HOMAG Group AG on Steady Growth Course

Following the record year 2007, HOMAG Group AG maintained its growth course in first quarter of 2008. Buoyed by a continued high utilisation of capacity, the SDAX-listed global manufacturer of plant and machinery for the woodworking industry recorded a substantial rise in sales revenue. In what is usually a slow quarter in the industry, sales revenue rose by 18 percent in the first three months vis-à-vis the comparable prior-year quarter, reaching EUR 227 million (prior year: EUR 193 million). Total operating performance rose 11 percent to EUR 240 million (prior year: EUR 216 million). Adjusted for the increase in merchandise of some EUR 5 million, sales revenue would have increased by 15 percent and total operating performance by 9 percent.

CEO Dr. Joachim Brenk is also highly satisfied with the order intake of EUR 232 million (prior year: EUR 234 million). ‘The weak market situation in countries such as the US, Spain or Japan was offset by an above-budget order intake from Eastern Europe and Asia in particular. We have almost matched the record figures achieved in the prior year again and we are thus above target.’ At EUR 312 million as of March 31st, 2008, the order backlog of the HOMAG Group rose considerably, by 12 percent compared to the end of the first quarter of 2007 (EUR 278 million) and by 22 percent compared to year-end 2007 (EUR 255 million).

The HOMAG Group AG's earnings indicators have improved across the board in the first quarter of 2008. Nevertheless, CFO Andreas Hermann points to a number of factors that should be considered when assessing this development. The Group only generates a small margin on merchandise, which has risen compared to same quarter of the prior year. In addition, the wages and salaries of employees in Germany increased by 4.1 percent as of June 2007 in line with the collective bargaining agreement concluded in the metal industry. This factor alone led to an a disproportionate increase in personnel costs of EUR 2.4 million between January and March 2008 compared to the first quarter of 2007. Currency losses on consolidation of EUR 0.8 million also need to be taken into account.

Despite these factors, EBITDA before employee participation expenses increased in the first quarter of 2008 to EUR 27.8 million (prior year: EUR 27.4 million), while EBT before employee participation expenses rose to EUR 19.4 million (prior year: EUR 19.2 million). Due to the lower tax rate, which decreased from 38 percent to 29 percent (or 31 percent adjusted for special effects), the net profit for the period before minority interests increased significantly by 16 percent to EUR 12.1 million (prior year: EUR 10.5 million), resulting in earnings per share of EUR 0.72 after minority interests (prior year: EUR 0.68).

As in past quarters, the number of employees in the group continued to rise in the first three months of 2008. As of March 31, 2008, the HOMAG Group had 5,206 employees, up from 4,775 employees as of the end of the first quarter of 2007 and 5,114 employees as of December 31, 2007. According to the company, the new recruits are mostly engineers and specialists needed for its engineering activities and for bringing the plant and machines into operation. About half of the approximately 90 new jobs at the start of the year were created in Germany and the remainder abroad.

Outlook
CEO Brenk expects continued growth in sales revenue and earnings in the second quarter of 2008: ‘We are confident that we will achieve a substantial improvement on the prior-year quarter, which had more bank holidays and was burdened by the cost of participating in the LIGNA trade fair as well as a slight loss of productivity owing to preparations for the trade fair. In addition, efficiency improvements from ‘Project 2008’ will impact the second quarter. Order intake in the second quarter will reflect the effects of Xylexpo, the major industry trade fair held in Italy, although this will not match the impact of the main trade fair, LIGNA, which is held every two years. Consequently, the order intake budgeted for the second quarter is lower than in the same quarter of the prior year, but remains at a high level.’

Overall, the management board's confidence has grown as regards its forecast for fiscal 2008, according to which sales revenue is expected to increase by at least 6 percent and EBITDA to at least match that rise. Indeed, the management board sees a good chance that sales revenue might surpass the EUR 900 million mark for the first time. In light of an improved interest result, the non-recurring nature of the IPO costs incurred and the effects of the business tax reform in Germany, the net profit for the year after minority interests is expected to swell by more
than 30 percent.

Tel: 01332 856500
Email: info@homag-uk.co.uk
Web: http://www.homag-uk.co.uk