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GARDENA with powerful earnings improvement
Earnings increase (EBIT) by 14.3 per cent to 45.5 million euros
Frankfurt am Main/ Ulm, February 7, 2006 - GARDENA AG, Europe's leading manufacturer of garden equipment was able to increase earnings in financial year 2004/2005. "With it, the concentration on the profitable core business with the GARDENA brand is showing sustainable positive effects. Furthermore, the efficiency increasing programme, which we started in 2004 is taking effect," says Martin Bertinchamp, CEO of GARDENA AG.
The earnings before interest and taxes corrected for special items (EBIT) improved over the prior year by 14.3 per cent from 39.8 million euros to 45.5 million euros. This corresponds to a percentage return on sales of 11.6 per cent. In the same time period, the EBITDA increased from 61.3 million euros to 68.4 million euros.
Restructuring the logistics and downsizing the international organisations in particular as part of the efficiency increasing programme have had a positive effect on earnings. The logistics locations in France, Spain, the Netherlands, and Belgium were shut down, and shipments now come directly from Germany. As a result, there was simultaneously improved utilisation of the German logistics centre and, consequently, inventory levels dropped while the ability to deliver improved. In addition, the American subsidiary Melnor Inc., which had a negative effect on earnings in the past, was sold effective 30.6.2004. "The increased prices of raw materials for plastic and steel are an additional burden to us. However, we were able to compensate for them in the past financial year by means of price increases - further proof of the strength of the GARDENA brand." explains CFO Erich Schefold.
At 393.3 million euros, turnover in financial year 2004/2005 fell slightly compared to 409.7 million euros in the prior year (corrected for Melnor Inc.). The decisive factors for this are product range streamlining as well as weather-related drops in the areas of garden watering and garden pumps in large Central European markets such as Germany and France. In contrast, in the garden equipment sector, turnover grew by 9 per cent due especially to the introduction of the innovative Electric Flexible Steerable Lawnmower - according to GfK, it is the best product launch in the gardening market in the 2005 season.
Regional growth in the Southern Europe, Eastern Europe as well as South African and Australian markets also had a positive effect on turnover. Overall, GARDENA has very stable market shares at a very high level. Market share gains were achieved due to the steerable lawnmower in the garden equipment segment.
In 2004/2005, GARDENA AG had an average worldwide workforce of 2,785 employees - 126 fewer than in the prior year. The domestic personnel reduction as part of the efficiency increasing programme took place exclusively in a socially acceptable way. The decline internationally was primarily attributable to the centralisation of logistics and administration. "Furthermore, at the same time, centralisation efforts are also leading to a strengthening of the German location," emphasises Martin Bertinchamp.
"For financial year 2005/2006, we are expecting growth in the single digit per cent range and once again a disproportionate increase in earnings. In the process, GARDENA is continuing with its programme of innovation leadership and internationalisation - especially in Eastern and Southern Europe. Furthermore, cultivation of the GARDENA brand is decisive," explains Martin Bertinchamp regarding the expectations and strategy for financial year 2005/2006.
Regarding market development in Eastern and Southern Europe, GARDENA is primarily working with subsidiaries. In Russia and Slovenia, two subsidiaries have already been founded since October 2005 and an additional six are to follow by the end of 2008. With 120 new products across the entire product range, the innovation rate in 2005/2006 continues to be very high, with the focus being primarily on products for mobile and automatic watering, cutting tools, and pressure tank units.
About GARDENA
The holding company Industri Kapital took over GARDENA in May 2002. The leading European manufacturer of high-quality garden equipment is represented worldwide in more than 80 countries. In financial year 2004/2005, GARDENA AG generated turnover of 393.3 million euros and an EBIT of 45.5 million euros with approximately 2800 employees. Additional information can be found at: www.gardena.com.
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