Loewe reports growth in sales and significantly improved results
- Sales increase by 6% to EUR 125.6 million
- EBIT improves from a loss of EUR 7.8 million to a loss of EUR 2.2 million
- Gross margin rises significantly to 26.0%
- Market share in Europe rises from 3.2% to 4.4%
- Subsidiary established in China
Kronach, August 2, 2012 – "Our sales are surpassing those of 2011 and we have succeeded in continuing to improve our results. We achieved this in a European market for LCD TVs whose value has declined by 10%," was how Oliver Seidl, Loewe CEO, summed up business development in the first six months of 2012. Loewe Group sales reached EUR 125.6 million in the first six months of 2012, up 6% from EUR 118.7 million in the same period in 2011. The business development in the Audio/DVD product group was also very pleasing, thanks to the new Loewe Audiodesign solutions, whose sales grew by 13% to EUR 12.1 million in the first half. The higher sales volume and the significantly improved gross margin enabled Loewe to continue to significantly reduce its losses in the first half of 2012. Consequently, the Company generated an EBIT loss of EUR 2.2 million after an EBIT loss of EUR 7.8 million in the comparable period of the previous year.
In addition to the attractive Loewe Audiodesign solutions, the new product family Connect ID, which was launched in the market with great success in the second quarter of 2012, contributed to the positive sales and earnings trend. While Loewe's business development in Germany and Switzerland has been very good, persistently difficult economic conditions in large parts of Europe have strained the export business further. In its key German market, the premium manufacturer was able, however, to benefit from the positive stimuli from the shutdown of analog satellite TV and the UEFA Euro 2012 and continue to expand its strong position in the first six months of 2012. Sales in the home market thus rose significantly in the period under review by 20% to EUR 80.9 million. In contrast, with sales of EUR 44.7 million, the export markets recorded a 13% decline.
The growth in sales has enabled Loewe to counter the current market trend by increasing its European market share by value for LCD TV from 3.2% in 2011 to 4.4% by the beginning of June 2012. This growth was supported primarily by Loewe's strong business development in Germany where the market share by value was increased from 7.5% to 9.7%.
In addition to the increased sales volume, the clear improvement in EBIT in the first six months of 2012 was primarily due to the significantly higher gross margin. In response to the conceptual revision of two product families, the successful launch of the Loewe Audiodesign solutions and the market launch of the new TV line Connect ID, the gross margin rose by 3.3 percentage points from 22.7% a year before to 26.0% in the first six months of 2012. "This has almost returned the gross margin to our strategic target level," continued Seidl.
Moreover, good progress is being made with Loewe's strategic development. The Company established Loewe Asia Holding Ltd. in Hong Kong in late April 2012 and its subsidiary Loewe Technology Shenzhen Ltd. in July 2012. "The goal of our subsidiary in China is to utilize the existing networks in Asia even more intensively for our own activities and in doing so optimize the supply chain on a sustained basis. This will enable us to actually expand our product portfolio and make us even faster and more innovative," commented Loewe's Chief Technology Officer, Dr. Detlef Teichner. A first important focus is the Audio product group.
To expand its position as a leading premium brand in consumer electronics even further, Loewe is currently working on country-specific distribution concepts for the different European and international markets. As in the past, success in this area will continue to be based on the partnership with qualified retailers in the German-speaking core markets. Moreover, since July 2012, Loewe has also been offering its Audiodesign product line (Loewe SoundVision, AirSpeaker and SoundBox) on the online platforms of Amazon and Otto. "There is a strong demand for this important segment of the product line in the Internet in particular, and we must approach our customers where they look for these products. We have already had positive experience in European-wide sales via Apple online stores," said Seidl. Of course, in doing this, the Company ensures that the Loewe premium customers will also enjoy an authentic brand experience in the Internet and that their expectations for premium quality will be realized in every detail.
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.