DGAP-News: Gigaset AG / Key word(s): Half Year Results/Quarter Results Gigaset continues realignment 06.08.2015 / 07:55 --------------------------------------------------------------------- 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 --------------------------------------------------------------------- 06.08.2015 Dissemination of a Corporate News, transmitted by DGAP - a service of EQS Group AG. The issuer is solely responsible for the content of this announcement. The DGAP Distribution Services include Regulatory Announcements, Financial/Corporate News and Press Releases. Media archive at www.dgap-medientreff.de and www.dgap.de --------------------------------------------------------------------- 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 --------------------------------------------------------------------- 383951 06.08.2015
DGAP-News: Gigaset continues realignment
| Source: EQS Group AG