Loewe returns to profitability in the fourth quarter of 2011
Fiscal year 2011:
Fiscal year 2012:
Kronach, January 26, 2012 – The Loewe Group generated positive EBIT of EUR 1.2 million in the fourth quarter of 2011. "The 2011 International Consumer Electronics Fair in Berlin in September provided Loewe the anticipated strong boost for the start of the important holiday shopping season. Our top-quality home entertainment systems as well as our new appealing audio design systems contributed to earnings," Loewe CEO Oliver Seidl summed up the situation. Sales for all of 2011 (January 1 to December 31, 2011) at EUR 274.3 million fell short of the previous year's figure of EUR 307.3 million by 11% due to the strains in the early months of 2011. The reduced sales and production volume led to an EBIT loss for Loewe of EUR 10.5 million in fiscal year 2011 (previous year: EBIT loss of EUR 5.3 million).
Despite the negative EBIT Loewe succeeded in improving liquidity as of December 31, 2011 to more than EUR 25 million in response to strict cost discipline and very good working capital management. “This gives us an excellent financial basis, supporting our growth targets in the current fiscal year,” Oliver Seidl commented.
Loewe achieved a gross margin of 22.8% in fiscal year 2011 (previous year: 22.8%). The business development in the first nine months of 2011 prompted the Company to decide to intensify the "Fast Forward" future strategy program. After successfully reorganizing product development, adding new positions in sales and distribution, and further optimizing the internal processes in the last several months, the Company launched the new home entertainment systems and the attractive audio design solutions as scheduled in the fourth quarter of 2011. Furthermore, the conceptual redesign of two TV product lines improved the gross margin significantly in the later months of 2011. The gross margin rose by 0.8 percentage points from 23.6% in 2010 to 24.4% in the fourth quarter of 2011. "Overall, we were able in the fourth quarter of 2011 to lay the foundation for a successful turnaround," continued Seidl.
The Loewe premium strategy is of fundamental importance for a successful turnaround. Minimalist design, intelligent innovations and exclusive individuality set Loewe off from all other brands in the consumer electronics industry. Individualizability and joy-of-use are competitive advantages that can have a strong influence on purchasing decisions made by consumers. "The phrase 'made and engineered in Germany' is seen more than ever as a guarantee of quality all over the world," said Seidl. "As the inventor of television, we will in the future focus even more intensely on user-friendly systems that combine the best picture quality with the best sound to meet the high expectations of sophisticated users and can be optimally integrated in individual home interiors," he continued. For the medium term, the strategic goal is for Loewe to become the leading international premium brand for individual home entertainment solutions.
Especially the convergence of consumer electronics and the IT industry is bringing momentum to the market. A new world of individualizable networking is currently coming into being. The Internet is transforming the television set into a multifunctional "smart TV." For the sophisticated Loewe customer, this increases the benefit and attractiveness of intelligent, top-quality and carefully coordinated systems. "Its exclusive home entertainment solutions give Loewe an ideal starting position for benefiting from the growth in these segments. This is due not least to our award-winning innovations in the areas of smart TV, home networking and individual room integration," underlined Loewe’s new Chief Technology Officer, Dr. Detlef Teichner.
Loewe will restructure its entire TV product range in 2012. The new product line Connect ID (Individual Design, from 32 to 46 inches) in the price segment above EUR 1,500 will be launched as early as the second quarter. The Loewe Connect ID offers individual style and technical features offered by no other set in this price category. With the new product family, Loewe specifically meets the needs of a significantly broader target group and moreover appeals to a younger customer base which will thus be introduced to the brand at an earlier stage. Connect ID is positioned exactly in this attractive price segment which will grow by approximately 25% to about EUR 2.9 billion in the current 2012 fiscal year.
The result of the product offensive is already visible in audio: an entirely new segment of highly attractive Loewe Audiodesign products. For instance, the Loewe AirSpeaker (from EUR 750), which was developed for the Apple world, plays music wirelessly from any device with Apple AirPlay technology (iPhone, iPod, iPad, computer with iTunes software). The Loewe AirSpeaker features the best sound quality of its class with a nearly unlimited variety of colors and materials. And the Loewe brand world starts with prices as low as EUR 499 for the highly versatile audio system Loewe Soundbox. Regular sales to end consumers exceeded expectations in the fourth quarter of 2011, confirming this strategic product range enhancement.
Also with regard to innovative operating concepts for home entertainment systems, Loewe offers one of the best and most convenient solutions. The German premium manufacturer uses the new Loewe Assist Media App to connect TV sets to the Apple iPad, which the Loewe App transforms into a large-scale remote control for the intelligent TV set. In its current issue, the trade publication Video writes: "This app transforms the iPad into a luxury remote control. Station selection, EPG, archival recording and smart TV functions have never been so easy."
All of these innovations are currently being presented to Loewe retailers as part of the event series "Loewe plusTage," which is supported by a print campaign in high-circulation daily newspapers.
Even if the persistently difficult economic conditions in parts of Europe put a strain on Loewe's export business in particular, the market for consumer electronics in the premium segment offers good opportunities in the medium term. For that reason, Loewe expects growth in sales and a significant improvement in earnings for fiscal year 2012.