- Consolidated sales: Increase by 22% to €122.5 million
- Consolidated EBIT: Up 25% to €6.8 million
- Order books: Up 34% to €82.1 million
- EPS of €2 still the target
euromicron (ISIN: DE0005660005) has continued its dynamic performance in the third quarter of 2008. The increases in sales and income of the past quarters were able to be maintained, while there was even an above-proportionate rise in order books.
“Network infrastructure, with a functional and intelligent design as regards speed and volume, is the backbone of modern information societies. Investing in these technologies is a key factor in enhancing efficiency and gaining a competitive edge. Neither industry nor the public sector can afford to show restraint when it comes to investing in these areas, says Dr. Späth, Chairman of the Executive Board.
The structural realignment commenced in the past was also continued in the third quarter of 2008. For example, rako electronic data technology GmbH was merged with LWL Sachsenkabel GmbH retroactively with effect January 1, 2008. This, in conjunction with the structural adjustments in the first half of the year, meant that the Group has taken a further step toward becoming a clearly structured technology company.
The buy and build strategy was also continued. On August 25, 2008, Neef IT Solutions AG was acquired by euromicron solutions GmbH retroactively effective July 8, 2008, under an asset deal agreement. “This company has enabled us to obtain interesting contacts with largish medium-sized enterprises, in particular in Southwestern Germany, and build our expertise in the field of IT security,” states Dr. Bernardi, the board member in charge of Market, Technology and Operations.
Consolidated sales
The euromicron Group was able to increase its consolidated sales in the first nine months of fiscal 2008 by 21.7% year-on-year to €122.5 million (previous year: €100.6 million). The lion’s share of this – 15 percentage points – comes from organic growth at the “old” companies. Most of these sales – €104.5 million – are still generated in Germany and accounted for a year-on-year increase of around 19%. Sales in the Euro zone were €15.3 million, compared with €11.4 million for the same period of the previous year.
Consolidated income
In the third quarter of 2008, the euromicron Group posted income before interest and taxes (EBIT) of €6.8 million, a rise of 25.3% over the comparable figure for the previous year (€5.4 million). Operating income of the associated companies was €9.8 million (previous year: €8.8 million). Higher financing expenses and a larger profit share for minority interests meant that the Group’s net income increased by 9% to €3.0 million. Earnings per share (undiluted) rose from €0.61 in the previous year to €0.68 at September 30, 2008.
Order situation at the Group
The order situation continues to develop pleasingly in the current year. The euromicron Group recorded new orders of €114.1 million in the first nine months, versus €102.2 million for the same period in the previous year. Order books at September 30, 2008, increased year-on-year by 34% to €82.1 million. This high volume gives the Group cause to look optimistically to the coming quarters.
Balance sheet structure
Total assets at September 30, 2008, were €153.4 million, 3.6% above the figure at the end of the last fiscal year. On the assets side, noncurrent assets rose to around 59% of total assets, mainly due to changes to the consolidated companies as part of the buy and build strategy. The ratio of equity and long-term outside capital to assets is still more than 100%. There were no significant changes in the ratios on the liabilities side. The increase in current liabilities is the result of short-term interim financing of a large volume of projects in progress.
Personnel
The average number of employees at the euromicron group rose year-on-year by 8% to 898. In addition, the Group currently has 72 trainees, a rise of 47% over the figure for the previous year. As a result, the number of young people we are training marks a record in the company’s history.
Stockholders’ equity
The Group’s stockholders’ equity as of September 30, 2008, was €68.6 million, slightly below the figure for the previous year owing to the dividend payment for fiscal 2007. The equity ratio remains at a good 44.7%. The slight reduction in the equity ratio is attributable to the increase in total assets, which was in turn the result of an increase in operational business.
The share
euromicron’s share was not able to buck the trend of massive price slumps on all stock markets worldwide this year. Whereas only small and mid caps were initially affected, the prices of all listed companies tumbled in the course of the year. euromicron’s share followed the trend of the TecDax and SDax with some delays. euromicron’s share was even able to outperform the later index towards the end of the third quarter. However, the pressure on stock markets remains very high. The share is clearly undervalued at its present price; financial market analysts still rate it a “buy”.
Outlook
Our pleasing performance this fiscal year was much as expected. If there is no sharp economic downturn in the fourth quarter of 2008 and customers do not postpone or cancel projects, we anticipate that we will be able to meet our budget for 2008. However, that also implies that we will be able to continue our buy and build strategy in the fourth quarter of 2008 and make the odd acquisition or more. Our very fine order books at present give us cause to look to the end of the year with optimism.
The next steps in the Group’s structural realignment have already been initiated and we expect some of them to be accomplished this year.
All in all, we are convinced that in the past periods we have created a solid foundation for the future on which we can build successfully.
euromicron AG (www.euromicron.de) is one of the leading solution providers of communications systems and security networks and boasts production expertise in the field of fiber optics technology.