|MEDION AG, ESSEN
AD-HOC ANNOUNCEMENT, 28 February 2005
Preliminary assessment of fiscal year 2004
MEDION's turnover reaches upper range of expectations
Sales 2004: EUR 2.62 bn − domestic business in the fourth quarter marked by hesitant ordering − stable growth abroad
Essen, 28 February 2005 − In fiscal year 2004, MEDION has achieved turnover of approx. EUR 2.62 bn. Thus sales of the company which has its headquarters in Essen, Germany, have been below last year’s level of EUR 2.92 bn, but at the upper range of expectations. While shrinking order volumes and the weak domestic consumer spending have affected business particularly in Germany, MEDION has generated stable growth on foreign markets. Falling component prices and the significant devaluation of the US-Dollar compared to 2003 have led to lower average selling prices, which also had a dampening effect on overall sales.
As a consequence, MEDION reached sales of approx. EUR 1.55 bn in Germany compared with roundabout EUR 1.92 bn the year before. This sales reduction is primarily due to the difficult economic circumstances as well as to an increasingly worsening consumer confidence during the course of last year. This is why the German retail industry had to suffer a drop in sales by 1.7 %.
However, in the remaining parts of Europe, MEDION raised sales in 2004 by 6.1 % from EUR 922 M to EUR 978 M. In overseas markets sales went up by 13 % from EUR 86 M to EUR 97 M, of which EUR 46 M referred to the U.S. and EUR 51 M to the Asia-Pacific region. In total, foreign exposure amounted to 41.0 % (previous year: 34.5 %).
Due to lower sales and higher transport and logistic costs MEDION expects EBIT to fall to approx. EUR 90 M. Detailed figures about fiscal year 2004 will be presented on the annual balance sheet press conference on 17 March 2005.
Sales percentages of segments have remained stable
Regarding total sales in detail, it becomes evident, that the relevant sales percentages of individual segments have nearly remained stable in fiscal year 2004. The PC/multimedia segment achieved 73.1 % of total sales (previous year: 71.5 %), entertainment and household electronics matched 24.5 % (previous year: 26.6 %) and the telecommunication activities contributed 2.4 % of group sales (previous year: 1.9 %).
||Fourth quarter marked by hesitant domestic ordering in Germany|
In the fourth quarter alone MEDION’s total turnover amounted to EUR 1.07 bn. Therefore, as expected, this quarter has been running below the comparable period the year before (Q4 2003: EUR 1.43 bn). The underlying reasons for this development - apart from falling average selling prices - have been that the ordering attitude of our German retail partners in particular has first been very hesitant which then affected the overall European business as well. As a consequence of such an ordering behaviour, which in the end proved to be too cautious, the products of several sales campaigns have been completely sold out within a rather short period. Although very few selected sales campaigns - at the expense of higher transport and logistic and component costs - have been successfully renewed before Christmas, the necessary pre-ordering schedules prevented that reduced order volumes were completely compensated.
In Germany, fourth quarter sales amounted to EUR 638.4 bn (Q4 2003: EUR 954.6 M) on total. As many German retail partners transferred their cautious order behaviour also to the other European markets fourth quarter sales in the remaining parts of Europe fell to EUR 399 M (previous year: EUR 443.7 M). However, concentrating just on those foreign clients, whose headquarter is abroad, sales in Europe went up by 2.3 %.
On overseas markets MEDION has been able to raise fourth quarter sales by 3.2 % from EUR 28.4 M to EUR 29.3 M.
In the fourth quarter of 2004 positive signals could be noticed in the German retail industry. However, we have to see whether these signals will lead to a sustainable normalization of consumer behaviour and order volumes. The fact that we have reached the upper range of our projected turnover is undoubtedly encouraging for the year 2005, but we can not close our eyes against the ongoing uncertainties. In 2005, MEDION will consequently continue the successful development of our business model. Above all, we will actively accompany the advancing internationalization of the large retail chains.