NASDAQ OMX Copenhagen
Nikolaj Plads 6
DK-1007 Copenhagen K
18 December 2008
Release No. 22
Changed earnings expectations for 2008
NKT Holding A/S has reduced its forecast earnings for 2008 as a consequence of
developments in November and updated earnings expectations for December.
Forecast Group net income before tax and restructuring costs is now around 725
mDKK, which is 50 mDKK lower than notified previously.
From this amount must be deducted costs for restructuring. These costs have
previously been reported as being approximately 125 mDKK, which includes 75
mDKK relating to NKT Cables and 50 mDKK relating to Nilfisk-Advance. In
addition, the decision has been taken in December to close the small business
Nanon which carries out surface modification of plastics. It is estimated that
the closure will result in write-downs and winding-up costs amounting to around
10 mDKK. Forecast total restructuring costs are thereafter around 135 mDKK.
Total net income before tax and after restructuring costs is thus expected to
be on the low side of 600 mDKK, as against 650 mDKK previously.
The assessment of forecast earnings is based on the assumption that impairment
testing performed in connection with the closing of the annual accounts will
not result in write-down of Group assets. There are at present no indications
of impairment of group assets, but final verification of course await
completion of the year-end audit.
Background
The NKT Group's last earnings forecast was published in interim financial
report 3/2008. This was based on realised earnings development for the period
January - October 2008 and on expected earnings for the remaining two months.
Forecast earnings for the year, after inclusion of the month of November, are
stated below:
1. Nilfisk-Advance realised a nominal revenue decrease in November of 14% in
relation to the same period last year. After adjustment for the effect of
exchange rates, the fall in revenue was 17%. In comparison October showed a
decline of 3% and for December a decline in the level of 10% is expected.
This development reflects a sharp slowdown in demand in all main markets, which
far exceeds our previous expectations. The underlying cause is the global
economic situation, including the financial crisis. Both factors have led to
increased focus by all players in the value chain on reducing capital tie-up in
stocks. The trend is expected to continue in December, and against that
background the forecast full-year revenue for Nilfisk-Advance is now 5.9 bnDKK,
as against 6.0 bnDKK previously. Expectations with regard to profit margin are
changed and are now expected to be on the low side of 7.5%
2. As expected, NKT Cables realised flat organic growth in November. Against
this background, expectations with regard to full-year revenue, measured in
standard metal prices, are unchanged at around 5.0 bnDKK.
It is no longer possible to realise the profit margin of around 7.5% - 8.0%
previously forecasted. The main reason is the sharply and rapidly falling metal
prices and exchange rates that have temporarily reduced the contribution ratio
in a number of markets. After allowing for this, forecast profit margin for the
year is around 7%.
3. The decision has been taken to close down the company Nanon, whose business
is surface modification of special plastics. Despite unique technology, a
commercially sustainable platform has been unable to be created. Nanon, which
in the most recent interim financial reports has been included within the NKT
Holding segment, realised an operating loss (EBIT) of 7 mDKK for the first 10
months.
The closure decision follows a long and unsuccessful search by NKT Holding to
find a new owner for Nanon. At the end of November it was expected that a sale
could be completed, but the potential buyer withdrew. The closure will lead to
15 redundancies, and activities currently in progress will be wound up over the
months ahead. The closure will result in write-downs and closure costs of
around 10 mDKK.
Intensified reporting
In a departure from normal practice, the Board of Directors of NKT Holding A/S
has decided to intensify the publication of earnings forecasts for as long as
macro-economic and financial market conditions are as uncertain and volatile as
is currently the case.
It is thus intended to supplement this release with an update on 6 February
2009 when results for December are known and when overview has been obtained of
the year's closing financial entries. The up-date is also expected to include
announcement of further restructuring measures. The annual report for 2008 will
be published on 5 March 2009 as previously stated.
Further information
More information can be obtained by emailing the undersigned at
thomas.hofman-bang@nkt.dk or calling +45 4348 2000.
Kind regards,
NKT Holding A/S,
Thomas Hofman-Bang,
CEO
