BALDA
Losses mount in 2007 / Continuing operations show positive performance / Medical unit now up for sale
Unsurprisingly in light of recent events, the 2007 performance of precision injection moulder Balda (Bad Oeynhausen / Germany; www.balda.de) was dismal – see Plasteurope.com of 12.03.2008 and 07.03.2008. Figures presented by chief financial officer Dirk Eichelberger at the annual results press conference in Frankfurt show a net loss of EUR 73.3m, compared with a loss of EUR 42m in 2006, on consolidated sales from continuing operations of EUR 257.4m (EUR 157.4m). Sales of the spun-off European “Infocom” units slid back by more than 75%, from EUR 213.5m to EUR 51.8m. Group EBIT was positive at EUR 8.5m, following a 2006 loss of EUR 17.2m. Following the spin-offs, only 80m of sales were in Europe, compared with EUR 230m a year earlier.
CEO Joachim Gut predicted that results for the embattled mobile phone supplier in Q1 2008 – to be announced on 7 May – will show an equally poor performance. He said the quarterly business was hit by start-up costs, but noted that the company’s position would improve when it achieves the necessary critical mass as a systems supplier in the second half of 2008 – a statement that could be interpreted to mean that the touch screen business in Asia has not developed as well as initially hoped. Overall, Gut predicted a "noticeable increase in sales and earnings" in Q3 and Q4.
The CEO expressed guarded optimism for full year 2008, as the course for improvement has been charted. He forecast sales of around USD 600m. This would come to EUR 414m at the EUR1.00=USD 1.45 exchange rate prevailing at the end of 2007, which management is taking as a calculation basis. At current exchange rates, turnover would come to only about EUR 375m. The pretax result (EBT) is predicted to reach USD 35m. Balda intends to invest some EUR 50m in projects in Asia during 2008.
Operating losses of the six businesses sold in 2007 or in the process of being sold amounted to EUR 32m. To this are added EUR 13m in impairment charges and a EUR 19m charge resulting from profit and loss transfer agreements. This was more than the company initially communicated.
The three companies in the European Infocom segment are still up for sale, but, as Gut admitted, "interested parties are not exactly queuing up to bid." He said negotiations are being conducted with three potential buyers, and could be concluded during the first half of 2008. However, the company does not expect to make a profit on the sale. Eichelberger confirmed that Balda incurred relatively substantial transaction costs for buying back the companies in Gemany and Hungary sold last year to KS Plastic Solutions (Schondorf / Germany). He said the sale plans collapsed because KS’ calculation of the losses that Balda had agreed to assume for the subsidiaries was higher than its own management had estimated.
Contrary to statements made in October 2007, Balda now plans to sell its Medical unit, which had sales of EUR 28.5m in 2008. Although Gut and Eichelberger denied that the business must be sold to facilitate refinancing in the wake of the failed sell-offs, suspicions remain. At the beginning of this year, Balda was facing insolvency due to the transaction’s breakdown and is not yet out of the danger zone. Moreover, in the annual report for 2007, management said the Medical business had developed better than expected and that the company was well positioned in this new segment.
In Frankfurt, the two managers declined to comment on the expected selling price; however, analysts calculate a figure of 0.8 to 1.5 times the sales total as standard for this branch of industry. This would put intake in the broad range of EUR25m to EUR 50m, depending on the period for which sales are calculated. Negotiations with three potential buyers are said to be in progress. Balda declines to be drawn on whether the fast expanding medical technology specialist Gerresheimer Wilden (Regensburg / Germany; www.gerresheimer-wilden.de) could be one of the candidates. That company is in the process of expanding its own medical plastics operations – see Plasteurope.com of 22.04.2008.
e-Service:
Balda preliminary annual report 2007 as a PDF document (1,897 KB)
CEO Joachim Gut predicted that results for the embattled mobile phone supplier in Q1 2008 – to be announced on 7 May – will show an equally poor performance. He said the quarterly business was hit by start-up costs, but noted that the company’s position would improve when it achieves the necessary critical mass as a systems supplier in the second half of 2008 – a statement that could be interpreted to mean that the touch screen business in Asia has not developed as well as initially hoped. Overall, Gut predicted a "noticeable increase in sales and earnings" in Q3 and Q4.
The CEO expressed guarded optimism for full year 2008, as the course for improvement has been charted. He forecast sales of around USD 600m. This would come to EUR 414m at the EUR1.00=USD 1.45 exchange rate prevailing at the end of 2007, which management is taking as a calculation basis. At current exchange rates, turnover would come to only about EUR 375m. The pretax result (EBT) is predicted to reach USD 35m. Balda intends to invest some EUR 50m in projects in Asia during 2008.
Operating losses of the six businesses sold in 2007 or in the process of being sold amounted to EUR 32m. To this are added EUR 13m in impairment charges and a EUR 19m charge resulting from profit and loss transfer agreements. This was more than the company initially communicated.
The three companies in the European Infocom segment are still up for sale, but, as Gut admitted, "interested parties are not exactly queuing up to bid." He said negotiations are being conducted with three potential buyers, and could be concluded during the first half of 2008. However, the company does not expect to make a profit on the sale. Eichelberger confirmed that Balda incurred relatively substantial transaction costs for buying back the companies in Gemany and Hungary sold last year to KS Plastic Solutions (Schondorf / Germany). He said the sale plans collapsed because KS’ calculation of the losses that Balda had agreed to assume for the subsidiaries was higher than its own management had estimated.
Contrary to statements made in October 2007, Balda now plans to sell its Medical unit, which had sales of EUR 28.5m in 2008. Although Gut and Eichelberger denied that the business must be sold to facilitate refinancing in the wake of the failed sell-offs, suspicions remain. At the beginning of this year, Balda was facing insolvency due to the transaction’s breakdown and is not yet out of the danger zone. Moreover, in the annual report for 2007, management said the Medical business had developed better than expected and that the company was well positioned in this new segment.
In Frankfurt, the two managers declined to comment on the expected selling price; however, analysts calculate a figure of 0.8 to 1.5 times the sales total as standard for this branch of industry. This would put intake in the broad range of EUR25m to EUR 50m, depending on the period for which sales are calculated. Negotiations with three potential buyers are said to be in progress. Balda declines to be drawn on whether the fast expanding medical technology specialist Gerresheimer Wilden (Regensburg / Germany; www.gerresheimer-wilden.de) could be one of the candidates. That company is in the process of expanding its own medical plastics operations – see Plasteurope.com of 22.04.2008.
e-Service:
Balda preliminary annual report 2007 as a PDF document (1,897 KB)
24.04.2008 Plasteurope.com [210699]
Published on 24.04.2008
German version of this article...