Bottom formation during 2010, stronger growth dynamic only anticipated from 2011
Free cash flow improved by € 41.5 million to € 59.3 million - Net debt falls by 28 %
Increase in dividend to € 0.40/share proposed
The early adjustment of capacities and cost structures have enabled SURTECO SE, leading manufacturer of surface materials based on plastics and technical papers for the international construction and furnishing industry, to achieve a satisfactory result in very difficult circumstances during the business year 2009. A major factor in this success was that SURTECO responded to the emerging crisis at an early stage. An edgebanding facility in Montréal, Canada, was closed as a result and production was allocated to three other plants on the American continent. Another measure involved the concentration of melamine edgebanding production within Germany. The number of employees in the Group was reduced by 11 % to 1,903 in response to the slack in capacity.
Crisis-related decline in sales
The company had to overcome a 15-percent drop in consolidated sales to
€ 341.1 million as a result of the economic slowdown. While foreign sales fell by 18 %, a drop of 11 % was recorded in the German market. The Strategic Business Unit Plastics closed the business year with sales of € 210.0 million. This corresponds to a fall of 18 %. The paper segment achieved sales of € 131.1 million (-12 %).
Consolidated net profit up by 37%
The SURTECO Group generated an operating result (EBITDA) amounting to € 54.3 million (-4 %) in 2009. EBITDA in the previous year was impacted negatively by one-off restructuring expenses amounting to € 7.3 million. The financial result improved from € -21.3 million to € -16.9 million – essentially due to a lower impairment requirement for the share package in Pfleiderer AG, Neumarkt, held by SURTECO. As a result, Earnings before Income Tax (EBT) went up by 11 % to € 17.6 million.
Consolidated net profit climbed by 37 % to € 9.2 million, earnings per share rose accordingly from € 0.61 to € 0.83. The Board of Management and the Supervisory Board will recommend to the Annual General Meeting of the shareholders of the company to be held in Munich on 24 June 2010 that a dividend of € 0.40 (2008: € 0.35) should be paid.
Quality of the balance sheet significantly improved
Despite the decline in the operating result, SURTECO SE succeeded in increasing free cash flow by € 41.5 million to € 59.3 million. The key factor here was primarily the reduction in the working capital by € 18.1 million and a conservative investment policy. The funds accrued as a result were used consistently to reduce debt so that net debt came down during the reporting period by 28 % to € 122.8 million. At the same time, equity went up by 6 % to € 191.8 million. The equity ratio improved from 36.8 % to 39.8 % on the back of a slightly reduced balance sheet total. As a result, the gearing (ratio of net debt to equity) fell significantly from 95 % to 64 %.
Stronger dynamic growth only anticipated from 2011
The emerging economic upswing will also exert a positive impact on the operating business of the SURTECO Group. At the same time, the current business year 2010 will again be a year of major challenges for SURTECO SE. The crisis in the construction and furniture industry is far from over. Consumers continue to be restrained in their purchasing behaviour and as a result manufacturers of furniture and interior fittings are adopting an extremely cautious approach. Order batch sizes are therefore unlikely to rise in any tangible way during the current business year. Excess capacities in the sector will tend to intensify price competition. Developments in pricing are a considerable cause for concern, as is the availability of raw materials in some cases. Significant cost increases are being experienced here and some shortages should be assumed.
“We have been comparatively successful in overcoming a very difficult environment in 2009. The balance sheet of the SURTECO Group is very healthy indeed. However, despite the brighter macroeconomic conditions emerging in 2010, it is still too early for euphoria. We will only see the situation starting to relax significantly from 2011,” according to the Chairman of the Board of Management of SURTECO SE, Friedhelm Päfgen.
