Peter A. Poulsen, CEO of Brdr. Hartmann, makes the following
statement:"If we leave out the non-recurring items and the impairments which
are results of our ongoing turnaround process, the core business is
developing on par with our expectations. We are still struggling with
the unfavorable development in the cross rate between the Canadian
and American dollar. But we are pleased that we can begin to see an
effect of several of the initiatives which are being rolled out in
our turnaround."
He continues:"The contribution ratio has generally been dwindling for the past
couple of years, however without an adjustment of fixed costs. As a
step in Hartmann's turnaround, we are compelled to reduce the fixed
costs. Unfortunately, our efforts involve having to dismiss many
competent and much-valued colleagues both at head office, at the
plant in Tønder and in the sales offices."
Developments in brief:
Third-quarter revenue reached the expected level of DKK 356 million,
up from DKK 347 million in the same period last year. Accumulated for
2007, revenue reached DKK 1,070 million, down from DKK 1,077 million
in the same period last year.
Operating profit/loss (EBIT) for Q3 2007 stood at DKK -1 million
against DKK 69 million last year, which reflected a positive earnings
impact of DKK 66 million from the sale of the Group domicile in
Lyngby.
Accumulated for 2007 the amount in operating profit/loss (EBIT) comes
to DKK -172 million against the year-earlier level of DKK 76 million.
After allowing for DKK 29 million in non-recurring items and DKK 164
million in impairment of assets, the amount in operating profit/loss
stands at DKK 21 million. The year-earlier level reflected DKK 66
million in positive effect of the sale of the Group domicile as well
as the negative effect of DKK 15 million in non-recurring items.
After allowing for these items, the accumulated operating profit/loss
for 2006 came to DKK 25 million, which is on a par with the
accumulated amount for 2007.
The consolidated profit/loss (EAT) for Q3 2007 came to DKK -31
million against the year-earlier level of DKK 45 million. Accumulated
for 2007 the consolidated profit/loss comes to DKK -517 million
against DKK 70 million in the same period last year.
The total value of operations in North America is unchanged as at 30
September 2007. Positive developments and improvement in operations
(sales prices, energy and cost level) compensate for the further
deterioration of the CAD/USD cross rate.
Equity declined from the opening level of DKK 544 million to DKK 218
million as at 30 September 2007.
The forecast revenue and operating profit/loss before impairments in
2007 are unchanged. Due to increased financials and tax, the Group is
making a downward adjustment of DKK 20 million of its forecast for
profit/loss after tax (EAT) for the year for continuing operations to
the level of between DKK -260 million and DKK -270 million. The
profit/loss from discontinuing operations in South America reduces
the total amount forecast in consolidated profit/loss (EAT) to the
level of between DKK -500 million and DKK -510 million.
Management believes that the capital resources of the Group are
sufficient for the ongoing financing of present and planned
operations.
However, because of the present high gearing of the Group, major
investments and further developments of the Group require the
provision of additional capital. Against that background the Board of
Directors decided at its meeting today, 23 November 2007, to
investigate the possibilities for obtaining additional capital. The
Board of Directors decided to retain Danske Markets (a division of
Danske Bank A/S) and Nordea Corporate Finance as financial advisors
for that purpose.
An important element in the turnaround of Hartmann is the adjustment
of the organisation to match the Group's current financial situation
and the wish to focus on the Group's core activities. The reduction
of fixed costs will amount to approx. DKK 40 million per year and
will involve measures such as the dismissal of approx. 50 employees
at head office, at the Tønder plant and in the sales organisation.
The full effect of these savings will occur in 2009.
Furthermore, production capacity at the plant in Tønder will be
reduced as a consequence of the ongoing trimming of the product
portfolio and the transfer of part of the capacity at Tønder to
Hungary. The reduction is expected to involve the dismissal of
approx. 75 production workers, but the final number of dismissals
will be negotiated locally.
For further information please contact:
Peter Arndrup Poulsen
CEO
Brødrene Hartmann A/S
Tel.: +45 45 87 50 30
Mobile: +45 51 51 40 69
