AUGSBURG, Germany, April 11, 2005 (PRIMEZONE) -- Despite a drop in sales the BOWE SYSTEC Group again recorded a year-on-year increase in profit. As the Board of Directors reported at today's press briefing on annual results, the company achieved consolidated sales of EUR 309.1 million after EUR 346.4 million in the prior year. Nevertheless the BOWE SYSTEC Group was able to increase its net result by 8% to EUR 17.5 million. Thus, in the financial year 2004 the best result in the history of the company was reached.
In the past few years, the BOWE SYSTEC Group has developed from the European market leader for high-performance inserting systems to a one-stop provider for the automated mailroom with operations throughout the world. The formation last year of a joint venture in the area of pre- and post-paper handling and an agreement to acquire the majority of the U.S. company BOWE Bell + Howell were important landmarks in the further development of the company. As a result, BOWE SYSTEC feels well equipped to meet the challenges of the future.
Sales fall short of expectations
In fiscal 2004, the BOWE SYSTEC Group achieved sales of EUR 309.1 million compared to EUR 346.4 million in the prior year. The year-on-year decrease of EUR 37.3 million or 10.8% was due to almost 50% to changed exchange rates which diminished group sales by some EUR 15.7 million. A large-scale order in the area of mail verification and sorting systems contained in the prior-year sales and product portfolio grooming to eliminate products of the former BELL+HOWELL organization explain the rest of the drop in sales.
The largest company by far in the Group, the US American BOWE Bell + Howell, generated around half of group sales (approx. EUR 154 million). Another third stems from Europe where BOWE SYSTEC realized an increase in sales of 2.9% to EUR 102,5 million. With sales of EUR 24.6 million (+17.1%) Japan also recorded a very positive development. Sales in the inserting segment fell to EUR 262.4 million (prior year: EUR 285.6 million), in the mail sorting and scanner segment to EUR 43.7 million (prior year: EUR 57.1 million), and in the financial services segment to EUR 12.9 million (prior year: EUR 17.8 million). Results after tax reach a new peak
Despite the drop in sales, due in particular to the unfavorable development of the USD/EUR exchange rate, the BOWE SYSTEC Group again recorded a year-on-year increase in profits. With a result from ordinary activities of EUR 25.1 million, the Group improved the result by EUR 3.5 million or 16% compared to the prior-year result of EUR 21.6 million. Net income was raised to EUR 17.5 million. Due to the higher tax burden, this represented growth of just 8.0%. The net income percentage of sales has been increased from 4.6% in 2003 to 5.7%.
At EUR 31.1 million, earnings before interest and taxes (EBIT) rose slightly by EUR 0.1 million compared to EUR 31.0 million in the prior year. The EBIT margin rose to 10.1% compared to 9.0% in the prior year. In the reporting year 2004, earnings before interest, taxes, depreciation and amortization (EBITDA) amounted to EUR 50.1 million, exceeding the prior-year result (EUR 46.4 million) by EUR 3.7 million or around 8%. The EBITDA margin is thus 16.2% compared to 13.4% in the previous year.
The fiscal year 2004 contained a series of extraordinary transactions which have positively affected the consolidated result by just under EUR 6 million. A major profit contribution came from the repurchase of preference shares by BOWE Bell + Howell, USA, facilitated by the refinancing of BOWE Bell + Howell, USA. This is counterbalanced by significant burdens, not all of them quantifiable, such as non-recurring burdens incurred in connection with the closure of the Villingen-Schwenningen plant, additional costs resulting from the relocation of production facilities of BOWE Bell + Howell within the USA and the large marketing events Open House and drupa which only take place every two and four years respectively, pro rata write-downs of obsolete materials for product lines that are to be phased out as a result of the product portfolio grooming process, and an impairment loss of goodwill.
With a weighted average number of shares of 6,585,000, earnings per share came to EUR 2.66. The prior-year amount also stood at EUR 2.66; this however was based on a lower avarage number of shares, which as a result of the capital increase in December 2003 rose by 8.0%.
Dividends increase to EUR 1.30
Supervisory Board and Board of Directors of BOWE SYSTEC AG will propose to the General Meeting to be held on 9 June 2005 an increase of the dividend payment by EUR 0.05 to EUR 1.30 per share. In the prior year a dividend per share of EUR 1.25 has been payed. The payout sum thus amounts to EUR 8.6 million.
Number of employees slightly decreased
At year-end, the BOWE SYSTEC Group had 2,589 employees worldwide. This is a drop of 95 compared to the prior year. As its integration in the BOWE SYSTEC Group continued, the 50-percent US investment BOWE Bell + Howell cut the pro rata headcount by 90 to 1,014. At year-end, the domestic companies, including BOWE SYSTEC AG, had 919 employees, a decrease of 9 compared to the end of 2003.
Order backlog on record high
The development of incoming orders in the BOWE SYSTEC Group was considerably more positive than that of sales. At EUR 326.4 million, the order intake was slightly up on the prior-year figure of EUR 323.9 million. Adjusted for currency effects, this would have represented growth of 6.5% to EUR 345.1 million.
The order backlog as of the balance sheet date December 31, 2004 promises a considerably better starting position for fiscal 2005. While the order backlog at the end of fiscal 2003 stood at EUR 40.1 million, at year-end 2004 the group order backlog stood at EUR 57.4 million which is a significant increase of 43.5% compared to the prior year. Adjusted for currency effects, the increase would have come to almost 50%. As in the prior year, long-term service agreements are not considered in the order backlog figures. At EUR 148.0 million, they accounted for 47.9% of group sales in fiscal 2004.
Further growth in 2005
In the past fiscal year, BOWE SYSTEC took decisive steps to develop the Company into a full provider of products and services for the automated mailroom. With more and more customers demanding complete mailroom solutions from a single source, BOWE SYSTEC is increasingly reaping the benefits of its wide range of products and services. In collaboration with its partners in the printer industry, BOWE SYSTEC covers the entire product spectrum and all the related services of the automated mailroom. Decades of experience in the traditional market segment paired with ongoing product development secure the Company's position as a global player.
Since the formation of BOWE Bell + Howell, USA, the key market North America has been successfully served by a nationwide sales and service network. The management board believes that the takeover of the majority of the US company by BOWE SYSTEC in early 2005 will further strengthen the presence of BOWE SYSTEC on the North American market. Following the majority takeover, BOWE SYSTEC will fully consolidate the business of the US company from the current fiscal year onwards. As a result, the worldwide sales of the BOWE SYSTEC Group will report high doubledigit growth compared to 2004. The American subsidiary is expected to contribute around EUR 310 million.
Taking into account the current market position and the significantly higher order backlog compared to the prior year, the business plan for 2005 forecasts sales of up to EUR 480 million. Using the current accounting standards, the management board also expect profits to increase compared to fiscal 2004.
BOWE SYSTEC Group figures: Figures in EUR million 2004 2003 D in % Sales 309.1 346.4 -10.8 thereof abroad in % 90.1 91.3 - thereof service in % 47.9 45.5 - Order intake 326.4 323.9 +0.8 Order backlog 57.4 40.0 +43.5 Investments 27.7 9.2 +301.1 EBITDA 50.1 46.4 +8.0 Depreciation 19.0 15.4 +23.4 EBIT 31.1 31.0 +0.3 Result from ordinary activities 25.1 21.6 +16.2 Net income 17.5 16.2 +8.0 Cash Flow from ordinary activities 36.4 26.6 +36.8 Equity 99.6 94.9 +5.0 Earnings per share (EUR) 2.66 2.66 +/-0.0 Dividend per share (EUR) 1.30 1.25 +4.0 Employees (number, annual average) 2,621 2,674 -2.0
Financial Calendar 2005: Apr 11 Analysts' conference, Frankfurt am Main Apr 12 Road show in London, Frankfurt and Paris May 12 Interim report as of March 31, 2005 Jun 9 Annual Shareholders' Meeting, Augsburg Jun 10 Dividend payment Aug 11 Interim report as of June 30, 2005 Nov 10 Interim report as of September 30, 2005 November Analysts' conference, Frankfurt am Main BOWE SYSTEC AG The Board of Directors