Peter A. Poulsen, CEO of Brødrene 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."
"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."
"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
