TAKKT Group holds its ground in a difficult environment
High profitability shows small improvement
After achieving good results in the first nine months of 2008, also TAKKT felt the effects of the global financial and economic crisis in the final quarter. “The weak fourth quarter meant that our turnover figures ended the year under budget. Our improved earnings margins, however, prove how robustly-positioned TAKKT is to hold its ground even in difficult phases,” affirms CEO Georg Gayer.
Financial highlights in 2008
- Organic turnover growth of 0.7 percent
- EBITDA margin increases to 14.6 percent
- Cash flow margin reaches new record of 10.7 percent
“Following our announcement of new record figures for the first nine months of 2008 in spite of the already discernible weakness of the US economy, the financial and economic crisis caught up with us in the fourth quarter,” explains Georg Gayer, CEO of TAKKT AG. “In spite of our broad diversification, we cannot protect our turnover from a global recession. It is all the more satisfying, then, that we have increased our profitability slightly despite the economic slump. This is thanks not least to our focussing on our core business that we pursued rigorously in the preceding years and to the strict cost management.”
The TAKKT Group generated turnover of EUR 932.1 (2007: 986.2) million in the financial year 2008. In comparison to the previous year’s figure this represents a decline of 5.5 percent, which is due to the sale of Conney Safety Products LLC (Conney) in 2007 as well as the weak US dollar in the year under review. Adjusted for disinvestment and exchange rate effects, the Group’s turnover increased by 0.7 percent. This means that its growth forecast, which was reduced to around two percent in October 2008, was not achieved. The most significant reason for this weaker development was the reluctance of customers to order all over the world, a trend that was especially pronounced in November and December 2008.
The EBITDA (earnings before interest, tax, depreciation and amortisation) came to EUR 136.0 (142.3) million. The EBITDA margin increased to 14.6 (14.4) percent, keeping it at the upper end of the long-term target corridor of 12 to 15 percent which the Group has set itself. Thus, even under difficult overall economic conditions and despite the substantial expense incurred for newly started companies, TAKKT has again increased its profitability.
Earnings before tax amounted to EUR 113.9 (116.1) million, while the pre-tax margin increased to 12.2 (11.8) percent.
Cash flow margin improves again
The reduction in turnover caused the Group’s cash flow to drop to EUR 100.0 (101.2) million. The cash flow margin, measured as a percentage of Group turnover, nevertheless showed another year-on-year increase to reach a new record of 10.7 (10.3) percent.
“Our profitability and cash flow figures demonstrate the TAKKT Group’s strengths. Thanks to their relatively high variable element, we are able to adjust our most significant cost pools to the respective business trend,” explains CFO Dr Florian Funck. “At the same time, our B2B mail order business model gives us an important competitive advantage in this difficult economic environment. It offers customers clear savings potential in the procurement process costs area, an aspect which may become more significant in the current financial year.”
Turnover throughout the Group declines in fourth quarter
In the first nine months of 2008, TAKKT was still able to profit from its international diversification and generated organic turnover growth in its KAISER + KRAFT EUROPA and K + K America divisions. In the fourth quarter, particularly in November and December, the difficult market conditions for the Group as a whole became apparent, leading to a decline of 8.2 percent in turnover to EUR 228.9 (249.3) million. Adjusted for exchange rates, turnover decreased by 11.5 percent.
As a consequence of this, EBITDA likewise declined in the fourth quarter, falling to EUR 32.6 (41.0) million. The margin reached 14.2 (16.4) percent. Earnings before tax fell to EUR 26.6 (33.7) million and the pre-tax margin accordingly to 11.6 (13.5) percent.
Gayer assessed the fourth-quarter trend as follows: “Although we performed very well over the year as a whole, the sharpness of the recent downturn took us by surprise. Because the downward trend of the fourth quarter 2008 continued during the first weeks of 2009, further measures to adjust our cost structures will be implemented.”
Uneven development in the divisions in 2008
The divergent economic factors influencing the different regions are reflected in the varying trends shown by the divisions. In the year under review, KAISER + KRAFT EUROPA generated turnover of EUR 539.3 (519.8) million, still representing growth of 3.8 percent. The largest and most profitable division benefited over long periods from a relatively robust economic situation and, on the earnings side too, nearly maintained its previous year’s level with an EBITDA margin of 20.7 (20.9) percent.
The Topdeq Group, which aims at both the European and US markets with its assortment of high-quality office equipment, had been suffering from the economic uncertainty already since the start of the year. In the year under review turnover decreased by 9.3 percent to EUR 82.7 (91.2) million. Adjusted for exchange rates, turnover fell by 8.8 percent. Nevertheless, the EBITDA margin remained stable at 7.6 (7.6) percent.
K + K America’s turnover fell to USD 454.9 (513.0) million mainly due to the disposal of Conney in the previous year. The weakness of the US dollar meant that this decrease was more pronounced in the reporting currency of euro, namely from EUR 375.6 to 310.9 million. Adjusted for Conney, turnover as measured in US dollars fell by only 1.5 percent despite the difficult market conditions in North America. The EBITDA margin declined from 9.6 to 8.6 percent.
Chairman of the TAKKT AG Management Board retires
At the end of January, Georg Gayer (born in 1946), CEO of TAKKT AG, announced his retirement as CEO and member of the Management Board with effect from 31 May 2009.
This step is due only to personal reasons and is a regular option of Gayer’s employment contract, which was prolonged early 2008. Gayer will continue to work for TAKKT AG as a consultant.
Already in 2008 the Supervisory Board laid the basis for the long-term management structure of TAKKT through personnel decisions made and the prolongation of employment contracts with the management. The Supervisory Board will decide at its next regular meeting on 20 March 2009 about Gayer’s successor.
Telephone conference
We are inviting you to pose questions to the members of our Management Board in person. At 3pm (CET) on 17 February 2009, we will be staging a telephone conference in which you are welcome to participate. Please dial in using the number +49 711 9659-9628 (Access-Code 779134#).
Preliminary IFRS figures of the TAKKT Group for the financial year 2008
Press conference on annual financial statements
More details about the annual financial statements for 2008 and an outlook for the current financial year will be provided at the press conference in Stuttgart on 25 March 2009.
Short profile of TAKKT AG
TAKKT is the leading B2B mail order company for office, business and warehouse equipment in Europe and North America. The Group is represented with its brands in more than 25 countries. The product range of the TAKKT subsidiaries comprises over 130,000 items from the areas business and warehouse equipment, classical and design-oriented office furniture and accessories, as well as sales promotion items for retailers, the food service industry and the hotel market.
The TAKKT Group employs some 2,000 staff, has 3 million customers worldwide and distributes more than 70 million catalogues and mailings per year.
TAKKT AG is listed on the SDAX and was admitted to Deutsche Boerse’s Prime Standard on 1 January 2003.
Stuttgart, 17 February 2009
Contact:
Georg Gayer, CEO
Phone +49 711 34658-201
Dr Florian Funck, CFO
Phone +49 711 34658-207
E-mail: investor@takkt.de