Ultrasonic AG
Ultrasonic AG: Successful strategy for the ULTRASONIC brand secures growth
Ultrasonic AG / Key word(s): Half Year Results/Interim Report
Ultrasonic AG: Successful strategy for the ULTRASONIC brand secures growth
– Revenue from the ULTRASONIC brand rose 31.0% year-on-year – Group sales increased by 1.4% – EBT margin of 26.9% – Stable operating cash inflow of EUR 22.9 million Cologne, 28 August 2014 – Ultrasonic AG, quoted in the Prime Standard of the Frankfurt Stock Exchange (Prime Standard, ISIN DE000A1KREX3, US5), today published its interim report for the first six months of fiscal 2014. Thanks to the positioning of the ULTRASONIC brand, the Group enjoys sustained success in the growing Chinese market for consumer goods. The success of its strategy is shown by the continued strong growth realized by the Urban footwear segment in the past six months. Revenues from the ULTRASONIC brand of products grew 31.0% in this period, and therefore continued to drive the Group’s positive overall development. Total sales revenues rose 4.4% in the operating currency renminbi, the pre-tax margin was 26.9% and the operating cash flow amounted to EUR 22.9 million in the first half of 2014. “We are particularly pleased to report the start of production at our new factory in Xingtai Industrial Zone in recent weeks. After a number of delays, we now have about 100 employees at this site. Following a training period, the manufacture of children’s shoes started at the end of July. We aim to manufacture around 700,000 pairs by the end of this year. However, the difficulties in the development of this new site have made us aware that it is becoming increasingly difficult to maintain the high pace of business development through organic growth alone. Alongside the start of production at the new site we therefore see the new credit line and the authorization granted by the Annual General Meeting for a share buy-back as further stepping stones towards the future success of Ultrasonic AG”, said Qingyong Wu, the company’s founder and CEO, commenting on the company’s performance in the first half of 2014. Sales and earnings The ULTRASONIC Group grew sales 1.4% year-on-year from EUR 73.8 million to EUR 74.8 million in the first half of 2014. In the operating currency, Chinese renminbi, the increase was 4.4%. Growth in the reporting period was driven by the continued momentum of the Urban footwear segment (including accessories). Year-on-year, this segment raised sales revenues by 16.6%. This strong growth was driven by the ULTRASONIC brand of urban footwear, where revenues rose 31.0% to EUR 21.3 million in the reporting period (6M 2013: EUR 16.2 million). Online sales amounted to EUR 2.5 million. By contrast, OEM revenues slipped 3.2% year-on-year from EUR 11.9 million to EUR 11.5 million. Revenues in the Shoe soles and Sandals and slippers segments were also lower than in the prior-year period. In the Shoes soles segment, revenues fell 11.1% year-on-year to EUR 19.5 million (6M 2013: EUR 22.0 million). Far fewer units were sold (-15%), but higher prices were obtained due to an improvement in quality. In the Sandals and slippers segment, a combination of lower prices and a drop in volumes reduced revenues by 5.2% to EUR 22.5 million (6M 2013: EUR 23.7 million). The reduction in sales in both segments was mainly caused by the strong competition. The company is endeavouring to halt this trend by producing more new, higher quality products which command higher prices and yield better margins. The gross profit for the Group remained at EUR 23.1 million, as in the previous year (6M 2013: EUR 23.1 million). Due to higher cost of sales, the gross profit margin slipped back slightly to 30.8% (6M 2013: 31.2%). Marketing and selling expenses, especially for internet retailing, more than doubled to EUR 1.8 million in the first half of 2014 (6M 2013: EUR 0.8 million), but general administrative expenses only increased slightly from EUR 1.3 million to EUR 1.4 million. The Group’s financial result was EUR 161 thousand in the first six months of 2014 (6M 2013: EUR 27 thousand). In the reporting period, EBITDA declined 5.4% year-on-year to EUR 20.5 million (6M 2013: EUR 21.6 million). Group EBIT also slipped slightly from EUR 20.9 million in the prior-year period to EUR 19.9 million. Although the EBIT margin therefore decreased from 28.4% to 26.6%, it was still high. Earnings before taxes (EBT) were EUR 20.1 million in the reporting period (6M 2013: EUR 21.0 million), giving an EBIT margin of 26.9% (6M 2013: 28.4%). Tax expense was EUR 5.1 million in the first half of 2014 so the profit for the period was EUR 15.0 million (6M 2013: EUR 15.5 million). That was a drop of 3.3% year-on-year, giving earnings per share (basic and undiluted) of EUR 1.19 (6M 2013: EUR 1.28 (adjusted)). The net cash provided by operating activities was EUR 22.9 million in the reporting period (6M 2013: EUR 24.7 million). The slight decline compared with the previous year was due to lower profit for the period and changes in working capital. Cash and cash equivalents increased to EUR 131.1 million as of 30 June 2014 (31 December 2013: EUR 108.5 million) and the equity ratio improved to 88.2% (31 December 2013: 86.2%). ULTRASONIC therefore still has an extremely sound financial base. Outlook Following several delays, production has started at the new site. The Urban footwear segment plans to manufacture around 0.7 million pairs of children’s shoes there in 2014. In addition, production capacity for sandals and slippers is to be raised by 10% to 17.7 million pairs a year. The investments to increase the production capacity for shoe soles have been postponed as demand has been lower than expected. Completion of further buildings and the installation of machinery will take place successively, so production capacity will be ramped up further next year. In total, ULTRASONIC intends to invest a further EUR 0.5-1.0 million to raise capacity in 2014. Plans include purchasing two new production lines for urban footwear and sandals and slippers. Further, in 2014 the company will be investing EUR 3.0 – 4.0 million to expand infrastructure (fencing, access road, buildings) at the new site. In addition, it is planning to step up marketing to strengthen the ULTRASONIC brand and raise brand awareness, especially on the internet. For this, it has earmarked a budget of EUR 2-3 million for promotion expenses in 2014. In the mid term, the Management Board will be exploring various options for acquisitions as there are limits to the speed of organic growth. For example, competition for skilled workers in China is steadily increasing and this is raising employees’ expectations both of their employer and of the associated location and infrastructure. By acquiring a complementary competitor with skilled staff, efficient production and, ideally, its own distribution structure and brand presence, ULTRASONIC could generate further growth by extending its brand portfolio, integrating new production capacity and gaining new distribution channels. The half-year results were slightly below management expectations. However, the performance in the third and fourth quarters will be most important for the attainment of this year’s growth targets. Assuming a further rise in consumer spending in China and at least stable export demand, together with an unchanged number of distributors and a slight rise in the number of ULTRASONIC shops, the company still expects to report further growth on a euro basis of around 10-15% in 2014 (excluding currency effects). This is likely to be accompanied by rising demands on working capital. At Group level, production start-up costs and expenses for gaining access to new distribution channels will probably result in a slightly lower margin. Accordingly, the Management Board still expects to report a slightly lower pre-tax margin (EBT) of 24-27% in 2014. The full interim report for the first six months of fiscal 2014 is available at Investor Relations/Publications on the company’s website at www.ultrasonic-ag.de.
The Cologne-based company Ultrasonic AG is the German holding company of the Chinese ULTRASONIC Group, an established manufacturer and supplier of high-quality branded urban footwear. The Group has around 1,400 employees and operates in three main market segments, each of which currently contributes about a third of revenue. ULTRASONIC produces sandals and slippers for the upper price segment for the local and international market. It is also a long-term supplier of shoe soles to leading manufacturers in the established Chinese sport shoe industry such as Anta, Xtep and Unisuper. Moreover, the company has developed its own very successful high-quality urban footwear collection which is marketed under the ULTRASONIC brand and targets China’s young, fashion-conscious urban middle class, which has high purchasing power and expects high quality. The ULTRASONIC product line is currently marketed via more than 110 mono-label shops. For further information about the company visit: www.ultrasonic-ag.de
Ultrasonic AG
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Language: | English | |
Company: | Ultrasonic AG | |
c/o BPG mbH, Graf-Adolf-Platz 12 | ||
40213 Düsseldorf | ||
Germany | ||
Phone: | +86 1525 947 9902 (China); +852 966 227 40 (Hong Kong) | |
Fax: | +49 (0)211 172 9829 | |
E-mail: | ir@ultrasonic-ag.de | |
Internet: | www.ultrasonic-ag.de | |
ISIN: | DE000A1KREX3 | |
WKN: | A1KREX | |
Indices: | CDAX, Classic All Share, DAXsector All Consumer, DAXsector Consumer, DAXsubsector All Clothing & Footwear, DAXsubsector Clothing & Footwear, Prime All Share | |
Listed: | Regulierter Markt in Frankfurt (Prime Standard); Freiverkehr in Berlin, Düsseldorf, Stuttgart | |
End of News | DGAP News-Service |
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