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Trading Update Q3 2011: strong improvements of the results

Strong improvements of the results

Highlights third quarter
• Increase in turnover of 14.6%, of which 11.3% autonomous.
• Turnover increase strongest in Industrial Solutions.
• Operational result (EBITA) up 20.3%.

Outlook
• TKH maintains the expectation that for the full year 2011 a net profit before amortization between € 55 to € 60 million will be realized.

Key figures first nine months
(in € million unless otherwise stated)

 

 

9 months 2011

9 months 2010

Difference

in %

Turnover

      803.5

      642.4

    +   25.1

EBITA

        67.1

        47.6

    +   40.9

Net profit before amortization1)

        44.0

        27.2

    +   61.8

Net profit

        40.3

        24.2

    +   66.6

Net earnings per ordinary share (in €)

        1.07

        0.65

   

Solvency

     43.9%

     44.0%

 

ROS

       8.3%

       7.4%

 


Key figures third quarter
(in € million unless otherwise stated)

 

 

Q3

2011

Q3

2010

Difference

in %

Turnover

      254.2

      221.7

    +   14.6

EBITA

        20.7

        17.2

    +   20.3

Net profit before amortization 1)

        12.7

          9.3

    +   37.0

Net profit

        11.4

          8.2

    +   38.0

ROS

       8.1%

       7.8%

 

1) Amortization of intangible non-current assets relating to acquisitions (after taxes).

Alexander van der Lof, CEO of technology company TKH: “Turnover and result in the third quarter developed in line with our expectations. The success of our innovations has translated into a further strengthening of our market position in the segments in which TKH operates. A few end markets show signs of weakening of the market circumstances. The impact of this was limited in the third quarter, although the order intake in the industrial segment did slightly decrease, compared to last year. The total order intake of the Building and Telecom Solutions on the other hand increased.”

Developments third quarter

Turnover in the third quarter of 2011 increased by 14.6% to € 254.2 million (Q3 2010: € 221.7 million). Of this total, 1.5% was due to higher raw material prices charged on to customers. Acquisitions contributed 3.5% to the turnover growth. The divestment of the GSM activities in 2010 on the other hand, resulted in a decrease in turnover of 1.7%. On balance organic growth was 11.3%. EBITA rose 20.3% to € 20.7 million (Q3 2010: € 17.2 million). EBITA increased strong in all three segments.

In the third quarter of 2011, costs were at a lower level than in the second quarter of 2011, but increased by € 10.3 million when compared to the third quarter of 2010 due to the higher level of activities. ROS increased compared to the third quarter of 2010 from 7.8% to 8.1%. Net profit before amortization came in at € 12.7 million (Q3 2010: € 9.3 million). The net profit after amortization rose to € 11.4 million in the third quarter (Q3 2010: € 8.2 million).

Working capital increased in the third quarter by € 7.5 million compared to June 30, 2011. Working capital as a percentage of turnover was 15.0%. TKH operates well within the covenants agreed with its banks. The net bank debt at the end of the third quarter of 2011 stood at € 139.8 million, an increase of € 11.5 million compared to the second quarter, mainly as a result of acquisitions. The solvency ratio was 43.9% at the end of September 2011 (30 June 2011: 43.5%).

Telecom Solutions

In the Telecom Solutions segment, turnover decreased compared to third quarter 2010 by 0.5% from € 40.9 million to € 40.7 million. This is particularly due to the divestment of the GSM activities in the third quarter of 2010, which had a negative impact on turnover of 9.1%. Organic growth was therefore 8.6%. This growth was achieved in the optical fiber and copper network segments. In both segments the level of investment in the market increased, driven by the need to upgrade the capacity and quality of the networks as a result of the strong growth of internet traffic. EBITA rose strongly in the third quarter of 2011, when taking into account the net gain of € 2 million in the third quarter of 2010 on the divestment of the GSM activities.

Building Solutions

Turnover in Building Solutions increased 11.6% to € 88.0 million, from € 78.9 million in the third quarter of 2010. The turnover rose in all three sub-segments. The main increase was realized in the segments building technologies and security systems, mainly due to increased turnover in technology for the healthcare sector and the infrastructure market. Despite the challenging market conditions, connectivity systems also showed a growth in turnover. EBITA increased significantly compared to third quarter 2010 as a result of a better mix of activities.

Industrial Solutions

Turnover within the Industrial Solutions segment increased by 23.1% from € 102.0 million to € 125.5 million compared with the third quarter in 2010. This increase in turnover was realized in both connectivity systems and manufacturing systems. The order intake within manufacturing systems was in line with the first two quarters, which means a decrease compared to last year. The order intake within connectivity systems also decreased slightly. EBITA increased significantly compared to third quarter 2010.

Developments first nine months

Turnover in the first nine months of 2011 was up 25.1% to € 803.5 million. Of this increase, 2.5% was due to higher raw material prices charged on to customers. EBITA in the first nine months rose by 40.9% to € 67.1 million (first nine months 2010: € 47.6 million). Net profit before amortization in the first nine months rose by 61.8% to € 44.0 million (first nine months 2010: € 27.2 million). Net profit after amortization rose to € 40.3 million in the first nine months.

Outlook

The activities are developing in line with the outlook which was presented at the announcement of the results over the first half year of 2011.

Within Telecom Solutions the level of investment in the upgrading of quality and capacity of networks for both copper and optical fibre networks has increased. However, investment willingness among consumers is lower which means that the turnover within indoor telecom systems is somewhat under pressure.

Within Building Solutions it is expected that investments in the utility sector in Europe will continue to decline. In contrast, the innovations of the TKH Group in the area of security and care systems and also the market for infrastructure projects show perspective for growth.

Within Industrial Solutions, the order intake is lower compared to last year but in line with the first half of this year and there is a reluctance for investments despite many plans announced for the expansion of capacity and replacement investments in the tire manufacturing sector. Also in the robot and machine building sector there are signs of weakening demand.

Based on the results realized in the first nine months of 2011 and the outlook for the coming months, TKH reiterates its expectation that, barring unforeseen circumstances, for the full year 2011 a net profit before amortization between € 55 to € 60 million will be realized.

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