DGAP-News: Gigaset AG / Key word(s): Half Year Results/Quarter Results
Gigaset continues realignment
06.08.2015 / 07:55
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Press Release
Munich, August 6, 2015
Figures for the 1st half of 2015:
Gigaset continues realignment
- Consolidated revenue of EUR142.6 million (H1/2014: EUR147.0 million)
- EBITDA of EUR1.7 million (H1/2014: EUR2.3 million)
- Consolidated net income of minus EUR9.0 million (H1/2014: minus EUR10.9
million)
- Free cash flow of minus EUR24.0 million (H1/2014: minus EUR26.9
million)
- Revenue in the Business Customers growth business up 18% year on year
in the first six months
- Revenue in the Home Networks growth business jumps 71% year on year in
the first six months
- Leading position in cordless phone market retained
- Portfolio of smartphones to be presented at IFA
- CEO Charles Fränkl: "The realignment of Gigaset is continuing unabated.
The presentation of our first smartphones at IFA and hence our entry
into a market that is many times larger than our existing core
business, marks the next milestone."
After an initially good start into the new fiscal year in the first
quarter, which saw rising revenue and break-even consolidated net income,
the positive trend stalled in the second quarter. Similar to previous
years, revenue resumed its decline, falling by 12 percent. The seasonally
poor free cash flow performance was weighed down further by additional
one-time factors, such as outflows due to a voluntary program to reduce
personnel costs and payments under the settlement with Evonik.
The decrease in revenue is due to both the consolidation of the sales
regions according to aspects of profitability and the general decline in
the market. Compared with the prior-year quarter, the cordless phone market
contracted 4.7% by number of units and 2.0% by revenue. Gigaset was able to
maintain its clear premium position over the competition: its portfolio
achieved an average sales price which was 20% above that of its
competitors. In the critical European core markets, Gigaset had high market
shares again in the second quarter of 2015, achieving 32.5% by revenue and
28.4% by number of units.
Because of the continuing challenging development in the cordless phone
business, Gigaset is making further investments in promising business
segments and product groups. Although these will make additional
contributions to revenue, they will only partially compensate for the
market-related decline in cordless phones this year. In line with this
strategic realignment, the Gigaset Group is about to make one of the most
important product announcements in its history. Gigaset Mobile Pte. Ltd.,
Singapore (Gigaset Mobile for short), a venture operated jointly by Goldin
and Gigaset, will present a portfolio of smartphones at IFA in September
2015. Gigaset AG and Gigaset Communications GmbH, which will provide
services and act as sales partners for Gigaset Mobile, will generate
additional income from these activities. By entering the smartphone market,
the Group will operate in a market that is many times larger than the
market served by the DECT phone business. The entry into this new business
segment has only been made possible by the strategic investor Goldin.
Thanks to Goldin, Gigaset now has access to a larger group and will be able
to push open doors in this new business segment.
In connection with the launch of the smartphone portfolio and the resulting
high marketing expenses, all of which are borne by the Gigaset Mobile joint
venture, the company announced the reorganization of its brand and domain
names in June. Under this agreement, brand and domain names totaling EUR35
million will be transferred to Goldin Brand, although the usage rights will
be retained permanently, free of charge, and largely exclusively by Gigaset
AG und Gigaset Communications GmbH for the Cordless Phones, Gigaset pro,
and Gigaset elements business segments. The brand will continue to be
managed on a joint basis in future. The company will invest the funds
raised on the basis of this agreement in further securing the company's
future. The first part of the transaction is expected to be completed in
the third quarter of 2015.
CEO Charles Fränkl comments on the results for the six-month period: "The
realignment of Gigaset is continuing unabated. The presentation of our
first smartphones at IFA and hence our entry into a market that is many
times larger than our existing core business, marks the next milestone."
CFO Kai Dorn commented as follows on the reorganization of the brand and
domain names: "The reorganization of the trademark and domain rights is a
very beneficial transaction for Gigaset. The EUR35 million we will receive
in cash is a very fair amount of additional income that will have no
negative impact of any kind on our day-to-day operations. This saves us
additional financing rounds to further secure the future of the company."
Overview of the figures for the second quarter of 2015:
- Consolidated revenue: EUR72.5 million (Q2/2014: EUR82.0 million)
- EBITDA: minus EUR7.1 million (Q2/2014: EUR10.0 million)
- Consolidated net income: minus EUR9.8 million (Q2/2014: EUR1.3 million)
- Free cash flow: minus EUR5.8 million (Q2/2014: EUR1.1 million)
Relative to the first half of 2015:
- Consolidated revenue: EUR142.6 million (H1/2014: EUR147.0 million)
- EBITDA: EUR1.7 million (H1/2014: EUR2.3 million)
- EBITDA margin: 1.2 percent (H1/2014: 1.6 percent)
- Consolidated net income: minus EUR9.0 million (H1/2014: minus EUR10.9
million)
- Free cash flow: minus EUR24.0 million (H1/2014: minus EUR26.9 million)
Outlook
Despite the expected one-time factors from the reorganization of the brand
and domain names, Gigaset AG largely confirms its outlook for the current
fiscal year, with the following updates:
The company continues to expect that the decline in the cordless phone
business will continue this year. For this reason, Gigaset will make
further investments in promising business segments and product groups.
These will make additional contributions to revenue, but they will not yet
be able to compensate fully for the market-related decline in cordless
phones this year. Gigaset therefore expects the following in the current
fiscal year in the Consumer Products, Business Customers, and Home Networks
segments (excluding business with mobile devices):
- A decline in revenue from continuing operations in a high single-digit
to low double-digit percentage range.
- A positive EBITDA once more in the lower double-digit million range.
However, the EBITDA is expected to be below that of the previous year
due to lower revenue, the investments required in new business
segments, and the accelerated restructuring of the company. An EBITDA
margin in the low to middle single-digit range is anticipated.
- One-time factors will lead to a significant improvement in cash flows
in the current fiscal year. Expected operating free cash flow will,
however, remain unchanged. Due to considerable investments in the new
business segments, Gigaset AG expects negative free cash flow before
one-time factors in the high single-digit to low double-digit million
range.
Gigaset also expects positive contributions to earnings from business with
mobile devices, in particular from its future smartphone business. However,
a more precise figure can only be put on the latter after the company has
entered the market.
Overview of the Business Units
Consumer Products
Gigaset's sales strategy is still geared toward maintaining the Gigaset
brand's price premium in the market as well as its high market share in
Europe.
The CL750 (Sculpture) - a modern designer phone - was initially launched on
the French market in the second quarter. The French market is the most
advanced in this area. The product will be introduced in other countries in
the third quarter. At the same time, the Gigaset High Sound Performance(TM)
technology delivers brilliant sound quality even during handsfree calls.
In addition, Gigaset has launched the CAT-iq 2.0 certified cordless phone
A540 CAT on the market. The handset is the perfect complement for DECT
routers using the CAT-iq standard. The handset, which won the Red Dot
Design Award, comes in tried-and-proven Gigaset quality and offers
telephony, including in handsfree mode, in excellent audio quality (HD
voice) as well as the usual reliable phone convenience. The Gigaset A540
CAT also recognizes call lists and the central phone book in the router and
hence enables persons in them to be called back directly. It can, of
course, also be used to operate an answering machine, no matter whether it
is implemented in the network or on the router.
Business Customers
Revenue in the Business Customers segment increased again in the second
quarter of 2015, expanding by around 9% compared with the same quarter of
the previous year (Q2/2014). Growth was driven primarily by the business
under the "Gigaset pro" brand, particularly in France, the United Kingdom,
and the Netherlands.
The recently introduced Maxwell 10 product made a significant contribution
to this development and will continue to drive growth in the future. The
redefinition of the product portfolio continues to be pursued and will lead
to further product launches in the current fiscal year.
Regional expansion is being driven further - various regions are currently
being evaluated with a view to continuing to scale the expansion of the
market presence in the regions.
Home Networks
In September 2013, Gigaset began marketing the Gigaset elements starter
kits through the network of specialty retailers and online in Germany and
then in France shortly afterwards. The system is now also available in
Switzerland, Austria, the Netherlands, the Czech Republic, and Sweden.
Revenue jumped by 71% in the first six months compared with the first half
of 2014.
.
In mid-January 2015, Gigaset presented a new and innovative product in the
field of networked electronics: the G-tag. The G-tag is a latest-generation
Bluetooth beacon that searches for, keeps an eye on and finds objects to
which it is attached. In the second quarter, the segment expanded its sales
activities relating to the product, successfully launching the G-tag for
online and retail sales not only in Germany, but also in France, the
Netherlands, Belgium, and Sweden.
Mobile Products
The most important milestone for Gigaset will be the presentation of a new
smartphone portfolio at IFA in September 2015. The elegant, timeless
design, which has over the decades become the traditional brand's hallmark,
formed the basis for the development of the new handsets. The smartphone
series was developed by a mixed team of German and Chinese experts. The
smartphones will carry the Gigaset DNA, be of superior quality, and very
competitive. In line with common practice, the handset will be manufactured
in China.
Gigaset AG, Munich, is an internationally operating company in the area of
communications technology. The company is Europe's market leader in DECT
telephones. The premium supplier is likewise the leader worldwide with
around 1,300 employees and sales activities in around 70 countries. Under
the name Gigaset pro, the company continues to develop and market
innovative business telephony solutions for small and medium-sized
enterprises. The company also operates in the smart home arena.
Cutting-edge, cloud-based products and solutions for the smart home are
developed and marketed under the name Gigaset elements. In addition,
together with the Singapore-based Goldin Fund Pte. Ltd., the company runs
Gigaset Mobile, which operates in the mobile phone, smartphone, and
accessory segments.
Gigaset AG is listed in the Prime Standard of Deutsche Börse and is
therefore subject to the highest transparency requirements. Its shares are
traded on the Frankfurt Stock Exchange under the symbol "GGS" (ISIN:
DE0005156004).
Gigaset in social media: / / / / / / / / /
Gigaset corporate blog: http://blog.gigaset.com
Gigaset homepage: http://www.gigaset.com/de
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Language: English
Company: Gigaset AG
SeidlstraÃe 23
80335 München
Germany
Phone: +89444456866
Fax: +89444456930
E-mail: info@gigaset.com
Internet: www.gigaset.com
ISIN: DE0005156004
WKN: 515600
Listed: Regulated Market in Frankfurt (Prime Standard); Regulated
Unofficial Market in Berlin, Dusseldorf, Hamburg, Munich,
Stuttgart
End of News DGAP News-Service
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383951 06.08.2015
DGAP-News: Gigaset continues realignment
| Source: EQS Group AG