Western Pomerania), specialises in universal cooling systems from 5 kW to 300 kW as well as energy-conscious industrial cooling equipment and installation up to 1 MW. KLH’s customers include leading manufacturers of laser applications. The partnership between the two companies involves the sales, service, manufacturing and purchasing areas.
“According to experts, the market for laser applications will grow by an average of nine percent over each of the next years. By tapping into technotrans’ international sales and service network and exploiting the scope to extend the product range through the collaborating, over the medium term our activities in the laser industry should perform easily better than the market as a whole”, says Brickenkamp.
The organic activities away from the printing industry also progressed well. For example technotrans was chosen as volume production supplier of a self-developed preparation system for cooling lubricant – the toolsmart – for the machine tool manufacturer Sauer GmbH, which is part of the Gildemeister group. The first systems were delivered in 2011 and they are expected to generate a notable level of revenue from 2012.
Outlook
Bearing in mind the business performance in the closing months of the 2011 financial year and the current situation of slow business at the start of this year, management approaches the plans for the new financial year only with cautious optimism. Demand for printing presses has been falling recently and the activities in markets outside the printing industry are not yet able to compensate fully for this downturn.
The aim is to generate revenue of € 90 to 95 million in the 2012 financial year in the technotrans group. “An improvement in the economic climate would prompt us to review our targets”, says Brickenkamp.
“We expect to be able to achieve an EBIT margin of 5 to 6 percent at the anticipated level of revenue, depending on whether the latter comes in nearer the upper or lower end of the target range”, says Dirk Engel, Chief Financial Officer of technotrans AG. 2012’s earnings will again have to absorb expenses incurred for the drupa show, along with ongoing expenses in activities outside the printing industry in order to tap new areas of business.
As matters stand management expects the underlying situation to improve in the second half of 2012. This, together with the strategic options, would pave the way for both increasing revenue to as much as € 110 million in the 2013 financial year, and making substantial progress in terms of profitability and increasing the EBIT margin further up to 10 percent.
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