SW Umwelttechnik Stoiser & Wolschner AG
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SW Umwelttechnik: results press conference
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annual report
23.04.2008
* EBIT up by 12% * Record E26.4 million investment programme * Expansion in Romania and market build-up in Bulgaria and Serbia slated
Vienna, 23 April: After successfully fighting a harsh trading environment - especially in Hungary and Romania - today at the results press conference joint chief executives Dr. Bernd Wolschner and DI Klaus Einfalt unveil SW Umwelttechnik's results for 2007. Despite the difficult conditions they can - due to the realisation of a record investment programme - unveil a creditable result. And the outlook for 2008 is good.
Revenue Revenue decreased by 6% to EUR 91.2m in 2007 (2006: EUR 101.9m). The main reasons for this were government spending cuts in Hungary which led to a sharp decline in municipal contract awards, as well as hold-ups in major EU funded projects in Romania. Part of the lost ground was made up by increased deliveries to commercial and industrial customers, and exports to countries bordering core markets.
Our main geographical market, Hungary accounted for EUR 57.2m or 60% of total revenue in 2007, compared to E67.5m or 66% in the previous year. As expected, the revenue contribution of the Austrian market shrank to EUR 19.3m or 20% (2006: EUR 23.0m, 23%), due to the works closures in 2006. The revenue share generated in Romania was below forecast due to delays in EU projects, only edging up to EUR 8.6m or 9% (2006: EUR 7.8m). By contrast exports from Hungary to Slovakia jumped from EUR 1.0m to EUR 6.6m (7%), while the proportion of revenue derived from "other" countries (Croatia, Germany, Italy and Slovenia) almost doubled to EUR 4.0m or 4% (2006: EUR 2.3m).
A particularly satisfactory performance from the Infrastructure sector in 2007 boosted its revenue contribution to 51% from 43% in 2006. The main factor behind this success was strong order bookings from industrial and commercial clients. The proportion of revenue accounted for by the Water Conservation sector edged down to 30% (2006: 32%), while the Engineering sector was hardest hit by the public spending cuts in Hungary and its segmental contribution slid to 19% (2006: 25%).
Earnings Earnings before interest and tax (EBIT) improved again, by 12% to EUR 4.6m (2006: EUR 4.1m) despite the adverse trading environment. Some EUR 2m in non- capitalised start-up losses in Romania are recognised in this figure. EBITDA was up by 2% to a record EUR 9.4m (2006: EUR 9.2m). The sharp devaluation of the Romanian lei towards the end of 2007 resulted in a pronounced deterioration in net finance costs, as the remeasurement of the investment loans at balance sheet date led to an unrealised exchange loss. Due to this effect net finance costs increased to EUR 3.3m (2006: EUR 1.2m), cutting profit on ordinary activities (POA) to EUR 1.2m (2006: EUR 2.9m). Due to positive earnings expectations deferred tax assets were recognised, and as a result the profit for the period held at EUR 1.7m (2006: EUR 2.1m).
Assets and finances Total assets rose by 26% to EUR 120.2m (2006: EUR 95.5m). The reasons for the increase lay in the heavy investment programme, as well as the reclassification of the property in Csepel, which is surplus to operational requirements and is being held for sale.
Non-current assets were up by 30.8% from EUR 57.9m to EUR 75.7m, reflecting the expanded investment programme amounting to EUR 26.4m. The effect on non-current assets of currency differences arising from movements in the HUF and RON exchange rates totalled EUR 0.5m (2006: EUR 0.7m).
Equity increased from EUR 26.5m to EUR 27.2m due to strong earnings. However the equity ratio slipped from 27.7% to 22.6%.
The extensive investment programme was financed by cash flows from operating activities and increased long-term borrowings.
Employees The average head count decreased by 5% to 797 in 2007 (2006: 836) bringing it into line with reduced output. In 2007 the Austrian workforce averaged 153 (2006: 193), the Hungarian payroll 542 (2006: 583), and the number of employees in Romania 102 (2006: 60). The start-up of the new factory in Bucharest has expanded the Romanian labour force to about 200.
Capital expenditure 46% of the record capital expenditure of EUR 26.4 m in 2007 was channelled to the construction of new production facilities in Romania, while 46% was devoted to plant expansion and modernisation projects in Hungary - most of the money going to the final expansion phase at the South Budapest site - and 8% to restructuring programmes at the Austrian sites. Investment spending was mainly focused on the Infrastructure sector.
Order backlog Order backlog of EUR 46.0m at balance sheet date was the highest in SW Umwelttechnik's history, and represented a year-on-year gain of 77% (2006: EUR 25.9m). Order backlog climbed to EUR 30m in Hungary (2006: EUR 17m) and to EUR 12m in Romania (2006: EUR 6m). The upturn in order intake was particularly gratifying in the light of the difficult market conditions in Hungary and Romania.
Dividend recommendation Due to the group's positive operating performance the Management Board will be recommending a divided of E0.30 per share for the 2007 financial year (2006: E0.30/share).
Outlook The markets in Central and Southeastern Europe continue to offer excellent prospects. Above-average growth rates are likely to persist for some years to come - especially in Romania. Our record investment programme has laid the groundwork for the long-term consolidation of our position in these markets. During the year under review we pressed ahead with rigorous restructuring programmes in Austria, and turnaround was achieved. The increase in order backlog gives us a strong platform for a further improvement in the results of the Austrian operations in 2008.
Despite the collapse in construction activity in Hungary in 2007 we kept results in this market close to the previous year's levels thanks to hard work and good project management. We do not expect business to pick up in Hungary until the third quarter of 2008. Implementation of the major EU projects in the pipeline should begin in the autumn. Due to the excellent order books situation and the expectation of additional major contract wins, management expects at least modest year-on-year revenue growth, contrary to the forecasts for the industry as a whole.
In Romania, the commissioning of the Bucharest works in November 2007 has opened the way for the coming expansion phases. Implementation of Phase II in 2008 will bring capacity for the Water Conservation sector. Due to a number of delays in the EU support programmes many projects that were to have been implemented in 2007 have been put back to 2008 or beyond. The new Bucharest works should make a positive contribution to Group earnings. Due to the expected delays in EU funded projects management has shifted the focus in this market to industrial and commercial projects in 2008.
Development of the neighbouring Bulgarian, Moldavian, Serbian and Ukrainian markets will proceed, using products exported from Hungary and Romania. We plan to build additional factories in these countries, and the first negotiations on land purchases have been initiated. Our policy of using land that is surplus to
operational requirements after new plants have been built and commissioned as an additional source of income remains in place.
Financial highlights |In Em |2007 |2006 |2005 | |Revenue |96.1 |101.9 |91.2 | |EBIT |4.6 |4.1 |3.9 | |EBITDA |9.4 |9.2 |8.6 | |POA |1.2 |2.9 |1.9 |
Founded in 1910, SW Umweltechnik remains a family business, though it has been listed on the Vienna Stock Exchange since 1997. The company is widely identified with sustainable enterprise and rapid expansion in Central and Southeastern Europe. Its innovative environmental technology products are contributing to infrastructure renewal in CSE countries.
end of announcement euro adhoc
Further inquiry note:
Dr. Bernd Wolschner
Member of the Management Board
Tel.: +43/7259/31 35 0
Fax: +43/463/37 667
Romed Lackner
Investor Relations/Marketing
Tel.: +43/664/811 76 70
Fax: +43/463/37 667 170
E-Mail: romed.lackner@sw-umwelttechnik.com
Website: www.sw-umwelttechnik.com
Branche: Technology
ISIN: AT0000808209
WKN: 910497
Index: WBI
Börsen: Börse Berlin / free trade
Börse Frankfurt / free trade
Wiener Börse AG / Regulated free trade