Corporate | 11 August 2005 07:01

MEDION: Slight increase in turnover in the second quarter

Corporate-news transmitted by DGAP. The issuer is solely responsible for the content of this announcement. —————————————————————————— Slight increase in turnover in the second quarter Earnings below last year’s level as expected In the second quarter of 2005 the MEDION group has been able to achieve the forecasted stabilization of turnover. Thus, the second quarter of 2005 has proved to be the first business quarter after three consecutive quarters with sales declines to show an increase of 1.8 %. This positive development has been achieved in spite of a persistently difficult economic environment in Germany and the hesitance of consumers on important foreign markets. Due to the successful development of our mobile computing and digital home activities, second quarter sales went up from EUR 490.2 M in last year’s quarter to EUR 499.0 M in 2005. Regarding the first six months the second quarter gains could not fully compensate the decline in turnover in the first quarter. On a half year basis turnover fell therefore by 10.1 % from EUR 1,256.8 M to EUR 1,130.3 M. Regarding first half year sales EUR 854.4 M or 75.6 % were covered by multimedia products (previous year: 76.7 %). Entertainment and household electronics contributed EUR 245.1 M or 21.7 % to group sales (previous year: 21.3 %). In communication technology EUR 30.8 M or 2.7 % of total turnover was achieved (previous year: 2.0 %). On a half year basis the comparability is affected by the unusually high levels of both sales and earnings in the first quarter of 2004. In total gross margin has reached 9.8 % in the first half of 2005 versus 10.5 % the year before. In the second quarter of 2005 alone it improved from 9.0 % in 2004 to 9.6 %. As expected, EBIT shrank from EUR 12.2 M to EUR 6.0 M in the second quarter. Based upon a balanced interest result net earnings of EUR 3.2 M have been achieved. Earnings per share amounted to EUR 0.07 versus EUR 0.13 the year before. Referring to the first six months of 2005 EBIT of EUR 18.5 M and earnings per share of EUR 0.21 have been reached. Foreign exposure In the second quarter of 2005 a weaker domestic consumer demand was also noticed on several important foreign markets such as France, the Netherlands and England. The lower ordering activity of some of our core clients, who purchase centrally from Germany, has been the main influencing factor on our declining foreign sales. This is why our foreign turnover fell by 18.3 % from EUR 203.1 M the year before to EUR 165.9 M in the second quarter of 2005. In the first six months of 2005 foreign turnover shrank from EUR 486.6 M to EUR 395.1 M. Investments In the first half of 2005 investments amounted to EUR 6.0 M. They comprised primarily expenditure referring to the expansion of our IT and communication infrastructure as well as investments into our new premises in Essen. Outlook In total the projected stabilization of turnover has finally materialized. Together with this domestic demand has recovered in the second quarter of 2005. Further along some important foreign markets in Europe are currently developing slowly due to consumers’ noticeable purchasing restraint. However, assuming that the current period of political uncertainty in Germany ends soon, market research institutes foresee a high chance of positive effects on domestic demand. Based upon our current order inflow we assume that third quarter sales will reach the previous year’s quarter level. Personnel costs will hardly change compared to the second quarter of 2005. Other operating expenses are characterized by service and Other sales costs which have risen compared to the previous year. This is why the introduced measures for raising efficiency and optimizing costs will be accelerated in the MEDION group. However it has to be taken into consideration that a significant reduction of fixed costs is prevented in the short-term by the fact, that high service quality and the rapid availability of innovative products in high quantities has to be maintained. Although a precise and reliable forecast for the full fiscal year 2005 is not yet possible, we can expect for the time being that a possible pick-up of Christmas business and the implemented cost-optimizing measures will not be sufficient to compensate the declines in both sales and earnings which have primarily occurred in the first six months of 2005. The current stabilization and improvement of domestic sales and margins underline that MEDION is on the right track to successfully further develop its business model which is based upon long-lasting partnerships with clients and suppliers. MEDION will thus create the preconditions to generate again sales and earnings increases in the mid-term in an improved economic environment. MEDION group financial highlights Figures in EUR million Figures in EUR million 01.01. – 30.06.2005 01.01. – 30.06.2004 Sales 1.130 1.257 – inside Germany 735 770 – outside Germany 395 487 Sales by business division – PC/multimedia 854 964 – Entertainment and household electronics 245 268 – Communications technology 31 25 Earnings before taxes 18,2 56,4 Net income for the period 10,0 33,0 Total assets 735 757 Equity ratio 60,27 % 58,18 % Key figures on the MEDION stock Subscribed capital EUR 48.418.400 ISIN DE0006605009 Listed Frankfurt a. M. (MDAX) XETRA Figures in EUR Figures in EUR 01.01. – 30.06.2005 01.01. – 30.06.2004 Earnings per share 0,21 0,68 Contact MEDION AG Investor Relations Am Zehnthof 77 D-45307 Essen Tel +49 (0)201-8383 6500 Fax +49 (0)201-8383 6539 Email aktie@medion.com Internet www.medion.com End of announcement (c)DGAP 11.08.2005 —————————————————————————— WKN: 660 500; ISIN: DE0006605009; Index: MDAX Listed: Geregelter Markt in Frankfurt (Prime Standard); Freiverkehr in Berlin- Bremen, Düsseldorf, Hamburg, Hannover, München und Stuttgart 110701 Aug 05