and remains confident that it will have a strong future as part of the Agenda 500
euromicron AG, a leading provider of network and fiber optic technology, successfully tackled the first of its years of core integration in 2012. The company offers its shareholders interesting growth prospects with its Agenda 500, under which it aims to achieve annualized sales of €500 million in 2015.
euromicron generated sales of €330.0 million in 2012, surpassing the exceptionally strong figure of the previous year again by around 8%. Total operating performance even rose by around 10% to €329.8 million. As a result, the envisaged sales growth target was achieved despite the focus on integration. That shows that euromicron is excellently positioned in the market with its products and services to leverage existing potentials.
Earnings before interest and taxes and after integration costs were €17.1 million. As planned, expenditure on integration and structural changes totaled €4.5 million and were funded continuously from the EBIT. Unforeseeable postponements in capital spending, in particular in the telecommunications industry, meant that the EBIT margin was 5.2%.
In view of these respectable figures, the General Meeting on May 17, 2013, gave overwhelming backing to the policies and strategy of euromicron AG and its management bodies. There was approval of the work of the Executive Board (92.56 percent) and Supervisory Board (89.99 percent) in fiscal year 2012. The adjustment to the dividend policy was explicitly praised by shareholders. They also confirmed their approval of the company’s strategy and planned development in talks and discussions on the fringes of the event.
Successful share
The stock market year 2012 got off to a very positive start for euromicron’s share with its admission to the TecDAX. After a continuous evolution in its shareholder structure in the past years and unbroken demand from potential investors, the share was launched on the TecDAX at a price of €16.20 on the basis of an almost 100% free float. Analysts concur that as a result the uncertainty that weighed on the share a few years ago due to the stakes held by critical funds has been almost completely dissipated.
The share consequently climbed to peak briefly at €23 in the first quarter of 2012. Although the restrained trend in operational business, in particular in the telecommunications industry, also resulted in temporary fluctuations in the price of euromicron’s share in the further course of the year, the share proved stable overall and was mostly listed at around the €20 mark thanks to greater attention for it on the capital market.
The euromicron share’s market capitalization rose sharply and stood at €120.9 million at December 31, 2012, and its trading volume was around 30% higher year on year at 7.4 million – a reflection of the higher awareness and increased acceptance of the share on the market, as well as the company’s continuous and intensive investor relations work in 2012 aimed at enhancing the quality of the shareholder structure even further.
As Dr. Willibald Späth, Chairman of the Executive Board, stated, this was in every respect an acknowledgement by the capital market of the company’s sustainable strategy and its further rounding-out of its technological and employees’ expertise as part of the first stage of the build and integrate phase throughout 2012.
In accordance with the resolution adopted by the General Meeting, the dividend for fiscal 2012 is €0.30 a share. That corresponds to around 50% of euromicron AG’s profit. The shareholders thus support the Executive Board’s strategy of taking into account the investments that are needed in the company’s integration phase and sticking to its goal of becoming a €500 million company by 2015 based on its customary cautious approach.
Optimization of the capital structure
Sustainable organization of the build and integrate phase demands not only further development of human resources, but also a balanced financing structure suited to the company’s size, added the Chairman of the Executive Board: At the balance sheet date, for example, the company paid an average rate of interest, including the margin, of 1.15 percent for around €35 million in short-term funding thanks to its top rating. In line with shareholders’ wish to strengthen medium- to long-term financing, two amortizing loans totaling €20 million were raised in 2012, enabling a restructuring of short-term debt to long-term debt.
Despite integration, the equity ratio is around 42% and so very solid. This, the existing stable basis for financing and the careful use of all the company’s available resources secure the company “the financial strength it needs, with its structural changes in the integration phase and on the capital market, to accomplish its aim of becoming a €500 million company,” said Dr. Späth in his speech to the General Meeting.
Expansion and rounding out of the company’s competence profile
A key component of euromicron’s business model is its great technological expertise and comprehensive footprint. euromicron therefore seized another opportunity in fiscal 2012, this time to acquire ANS GmbH, RSR Datacom GmbH & Co. KG and Stark- und Schwachstrom Montage GmbH and so take over small, qualified medium-sized companies and integrate them in the Group. These pinpointed acquisitions complement the portfolio and boost the euromicron Group’s expert workforce.
In addition, expenditure on development was increased above and beyond the budget in order to develop individual components and product systems into all-round solutions for national and international use. This enables the company to play a role at the vanguard of market development, to partner all pioneers in the network market and professionally install existing technology and cutting-edge technology of the future. euromicron will also maintain a setup in future that ensures it can enable its customers to continue coping with the technological challenges in their business. In 2012, the Group therefore pooled its existing technological know-how and launched Competence Centers for products and solutions that are of strategic importance throughout the Group.
As part of its international commitment, euromicron continued to pursue a strategy of gradual and cautious expansion in 2012. Apart from existing companies and branch offices in Italy, Austria, Poland, the Benelux countries and France, euromicron acquired RSR Datacom and its subsidiary ProCom, a further company that caters for the international market, in particular Russia and China. The Chairman of the Executive Board also noted that there was growing interest in the products of euromicron’s production companies, especially in the Middle East. The Group was able to stabilize its position in the Austrian market in 2012 by adapting the successful business model for Germany to that country.
Further development of personnel structures
There was again a clear focus on qualification of the company’s workforce in 2012. The trainee ratio is a strong 6%. Various further training programs help professionalize executives, sales staff and project management. Employees in technology and service gain specialist qualifications as part of certification programs and courses.
Management structures at a number of operating companies were reorganized in the past year. The Group also invested in optimizing cross-company processes at the subsidiaries. This also includes establishing standardized procedures, for example in project management, sales, purchasing and IT. The objective of this is to tap synergy potentials and simplify collaboration across companies and make it more cost-effective. In order to ensure that business transactions and activities by employees are in accordance with the law and company’s values, a Code of Conduct was published and a compliance structure established at the beginning of the year.
Solid outlook for 2013
In order to put euromicron on a new professional foundation as soon as possible and equip it with feasible structures and the necessary agility as it moves to the next plane, the company will also focus in the coming two years on integration and structuring of its activities.
The primary objective of the Agenda 500 is evolve the SME model to enhance decentralized responsibility, agility, innovation and customer benefit and proximity. Alongside that, all organizational, responsibility and cost structures, including all processes, will be reviewed as part of strategic Group integration so that the opportunities of the current phase of change can be fully tapped before the company grows further. Cost-cutting programs will contribute around €10 million over the integration phase up to the end of 2014 to helping secure the quality of earnings.
As a second focus of the Agenda 500, the company will focus in the years of integration on developing its business organically and strategically rounding out its expertise in the market and its regional activities. Apart from expansion and qualification of the sales and management teams, that also includes developing the entire workforce, above all in terms of quality, as well as taking opportunities that arise to integrate qualified teams, technologies, market access and patents in the Group. The Chairman of the Executive Board commented that the company now had its sights on 3 to 4 smallish companies whose performance is currently being observing and whose competences and products represent a sensible complement to euromicron’s portfolio.
The Executive Board is planning organic growth in sales of 5% to 10% in 2013 and 2014 and then – after the phase of operational structuring and strategic integration of the Group – aims to achieve the €500 million sales mark in subsequent years. The EBITDA return at the Group level is to be in a corridor between 8% and 11% up and into the year 2014. As of 2015, it is then expected to return to a sustained 10% to 13%.
euromicron AG (www.euromicron.de) is an all-round solution provider for communications, transport, data and security networks. euromicron’s network infrastructures integrate voice, video and data transport wirelessly, via copper cable and by means of fiber-optic technologies. euromicron builds leading applications, such as security, control, healthcare or surveillance systems, on the basis of these cutting-edge network infrastructures.
Founded on its expertise as a developer and producer of fiber-optic components, euromicron AG is a strongly growing, highly profitable group that is listed on the stock market, has a medium-sized character and focuses on operational growth, integration and further market penetration, internationalization and expansion.