Dear Shareholder,
Dear Sir/Madam,
In the first six months of 2008 we failed to fully counter the downward trend caused by the restructuring measures undertaken in the past few years. However, we managed to continue to provide high inventory availability amid constant quality levels, which is a prerequisite condition for a lasting successful business model, in particular in an advertising market characterised by short campaigns. Following positive development in the first quarter, an unexpectedly weak second quarter gave rise to revenues below the previous year’s figures.
As per 30.06.2008, sales were € 63.3 million, i.e. € 2.3 million below the previous year’s figures. Following adjustments to account for exchange rate influences, the drop in sales is merely € 0.4 million (- 0.6%). EBIT and EBITDA are in line with expectations for the medium-term planning. The EBIT margin is 4.6% (1st six months of 2007: 4.8%), while the EBITDA margin is 7.2% (1st six months of 2007: 7.4%). We experienced a drop in sales, in particular in the
The weakness of the second quarter was characterised by recessionary markets in the
Following targeted development, the first six months of 2008 saw the launch of numerous innovative and new products at various trade fairs. The feedback from our customers, and the new customers we have acquired, shows that we are on the right track. At present it is crucial that we consistently push this further, secure the high inventory availability and improve our innovative capability on an ongoing basis. Neschen must push its new product launches to counter the falling demand for mounting and laminating films on the basis of the further technical development of printing systems and printable materials. To this end we developed a new marketing system in the past business year that helps us bring our entire product portfolio closer to customers, and utilise additional cross selling potentials.
Growth in the Documents division remains gratifying. Compared with the first six months in 2007, we saw an increase in sales revenues of 4.6%. However, due to the low percentage of overall sales (approx. 12%), this will not be sufficient to balance the drop in sales in the Graphics division.
Our Documents division was characterised by the expansion of activities in the archive centres. In Brauweiler we put into operation a further production facility for the machine deacidifying of individual sheets. For some months now we have been offering our
The newly developed book conservation system is already in the final assembly stage, and will probably be put into operation in the third quarter in Bückenburg. In the future we will therefore be able to deacidify and conserve entire books and bound archives in a single step. If the procedure meets with our expectations, this will constitute a significant international innovation which we expect will give rise to the worldwide expansion of our deacidifying activities. Due to the labour-intensive phase of running-in the system, we expect to see notable sales with effect from 2009.
The Technical Coatings division is well below expectations. As a result of strategic changes implemented for a major customer, and the loss of an Asian customer, we expect to see a loss in the established business in the current business year. We have made considerable progress with the new developments, for example high-glossy coatings for the furniture industry, new adhesives for incision films (human medicine) and films for the glass industry. Thanks to the positive trials and internal as well as external test results, we are convinced that we can embark on the launch of these products shortly. On the basis of the long lead times, in respect of the technical development, our customers and winning new market shares, we expect to see notable sales in these divisions with effect from 2009.
Irrespective of the emerging slight fall in Group sales, Neschen is well placed in the market for special and niche products. We have launched innovative products, and many of these have been well received in the market following a re-launch. Furthermore, we expect to see a considerable increase in sales following the signing of a contract with a worldwide leading OEM partner for the supply of printable materials. The increase will commence with effect from 2009 in line with our partner’s sales planning. We aim to utilise additional potentials in volume markets with a new drive and various measures based on new procurement opportunities and the stated OEM contract.
The next few months will be characterised by making the greatest possible effort to complete the stated development projects, and further pushing sales activities in all divisions. A number of new appointments in Sales and Product Management will have a positive effect. The development in some sales divisions shows that we are fundamentally on the right track. A considerable amount of additional potential must be utilised via new products and new customers to counter future setbacks involving individual customers and weaknesses in individual market segments, for example the USA and the UK, and to ultimately generate growth.
The Management Board