DGAP-Adhoc: Balda AG: Balda AG lowers 2006 sales forecast again, expects Euro 45-50 million loss in 2006
24.10.2006
Balda AG / Key word(s): Quarter Results
24.10.2006 20:46
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.
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* Q3 Sales at Euro 82.6 million, down 19.8 percent from year-earlier
period
* Euro 47.8 million pretax loss in Q3 following extraordinary items
* Pretax loss in 2006 of approximately 45-50 million Euro including around
Euro 35 million in extraordinary items. Operating profit should reach 10-
15 million Euro.
* 2007 upturn in EBT to Euro 50-55 million expected, upturn in sales to
Euro 650-700 million
* Aim to sell three production sites in Germany in 2006, lay-offs are
unavoidable
* Medtech business to carry large strategic role in Europe
Balda has suffered a significant downturn in the third quarter caused by
recent developments at mobile phone producer BenQ and lower orders from
other customers. In the first nine months of 2006, the Balda group posted a
4.5 percent drop in sales to Euro 268.9 million (year-earlier period: Euro
281.5 million). In the third quarter, the specialist for plastic
components for mobile phones posted sales of Euro 82.6 million, 19.8
percent below the year-earlier period and 11.6 percent less than in the
second quarter 2006.
As a result, Balda is obliged to cut its sales and profit forecast for 2006
drastically. The sales decline particularly affects production in Germany.
To prevent further burdens, the production sites in Herford (North
Rine-Westphalia), Oberlungwitz (Saxony) and Seelbach (Baden-Wuerttemberg)
which have produced mainly for BenQ and Nokia will be sold, preferably in
2006, even if this means incurring book losses. Depending on market
developments and ongoing sales, these effects will amount to around Euro
60-65 million. We expect a pretax loss of Euro 45-50 million for 2006.
Goodwill amortization and other depreciation of fixed assets will amount to
Euro 35 million, which are not cash relevant.
While the global market for mobile phones is growing in volume, the market
for plastic components is shrinking in terms of sales due to the current
price pressure on suppliers. Mobile phone manufacturers are increasingly
sourcing in Asia – a trend that will continue in the future. Balda has
already adapted by building new factories in China, but it was unexpected
that this trend would intensify to such an extreme in the short term. We
assume that the insolvency of BenQ in Germany will negatively affect the
activity of other BenQ affiliates, who are also among Balda’s customers. We
had to account for these additional burdens, mainly by writing off
inventory and receivables in the third quarter. Separately, we had to write
off the goodwill on our Brazilian sites due to declining prospects.
Due to the sale of the three production facilities the capacity of our
German production sites will be reduced by over 50 per cent. Therefore and
for the necessary capacity adjustments at our core factory the number of
employees in Germany will decline from about 1,600 to roughly 600. Around
750 of these employees should be taken on board by the prospective buyer of
the production facilities. In Bad Oeynhausen 250 people must be cut in a
socially acceptable manner. In addition, we won’t be able to keep the 450
employees of a temporary staffing agency who are currently working for
Balda. The board and the workers council are examining all options in order
to make these job cuts as socially acceptable as possible.
From today’s viewpoint, business with the leading mobile phone makers
should resume growth in 2007 and should become more profitable than this
year. For example, Balda’s mass production for Nokia will start in Asia
next year, which should overcompensate for this year’s lower demand by BenQ
in Asia. The resulting higher capacity utilization in Asia, cost-cutting
measures and a new customer mix will boost operating profitability.
The forceful implementation of these measures should assure that 2007 will
largely remain free of carry-over charges from 2006 and that the chosen
growth strategy can be continued in a focused way, in part to maintain the
remaining jobs.
In 2007, our core business plastic components should post sales of Euro
330-350 million and post a pretax profit (EBT) of between Euro 15 million
and 20 million. For our touchscreen solutions business we continue to
expect sales of between Euro 300 and 350 million for our stake and a
pretax profit (EBT) of between Euro 30 million to 35 million. Overall in
2007, the group expects sales of between Euro 650 million and 700 million
with a pretax profit of between Euro 50 and 55 million. Balda expects EPS
of around 0.70 Euro per share (based on 40.2 million shares) for 2007,
since the marginal tax rate of Balda group is likely to be below 20 per
cent in fiscal 2007 due this year’s additional capacity build-up in Asia.
Balda AG, Cersten Hellmich and Kathrin Wiederrich (Investor Relations),
Tel.: (0049) (0) 5734 922-2706/2751, e-mail:chellmich@balda.de,
kwiederrich@balda.de. Internet: www.balda.de
24.10.2006 DGAP’s Distribution Services include Regulatory Announcements,
Financial/Corporate News and Press Releases.
Media archive at www.dgap-medientreff.de and www.dgap.de
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Language: English
Company: Balda AG
Bergkirchener Str. 228
32549 Bad Oeynhausen
Germany
Phone: +49 (0) 57 34 / 9 22-0
Fax: +49 (0) 57 34 / 9 22-2604
E-mail: info@Balda.de
Internet: www.balda.de
ISIN: DE0005215107
WKN: 521510
Listed: Regulierter Markt in Frankfurt (Prime Standard); Freiverkehr
in Berlin, Düsseldorf, Hamburg, Hannover, München, Stuttgart
End of Announcement DGAP News-Service
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