Portfolio strategy reduces dependence upon economic situation - Acquisition of Hubert secures growth

TAKKT records 10.4 percent increase in turnover in the third quarter

Stuttgart-based TAKKT AG was able to maintain during the first nine months of the financial year 2001 despite difficult global economic conditions. TAKKT AG, the leading business-to-business mail order company for office, business and warehouse equipment in Europe and North America, increased its turnover by 15.2 percent to EUR 627.2 (544.6) million. Earnings before interest, tax, depreciation and amortisation (EBITDA) were up 6.6 percent to EUR 51.9 (48.7) million. Despite the investments made by the newly established companies in Poland (KWESTO), Portugal, Ireland (KAISER + KRAFT) and the United States (Topdeq), the EBITDA margin declined only slightly by 0.6 percent to 8.3 (8.9) percent. Georg Gayer, chairman of the management board of TAKKT AG, is pleased with the results: "Even though the world’s economic situation is presently slowing down, the TAKKT group has managed to secure its strong positioning in the European and American market so far. This shows that our portfolio strategy to expand the B2B mail order business into different regions, product and customer segments has proven to be right."

Broad product portfolio offsets economic dependence
The TAKKT customers reacted to the generally difficult economic situation with reserved purchasing behaviour. During the past few months, a lower average order size and decreased order frequency have impacted the group's turnover development. On the other hand, the group's expanded customer base and product portfolio and the reduced exposure to the general economy that goes along with this expansion, had a positive effect. The acquisition of the US company Hubert, a mail order company for equipment and supplies for food service retailers and restaurants, is a good example of this strategy.
Earnings before interest and tax (EBIT) were down 16.0 percent to EUR 29.5 (35.1) million. Earnings before tax were EUR 13.3 during the first nine months of the year, as compared to EUR 27.9 million in the same period of the previous year. "This decline is due to interest expenses of EUR 9.1 million as well as amortisation of goodwill of EUR 7.3 million for the acquisition of Hubert. However, at EUR 28.6 (29.9) million, our cash flow was down only marginally so that finance for future growth is secured", says Dr. Felix A. Zimmermann, board member for finance and controlling at TAKKT AG.

KAISER + KRAFT EUROPA remains the strongest division
With a 46.4 percent share in the group's overall turnover, KAISER + KRAFT EUROPA remains the key revenue contributor for the group. Turnover increased by 9.9 percent to EUR 291.3 (265.0) million during the first nine months. The products of the newly established KAISER + KRAFT companies in Ireland and Portugal and of KWESTO Poland met with the customers’ expectations.

Topdeq USA fulfils expectations in difficult environment
During the period under review, Topdeq contributed 9.4 percent to the group's turnover. Turnover decreased by 5.3 percent to EUR 59.0 (62.3) million. This is mainly due to the cautious purchasing behaviour of “new economy” customers. The decline in demand could not be compensated through the continuing acquisition of new customers. Considering the uncertain economic situation in the United States, the newly launched US subsidiary met expectations of the management. The company convinced its customers in the United States with its European and design-oriented office furniture and its excellent service.

K + K America grows with Hubert
Considering the acquisition of Hubert, K + K America recorded a growth of 21.2 percent. As a result, turnover was USD 248.0 million, up from USD 204.6 million. Without Hubert, K + K America's turnover (in USD) would have been 12.8 percent lower. The expansion into product groups that are less dependent upon the economic cycle is systematically pursued by TAKKT AG and implemented step by step and has once again proved to be the appropriate approach. As during the previous quarters, the significant decline in turnover was entirely due to the economic situation. The events of September 2001 had no sustained impact. It should be especially mentioned that C&H Distributors and Conney Safety Products helped the people affected by the terrorist attacks in an unbuerocratic way. Both companies delivered goods in a service-oriented fashion that is typical of the mail order business.

TAKKT continues its growth course
"We will not be able to insulate ourselves completely from the general state of the economy. That’s why we are convinced of our portfolio strategy which further increases our independence from regions as well as product and customer groups even in these difficult economic times", says Gayer. Whether the aimed target of 10 percent growth in turnover can be reached, depends upon the further economic development in Europe and the USA. Extrapolated for the entire financial year, the TAKKT group expects a turnover increase and an EBITDA margin of about 10 percent.

Stuttgart, 30 October 2001

Contacts:

Georg Gayer
Phone +49 (0)7 11.50 01-239

Dr. Felix A. Zimmermann
Phone +49 (0)7 11.50 01-861