Press release

TAKKT AG: increased profitability in 2003 / Stable dividend of EUR 0.10; cautiously optimistic outlook on 2004

TAKKT AG successfully held its ground in a difficult economic environment in the financial year 2003. While the company reported a decline in turnover, profitability increased. Turnover decreased by 8.9 percent to EUR 713.9 (783.7) million, primarily because of the weak US dollar. In exchange rate adjusted terms, the decline was only 1.1 percent. By contrast, earnings before taxes rose by 4.1 percent to EUR 40.6 (39.0) million, with the EBITA margin up to 9.8 (9.6) percent. TAKKT AG’s Management Board will propose payment of an unchanged dividend of EUR 0.10 per share to the Annual General Meeting.
“TAKKT AG continued to strengthen its market position. We were able to operate highly profitably despite the difficult market situation and strong currency fluctuations. This means that TAKKT’s growth and portfolio strategy has continued to pay off,” said CEO Georg Gayer at the financial statements press conference in Stuttgart.

Key figures of the TAKKT subsidiaries reflecting weak economic activity and changing exchange rates
The KAISER + KRAFT EUROPA division reported a 2.5 percent decline in turnover to EUR 357.9 (367.2) million. In exchange rate adjusted terms, the decline would have been only 1.2 percent. By contrast, the division’s EBITA rose by 1.7 percent to EUR 56.0 (55.1) million. The EBITA margin also continued to improve, reaching a new record at 15.7 (15.0) percent.

Turnover of the Topdeq group, a mail order company for design-oriented office furniture and accessories, dropped 5.9 percent to EUR 74.6 (79.3) million. The decline is primarily attributable to the persistent weakness of the market for office furniture. The well-established Topdeq companies nevertheless continued to make profits, which were insufficient, however, to offset the scheduled start-up losses incurred by the young companies in France and the USA. EBITA amounted to a projected EUR -1.2 (-1.5) million, with the EBITA margin at -1.6 (-1.9) percent.

On a dollar basis, K + K America’s turnover remained almost stable at USD 317.7 (318.0) million, while EBITA was down 6.3 percent to USD 25.5 (27.3) million. At 8.0 percent, the EBITA margin was down slightly on the previous year’s 8.6 percent. Absolute figures in euros, the reporting currency, dropped noticeably due to the weakness of the US dollar. Turnover declined by 16.6 percent to EUR 281.4 (337.4) million, while EBITA fell 21.8 percent to EUR 22.6 (28.9) million.

Increase in gross profit margin and pre-tax profit
The TAKKT group’s gross profit margin continued to increase in the past financial year to 40.5 (40.0) percent. “In Europe, we benefited from the expansion of the stock shipment, which generally generates higher profit margins than the drop shipment business,” explained CFO Dr. Felix A. Zimmermann at the financial statements press conference.

Earnings before interest, taxes and amortisation (EBITA) decreased by 6.4 percent to EUR 70.3 (75.1) million. The decline is primarily attributable to currency effects. The currency fluctuations have little impact on the group’s profitability. The EBITA margin was up slightly to 9.8 (9.6) percent and well within the long-term target range of 9 to 11 percent.

Consolidated earnings before interest and taxes (EBIT) were down 5.5 percent to EUR 53.9 (57.0) million. The EBIT margin rose moderately to 7.5 (7.3) percent. Earnings before taxes climbed 4.1 percent to EUR 40.6 (39.0) million, as the TAKKT group benefited from reduced interest expense. At EUR 24.4 million, net income after taxes was on a par with the previous year’s EUR 24.5 million. Earnings per share remained stable at EUR 0.33.

Cash flow stays at high level
As in the previous years, TAKKT again generated a high cash flow of EUR 50.6 (53.0) million in 2003. The moderate decline is mainly attributable to currency translation. At EUR 9.8 (8.6) million, capital expenditure was at a normal level. The free cash flow amounted to EUR 40.8 (44.4) million. “The very good figures testify to the profitability of the TAKKT group. The cash flow provides us with sufficient liquidity for scheduled debt repayments and internal financing of our future expansion”, said Dr. Felix A. Zimmermann commenting on the figures presented.

Strong increase in equity ratio
Fixed assets declined for currency reasons and as a result of scheduled depreciation. Current assets also declined due to currency effects. Overall, total assets dropped by 11.2 percent to EUR 479.9 (540.4) million. The group’s net income (after minority interests) increased the equity to EUR 157.2 (149.6) million. The equity ratio improved noticeably to 32.8 (27.7) percent. In euro terms, liabilities declined significantly as a result of currency effects and scheduled debt repayments. As of the reporting date, interest-bearing liabilities amounted to EUR 238.6 (291.3) million.

Stable dividend
The Management Board will propose to the Annual General Meeting to pay out an unchanged dividend of EUR 0.10 per share for the financial year 2003. “We are pleased that we can pay our shareholders an appropriate share in the past year’s results despite the difficult conditions under which our company has operated,” said Georg Gayer at the press conference.

Cautious optimism for 2004
TAKKT hopes that the global economy will recover in the financial 2004. In view of the continuing uncertain economic prospects, the group will focus on optimising its processes, services, advertising materials and product offerings and on expanding its position in different markets. If the growth rates projected by economic researchers are actually achieved, the Management Board expects exchange rate adjusted organic turnover to grow by 3 percent.

While a continued weakness of the US dollar may have an ad-verse impact on turnover in euros, this has no effect on the group’s profit margins. TAKKT AG will therefore retain its EBITA margin target of 9 to 11 percent.

The figures for the first three months of 2004 will be published on April 29, 2004. The Annual General Meeting will be held in Ludwigsburg on May 4, 2004.

Short profile of TAKKT AG
Represented in more than 20 countries, TAKKT AG is the number one B2B mail order company for office, business and warehouse equipment in Europe and North America. The product range of the TAKKT subsidiaries comprises some 100,000 business and warehouse equipment items, classical and design-oriented office furniture, occupational safety products as well as sales promotion items for retailers, the food service industry and the hotel market.

TAKKT AG employs approximately 1,900 people, has 2.5 million customers worldwide and distributes more than 50 million catalogues and mailings per year. The company is listed in the SDAX and was admitted to Deutsche Boerse’s Prime Standard on January 1, 2003.

Stuttgart, March 23, 2004

Contact:

Georg Gayer
Phone +49 (0)711 3 46 58-201

Dr. Felix A. Zimmermann
Phone +49 (0)711 3 46 58-207