TAKKT defies the weak economic situation in Europe in 2012 with strategic acquisitions and strong US business

TAKKT AG / Key word(s): Final Results

21.03.2013 / 10:30


TAKKT defies the weak economic situation in Europe in 2012 with strategic acquisitions and strong US business

  • Consolidated turnover rises by 10.3 percent to EUR 939.9 (852.2) million
  • Organic decline in turnover of 2.8 percent
  • EBITDA margin remains stable at 14.2 percent, acquisition-adjusted at 13.8 percent
  • Gross profit margin remains constant at 43.3 (43.3) percent
  • Earnings per share came to EUR 1.02 (1.01)
  • TAKKT cash flow rises to EUR 92.7 (87.8) million
  • Ordinary dividend of EUR 0.32 per share proposed

Stuttgart, Germany, 21 March 2013. In spite of a challenging economic environment in Europe, the TAKKT Group was able to continue along its long-term growth path in the financial year 2012. The Group benefited from the promising acquisitions of the companies GPA and Ratioform. The decline in organic turnover in Europe was partly offset by strong US business. 'We particularly benefit from our strategy of diversification in times of economic difficulty. Thanks to our broad positioning, we are less dependent on cyclical fluctuations in individual regions and sectors,' says CEO Dr Felix A. Zimmermann, commenting on the figures.

Acquisition and currency effects create growth in turnover and earnings
TAKKT achieved consolidated turnover growth of 10.3 percent, bringing it to EUR 939.9 (2011: 852.2) million. In particular, the newly acquired companies GPA and Ratioform contributed towards this in the year under review, as did the strong US dollar and the online business, which saw above-average growth. Adjusted for acquisition and currency effects, consolidated turnover fell by 2.8 percent. 'This slight drop in organic turnover did not come as a surprise to us. As a result of the economic conditions, many European businesses have put their investments on hold for the time being,' states CFO Dr Claude Tomaszewski, addressing the reasons behind this development. The growing importance of online business is encouraging. The corresponding order intake saw an above-average rise of 32.7 percent, due in part to the newly acquired companies and their focus on online sales channels. E-commerce business now accounts for 25.7 (21.3) percent of the order intake.

The gross profit margin and EBITDA margin are important key performance indicators for TAKKT. The Group has set itself the target of maintaining a gross profit margin of over 40 percent in the long term and keeping its EBITDA margin within the long-term target corridor of 12 to 15 percent. TAKKT was able to meet these targets in the past financial year. The gross profit margin remained constant at 43.3 (43.3) percent, while the EBITDA margin was unchanged at 14.2 (14.2) percent. Adjusted for acquisitions, the gross profit margin came to 42.4 percent, while the EBITDA margin was 13.8 percent. This slight decline is due mainly to the shift in the turnover and earnings contributions among the divisions. TAKKT AMERICA contributed a larger share of the consolidated turnover in 2012 than in the previous year, although the margins it generated were below the Group average.

EBITDA in the year under review amounted to EUR 133.8 (121.0) million, which corresponds to a rise of 10.6 percent. Despite the higher finance expenses and increased depreciation and amortisation - all of which are consequences of the acquisitions - consolidated net profit also rose to EUR 67.0 (66.0) million. Earnings per share reached EUR 1.02 (1.01).

Cash flow stays strong - ordinary dividend remains constant
One of the strengths of the TAKKT Group remains its solid self-financing capability. The TAKKT cash flow - defined as the result for the period plus depreciation and amortisation, impairment of non-current assets and deferred taxes recognised in profit and loss - rose to EUR 92.7 (87.8) million. Relative to turnover, this gives rise to a slightly lower cash flow margin of 9.9 (10.3) percent. 'In light of the solid financing situation and the healthy balance sheet structure, the TAKKT Management Board and Supervisory Board will propose the payment of an unchanged ordinary dividend of EUR 0.32 per share to the shareholders at the Annual General Meeting,' explains Tomaszewski.

Divisions: TAKKT AMERICA serves as primary driver in the financial year 2012
As expected, economic conditions brought about a shift in the shares of consolidated turnover generated by each of the two divisions in the year under review. While performance in the TAKKT EUROPE division was held back by European customers' reluctance to invest, TAKKT AMERICA proved to be the growth driver.

In addition to a declining acquisition-adjusted number of orders, the TAKKT EUROPE division also reported a drop in the average order value. However, the division's turnover nonetheless increased by 1.5 percent to EUR 515.1 (507.3) million as a result of the acquisition of the Ratioform Group. The corresponding share of consolidated turnover fell to 54.8 (59.5) percent because TAKKT EUROPE saw weaker growth than TAKKT AMERICA. Adjusted for acquisition and currency effects, turnover decreased by 7.6 percent.

Combined with the EBITDA generated by Ratioform in the second half of 2012, TAKKT EUROPE recorded an operating profit of EUR 102.0 (101.0) million. This corresponds to an EBITDA margin of 19.8 (19.9) percent. Excluding Ratioform, the margin fell to 19.3 percent. The main reason for this development was a reduced capacity utilisation compared to the previous year. As expected, the margin remained well above the target corridor. The turnover of the Business Equipment Group (BEG) decreased by a mid single-digit percentage figure, while the EBITDA margin remained well above the target corridor. The European Office Equipment Group (OEG) had to accept a decline in turnover in the low double-digit percentage range. The EBITDA margin also saw a year-on-year decline and is well below the target corridor. The Packaging Solutions Group (PSG), newly established following the acquisition of Ratioform, contributed EUR 42.9 million to the division's turnover in the second half of the year. The PSG is now the new leader within the TAKKT Group in terms of profitability.

TAKKT AMERICA's turnover grew by 23.2 percent to EUR 425.2 (345.2) million, thereby contributing 45.2 (40.5) percent of consolidated turnover. Adjusted for acquisitions and currency effects, the rise in turnover amounted to 4.2 percent. While the absolute number of orders declined in organic terms, a higher average order value in US dollars did provide a basis for solid growth. At EUR 41.3 (28.6) million, EBITDA was 44.4 percent higher than in 2011.

At 9.7 (8.3) percent, the EBITDA margin almost reached double digits, which is a medium-term target for TAKKT AMERICA. If the extraordinary effects arising from the acquisition of GPA are excluded from the calculation, the margin comes to 10.4 percent, which is above the aforementioned threshold. Without the acquisition, a margin of 9.6 percent would have arisen. The increased profitability in North America is primarily due to the improved utilisation of the direct marketing infrastructure and higher advertising efficiency.
In the Plant Equipment Group (PEG), the declining number of orders could not be offset by the higher average order value, causing the group's turnover to see a slight year-on-year decline. The EBITDA margin was in the mid single-digit percentage range, putting it below the division average. Even acquisition-adjusted, the Specialties Group (SPG) recorded an increase in turnover in the mid single-digit percentage range. The increased average order value more than compensated for the declining order number. The SPG remains the most profitable group in the division and generates an EBITDA margin within the Group's target corridor. The Office Equipment Group (OEG) reported a strong performance in the year under review. It increased both its absolute number of orders and its average order value in US-Dollars, thereby generating the highest organic turnover growth in the division. The EBITDA margin rose for the first time into the double-digit range.

Forecast for 2013: continuation of corporate strategy and expected economic recovery
'Grow profitably, diversify risks and act sustainably - these are and will continue to be the goals of the TAKKT Group,' summarises Zimmermann. 'We have been able to overcome a challenging market environment in Europe in 2012. With the integration of the high-growth, high-margin companies GPA and Ratioform, we have established the foundation from which we will benefit when the global economy recovers.' In addition to greater regional and sectoral independence, TAKKT also aims to further diversify its marketing and sales channels in a gradual manner. 'Our goal is to take the logical step from a mail order company to an integrated multi-channel business.' The Group-wide strategic programme DYNAMIC has been launched specifically for this purpose.

As in the previous year, the TAKKT Management Board has outlined three possible scenarios for business development in the current year on the basis of expected Group performance:

  1. With a considerable improvement in GDP growth rates in comparison to those in 2012 and purchasing managers' indices (PMIs) between 50 and 60 points, organic turnover growth (i.e. when adjusted for acquisitions and currency effects) of between three and five percent is realistic for TAKKT. Taking the effects of acquisitions into account, this would generate currency-adjusted growth of nine to eleven percent.
  2. If GDP growth rates remain unchanged or only improve slightly and PMI values remain at around or slightly above 50, the Group should generate organic turnover growth of between one and three percent. When including the acquisitions of the 2012 financial year, this would mean currency-adjusted turnover growth of between seven and nine percent.
  3. Should GDP growth rates be worse than in 2012 and if PMIs remain below 50 points permanently, the possibility of zero growth or another decline in organic consolidated turnover cannot be ruled out. In this case, the decline in organic turnover would be partly compensated for or even more than compensated for by the effects of acquisitions.

Depending on the economic environment as detailed above, TAKKT expects an EBITDA margin of between 14 and 15 percent in the second scenario. Should the more cautious performance scenario prove to be the case, a decline in the EBITDA margin into the lower half of the target corridor of 12 to 15 percent cannot be excluded. However, should the more optimistic scenario apply, the EBITDA margin may reach the upper end of the target corridor or even exceed it slightly. 'In the light of current economic indicators, we currently consider the second scenario to be the most probable,' explains Zimmermann. 'There are growing signs of an economic improvement in Europe in the second half of 2013. Despite slowing momentum, the forecast for North America remains somewhat better than for Europe.'

IFRS figures for the TAKKT Group for the financial year 2012
(in EUR million)

   2012 2011 Change in %
TAKKT Group turnover 939.9 852.2 10.3
Organic growth     -2.8
TAKKT EUROPE 515.1 507.3 1.5
TAKKT AMERICA 425.2 345.2 23.2
EBITDA 133.8 121.0 10.6
EBITDA margin (%) 14.2 14.2  
EBIT 111.6 104.1 7.2
EBIT margin (%) 11.9 12.2  
Profit before tax 100.1 95.6 4.7
Pre-tax profit margin (%) 10.7 11.2  
TAKKT cash flow 92.7 87.8 5.6
TAKKT cash flow margin (%) 9.9 10.3  
Capital expenditure 8.5 9.3 -8.6
TAKKT cash flow per share in EUR 1.41 1.34  
Earnings per share in EUR 1.02 1.01  
Non-current assets 679.7 376.9 80.3
in % of total assets 77.7 68.5  
Total equity 312.0 301.0 3.7
in % of total assets 35.7 54.7  
Net borrowings 324.9 93.7 246.7
Employees (full-time basis) as at 31.12. 2,351 1,869 25.8


Financial calendar
The figures for the first three months of 2013 will be published on 30 April 2013. The Annual General Meeting will be held at the Forum Ludwigsburg on 07 May 2013.

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 more than 200,000 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 2,500 staff and has over three million customers worldwide. 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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