Loewe reports significant growth in sales
- Sales increase by 8% to EUR 66.6 million
- 32% increase in audio sales
- EBIT improves to a loss of EUR 0.9 million
- Market share in Europe increases to 4.5%
- Gross margin rises significantly to 24.8%
- Targets for full year 2012 confirmed
Kronach, May 3, 2012 – Loewe Group sales increased significantly to EUR 66.6 million in the first quarter of 2012, up 8% from EUR 61.5 million in the same period in 2011. The business development in the Audio/DVD product group was also very pleasing, particularly thanks to the new Loewe Audiodesign solutions. This product group's sales rose by 32% to EUR 7.4 million in the first quarter. "Our Company has made a good start in fiscal year 2012 in a difficult market environment. In line with our expectations, our sales have clearly surpassed those of the previous year and we have been able to continue the positive earnings trend," Loewe CEO Oliver Seidl summarized the business development in the first quarter of 2012.
As expected, the higher sales volume enabled Loewe to reduce its losses significantly in the first quarter of 2012. In the period under review, the Company generated an EBIT loss of EUR 0.9 million, up from an EBIT loss of EUR 2.9 million in the comparable period of the previous year. Despite the still negative earnings, Loewe's successful working capital management enabled it to increase liquidity even further to EUR 36.2 million as of March 31, 2012. "This provides us an excellent basis for supporting our growth targets in the current fiscal year," continued Seidl.
In addition to the up-to-date and attractive product portfolio in the core TV segment, the new Loewe Audiodesign solutions launched in late 2011 contributed significantly to the positive sales and earnings trend in the first quarter of 2012. While Loewe's business development in Germany, Austria and Switzerland has been extremely positive, the persistently difficult economic conditions in large parts of Europe have strained the Company's export business. In its key German market, the premium manufacturer further expanded its strong position and increased sales in the first three months of 2012 by 27% to EUR 44.2 million. In contrast, with sales of EUR 22.4 million, the export markets recorded a 16% decline.
Despite the current market trend, the growth in sales enabled Loewe to increase its market share by value for LCD TV in Europe from 3.0% in 2011 to 4.5% in the first quarter of 2012. Loewe's very good business development in Germany was the primary contributor to the growth. The market share in Germany increased significantly from 6.9% to 9.8% in the period under review.
The clear improvement in EBIT in the first quarter of 2012 is primarily due to a significantly higher gross margin. Due to the conceptual revision of two TV set lines, the early market launch of a large-screen television set and the introduction of the new product category Loewe Audiodesign, the gross margin increased by 2.0 percentage points from 22.8% in the first quarter of 2011 to 24.8% in the first quarter of 2012. Value-based marketing of the Company's top quality home entertainment systems will continue to contribute to safeguarding Loewe's financial performance.
"We are making good progress with the strategic enhancement of Loewe as a premium brand," said Seidl. In this connection, the Company started a communication offensive with more than 150 retailers at the beginning of the year in the form of the “Loewe plusTage” campaign. The market launch of the new TV line Connect ID in only a few days from now will mark the start of the next large communication wave, with events at retailers, cooperation with the well-known Lumas Art Galleries and a large-scale print campaign. In the price segment above EUR 1,500, the Loewe Connect ID offers individual style and technical features like no other set in this price category.
To expand its position as an international premium brand in consumer electronics even further, Loewe is currently working on country-specific distribution concepts for the different European and international markets. Success will continue to be based on the partnership with qualified retailers in the German-speaking core markets. In non-German-speaking European countries, Loewe will in the future work even more intensively with retail trading partners. The Company is also becoming more intensively engaged in global growth markets.
Even if the persistently difficult economic conditions in parts of Europe put a strain on Loewe's export business in particular, the market for large-screen LCD TVs priced above EUR 1,500 in the premium segment offers good opportunities in the medium term. For that reason, Loewe continues to expect growth in sales and a significant improvement in earnings for fiscal year 2012. Moreover, Loewe’s sound capital structure positions the Company positively for the future.