Bügg/Biel, 20 April 2004 - The 2003 results of the Biella Group - Switzerland's largest manufacturer of office supplies, which has a strong presence in central Europe - continued to be affected by the difficult economic environment. The 2003 result was half that of the previous year, despite an acquisition-related increase in sales. The restructuring introduced last year will be continued.
As feared, 2003 did not bring about any improvement in the market. The economic trend in western Europe as again characterized by stagnation and recession, while the pace of the economic upswing in eastern Europe slowed considerably. This accentuated the crisis in the paper, office supplies and stationery sector, resulting in fiercer competition and a steep drop in prices and margins.
Earnings slump despite higher sales
In 2003, the Biella Group posted net sales of CHF 179 m, an increase of 8.3% over the previous year (CHF 165 m). However, this rise in sales is due primarily to the acquisition of the Dutch company Stadtman B.V. last year. The merger of its Kadee Delft subsidiary with Stadtman to form Stadtman-Kadee B.V. has considerably strengthened Biella's position in the Netherlands and enabled the Group to become the leading manufacturer of presentation and organization supplies in both direct sales and for resale. The difficult situation for the Donau Group worsened in 2003. The level of sales growth in 2003 in central and eastern Europe could only be achieved through lower prices and lower margins, owing to fiercer competition. In Switzerland, sales continued to decline sharply against the backdrop of a persistently weak economy on ongoing Europeanization in the sector, resulting in lower earnings. In addition, unfavourable exchange rate trends, especially in eastern Europe, impacted on results. Consequently, Group profit for 2003 after taxes and minority interests fell to CHF 1.4 m (2002: CHF 2.8 m).
Higher financing requirements
Equity (incl. minority interests) as a proportion of total assets at year-end 2003 was lower than in the previous year and now stands at 53% (2002: 60%). Net liquidity for 2003 comes to CHF -5.2 m (CHF 2.3 m) and is an expression of the Biella Group's - and in particular the Donau companies' - higher financing requirements, resulting from sales expansion and lower earnings. Cash flow from operating activities amounted to CHF 3.1 m or 1.7% of net sales (2002: CHF 12.7 m or 7.7%).
Provisions createdc in 2002 for restructuring were largly used up in 2003 with the closure of the Aufhof site in Vienna and the merger of Kadee and the newly acquired Stadtman B.V. in the Netherlands. As the Group's situation remained difficult it had to create new provisions in order to adapt structures more quickly to changing market conditions.
With the sales and earnings trend having deteriorated in the first two months of this year and no improvement in the market situation expected any time soon, the Board of Directors and no improvement in the market situation excepted any time soon, the Board of Directors and Group management have decided to propose a dividend waiver for the 2003 business year at the General Meeting of Shareholders.
If you like further information, please contact:
Mister Urban Fäh, CEO
+41 79 512 83 88
+41 32 366 33 33