The ongoing preparation of Hartmann's interim report for H1 2010 has given rise
to a downgrade of the company's EBIT margin forecast for 2010 to approximately
7% against the previous forecast of approximately 10% (actual 2009: 5.7%). The
downgrade is due, among other factors, to higher raw materials prices in H1
2010 and even sharper increases in raw materials prices in the first part of H2
2010. New initiatives have been launched with a view to increasing the company's
EBIT margin in the long term.
Based on the ongoing preparation of the interim report for H1 2010, Brødrene
Hartmann A/S has resolved to downgrade its forecast for the 2010 financial year.
According to the preliminary figures, consolidated revenue for Q2 came to DKK
326 million (2009: DKK 310 million), and the company generated an operating loss
of DKK 7 million (2009: DKK 12 million). The preliminary figures further show
that Hartmann's consolidated revenue for H1 2010 came to DKK 706 million (2009:
DKK 675 million) and that the company generated an operating profit of DKK 31
million (2009: DKK 24 million) and an EBIT margin of 4.3%.
The EBIT margin forecast is revised to approximately 7%, down from the previous
forecast of approximately 10% (actual 2009: 5.7%). The revised EBIT margin
corresponds to an expected operating profit for 2010 of approximately DKK
90-105 million against the previous forecast of an operating profit of
approximately DKK 140 million (actual 2009: DKK 79 million).
The downgrade of the EBIT margin forecast and the operating profit forecast for
2010 is due to higher raw materials prices (paper, energy and other raw
materials) in Europe in H1 2010 and even sharper increases in raw materials
prices in the first part of H2 2010. This trend is most pronounced for recycled
paper, one of the key raw materials in Hartmann's production. Furthermore, the
prices of energy and other materials have increased moderately. The increase in
raw materials prices alone is believed to be capable of reducing the company's
EBIT margin for 2010 by approximately two percentage points.
Moreover, the previous forecast was based on expectations of significant organic
growth in the North American operations. However, growth fell short of
expectations, adversely affecting the guidance for 2010.
The cost level in H1 2010 was also adversely affected by a number of additional
costs incurred in connection with the recruitment of a new management and the
launch of a range of initiatives forming part of the strategy phase 2011-13,
which aims to optimise Hartmann's processes and strengthen the company's EBIT
margin in the long term.
The earnings downgrade for 2010 implies that several planned investment projects
will be postponed in order to ensure cash inflows and retain focus on production
for the remainder of the year.
In the long term, Hartmann aims for a significant improvement of its EBIT margin
relative to the expected EBIT margin for 2010. Initiatives (in addition to the
'10 in 10' initiatives) have already been launched with a view to improving
efficiency in production and planning, etc., and the company is currently
assessing how to compensate for the increase in raw materials prices.
The company's interim report for H1 2010, to be released on 25 August 2010, will
include additional information on developments in Brødrene Hartmann A/S in H1
2010 and the background for revising the company's forecast for 2010.
Brødrene Hartmann A/S
Peter Arndrup Poulsen
CEO
Mobile: +45 51 51 40 69
[HUG#1438358]
