Loss Increase at Hirsch Servo
The Austrian packaging company announced its results for the first three quarters of 2011/12. Revenues and earnings were down substantially. Hirsch Servo aims to cut costs further.
In what continued to be a volatile market environment, the results for quarters 1-3 of fiscal 2011/12 fell short of those for the same period the previous year. Lower revenue in the EPS Processing business segment was still mainly due to a decline in sales volume in the Packaging division as a result of consumers’ reluctance to buy household appliances and electronic devices. The trends in the Insulation division were negatively affected by the severe winter in the third quarter, which is typically a weak season. In the Technology business segment customers were also still exercising restraint because of the general global economic situation. Following reintegration into the two core segments (effective June 30, 2010), the Logistics business segment did not generate any sales in the period under review.
Total sales revenue amounted to € 61.1m for the reporting period (PY: € 66.9m). The operating profit (EBIT) was minus € 3.00m (PY: € 0.34m), while the profit on ordinary activities (POA) fell to minus € 5.47m (PY: minus € 1.59m).
Profit after tax fell to minus € 5.47m (PY: minus € 2.17m). The net loss was minus € 13.83m as at March 31, 2012 (June 30, 2011: minus € 8.72m). At 10.1 percent, the equity ratio was lower than at the balance sheet date (June 30, 2011: 15.2 percent).
The Hirsch Servo Group employed 572 people at the reporting date March 31, 2012 (PY: 593). The payroll fell to 584 on average for the year (PY: 610).
Investments in the first nine months of the current fiscal year totaled € 1.0m (PY: € 1.1m). Primarily aiming to ensure liquidity, the company is also planning to restrict investing activities in the last quarter of the current financial year.
In the EPS Processing business segment, which consists of the two divisions EPS Packaging and EPS Insulation, sales revenue totaled € 52.1m for the period under review (PY: € 55.4m). What mainly accounted for the 6 percent decline in sales were still lower volumes than the previous year in the Packaging division. The drop in volume as a result of consumers’ reluctance to buy household appliances and electronic devices, the decrease in the Insulation division caused by the weather, and higher fixed costs because of a change in the way Group charges are allocated resulted in a negative EBIT of minus € 1.04m (PY: € 2.14m). Furthermore, foreign exchange losses had a negative impact on the financial result. The POA was minus € 2.92m (PY: € 0.75m).
The Technology business segment generated sales revenue of € 9.1m in the reporting period (PY: € 11.5m). What caused the decrease in sales was the lower number of units shipped, which however resulted in slightly higher contribution margins compared with the same period the previous year. The block molds market (insulation) in particular collapsed, but the demand for preexpanders and molding machines stabilized albeit at a low level. Although non-recurring effects such as specific allowances for doubtful debts, allocations to provisions, and the closing of the HIRSCH USA Inc. sales subsidiary based in Atlanta had a negative impact on the result, the change in the way Group charges are allocated meant that the fixed costs were still lower in total than the same period the previous year. Together with the slightly higher contribution margins, they led to a marginal reduction in the EBIT – in relation to the decline in sales – to minus € 1.69m (PY: minus € 1.47m). The POA was minus € 2.20m (PY: minus € 1.82m).
Effective June 30, 2010, the Logistics business segment was integrated in the two business segments EPS Processing and Technology, which was why it did not report any revenue. The EBIT totaling minus € 0.27m (PY: minus € 0.33m) is primarily due to accumulated depreciation and amortization. In addition, interest expenses led to a POA of minus € 0.35m (PY: minus € 0.51m).
„Continuing the restructuring measures, taking further steps to cut costs, and implementing the long-term financing plan will create a sound basis for the future of the Hirsch Servo Group. Given the general economic situation and volatile market environment, we still do not however propose to forecast earnings for fiscal 2011/12.“ the company announced.