Solid cash flow despite continuing challenging market conditions

| Source: IC Group A/S IC Group A/S

 

Company Announcement no. 4/2012   

Copenhagen 7 February

 

 

As reported in Company Announcement no. 1/2012 the Group experienced a further slowdown in consumer spending during Q2 2011/12. Consolidated revenue for H1 2011/12 amounted to DKK 2,105 million corresponding to the same level as last financial year, and the operating profit decreased by 45% to DKK 146 million after having adjusted for non-recurring costs of DKK 23 million. Efficient price campaigns and presales have resulted in the Group being able to retain its market position and generate a solid cash flow, but have at the same time exerted an increased pressure on the Group’s gross margin which suffered a decline of 3.6 percentage points.

 

  • Consolidated revenue for H1 2011/12 amounted to DKK 2,105 million (DKK 2,108 million) corresponding to the same level as H1 2010/11. Consolidated revenue for Q2 2011/12 amounted to DKK 930 million corresponding to an increase of 4%.

 

  • Wholesale revenue amounted to DKK 1,324 million (DKK 1,301 million) corresponding to an increase of 2%. Wholesale revenue for Q2 2011/12 rose by 11% to DKK 512 million.

 

  • Retail revenue amounted to DKK 780 million (DKK 807 million) corresponding to a 3% setback. Retail revenue for Q2 2011/12 decreased by 4% to DKK 418 million.

 

  • Gross profit amounted to DKK 1,190 million (DKK 1,267 million). The Group thus generated a gross margin of 56.5% (60.1%) corresponding to a decline of 3.6 percentage points compared to last financial year.

 

  • Capacity costs amounted to DKK 1,044 million (DKK 1,002 million) corresponding to an increase of 4%. The cost rate for H1 2011/12 thus amounted to 49.6% (47.5%) which is an increase of 2.1 percentage points compared to last financial year.

 

  • After having adjusted for non-recurring costs of DKK 23 million and the effect of new retail activities amounting to DKK 16 million, the Group’s capacity costs for Q2 2011/12 were reduced by 2% compared to last financial year and the cost rate was thus improved by 3.3 percentage points.

 

  • Operating profit amounted to DKK 146 million (DKK 265 million). The Group thus generated an EBIT margin of 6.9% (12.6%).

 

  • Total cash flow from operating and investing activities increased by DKK 42 million to DKK 72 million (DKK 30 million).

 　

  • Order intake for the summer collection 2012 is expected to record a setback of 11% reported in local currencies.

 

Outlook for 2011/12

 

  • Management anticipates that the challenging market conditions will continue for the remainder of the financial year 2011/12 resulting in a substantial pressure on both revenue and gross profit. As a consequence hereof, the Group will thus continue throughout H2 2011/12 to defend its market position by means of sales promoting activities and campaigns.

 

  • Based on these statements, Management still expects the consolidated revenue for the financial year 2011/12 to attain a level of DKK 3.7-3.8 billion. Under the present market conditions, Management expects a positive operating profit for H2 2011/12, however, should the market conditions deteriorate, the Group may possibly suffer a double-digit loss in million DKK for H2 2011/12.

 

  • Under the present market conditions, Management also expects a cash inflow from operating and investing activities as well as a reduction of the working capital for H2 2011/12.

 

  • The outlook for 2011/12, except for investments, remains unchanged compared to the last announced outlook.

 

  • Investments for the financial year 2011/12 are expected to attain a level of DKK 80-100 million (previously announced outlook of DKK 90-110 million) primarily for an expansion of the distribution and sales promoting improvements of the IT platform.

 

Chief Executive Officer of IC Companys A/S Niels Mikkelsen commented;

"The results we expect to achieve for the financial year 2011/12 are dissatisfactory – even though they are primarily attributable to external market conditions. However, there is no doubt that the corporate strategy and the new structure have been important for the ability of the Group to steer safely through the crisis. So even though we are currently adjusting the strategy for some of our brands to counter the current conditions, the corporate strategy still remains the same. It sets the framework for our primary future goal; to enhance the Group’s earnings."

 

IC Companys A/S

 

Niels Mikkelsen

Chief Executive Officer

 

Chris Bigler

Chief Financial Officer

  

 

Please direct any questions regarding this announcement to:         

 

Thomas Rohold

Head of Investor Relations and Communication

+45 32 66 70 93

 

 

 

This announcement is a translation from the Danish language. In the event of any discrepancy between the Danish and English versions, the Danish version shall prevail

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