Corporate | 21 May 2015 07:50

Gigaset breaks even

Gigaset AG / Key word(s): Quarter Results

2015-05-21 / 07:50

Press Release
Munich, May 21, 2015

Figures for the 1st quarter of 2015:

Gigaset breaks even

– Consolidated revenue rises to EUR70.1 million (Q1/2014: EUR65 million)

– EBITDA improves to EUR8.8 million (Q1/2014: minus EUR7.7 million)

– Positive consolidated net income of EUR0.8 million (Q1/2014: minus EUR12.2 million)

– Free cash flow improves to minus EUR18.2 million (Q1/2014: minus EUR28.0 million)

– CEO Charles Fränkl: “The new business segments are making a growing contribution to revenue. Revenue at the Business Customers Business Unit rose by 23 percent compared with the first quarter of 2014. Revenue from the smart home product Gigaset elements has increased almost five-fold and the Mobile segment is also increasingly generating income. That shows the new strategy is having an impact.”

Gigaset has got off to a stable start to the new fiscal year. After a long spell of declining revenue in its core business due to market-related reasons, revenue in the first quarter increased by 7.9 percent year on year, despite the fact that the company had withdrawn from unprofitable regions in 2013. The new growth segments Home Networks, Business Customers and Mobile also contributed to this positive revenue trend. Revenue at the Business Customers Business Unit rose by 23 percent compared with the first quarter of 2014. Revenue from the smart home product Gigaset elements increased almost five-fold.

Higher revenue, successful efforts to increase efficiency and gains from foreign exchange hedges also improved profit ratios. After losses in the same quarter of the previous year, EBITDA and EBIT were well in the black. Following losses of minus EUR12.2 million, consolidated net income was back in positive territory at EUR0.8 million. The free cash flow remained negative at minus EUR18.2 million, not least due to the fact that payables to suppliers from Christmas trade had to be settled, but improved significantly year on year. The free cash flow in the same period of the previous year was minus EUR28.0 million. The equity ratio was lower year on year due to the continued fall in the level of interest rates used in discounting, which resulted in higher pension provisions.

The overall market for cordless phones in Europe recovered slightly in the 1st quarter of 2015, as measured by revenue and units in the markets observed by Gigaset. As expected by the company, the market trend in Western Europe points to further consolidation at a stable level of prices overall. The market declined by 0.5 percent in terms of units in Q1/2015 compared with the previous year, but remained stable in terms of value. Gigaset slightly lost market share in Europa over the previous year, but still retains its leading position. In its key European core markets, Gigaset maintained its remarkably high market share in terms of revenue (31.8 percent) and units (27.4 percent) in the first quarter of 2015. Gigaset was able to maintain its clear premium position over the competition and achieved an average sales price with its portfolio which was 22 percent above that of its competitors.

CEO Charles Fränkl comments on the results for the quarter: “The new business segments are making a growing contribution to revenue. Revenue at the Business Customers Business Unit rose by 23 percent compared with the first quarter of 2014. Revenue from the smart home product Gigaset elements has increased almost five-fold and the Mobile segment is also increasingly generating income. That shows the new strategy is having an impact.”

CFO Kai Dorn adds: “The new fiscal year has got off to a stable start. Although we withdrew from unprofitable markets last year and despite a slight decline in the market, we grew our revenue. Our efforts to improve efficiency are also having an impact, meaning we were able to post a slight profit in the first quarter.”

Overview of the figures for the first quarter of 2015:

– Consolidated revenue: EUR70.1 million (Q1/2014: EUR65.0 million)

– EBITDA: EUR8.8 million (Q1/2014: minus EUR7.7 million)

– Consolidated net income: EUR0.8 million (Q1/2014: minus EUR12.2)

– Free cash flow: minus EUR18.2 million (Q1/2014: minus EUR28.0 million)

Outlook

Gigaset AG sticks to the outlook it gave when the 2014 Annual Report was published on April 1, 2015.

The company will continue its strategic realignment uncompromisingly. It expects the decline in the market for its core business to slow slightly this year. However, cordless phone business is nevertheless still declining and so Gigaset is investing further in establishing new, promising business segments and product groups. These will make additional contributions to revenue, but they will not yet be able to compensate fully for the market-related decline in cordless phones this year. Gigaset therefore expects in the current fiscal year in the Business Units Consumer Products, Business Customers and Home Networks (excluding business with mobile devices):

– A decline in revenue from continuing operations in a high single-digit to low double-digit percentage range.

– A positive EBITDA once more in the lower double-digit million range. However, the EBITDA is expected to be below that of the previous year due to lower revenue, the investments required in new business segments and restructuring of the company. An EBITDA margin in the low to middle single-digit range is anticipated.

– A negative free cash flow in the high single-digit to low double-digit million range due to considerable investments in the new business segments.

Gigaset also expects positive contributions to earnings from business with mobile devices, in particular from its future smartphone business. However, a more precise figure can only be put on the latter after the company has entered the market.

Overview of the Business Units

Consumer Products
An attractive premium large-button phone with a 1.8″ color display was launched in the shape of the E550 product family, a system with an answering machine and additional handset. The new Go product series was premiered and aims to address the new all-IP strategy of some fixed-network operators. The SL400A GO, E360A GO, S850A GO and C430A GO enable both familiar analog telephony and the new Internet telephony. Apart from telephony, new functions (such as notifications on the smartphone, public telephone directory, information services, free calls worldwide between Gigaset Go customers) also use the Internet or the Gigaset cloud.

Business Customers
Revenue at the Business Customers Business Unit grew by around 23 percent year on year. There were positive boosts to growth in particular in the regions Germany, Italy and France. Regional expansion of sales activities also continues to proceed apace. The S650H Pro, the new cordless phone for business customers, was launched in the first quarter of 2015. It has a 1.8-inch color display and a Bluetooth function for connecting a headset. The particularly long battery life and enhanced qualities of its surface (scratch resistance, compatibility with many different care products) and the vibrating alarm make it an ideal phone for use in companies. Marketing of the new T440 and T640 telephone systems was also commenced. Initial reference projects have been acquired, in particular in Germany and France. The systems are aimed at companies with up to 100 employees, boast an appealing functionality and have an especially simple and low-cost licensing model. Their market launch is being supported by a trade-in program where customers receive a bonus for having their old system disposed of properly by Gigaset. The N720 DECT IP multi-cell system, which has been successfully established on the market for several years, has now been expanded so that up to 30 base stations can be administered in a single installation.

Home Networks
In September 2013, Gigaset began marketing the Gigaset elements starter kits through the network of specialty retailers and online in Germany and then in France shortly afterwards. The system has also been available in Switzerland, Austria, the Netherlands and Sweden since April 2014. Sales of it in the Czech Republic were also commenced in October 2014.

Further “elements” are intended to be put on the market. The central software platform in the cloud is also being provided successively with new functionalities. So as to be able to address new segments, Gigaset is setting store in the cloud by machine learning and open interfaces (application programming interfaces (APIs)) to make it easier to integrate devices and services for partners. The objective is to further enhance the attractiveness of Gigaset elements as a whole.

In mid-January 2015, Gigaset presented a new and innovative product in the field of networked electronics: the G-tag. The G-tag is a latest-generation Bluetooth beacon that searches for, keeps an eye on and finds objects to which it is attached.

Apart from its core function of finding things, the innovation in the Bluetooth market offers further helpful functions for everyday use. A location function enables users to find where they have parked their car quickly and easily, for example. A list function that reminds them to take along all the important things for their work when they leave home. Or an alarm that sounds as soon as a tagged object leaves the smartphone’s Bluetooth range. All the G-tag’s functionalities are enabled by the free Gigaset G-tag app, which is easy to install on all mobile devices with Android 4.3 or iOS 7 and above and is then simple to operate. The basis for that is Bluetooth 4.0, which maintains a permanent connection to any number of G-tags. Thanks to the low power consumption of this Bluetooth generation, the built-in battery has a service life of up to one year. Unlike with many commercially available rival products, it can then be replaced simply.

Mobile Products
In December 2013, Gigaset entered the growing market for tablets with two Android-based models in an 8″ and 10.1″ format. That marked the completion of the next step in expansion of the Gigaset 2015 strategy. The main focus of their launch was Germany. Marketing of the tablets was then expanded successively to other European countries. At the moment Gigaset is developing a smartphone portfolio in cooperation with Goldin Fund Pte. Ltd., Singapore. The first devices are to be available in 2015.

Gigaset AG, Munich, is an internationally operating company in the area of communications technology. It is Europe’s market leader in DECT telephones. The premium supplier is likewise the leader worldwide with around 1,400 employees and sales activities in around 70 countries. Under the name Gigaset pro, the company continues to develop and market innovative business telephony solutions for small and medium-sized enterprises. The company also operates in the smart home arena. Cutting-edge, cloud-based products and solutions for the smart home are developed and marketed under the name Gigaset elements.

Gigaset AG is listed on the Prime Standard of Deutsche Börse and is therefore subject to the highest requirements for transparency. Its shares are traded on the Frankfurt Stock Exchange under the symbol ‘GGS’ (ISIN: DE0005156004).

Gigaset in social media: / / / / / / / / /
Gigaset corporate blog: http://blog.gigaset.com
Gigaset homepage: http://www.gigaset.com

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Language:	English
Company:	Gigaset AG
	Seidlstraße 23
	80335 München
	Germany
Phone:	+89444456866
Fax:	+89444456930
E-mail:	info@gigaset.com
Internet:	www.gigaset.com
ISIN:	DE0005156004
WKN:	515600
Listed:	Regulated Market in Frankfurt (Prime Standard); Regulated Unofficial Market in Berlin, Dusseldorf, Hamburg, Munich, Stuttgart

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359853  2015-05-21