DGAP-Adhoc: Balda AG: Balda AG lowers 2006 sales forecast again, expects Euro 45-50 million loss in 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.


* Q3 Sales at Euro 82.6 million, down 19.8 percent from year-earlier


* 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


* 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


Language: English

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

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