TAKKT Group turnover still under pressure

Measures to adjust structures and capacities weigh on profits 2009 as expected

Turnover within the TAKKT Group continued to feel the negative effects of the global economic crisis in the third quarter of the year as the Group recorded a 22.5 percent decline in turnover in this period. In spite of this massive slump in turnover, TAKKT managed to keep its operational profitability in double digits, with an EBITDA margin of 10.1 percent. Based on the business development in the third quarter, the Management Board has further specified its forecast for 2009.

Significant events in 2009
• Currency and acquisition-adjusted decline in turnover of 28.4 percent
• Gross profit margin above previous year’s level at 41.9 percent
• Acquisition of the leading US mail order group for restaurant equipment
• TAKKT wins first place in the German Investor Relations Award
• FOCUS and GROWTH programmes launched

FOCUS and GROWTH deliver first results
TAKKT introduced the FOCUS and GROWTH programmes in 2009 in response to the ongoing crisis in demand. FOCUS reviews the existing and potential value contribution of all the Group’s activities, processes and structures, and adequately adjusts its cost structures and capacities to the demand situation, while GROWTH pools and prioritises all the Group’s clearly identified growth initiatives and accelerates their implementation. Beside the measures announced at half-year, further FOCUS measures have been determined in the third quarter. Mainly at KAISER + KRAFT EUROPA, the personnel capacities at the production site in Haan near Duesseldorf will be adjusted to the economic situation and the Haan warehouse will be closed on 31 December 2009. “All FOCUS measures determined so far are being implemented according to plan and shall be concluded until the end of the year,” said CEO Dr Felix A. Zimmermann.

All FOCUS measures are connected with one-time extraordinary expenses of slightly more than EUR 5 million (at the EBITDA level) in 2009, of which just under EUR 3 million are already included in the profit for the first nine months of 2009. The Management Board is reckoning with a positive earnings effect of more than EUR 3 million per annum from all the FOCUS measures as of 2010.

Changes to the corporate structure in 2010
For reasons that include the closing down of Topdeq in the USA, the corporate structure of the TAKKT Group is set to change on 01 January 2010. From then on, the TAKKT Group will consist of two business divisions: TAKKT EUROPE and TAKKT AMERICA. TAKKT EUROPE will comprise the two following groups: the Business Equipment Group (BEG), consisting of the companies of the former KAISER + KRAFT EUROPA division, and the Office Equipment Group (OEG), made up of the Topdeq companies. TAKKT AMERICA will continue to consist of the Plant Equipment Group (PEG), the Office Equipment Group (OEG) and the Specialties Group (SPG).

The structural changes will result in the downsizing of the Management Board from four to three members. As the CEO, Dr Felix A. Zimmermann will remain in charge of the TAKKT AMERICA division, while Franz Vogel will assume responsibility for TAKKT EUROPE within the Management Board, and Dr Florian Funck will continue to be CFO. Didier Nulens is retiring from the TAKKT AG Management Board as of 31 December 2009 and will henceforth focus on managing the Topdeq activities respectively the Office Equipment Group within TAKKT EUROPE.

Additional GROWTH measure: expansion into Russia
The new e-commerce company Certeo, which was announced as part of the GROWTH programme, went into operation as planned in October 2009, and the expansion into the service sector progressed to the next level when Hubert was launched in France. The Management Board has also decided to expand the successful TAKKT business model into Russia, introducing the KAISER + KRAFT brand there in early 2010. More GROWTH initiatives are in the pipeline for 2010 and their implementation is currently being worked on intensively.

Strong buying resistance continues to affect TAKKT Group
The TAKKT Group generated turnover of EUR 544.9 (2008: 703.2) million in the first nine months of 2009, which represents a year-on-year downturn of 22.5 percent. Adjusted for acquisition and currency effects, consolidated turnover was down by 28.4 percent. CFO Dr Florian Funck commented on the development of turnover as follows: “The decline in turnover slowed down in the third quarter. Therefore, the trough of the crisis seems to be behind TAKKT. However, it is still too soon to talk of a substantial upturn in demand.”

The TAKKT Group’s gross profit margin rose to 41.9 (41.7) percent. Adjusted for acquisition effects, it increased to 42.3 percent thanks to improvements in purchasing prices. As expected, EBITDA (earnings before interest, tax, depreciation and amortisation) fell on the back of the sharp downturn in business in the first nine months, from EUR 108.2 to 55.2 million, equating to an EBITDA margin of 10.1 (15.4) percent. The drop in profits reduced cash flow from EUR 78.0 to 40.7 million, for a cash flow margin of 7.5 (11.1) percent.

“The unusually severe economic downturn meant that it was not possible to maintain operational profitability at a steady level, in spite of comprehensive measures implemented to adjust capacities and cost structures to the economic situation,” Funck commented. Adjusted for extraordinary expenses relating to the FOCUS programme, TAKKT had an EBITDA margin of 10.7 percent.

Investment abstinence weighs heavily on turnover of KAISER + KRAFT EUROPA
The turnover of the largest and most profitable division, KAISER + KRAFT EUROPA, fell by 32.4 percent to EUR 276.0 (408.1) million up to the end of the third quarter, primarily as a result of lower order numbers and lower average order values. Turnover developed negatively across the board, with the companies in Eastern Europe continuing to suffer the most. EBITDA was down from EUR 85.2 to 40.3 million and the EBITDA margin fell to 14.6 (20.9) percent.

Topdeq experiences sharp slump in turnover
Topdeq, the specialist for design-oriented office equipment, suffered a fall in turnover of 30.8 percent down to EUR 43.3 (62.6) million in the first nine months of 2009. This downward trend was most pronounced in the US market. Adjusted for the positive currency effects of the Swiss franc and the US dollar, the organic drop in turnover was 32.3 percent. EBITDA fell to EUR -1.5 (5.5) million, resulting in an EBITDA margin of -3.5 (8.8) percent.

Turnover decline varies in severity within K + K America
So far this year, the K + K America division has continued to fare the best. Its turnover fell by 13.0 percent to USD 308.2 (354.3) million, but the initial consolidation of Central Restaurant Products (Central) had a positive effect. Even when adjusted for the effects of this acquisition, the division still developed slightly better than the rest of the Group with a minus of 22.4 percent. When translated into the reporting currency of euro, turnover fell by 3.0 percent to EUR 226.0 (233.1) million. But business has not developed in the same way throughout the division, and the Plant Equipment Group, which focuses on clients from the manufacturing industries, has had to absorb losses similar to those incurred by the European companies. In contrast, the Office Equipment Group and the Specialties Group have benefited relatively from improvement in the buying behaviour of its corporate customers in the services sector and of public authorities and government bodies.

EBITDA fell from EUR 25.0 to 21.9 million and the EBITDA margin was 9.7 (10.7) percent. Central’s higher operational profitability had a slightly positive effect on the division’s margin. Disregarding Central, K + K America had an EBITDA margin of 9.3 percent.

2009 turnover likely to be at lower end of target corridor – operational profitability will be above 9.0 percent
After the first three quarters of the current financial year, the Management Board is expecting the organic drop in turnover to be at the lower end of the target corridor of minus 20 to 25 percent. However, an organic turnover decline of slightly more than 25 percent can not be ruled out. Nevertheless, with organic turnover decline of more than 25 percent, the EBITDA margin before special effects relating to FOCUS measures will be at 9.0 percent plus x.

Conference call
We invite you to directly address the Management Board with your questions. We will be hosting a conference call for this purpose at 15:00 (CET) on 29 October 2009, during which we will be open to questions. To take part, please dial the following number: +49 711 9659-9628 (access code: 779134#).

 

IFRS figures for the TAKKT Group at the end of Q3 2009
in EUR million

In order to make a valid comparison with the prior year, the figures for 2008 were amended in accordance with the new IFRS standards regarding catalogue accounting introduced on 01 January 2009.

Short profile of TAKKT AG
TAKKT is the leading B2B mail order specialist for business 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 160,000 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 60 million catalogues and mailings per year.

TAKKT AG is listed on the SDAX and was admitted to Deutsche Boerse’s Prime Standard on 01 January 2003.

Contact:
Dr Felix A. Zimmermann, CEO     
Tel. +49 711 3465-8201

Dr Florian Funck, CFO       
Tel. +49 711 3465-8207

Email: investor@takkt.de