TAKKT Group benefits from regional diversification despite weak European economy

TAKKT AG / Key word(s): Interim Report/Quarter Results

30.10.2012 / 07:30

P R E S S   R E L E A S E

TAKKT Group benefits from regional diversification despite weak European economy
Acquisitions enable growth course to continue

Significant events in the first nine months of 2012

  • US business as well as acquisitions there and in Germany enable further growth despite economic weakness in Europe
  • 9.8 percent increase in turnover in the reporting currency euro, acquisition and currency-adjusted decline in turnover of 1.8 percent
  • EBITDA margin almost unchanged at 15.5 (2011: 15.6) percent, acquisition-adjusted 15.2 percent
  • Earnings per share rise to EUR 0.86 (0.82)

Stuttgart, Germany, 30 October 2012. TAKKT Group benefited from the regional diversification of its business activities and its acquisition strategy in the first nine months of 2012. TAKKT Group achieved a 9.8 percent increase in its consolidated turnover to EUR 695.4 (633.6) million in the first three quarters of 2012. Adjusted for acquisition and currency effects, consolidated turnover fell by 1.8 percent due to a lower number of orders. 'The Group's performance is therefore in line with our expectations', said CEO Dr Felix A. Zimmermann. 'We particularly anticipated an economic slowdown in Europe. As expected, we recorded an organic decrease in turnover in the third quarter.'

The gross profit margin remained stable at 43.2 (43.2) percent in the first nine months of 2012, on account of the acquisitions. Excluding these two purchases, it fell to 42.6 percent. This is mainly attributable to the regional shift in the share of turnover between North America and Europe. In line with the gross profit margin, operational profitability - adjusted for acquisitions - also declined slightly. In the first nine months of the financial year, the absolute EBITDA (earnings before interest, taxes, depreciation and amortisation), adjusted for acquisitions, fell to EUR 98.8 (99.1) million and the EBITDA margin to 15.2 (15.6) percent. Including the earnings contributions provided by the acquisitions GPA (since 01 April 2012) and Ratioform (since 01 July 2012), absolute EBITDA amounted to EUR 108.1 million and the EBITDA margin to 15.5 percent. The TAKKT cash flow - defined as the profit for the period plus depreciation, goodwill impairment and deferred tax affecting profit - amounted to EUR 77.4 (70.9) million in the first nine months of 2012, thereby remaining at a high level. This corresponds to a cash flow margin of 11.1 (11.2) percent and a TAKKT cash flow per share of EUR 1.18 (1.08).

TAKKT EUROPE benefits from Ratioform acquisition
The difficult economic environment already evident in the first half of the year for the TAKKT EUROPE division continued to deteriorate in the third quarter as expected and led to a further decline in turnover. All in all, TAKKT EUROPE generated turnover of EUR 372.0 (372.8) million in the first nine months of 2012 - a decrease of 0.2 percent. This means that TAKKT EUROPE accounted for 53.5 (58.8) percent of consolidated turnover. In organic terms - i.e. adjusted for currency and acquisition effects - turnover decreased by 6.1 percent. The main reason was a lower number of orders. The average order value was on previous year's level.

Despite the drop in turnover, TAKKT EUROPE's operating result remained at a high level in the first nine months of the year. The division generated EBITDA of EUR 74.9 million, resulting in an EBITDA margin of 20.1 percent. Excluding the acquisition of Ratioform, the EBITDA amounted to EUR 70.5 (77.6) million and the EBITDA margin to 20.0 (20.8) percent.

TAKKT AMERICA records significant increase in turnover and earnings
The TAKKT AMERICA division increased turnover in the first nine months of the year to EUR 323.6 (261.0) million. This corresponds to growth of 24.0 percent. The division contributed 46.5 (41.2) percent to consolidated turnover. Adjusted for currency effects, this growth amounted to 13.3 percent. Further adjusted for the acquisition of GPA, the division achieved organic growth of 4.6 percent compared to the same period in the previous year. Adjusted for the acquisitions, the average order value in US dollars was significantly higher, while order numbers remained on previous year's level.

In the period under review, TAKKT AMERICA generated EBITDA of EUR 40.0 million. This resulted in an EBITDA margin of 12.4 percent. Excluding the acquisition of GPA, in the first nine months of 2012 the EBITDA margin was 11.8 (11.0) percent and the absolute EBITDA amounted to EUR 35.1 (28.7) million. Better utilisation of the direct marketing infrastructure had a positive effect on earnings. By contrast, anticipated start-up losses at the European Hubert companies, as well as at IndustrialSupplies.com and cateringplanet.com had a negative impact on earnings.

TAKKT Group spurs growth through acquisitions
With effect from 01 July 2012, Ratioform Holding GmbH was acquired for a purchase price of EUR 211.7 million, free from financial debt. The Ratioform group, consisting of six legal entities, is managed since as an independent third group within the TAKKT EUROPE division, the Packaging Solutions Group (PSG). 'With this acquisition, we are sustainably diversifying TAKKT Group's portfolio and we are doing this in an extremely attractive growth segment of B2B direct marketing. A key growth driver behind the rising demand for transport packaging is the increasing importance of online trading, which offers Ratioform excellent prospects for development', commented CFO Dr Claude Tomaszewski.

Ratioform is the leading B2B direct marketing group for transport packaging in Germany, where around 75 percent of its turnover is generated. It also operates in five other European countries. Its product range is sold to B2B customers from various different sectors using the multi-channel approach. In 2011, the Ratioform Group generated pro forma turnover of EUR 83 million and a pro forma EBITDA of EUR 22.6 million.

TAKKT successfully places debut Schuldschein loan
Through the payment made on 19 October 2012, TAKKT AG has successfully issued a Schuldschein bonded loan with a volume of EUR 140 million. The debut transaction assures refinancing of an acquisition facility which the multi-channel direct marketing group headquartered in Stuttgart, Germany, had borrowed at short notice for the acquisition of Ratioform group, completed as per 01 July 2012. With this transaction TAKKT AG is expanding its investor scope and debt financing instruments as well.

The financing offering attracted wide interest of investors and the order book was noticeably oversubscribed. Maturity periods of three and five years with fixed and variable interest rates were offered. Due to the keen demand, the original volume of EUR 75 million was able to be increased to EUR 140 million and interest conditions could be fixed at the lower end of the marketing spread.

'The strong demand from institutional investors is a sign of confidence in the sustainable cash flow strength and the attractive business model of TAKKT AG even in times of the financial and sovereign debt crisis,' says Tomaszewski. 'With this Schuldschein loan we are taking early action to improve the maturity structure of our borrowings and solidify our long-term financing within a historically favourable interest-rate environment.'

This successful transaction was supported by Bayerische Landesbank and Landesbank Baden-Wuerttemberg.

Outlook - economic indicators still advise caution, particularly in Europe
In light of still weak early indicators for economic developments in Europe and North America, the TAKKT Management Board has determined its turnover and earnings forecasts for the current financial year. The more cautious of the three scenarios outlined at the start of the year is still considered the most likely to occur. The Management Board therefore anticipates a slight organic decline in consolidated turnover. 'The economic indicators still advise caution, particularly in Europe. For North America on the other hand, we remain moderately optimistic. Together with our acquisitions, we are on a positive path', said Zimmermann. Including the two acquisitions and based on current economic data, the Management Board expects currency-adjusted turnover growth of between six and eight percent and an EBITDA margin between 13 and 14 percent.

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 30 October 2012, during which we will be open to questions. To take part, please dial the following number: +49 69 201744-295 (access code: 779134#).

IFRS figures for TAKKT Group for the first nine months of 2012
(in EUR million)

  Q3 2012 Q3 2011    Change in % 9M
   Change in %
TAKKT Group turnover 251.9 216.0 16.6 695.4 633.6 9.8
Organic growth     -4.5     -1.8
   TAKKT EUROPE 126.6 118.3 7.0 372.0 372.8 -0.2
   TAKKT AMERICA 125.4 97.8 28.2 323.6 261.0 24.0
EBITDA 38.4 31.3 22.7 108.1 99.1 9.1
EBITDA margin 15.2 14.5   15.5 15.6  
EBIT 31.4 27.3 15.0 92.6 86.7 6.8
EBIT margin 12.5 12.6   13.3 13.7  
Profit before tax 28.3 24.6 15.0 85.9 80.4 6.8
Pre-tax profit margin 11.2 11.4   12.4 12.7  
TAKKT cash flow 26.6 21.5 23.7 77.4 70.9 9.2
TAKKT cash flow margin 10.6 10.0   11.1 11.2  


Company calendar
TAKKT will publish the preliminary figures for the financial year 2012 on 19 February 2013.

Short profile of TAKKT AG
TAKKT is the leading multi-channel direct marketing group 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 more than 180,000 products for the areas of business and warehouse equipment, classic and design-oriented office furniture and accessories, transport packaging, display articles, supplies for retailers, the food service industry and the hotel market.

TAKKT Group employs more than 2,000 staff, has over three million customers worldwide and distributes more than 45 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.

Dr Felix A. Zimmermann, CEO, Tel. +49 711 3465-8201
Dr Claude Tomaszewski, CFO, Tel. +49 711 3465-8207

Email: investor@takkt.de

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