Sales increased to €165 million / earnings rise by 33 percent / restructuring of the group completed
euromicron AG, a leading provider of network and fiber optic technology, posted the most successful fiscal year in its history in 2008. Sales increased in the past fiscal year by 21 percent to €165 million, while consolidated earnings before interest and taxes grew in 2008 by around 33 percent to €16 million. The Group’s EBIT margin increased from 8.8 to 9.7 percent; earnings per share rose from €1.53 to €1.78.
The companies acquired in 2008 contributed some 6 percent to the growth in sales, meaning that the company achieved organic growth of 16 percent in the past year. Sales from production of components and assembly rose by 7.3 percent, project and system business grew by 25 percent, and the distribution and services business segment recorded a rise of 56.8 percent. The Group’s foreign associated companies contributed 18.6 percent to the Group’s sales result.
Positive outlook for 2009
“Our company has kept on course, irrespective of and unswayed by all the stormy weather and adversities,” stated Chairman of the Executive Board Dr. Willibald Späth at the company’s General Meeting. The initial figures for 2009 also indicate the prospect of a positive trend: order books at December 31 were €70.4 million, slightly above the record figure of the previous year, and in January euromicron AG recorded the highest level of new orders in the Group’s history. “The company has started 2009 with well-filled order books and contracts have already been concluded for a major portion of the sales planned for 2009,” added Späth.
Despite these successes, the company would still remain cautious – given the current economic situation, it has launched a cost-cutting program as a precautionary measure. As a consequence, the ratio of costs of materials is to be reduced by one to three percentage points and personnel expenses cut by a further ten percent; other expenditures are to fall by some 15 percent. These measures should create an income reserve of approximately €5 million in total for the Group for 2009, a sum that will be reinvested in sales power, innovations or licenses if business proceeds normally.
Dividend yield of 9 percent
Visible proof of the company’s success is the rise in earnings per share to €1.78 – the dividend yield for euromicron’s share is almost 9 percent. The fall in the share’s price last year despite these successes is attributed by Späth to the current financial crisis: “In a year where more or less all stock exchanges worldwide saw their market capitalization plunge by almost half, market players made little distinction between good and weak companies and sold everything across the board,” explained Späth. However, the performance in the current year gave cause for optimism: since the beginning of the year the euromicron share has shrugged off the general market trend and performed well.
So that shareholders again participate adequately in the company’s good development, the Executive Board and Supervisory Board of euromicron AG have decided to distribute half of the consolidated net income to them in the form of dividends – the dividend for fiscal 2008 is €1.00 a share.
Group restructuring completed
The process of transforming euromicron AG into a clearly structured technology group that was started ten years ago has now been completed according to Späth: “We have successfully accomplished our divestment strategy and streamlined our Group portfolio. At the same time, we have expanded our core business segment in further steps. We now have a comprehensive footprint in the whole of Germany, boast expertise in all common network technologies, can offer our customers any service for their network and are one of the largest and most important vendors in fiber optic markets,” he stated.
Späth sees further need for expansion in the coming years abroad – in the past years the company had cautiously begun to strengthen its international presence and had made various acquisitions abroad. For example, a first step toward developing the Italian market had been made in 2008 with the purchase of Qubix S.p.A. Since Qubix is an established vendor of network solutions in Eastern Europe, this investment was also a first step eastwards. Späth was less satisfied about the company’s current commitment in Austria: Cteam GmbH, which was acquired in 2007 and is now called euromicron austria, suffered a tough 2008 due to consolidation of the Austrian mobile communications market; however, the level of new orders for the current year, including outside the mobile communications market in the euromicron Group’s core segment, indicate that euromicron austria will overcome these difficulties this year.
According to Späth, the objective in the coming months will be to integrate the overall Group and leverage and promote the various opportunities to make it more effective and efficient, for example by merging further units of the company. rako electronic data technology GmbH was merged with LWL Sachsenkabel GmbH, for example. With a view to this task of integration, euromicron international services was founded last year and is responsible for strategic, cross-business segment controlling tasks that are not part of the Group’s core business. Among other things, this company manages land and buildings, as well as taking care of financing and specific associates – an organizational milestone on the way to becoming an integrated overall Group.
Next steps
Späth added that the next phase of the company’s development is now to be initiated with completion of the Group’s restructuring. “In this phase we will constantly review our portfolio of products and services and ask ourselves whether and, if so, where we have to expand or reorganize our Group.” If and when required, further manufacturers and products or new technologies would be included in the portfolio; likewise, the company would shed specific technologies if necessary. “We will constantly ask ourselves where there are new business segments that are opening up as a result of customers’ needs and problems and that we have to address,” is how Späth describes this approach. And wherever demand for new products and technologies arose, the company would try to meet it by means of internal growth by acquiring licenses or patents and through partnerships or systematically strengthen itself in a number of areas by means of acquisitions.