Balda AG / Key word(s): Profit Warning
Dissemination of an Ad hoc announcement according to § 15 WpHG, transmitted
by DGAP – a company of EquityStory AG.
The issuer is solely responsible for the content of this announcement.
2006 sales target will be missed
– Profits expectation of EUR 46 to 48 million reduced to around EUR
– 2006 sees decline in business in the Asian and American regions,
and also in Europe
– Core business back on course for growth in 2007 with increasing
– On the other hand, build-up of the newly acquired Touchscreen
Solutions sector as scheduled
– 2007 forecasts for TPK participation unchanged, with proportional
sales of EUR 300 to 350 million with pre-tax profits (EBT)
amounting to EUR 30 to 35 million.
Bad Oeynhausen – Balda AG retracts its previous forecast of between EUR 450
and 460 million for sales in the full year 2006, and reduces expectations
for pre-tax profits (EBT) from the former estimate of between EUR 46 and 48
millions to around EUR 20 million. Core business in the mobile phone market
will grow again in 2007, delivering higher profits. The forecasts for the
shareholding in TPK’s touchscreen business are confirmed with a sales
target of between EUR 300 and 350 million, with EBT of between EUR 30 and
At its global sales meeting in China last week (week 38), the Group
intensively examined and carefully assessed the current customer forecasts
and possible new business. The trends arising from the results for the
months of July and August were confirmed in the course of this examination.
Balda notes that the revival of customer calls, upon which its forecast of
mid-July was based, has not occurred as anticipated. Furthermore, the
company expects new projects to start up later than scheduled.
As expected, Balda has indeed also been listed by Nokia as a supplier in
Asia, and has won some initial projects. However, these orders will not be
going into mass production until 2007. Even so, the Group no longer assumes
that Nokia will still be involving Balda as a second source for ongoing
projects in the fourth quarter.
The aforementioned effects apply above all in Asia. The shortfalls that
have already occurred there in the second quarter will continue in the
remainder of 2006. The increased fixed costs associated with the setup of
the factory in Beijing are thus contrasted with a lower capacity
utilisation by reducing sales. This situation will, however, change for the
better in 2007 as a result of the improved customer mix.
The European region was on target in terms of sales and profits at the end
of the first 6 months of 2006. Even so, it will not be possible to maintain
this trend for the full year. The company cannot entirely absorb the
pressure on prices from customers in the mobile phone market. This pressure
is so intense that while the global market for mobile phones has grown in
volume, it has in fact shrunk in turnover terms. This trend can be
attributed to the keen competitive situation for Balda’s customers in the
global mobile phone market, but also to increasingly intensified
competition among suppliers to the mobile phone manufacturers. Balda
intends to counter this situation with a cost-reduction programme
specifically for the European region, going beyond the measures taken to
The American region will miss the target for 2006. The Infocom market in
Brazil is recording significant falls in comparison with last year. Balda’s
customers have withdrawn considerable production quotas from the country
intended for export, and relocated them to their plants in Mexico or China.
In the estimation of the Company, this development is a result of the
reinvigorated Brazilian currency and of the lengthy strike by customs
officials in Manaos. This relocation has led, particularly in Manaos, to
major overcapacity on the part of suppliers to the mobile phone industry.
This situation affects Balda just as much as its competitors. In Balda’s
estimation it is not yet possible to predict whether mobile phone
manufacturers will entirely close their plants in Manaos. In addition to
the cost adjustments already carried out, the Bad Oeynhausen-based Group is
examining its entire strategy for the American region.
On the basis of the developments described above, Balda AG expects earnings
before tax to amount to approx. EUR 20 million for the full year 2006,
significantly missing the sales target. However, the Group does expect
strong growth in the core mobile phone business in 2007. The Company is
convinced that the negative effects in Asia described here are only of a
temporary nature. Increasing utilisation of capacity in Asia and the cost
reduction measures will lead to enhanced profitability, in the estimation
of the Group.
On the other hand, the build-up of the newly acquired Touchscreen Solutions
sector is progressing on schedule. In the coming weeks TPK will be defining
with its customers the detailed ramp-up sales volumes. Balda is sticking to
the proportional sales target of EUR 300 to 350 million and expected
earnings (EBT) of between EUR 30 and 35 million at TPK. In the opinion of
the Group, the high importance of the involvement at TPK is now confirmed
in the current market situation. The holding offers the significant
competitive advantage of a one-stop solution for customers from the mobile
phone market, which will lead to clear synergies with the core business.
This offering will additionally help the Company to absorb the pressure on
margins in the plastics business.
If you have any questions, please contact: Balda AG, Cersten Hellmich and
Kathrin Wiederrich (Investor Relations), telephone: +49 (0)5734 922-2706 /
2751, e-mail: email@example.com, firstname.lastname@example.org, Internet:
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Company: Balda AG
Bergkirchener Str. 228
32549 Bad Oeynhausen
Phone: +49 (0) 57 34 / 9 22-0
Fax: +49 (0) 57 34 / 9 22-2604
Listed: Regulierter Markt in Frankfurt (Prime Standard); Freiverkehr
in Berlin, Düsseldorf, Hamburg, Hannover, München, Stuttgart
End of Announcement DGAP News-Service