TAKKT AG 2004: Increase in turnover and earnings

“TAKKT had projected currency-adjusted growth of three percent for financial year 2004. We have clearly exceeded this target,” said Gayer. All earnings figures also increased sharply, with profit before tax up by 26.8 percent to EUR 51.5 (40.6) million.

“It is important to us to give our shareholders an appropriate part in the company’s success. We will therefore propose to the Annual General Meeting to increase the dividend from 10 to 15 cents per share,” said Dr Florian Funck, Chief Financial Officer of TAKKT.

Currency-adjusted growth in all divisions
At EUR 379.5 (357.9) million, turnover in the KAISER + KRAFT EUROPA division was up 6.1 percent on the previous year. Based on stable exchange rates, the increase would have been 6.2 percent. The division continued to improve its profitability at a high level. KAISER + KRAFT EUROPA’s EBITA amounted to EUR 61.2 (56.0) million, while the EBITA margin climbed from 15.7 to an excellent 16.1 percent.

The Topdeq division performed relatively well in a persistently difficult environment. While the weakness of the European office furniture market again weighed on the company’s turnover in 2004, the effects were not as strong as in 2003. Topdeq generated EUR 74.6 (74.6) million in turnover. Based on stable exchange rates, however, turnover would have been up by 1.7 percent. Personnel measures at the management level had a non-recurrent negative effect on earnings. As a result, EBITA declined to EUR -2.2 (-1.2) million and the EBITA margin stood at -2.9 (-1.6) percent.

K + K America, the third TAKKT division, generated USD 339.8 (317.7) million in turnover, up 7.0 percent on the previous year. The Group clearly increased its profitability through optimised capacity utilisation and cost savings. As a result, EBITA surged by over 30 percent to USD 33.4 (25.5) million and the EBITA margin reached 9.8 (8.0) percent. Due to the weak US dollar, euro-denominated turnover declined by 2.8 percent to EUR 273.5 (281.4) million, while EBITA increased to EUR 26.9 (22.6) million.

Over-proportional increase in earnings figures
TAKKT once again increased its gross profit margin moderately to 40.8 (40.5) percent. “This positive development is due, among other things, to the fact that we negotiated improved purchasing terms again,” said Funck. The expansion of the Kamp-Lintfort mail order centre also had a positive effect, as the company’s stock shipment business generally generates higher gross profit margins than the drop shipment business.

Earnings before interest, tax and amortisation (EBITA) rose by 11.1 percent to EUR 78.2 (70.3) million. Profitability also improved, as the EBITA margin climbed from 9.8 to 10.7 percent, which means it is now at the upper end of the 9 to 11 percent target corridor.

Profit before tax rose by 26.8 percent to EUR 51.5 (40.6) million, benefiting besides the increase in EBITA from a further reduction in interest expenses. Due to a tax refund, the Group’s tax ratio in 2004 was lower than in the previous year. The company generated a net income before minority interests of EUR 33.0 (24.4) million, up 35.6 percent on the previous year. Earnings per share rose from EUR 0.33 to EUR 0.44.

Excellent cash flow
As a result of the good turnover and earnings figures, cash flow continued to increase at a high level to an excellent EUR 57.7 (50.5) million. At EUR 8.6 (9.8) million, capital expenditure was in line with the long-term average. Free cash flow also rose significantly by 20.6 percent to EUR 49.1 (40.7) million. “This earnings power allows us to repay our liabilities as planned, to finance future growth and to raise the dividend by 50 percent,” explained Funck.

Equity ratio at record level
TAKKT’s fixed assets declined in the year under review as a result of scheduled write-offs and currency effects. Current receivables and assets increased moderately due to the higher turnover. At the bottom line, the company’s total assets declined by 4.6 percent to EUR 457.8 (479.9) million.

Due to the good net income, equity rose to EUR 181.1 (157.2) million, bringing the equity ratio to a record level of 39.6 (32.8) percent. At the same time, net borrowings declined to EUR 182.3 (234.3) million as a result of scheduled repayments and currency effects.

Outlook on 2005: Five start-ups planned
The Management Board is cautiously optimistic about the financial year 2005 - even though the latest economic data point to weakening economic activity in Europe and North America. Thanks to the solid earnings and financial situation, TAKKT is well positioned for continued growth. In the coming months, the Group intends to establish five new companies in China, Turkey, Romania, Belgium and Canada. “We also expect our “Perfect Service” quality initiative to provide additional stimulation. The project is designed to improve our services in all divisions and, hence, to increase customer loyalty and turnover,” explained Gayer.

Against the background of the planned start-ups, the “Perfect Service“ initiative and new, optimised catalogues, the TAKKT-Management expects the Group to achieve currency-adjusted organic growth of at least three percent. The five start-ups will have an impact on profitability, as investments in new markets mean increased catalogue expenses. The EBITA margin will nevertheless again be in the upper half of the 9 to 11 percent target corridor.

The figures for the first quarter of 2005 will be published on 28 April. The Annual General Meeting will be held in Ludwigsburg on 3 May.

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 items from the following areas: business and warehouse equipment, classical and design-oriented office furniture and accessories, occupational safety products, sales promotion items for retailers, the food service industry and the hotel market.

TAKKT AG employs approximately 1,900 people, has more than 2.6 million customers worldwide and distributes more than 50 million catalogues and mailings per year.

The company is listed on the SDAX index and was admitted to Deutsche Boerse’s Prime Standard on 1 January 2003.

Stuttgart, 23 March 2005

Contacts:

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

Dr Florian Funck, CFO
Phone +49 (0)711-3 46 58-207