Loewe off to a good start in 2010
EBIT of EUR 13.5 million in 2009
Sales of EUR 324 million in 2009
Dividend of EUR 0.25 per share proposed
Higher sales and EBIT in the first quarter of 2010 than in the previous year
Moderate sales growth expected for 2010 as a whole
Product offensive in the premium market
Kronach/Munich. – "Loewe bucked the industry trend in 2009 by generating profitable EBIT of EUR 13.5 million. We came through the turbulences of the global financial crisis in the premium market very well," was how Frieder C. Löhrer, Chief Executive Officer of Loewe AG, described business development during the financial statements press conference in Munich.
In 2009, Loewe systematically expanded its product portfolio in the high-end segment in particular to include the Loewe Reference home entertainment system. In addition, the Company invested primarily in the brand's adequate appearance in the international retail trade. "In doing this, we have systematically strengthened our position as the leading premium brand in the European consumer electronics market," said Löhrer.
"For Loewe, the margin is more important than sales growth. We keep prices at a stable level. In 2009, we experienced this in sales which declined from EUR 374 million in the previous year to EUR 324 million in 2009," continued Löhrer. The persisting difficult economic conditions in parts of Europe have also severely strained Loewe's sales. This applies in particular to the important markets in Spain and the Netherlands, which are important for Loewe. For that reason, export sales of EUR 131 million reflected a decline of roughly EUR 43 million. However, the high sales level for consumer electronics of the previous years was maintained in the most important market of Germany. Highly profitable large-screen TVs, accounted for 58 percent of the Company's total TV sales as they did in the previous year.
Despite the lower sales and production volume than in the previous year and the ongoing expenses for the premium positioning of the brand, Loewe succeeded in generating positive EBIT of approximately EUR 13.5 million in fiscal year 2009, compared to EUR 28.5 million in 2008. The positive contribution to earnings was caused primarily by the marketing of the innovative home entertainment systems at more consistently stable prices than the competition. The sustained high share of large-screen TV sets, more favorable procurement costs and the relatively strong sales in Germany also supported earnings. "Compared to the first six months of 2009, we increased our EBIT margin significantly from 1.0 percent to 6.7 percent in the second half. We thus again achieved our strategic margin level of 6 to 7 percent in the second half," explained Oliver Seidl, CFO of Loewe AG. Because of the positive business trend, the Executive Board will propose to the Annual Shareholders' Meeting on May 20 that a dividend of EUR 0.25 cents per share be paid.
"In the early weeks of the current year, Loewe's performance has been within the scope of our budget. The Olympic Winter Games and the associated launch of high-definition television in Germany have produced positive stimuli for the market and for Loewe as well. Nonetheless, we continue to experience the impacts of the global financial crisis," was how Frieder C. Löhrer described the start of the current fiscal year.
Based on sales, Loewe is as a whole moderately ahead of the comparable figures for 2009. "This trend should continue to stabilize in the months to come, especially due to the fact that a world-class media event in the form of the FIFA World Cup is still in store for us this summer. We will launch the new Individual SL line of TVs just in time for it in May," commented Löhrer.
Based on the moderate increase in sales and the high quality of earnings, Loewe's EBIT in the first quarter of 2010 will exceed the comparable figures for 2009. "In this area also, we are within the scope of our budget despite the sharp downward trend of market prices, and we will have to make every effort to maintain Loewe's pricing stability, not only for the sake of profitability but also the brand's reputation.”
Loewe presumes that the LCD TV market will continue to grow in the next few years, due in particular to the high replacement demand and increasing ownership of more than one set. In addition to the FIFA World Cup, technological innovations such as TVs with LED backlighting, the combining of television and the Internet and even more impressive surround sound systems will provide an enormous boost for the market beyond the current year.
In 2010, Loewe will launch three new LCD TV set lines and invest in the qualitative and quantitative expansion of distribution in selected key markets – primarily in France and Italy.
Loewe expects sales to grow moderately in the current 2010 fiscal year. As a premium brand, Loewe will continue to focus systematically on results with cost discipline and value-based marketing. EBIT in the current year is expected to be at the 2009 level. "Assuming that the value of the European market for LCD TVs will grow by about 10 percent and Loewe maintains its high margin level, growth in earnings can be expected for 2011. Moreover, Loewe’s sound capital structure and wide-ranging financing agreements put the company in an optimum position for the future," said CEO Frieder C. Löhrer
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