Dornbirn, Austria, July 5, 2006 01 Zumtobel Group back on course for substantial growth Lighting group posts adjusted growth of 6% Net profit again moves ahead strongly, up 49.7% European market and Asia are key growth drivers Focus on three pillars of organic growth Positive outlook for financial 2006/07 Dornbirn, Austria - The Zumtobel Group based in Dornbirn, Austria, closed its books on financial 2005/06 at the end of April with significant growth in sales revenues. For the first time since 2000, the past financial year brought a clear increase in revenues and a further improvement in profit. While the European market was the principal contributor to growth, the Group was also successful in opening up new markets in Eastern Europe and Asia, and in expanding its LED activities. Revenues rose EUR 55.0 million to EUR 1,184.2 million (PY: EUR 1,129.2 million), which equates to an increase of 4.9%. When prior-year revenues are adjusted for sales reported by the Group s former Toolmaking division, sold-off by way of an MBO in financial 2004/05, growth amounts to 6%. Zumtobel Group CEO Dr. Andreas Ludwig was delighted at the clear signs of growth: After a restructuring phase spanning several years, in the course of the past financial year we were able to set the stage for new growth. With adjusted revenue growth of 6%, we have posted above-average growth compared to the overall building sector, which is now gradually recovering, and compared to the competition. Adjusted for restructuring costs and non-recurring items, EBIT (earnings before interest and taxes) moved ahead by EUR 9.4 million (+10.4% year-on-year) to EUR 99.5 million. Without that adjustment, EBIT totalled EUR 86.1 million, which equates to an increase of EUR 2.5 million (+3.0%). One item that merits particular note is the improvement in the profit situation at TridonicAtco in Australia. After posting substantial losses in the previous year, in the year under review the company s operations returned to profit as a result of a consistent programme of restructuring. Net profit showed a further significant increase in financial 2005/06, rising by EUR 14.5 million or 49.7% to EUR 43.6 million, against EUR 29.1 million in 2004/05.
European market and Asia prove key growth drivers 02 Revenue growth of 4.9% was supported by both divisions of the Group: Revenues generated by Zumtobel Lighting Division (with the two brands Zumtobel and Thorn) showed year-on-year growth of EUR 33.0 million (+3.8%) rising to EUR 909.5 million. After adjustment for revenues recorded in financial 2004/05 by the former Toolmaking division, the Zumtobel Lighting Division posted growth of 5.3%. Revenues generated by the components business of the TridonicAtco Division showed a year-on-year increase of EUR 24.1 million or 7.7%, to reach EUR 339.5 million. As in previous years, the European market, which showed clear signs of growth, accounted for the lion s share of revenues (80.1%). Sales revenues reported in Western European countries increased by EUR 26.8 million (+7.1%), with Eastern Europe posting an increase of EUR 5.4 million (+12.8%) and Southern Europe moving ahead EUR 12.3 million (+13.5%). In the German-speaking markets of Germany, Austria and Switzerland, revenues were up by 2%. Adjusted for sales at the former Toolmaking division, revenues in the German-speaking markets showed an increase of approximately 6.4%..In the Americas, revenues rose EUR 7.6 million (+23.4%), and Asia too reported a marked increase in revenues, which were up by EUR 8.3 million (+11.5%). Downturns in revenues were reported in Northern Europe (-3.6%), Australia and New Zealand (-6.6%) due to strong market pressure on prices and the conscious decision to discontinue unprofitable transactions. LED activities which are of growing importance for the future of the Zumtobel Group made a substantial contribution to the increase in revenues. Thus the Zumtobel Group was able to increase revenues from the sale of LED lighting products and LED components by EUR 4.3 million or 36.1% to a total of EUR 16.4 million. The Group s presence in the LED sector was greatly strengthened in the year under review by the establishment of two new LED start-ups Lexedis Lighting GmbH and Ledon Lighting GmbH. Key financial indicators improved As a result of the improvement in net profit, net debt declined by EUR 41.0 million from EUR 397.1 million in the previous year to EUR 356.1 million as at April 30, 2006. This resulted on the one hand from a reduction of EUR 34.2 million in financial liabilities and on the other from an increase of EUR 6.8 million in liquid funds. Equity rose by EUR 50.1 million in the year under review, from EUR 173.6 million in financial 2004/05 to EUR 223.7 million in financial 2005/06, leading to an equity ratio of 20.7% as at April 30, 2006 (PY: 17%). The Group s strategic focus on innovation and the use of state-of-the-art technologies was underpinned by an increase in research and development expenses. Including development costs carried as assets, R&D expenses showed a year-on-year increase of EUR 2.7 million in financial 2005/06 (+9.3%) to stand at EUR 31.5 million. The Zumtobel Group workforce grew from 7,000 FTE (full-time equivalent) employees to 7,212 FTE or by 3% in the course of the year under review. In order to support the Group s ongoing growth
initiatives with an even more innovative product portfolio, the number of Research & Development staff on the payroll showed an above-average increase of 16.8%. 03 According to Zumtobel Group CFO Thomas Spitzenpfeil: In the course of the past financial year we were able to reduce our net debt by a further EUR 41.0 million and at the same time increase our equity ratio by 3.7% to 20.7%. The foundations for these positive developments were laid by the further improvement in our operating performance and the resultant gratifying level of net profit for the year. The improved key financial indicators give us the latitude we need to maintain and strengthen the growth of the Zumtobel Group. Milestones for improvement in revenues and profit In line with the strategic goal of attaining a sustainable improvement in revenues and profit at the Zumtobel Group, in the year under review several major milestones were reached: Strategic growth initiatives As it strives to achieve further organic growth, the Zumtobel Group is basing its efforts on three main pillars: accessing new markets, devising new applications and developing technological innovations. In particular, high-power white LED light sources will come to play an increasingly important role in the field of general-purpose lighting. In ensuring future growth in this segment, the Zumtobel Group is banking on its two LED start-ups, Lexedis Lighting GmbH for the development and production of innovative solid state light sources, and Ledon Lighting GmbH for new applications based on the latest LED technology. In the field of applications, activities are focusing on the outdoor lighting and light control sectors, as well as the fast-growing Hotel & Wellness segment. In terms of regional growth, the Group is concentrating on China, Southeast Asia and Eastern Europe. Strengthening the brands The success of the Zumtobel Group is largely based on its three strong international brands, Zumtobel, Thorn and TridonicAtco. In the luminaire business in particular, the Group aims to differentiate more clearly between its two luminaire brands (Thorn and Zumtobel) in order to promote the segmentation of the light fittings market and enable different customer groups to be addressed more precisely. At the end of the year under review, in a measure supported by an international advertising campaign, the Zumtobel Staff brand name was replaced by the name Zumtobel with an attractive new logo. One key milestone in the year under review was the Group s presence at the international Light + Building trade fair, staged in Frankfurt am Main in April 2006. The Zumtobel Group made the most of this platform by presenting its three brands, Zumtobel, Thorn and TridonicAtco, and its two LED startups for the first time on adjacent stands, each with its own brand-specific design an approach that strengthened the Group s positioning as one of the few global players in the lighting industry. A marked increase in visitor numbers at all the Group s stands and the positive customer response to the innovations on show provided positive indications that demand will continue to pick up again as expected.
Further restructuring of the supply chain 04 In the course of financial 2005/06, the ongoing restructuring of the production network was continued and in many areas completed. The aim here is to consolidate the former regionally-structured production operations of Zumtobel and Thorn into a single worldwide supply chain, and to make the most of the opportunities presented by outsourcing and production in low-wage countries. In the medium-term the company is aiming to produce some 50% of its annual luminaire output in Western Europe keeping close to the market for project business and the remainder at low-wage locations, as well as by stepping up outsourcing and offshoring. In the year under review, a new luminaire plant was opened in Guangzhou, Southern China. Another new plant is currently under construction in Curtici, Romania, with production scheduled to start in the autumn of 2006. In the process, production operations will be relocated from the luminaire plant in Tettnang, Germany, to Dornbirn and Romania. Another milestone in the restructuring process is the consolidation of luminaire production operations in Australia, which will involve transferring production from two existing plants to a newly built facility. Appropriate provision for this measure has been made on the 2005/06 balance sheet. In the components business, TridonicAtco has also expanded its presence in Asia. A new components production operation came on stream in Shenzhen, Southern China, in the late summer of 2005, followed in the autumn by the establishment of a Chinese sales company for TridonicAtco. Continuation of efficiency drive and cost-cutting measures Also in the year under review, the Salomon project was kicked off with the aim of streamlining processes and structures in the administration sector and in the Zumtobel Lighting Division s sales organisation and thereby attaining a sustainable reduction in costs. Some of the measures defined in the 2005 calendar year were already implemented in the year under review and will lead to substantial savings in financial 2006/07. IPO continues expansion strategy One significant event that occurred after the balance-sheet date was the initial public offering of Zumtobel AG on May 12, 2006. This step increased the share capital of the company from EUR 92,023,360 to EUR 111,760,860, while the gross proceeds from the capital increase totalled EUR 161.8 million. The net proceeds from the capital increase and other liquid funds have been used to make voluntary repayments of EUR 143 million on long-term syndicated bank loans. The IPO of Zumtobel AG represents the logical next step in decades of expansion designed to transform this former family-owned Austrian company into the leading global player in the lighting industry. The enhanced financing structure and access to the capital market resulting from the IPO also give the Zumtobel Group the means to drive forward the consolidation of what is still a highly fragmented lighting industry.
Outlook for financial 2006/2007 05 For financial 2006/07, management is anticipating a further increase in revenues on account of a healthier market environment and continuation of the growth initiatives at the company. The unremitting pursuit of the efficiency drive, the absence of restructuring costs in the new financial year and lower financing costs on account of the improved capital structure generated by the IPO should providing the market situation remains positive lead to a further tangible improvement in profit. Zumtobel Group CEO Dr. Andreas Ludwig takes a positive view of the coming financial year: We will be continuing to grow over the coming year and to further reinforce our position as innovation and technology leader in the international lighting industry. We consider our company and the Zumtobel share a sustainably attractive investment and I am confident that we will attain our goals and meet the expectations of our shareholders. The Zumtobel Group at a glance Financial year 2005/06 2004/05 Revenues (in EUR millions) 1,184.2 1,129.2 EBIT 86.1 83.6 as a % of revenues 7.3% 7.4% Adjusted EBIT 99.5 90.1 as a % of revenues 8.4% 8.0% Net profit 43.6 29.1 Net debt 356.1 397.1 Equity 223.7 173.6 as a % of balance-sheet total 20.7% 17.0% Employees (FTE) on balance-sheet date 7,212 7,000
The Zumtobel Group global market leader in the lighting industry 06 The Zumtobel Group, based in Dornbirn in the Vorarlberg region of Austria, is a global player in the lighting industry. The Group, which started life as Elektrogeräte und Kunstharzpresswerk W. Zumtobel KG in 1950, today employs a workforce of 7,200 and concluded the financial year 2005/06 with net revenues of EUR 1,184.2 million. Under the leadership of its Executive Board of Dr. Andreas J. Ludwig (CEO) and Thomas Spitzenpfeil (CFO), the Group today comprises two subgroups. Zumtobel Lighting Division, the luminaire business, includes the Thorn and Zumtobel brands along with their shared production network, International Lighting Technologies. The TridonicAtco Division handles the lighting components side of the business. The financial year of the Zumtobel Group commences on May 1 and ends on April 30. Media Contact: Astrid Kühn-Ulrich Head of Corporate Communications T +43 (0) 5572 509-1570 M +43 (0) 676 8920 2002 astrid.kuehn@zumtobel.com www.zumtobelgroup.com Investor Relations: Christian Hogenmüller Head of Corporate Reporting T +43 (0) 5572 509-506 F +43 (0) 5572 509-9506 christian.hogenmueller@zumtobel.com www.zumtobelgroup.com