TAKKT Group returns to growth

Turnover and profit rise in both Europe and North America

The economic upswing in the first half of 2010 had a positive effect on business developments at TAKKT Group. TAKKT's business revived considerably in the second quarter, compensating for the negative growth rates recorded in the first months of 2010 and enabling the Group to post an organic increase in turnover for the first half-year. Operational profitability improved significantly compared to the previous year's period. As forecasted at the beginning of the year, TAKKT Group has returned to growth. In the light of the positive business climate, the organic growth target for the company's annual turnover has been raised to around three percent.

Significant events in the first half of 2010

• Organic increase in turnover of 0.9 percent in the first half-year and 6.6 percent in Q2
• EBITDA margin climbs to 13.9 (11.0) percent
• Earnings per share up 46 percent
• TAKKT awarded first place in the Investor Relations Awards organised by the business magazine Capital

In the first six months of 2010, TAKKT Group benefited from the economic upturn in all its key sales regions. Consolidated turnover increased by 5.2 percent to EUR 376.8 (previous year's period: 358.3) million. Adjusted for currency effects and Central Products LLC (Central), acquired in April 2009, this corresponds to organic growth of 0.9 percent in turnover. While an organic decrease in turnover of minus 4.1 percent was recorded in Q1, organic turnover growth of 6.6 percent was posted in the second quarter. "The growth dynamic remained intact in the first six months of the current financial year. In March 2010, we predicted that the company would return to growth in Q2 – this has proved us right”, said CEO Dr Felix A. Zimmermann. 

As expected, the gross profit margin increased slightly in the first half to 42.8 (42.3) percent. Excluding the Central acquisition, the increase was 0.8 percentage points. TAKKT Group is continuing to benefit from the improved procurement conditions agreed during the crisis.

Operational profitability showed a considerable year-on-year improvement in the first half of 2010 due to a turnover-related increase in infrastructure utilisation, higher advertising efficiency and the FOCUS measures implemented in the previous year. EBITDA (earnings before interest, tax, depreciation and amortisation) rose by 32.2 percent to EUR 52.2 (39.5) million in the first six months of the year. This corresponds to an increase in the EBITDA margin to 13.9 (11.0) percent. 

As usual, cash flow developed strongly during the reporting period, increasing by 24.3 percent to EUR 36.8 (29.6) million. The cash flow margin was 9.8 (8.3) percent.

Upturn at TAKKT EUROPE
The new Group structure introduced on 01 January 2010 (last year's figures have been adjusted to improve comparability) enabled the growth rate of the TAKKT EUROPE division to catch up with the TAKKT AMERICA division growth rate. Although its customers initially remained reluctant to buy, the first six months of the year were marked by a gradual, continuous recovery at TAKKT EUROPE. In total, the division generated turnover of EUR 222.4 (218.8) million – an increase of 1.6 percent year-on-year. With this, TAKKT EUROPE generated 59.0 (61.0) percent of consolidated turnover. Adjusted for the various currency effects, the growth was equivalent to 0.1 percent in the first half and 7.7 percent in Q2.

The Office Equipment Group (OEG) – comprising the Topdeq companies – was unable to keep up with the high single-digit growth rate posted by the Business Equipment Group (BEG), which consists of the former KAISER + KRAFT EUROPA companies. Even after adjusting for the US activities closed at the end of 2009, turnover dropped by a double-digit percentage at the OEG and remained disappointing. In the light of this, the Group is currently working on strategically repositioning the Topdeq companies.

TAKKT EUROPE generated EBITDA of EUR 41.9 (31.1) million in the first half of the year. This took the EBITDA margin from 14.2 percent in H1 2009 to 18.8 percent.

The Group continues to drive the division's expansion in the current financial year. KAISER + KRAFT began operations in Russia in January. Following a successful launch in Germany, the new online brand Certeo has now also been rolled out on the Austrian market. The gaerner Group, which specialises in plant and office equipment, commenced sales activities in Italy in May 2010.

All companies will expand their range of private label articles due to positive experience throughout the Group. The BEG has been offering high-quality transport equipment at fair prices under the name of Quipo since March. In addition to this, Topdeq has been marketing its own range of high-end office furniture since January, branded as siqnatop.

In April 2010, TAKKT acquired minority interests in the Dutch company Vink Lisse B.V. and the Belgian subsidiary KAISER + KRAFT N.V. for a purchase price of approximately EUR 11 million.

TAKKT AMERICA posts solid growth
Turnover at the TAKKT AMERICA division came in at USD 204.4 (185.8) million in the reporting period. This corresponds to a year-on-year increase of 10.0 percent. Adjusted for the Central acquisition, the division's turnover still grew by 3.4 percent based on US dollar figures in the first half, with growth of 5.5 percent recorded in the second quarter. Translated into the reporting currency Euro, turnover increased by 10.7 percent to EUR 154.5 (139.6) million during the first six months. TAKKT AMERICA therefore contributed 41.0 (39.0) percent to consolidated turnover.

The division still benefits from the broad diversification of its client base and product portfolio. As expected, the companies within the Office Equipment Group (OEG) experienced a slight year-on-year decline in turnover as they tend to be late-cycle businesses. Thanks to high growth rates in the second quarter, the Plant Equipment Group (PEG) posted a single-digit increase in turnover overall. With high single-digit rates of organic growth, the Specialties Group (SPG) recorded the strongest gain. Including Central, growth here even ran well into double figures.

In the period under review, TAKKT AMERICA generated EBITDA of EUR 14.1 (12.1) million. This corresponds to an EBITDA margin of 9.1 (8.7) percent. Adjusted for Central, the EBITDA margin was 8.9 (8.4) percent.

Following the successful launch of Hubert in Germany and France, the brand will be rolled out into the Swiss market in autumn 2010. The PEG has also been active on the North American market with the online-only brand Industrialsupplies.com since June. Furthermore all three groups of the TAKKT AMERICA division are intensifying their private label engagement.

Business climate gives grounds for more optimistic forecast
For the remainder of 2010, TAKKT expects the economic recovery in Europe and North America to continue, though with slightly diminished dynamic. "We should be able to exceed the upper limit of organic growth of two percent targeted at the beginning of the year. We currently expect to see growth of around three percent. If we achieve this turnover goal, the EBITDA margin for the whole Group should come close to the lower end of the long-term target corridor of twelve to 15 percent”, said Dr Florian Funck, CFO.

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 (CEST) on 29 July 2010, during which we will be open to questions. To take part, please dial the following number: +49 69 201744-295 (access code: 779134#).

Short profile of TAKKT AG
TAKKT is the leading B2B direct marketing 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 for the areas of business and warehouse equipment, classic and design-oriented office furniture and accessories, and supplies for retailers, the food service industry and the hotel market.

TAKKT Group employs some 1,800 staff, has around three million customers worldwide and distributes more than 55 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.

IFRS figures for TAKKT Group to the end of Q2 2010

in EUR million 

* The 2009 figures have been adjusted to the new segment structure for the sake of comparability.


Contacts:

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

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

Email: investor@takkt.de