DGAP-Adhoc: Balda AG: Strong Q3 growth in sales revenues, operating income (EBIT) burdened by special factors


Balda AG / Key word(s): Quarter Results

29.10.2008 07:34

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 growth in sales revenues of 103.9 million euros (previous year: 66.4

million euros)

– Sales revenues of first nine months at 207.1 million euros (previous

year: 153.0 million euros) more than doubled as compared to half-year level

– Positive EBITDA at 24.3 million euros (previous year: 19.2 million euros)

– Special factors resulting from value adjustments and depreciations cause

operating income to fall by 14.0 million euros

– EBIT at minus 5.0 million euros (previous year: plus 8.0 million euros),

without special factors at plus 9.0 million euros

– Original sales revenues and income objectives for 2008 cannot be achieved

Bad Oeynhausen, October 29, 2008 – Balda AG, listed in the Prime Standard

segment of the Frankfurt Stock Exchange, achieved sales revenues of 207.1

million euros in the first nine months of 2008 in the continued operations

(previous year: 153.0 million euros). This is a significant gain of 54.1

million euros or 35.4 percent. The Group achieved its best quarterly

results of 2008 in the third quarter of the current fiscal year with sales

revenues of 103.9 million euros.

The Group recorded 24.3 million euros in earnings before interest, taxes

and depreciation (EBITDA) (previous year: 19.2 million euros). Due to the

special factors totaling 14.0 million euros, the group’s operating results

(EBIT) at 30 September 2008 decreased to minus 5.0 million euros (previous

year: plus 8.0 million euros). In the third quarter of the current fiscal

year, the Group recorded a negative EBIT of 0.6 million euros (previous

year: 2.6 million euros). The Group achieved pre-tax earnings (EBT) of

minus 15.1 million euros in the nine-month period (previous year: plus 0.7

million euros).

Sales revenue development

The Asian region increased sales revenues in the first nine months of the

current fiscal year to 196.1 million euros (previous year: 143.0 million

euros). This is a substantial increase of 53.1 million euros or 37.2

percent. The Asian region contributed the largest share to the Group’s

sales revenues with 94.7 percent (previous year: 93.5 percent). Both the

companies of the Infocom and touch screen operations contributed to the


The American region, with a sales volume of 10.1 million euros, remained

slightly below the revenue level of the previous year of 10.8 million

euros. The Indian region recorded a clear plus with 1.6 million euros

compared to the previous year, in which no noteworthy sales volume

occurred. The European region is not conducting any more revenue-generating

business in the continued operations.

Due to strong sales volume growth, the total operating performance climbed

by 55.3 million euros or 33.8 percent to 218.7 million euros compared to

the previous year’s reference period with 163.4 million euros.

The Group’s material expenses in the first nine months of the current

fiscal year increased substantially to 122.7 million euros (previous year:

82.9 million euros). This is an increase of 39.8 million euros or 48.1

percent. The reason for the disproportionately high increase in this

position is on the one hand the increased purchase of expensive electronic

components and, on the other, increased materials usage in the production

start-up of new projects in the touch screen operations.

Personnel expenses recorded a disproportionately low increase in the first

nine months of the current fiscal year with 33.0 million euros (previous

year: 31.0 million euros) considering the growth in the sales volume and in

spite of the considerable increase in the number of employees, totaling

12,214 employees (including temporary staff and trainees).

Earnings development

The Group recorded 24.3 million euros in earnings before interest, taxes

and depreciation (EBITDA) (previous year: 19.2 million euros).

The depreciation and amortization of fixed assets and intangible assets

amounted to 29.4 million euros (previous year: 11.2 million euros). This is

an increase of 18.2 million euros. The increase had several causes.

Expenses were accrued in all regions totaling 11.5 million euros from

impairment depreciation, which had to be made due to the impairment review

of long-term assets as per IFRS. At the same time, the greatly increased

investments in Asia, in particular for TPK and Balda Solutions Malaysia, as

well as the amortization on activated customer relations in the amount of

7.2 million euros (previous year: 3.4 million euros), contributed to the


Due to the special factors from cumulative value adjustments on claims and

impairment expenses totaling 14.0 million euros, the group’s operating

results (EBIT) at 30 September 2008 decreased to minus 5.0 million euros

(previous year: plus 8.0 million euros). In the previous year, the EBIT was

still influenced by the one-time effect of the repurchase of an option bond

(6.8 million euros).

Taking into account taxes on profit and earnings as well as minority

interests, the three-quarter-year 2008 deficit for the continued operations

amounted to minus 17.2 million euros (previous year: Nine month surplus of

2.1 million euros).

Shareholders’ equity

With shareholders’ equity at 131.0 million euros (31 December 2007: 150.9

million euros), due to the net loss a decrease of 19.9 million euros was

recorded. The shareholders’ equity quota increased from 35.7 percent at the

previous year-end to 37.6 percent due to the decreased total assets.


The Balda Group had invested 39.9 million euros in total in its continued

operations at 30 September 2008. (previous year: 35.6 million euros). The

investment volume was mainly allocated to the Group’s Asian locations.

Investments in tangible and intangible assets were recorded at 25.8 million

euros in the first two quarters of the current fiscal year. Expenses, which

had increased compared to the first six months of 2008, relate primarily to

the build up of production capacity in the Asia region. A large portion of

the invested funds in the third quarter was further allocated to the

build-up of production capacities at TPK in Xiamen and Balda Solutions



Maintaining the profitability of the Infocom operations in Asia and

expanding both the customer base and sales volume base will be decisive for

the continued development of the Balda Group. The companies in Brazil are

being strictly monitored. The market environment there may have permanently

deteriorated. Balda will not invest any further in this region.

The situation in India continues to be very unsatisfactory. If Balda is

unable to generate Infocom sales in this region of any appreciable volume

then pulling out of this market is an option.

TPK will become a participation financing beginning at the fourth quarter,

with a view to a possible initial public offer from which Balda can profit.

At the same time, Balda and TPK can expand their cooperation in personnel,

technology and project-related matters to their mutual benefit.

Balda sees its future in the Asian Infocom market, on the basis of secure

and, under the current circumstances, favorably priced financing, the sale

of Balda Medical and the Bad Oeynhausen properties, as well as a

satisfactory solution in Brazil. Important segments of management will be

transferred to Asia; however, Bad Oeynhausen will remain the head office of

the holding. After a complete reprocessing of bad debts and a finalized

restructuring, management is cautiously positive about the Group’s future


The sales objectives set for the 2008 fiscal year cannot be achieved. The

reasons for this are the loss of the quota consolidation of TPK in the

fourth quarter, the sales volume shortfalls in the first nine months of the

current fiscal year, as well as the anticipated weakening in consumer

purchasing, the consequence of global fears resulting from the financial

market crisis. Management anticipates an overall annual net loss for the

Balda Group.

Key figures of Balda Group

in mio. EUR Q3/2008 Q3/2007 Change in %

Revenues 207.1 153.0 35.4

Asia 196.1 143.0 37.2

America 10.1 10.8 -6.0

India 1.6 – –

Total operating

performance 218.7 163.4 33.8

EBITDA 24.3 19.2 26.6

EBIT -5.0 8.0 -162.6

EBIT margin (in %) -2.3 4.9 -147.0

EBT -15.1 0.7 -2,257.0

9-months net income -17.2 2.1 -913.8

9-months net income



operations -30.6 -26.1 -17.3

EPS (in cent) -56.5 -55.0 -2.6

Employees 12,214 7,373 65.6


The Quarterly Report 3/2008 is available for download on the Balda AG

website at www.balda.de/ir/publikationen in German and English.


Information and Explaination of the Issuer to this News:

* * *

Company profile Balda AG

The Balda Group develops and produces highly integrated devices comprising

plastic and electronic components, primarily for the telecommunications

sector. In addition, the company manufactures high-tech components such as

headphones and hands-free sets.

The future is derived from past experience. Balda has developed an active

culture of continuous transformation through the traditions established

within the hundred years of its existence. Since its founding, innovation

and technology have been the significant driving forces of progress and the

guarantors of corporate success. Today, Balda is an internationally

positioned high-tech company with innovative products and a high

performance capacity.

Balda AG, which is registered in the Prime Standard on the German Stock

Exchange, services international brand-name clients in the mobile

telecommunications sector, medical technology and other similar markets.

The Group produces close to its customers’ locations in the expanding

growth markets. With four production facilities, the Group has a strong

position in China and Malaysia. Plants in Brazil and India, as well as the

facility in Germany for Balda Medical, underline the Group’s international

focus. Within the framework of a shareholding in a leading producer of

touch screens in China, Balda is participating in the dynamic development

in the touch-sensitive display sector.

The vision was and is clear: Balda will strengthen its technological

innovations potential and further expand in the promising growth regions of

Asia. Balda will thus achieve the conditions for profitable growth and a

sustainable increase in added value.

* * *

This ad hoc announcement includes ‘forward-looking statements’ which are

based on the current expectations of the management of Balda. They are

subject to risks and uncertainty because they relate to events and depend

on circumstances that will occur in the future, such as, for example,

developments in the mobile communications industry, changes in technology

and the ability to timely and successfully develop new products and various

other factors. Balda does not undertake any obligation to update publicly

or revise forward-looking statements except to the extent legally required.

This ad hoc announcement is not an offer of securities for sale or a

solicitation of an offer to purchase securities in the United States or

elsewhere. The shares in Balda AG (the ‘Shares’) may not be offered or sold

in the United States or to or for the account or benefit of U.S. persons

(as such term is defined in Regulation S under the U.S. Securities Act of

1933, as amended (the ‘Securities Act’)) unless registered under the

Securities Act or pursuant to an exemption from such registration. The

Shares have not been and will not be registered under the Securities


Contact: Balda AG, Clas Röhl, Fon: (05734) 922 – 2728, Fax:

(05734) 922 – 2691, Email: croehl@balda.de, Web: www.balda.de

29.10.2008 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