LED product offensive will be stepped up for the winter shopping season
1st - 3rd quarter 2010
Kronach, November 3, 2010 – At EUR 66.5 million, Loewe Group sales in the third quarter of 2010 were 13% lower than the 2009 figure of EUR 76.6 million. In the first nine months of 2010, Group sales declined moderately by 3% year on year from EUR 220.4 million to EUR 213.9 million. While sales in Germany at EUR 124.5 million in the first nine months of 2010 were 7% lower year on year, export sales grew by 3% to EUR 89.4 million. With a decrease in sales and production volume, Loewe posted negative EBIT of EUR 5.0 million in the third quarter of 2010 after positive EBIT of EUR 3.2 million in the same period in 2009. EBIT amounted to a loss of EUR 9.1 million in the first nine months of 2010, down from positive EBIT of EUR 4.6 million in the comparable period of the previous year.
Necessary price adjustments in the entry level TV segment and higher procurement costs (especially for the highly in demand LCD panels) enabled Loewe to achieve a gross margin of no more than 22.4% in the first nine months of 2010. This figure was thus 6.0 percentage points below the high level of 28.4% in the comparable period of the previous year. "The business associated with the FIFA World Cup in South Africa fell particularly short of our expectations in the first nine months of 2010. Advance purchases for the World Cup represented an additional burden during the traditionally weaker summer months of July and August," commented Oliver Seidl, Loewe CEO, on the current business development.
Loewe reacted early to the changed market and framework conditions and launched the "Fast Forward" restructuring and future strategy program already in June. Its objective is to consistently build Loewe's special strengths of being able to respond rapidly, flexibly and with an innovative competitive edge. "By exercising strict cost discipline across all divisions, we will use "Fast Forward" to significantly increase the entire Company's efficiency. It will be important for us to take structural and organizational measures to establish the basis for profitable growth," said Oliver Seidl. Defined individual measures were developed systematically in the third quarter of 2010. In purchasing panels, specific successful outcomes were achieved through a "Supplier Contribution" program with Loewe's key global suppliers. Savings to be recognized in income in the fourth quarter of 2010 will total approximately EUR 4 million.
The LED product offensive was stepped up as planned in the third quarter of 2010 with the launch of the appealing Individual 55 Compose and Individual 32 Selection and Compose TV sets. Loewe was able to launch the new Connect 26 LED even earlier than planned. During the fourth quarter of 2010, Loewe will put four more TVs with the state-of-the-art LED backlighting on the market. They are the Connect 32, the Connect 40 and the Art 32 and Art 40.
In connection with the restructuring of the central divisions of development, marketing and sales, Loewe implemented the first measures for organizational and process optimization. "We have strengthened the areas of competence of the project managers across divisions with the objective of further increasing the organization's effectiveness, creating additional customer benefit and reducing time to market for new products," continued Seidl.
In recent years, Loewe has built up a strong brand position in the premium segment in Europe. The successful market launch of the Individual TV line and the Reference and Individual Mediacenter as well as the launch of four additional TVs with state-of-the-art LED backlighting in the fourth quarter of 2010 will further sharpen Loewe’s profile as a system supplier for individual home entertainment solutions in the networked home. In addition to the continued high replacement demand and the increasing ownership of more than one LCD TV in Europe, new technologies like 3D television, the convergence of TV and the Internet and individual operating concepts offer Loewe growth opportunities that will last well beyond the current fiscal year. Loewe will continue in the future to systematically pursue the course of combining exceptional product design with the most advanced and developed technology.
Despite the necessary elimination of TV sets with standard backlighting from the current product line, Loewe expects that the successful conclusion of the International Consumer Electronics Fair in Berlin, initial successful outcomes of restructuring and the nearly completed conversion of the most important TV product families to LED backlighting will result in a good winter shopping season with positive contributions to income. The company therefore expects that sales will continue to grow moderately in fiscal year 2010, even if that may sound like an ambitious goal from today‘s perspective. Even with positive contributions to income in the fourth quarter, it is from the present perspective impossible to rule out negative EBIT for 2010 as a whole. However, the Company’s sound capital structure and financing agreements concluded for several years make it well positioned for the future.