Press ReleaseJuly, 4th, 2007
RESULTS FOR THE YEAR ENDED MARCH 31, 2007
(From April 1, 2006 to March 31, 2007)
Strong improvement of major operating indicators
Significant non recurring items
KEY INDICATORS
| Euros millions | Consolidated figures 31/03/2007 | Consolidated figures 31/03/2006 | Consolidated figures 31/03/2005 |
| Sales | 76.5 | 83,8 | 91,2 |
| Gross Margin (value) | 36.0 | 35,9 | 41,9 |
| Gross Margin (%) | 47.1% | 42,8 % | 46,0 % |
| Operating Result | 0.5 | (47,6) | (3,0) |
| Net financial expenses | (1.2) | (1,9) | (3,0) |
| Net results | (1.0) | (51,5) | (1,4) |
| Net result per share () | (0.003) | (8,27) | (5,4) |
| Net cash/(debt) | 10.3 | (26,6) | (22,4) |
| Equity | 17.7 | (21,3) | 29,5 |
KEY FACTS
Changes in Management Board
William Christie who was appointed as chairman of the management board on January, 2006 for an interim period has been replaced by Alain Crevet on Sep, 4, 2006.
Share Capital Increase
In order to deal with the cash crisis that took place in half year 2, 2005-2006, a share capital increase of 41.8 M was launched in June 2006.
The major shareholder D and D International B.V. raised its percentage of control from 55.5% to 68.8%
Restructuring
In line with the Business plan decided in February 2006, a restructuring plan took place during the year both for France and European subsidiaries.
This social plan led to a significant decrease in personnel (-130 FTE in France and -22 FTE in European subsidiaries)
Implementation of a new strategy
The new strategy decided by the management board aims at leveraging S.T.Dupont's unique DNA in a modern and provocative way:
"S.T.Dupont - Master Goldsmith, Lacquer and Travel case maker - since 1872"
"The French Art de vivre - Art of travelling, smoking, writing"
It's now included in the new S.T. Dupont logo:
(see attachment)
This new strategy is being delivered in the following areas:
- Strong initiatives based on the brand historical pillars through the launch of new iconic products
- Clear prioritisation of markets in term of capital expenditures (France, Hong-Kong/China, Japan and Russia) through a commercial policy focusing on an optimization of the existing network (efficiency in merchandising, opening of SIS/corners,.)
- Development of a selective licences business
- Tight control over costs
- Sales by products :
| Sales as at 31/03/07 | Change % | Sales as at 31/03/07 | Change % | Sales as at 31/03/06 | ||||
| Including exchange rate impact | versus 31/03/06 | Excluding exchange rate impact | versus 31/03/06 | |||||
| M | % | M | % | M | % | |||
| Lighters & writing instruments | 37,0 | 48% | -12,4% | 38,1 | 48% | -9,8% | 42,2 | 50,4% |
| Leather Goods & others | 34,4 | 45% | -3,3% | 35,4 | 45% | -0,5% | 35,6 | 42,4% |
| Net sales Products | 71,4 | 93% | -8,2% | 73,5 | 93% | -5,5% | 77,8 | 92,8% |
| Royalties | 5,1 | 7% | -15,5% | 5,3 | 7% | -11,3% | 6,0 | 7,2% |
| Net sales | 76,5 | 100% | -8,8% | 78,8 | 100% | -6,0% | 83,8 | 100,0% |
Due to the appreciation in value of Euro vs. other currencies, exchange rates had a material impact on sales (-2.8%)
By product lines
Decrease in lighters is slowing down, while it's more important in writing instruments, especially because of the decrease in business gift in order to increase gross margin in this segment of business.
Leather goods and others remain stable excluding exchange rates impact.
Last year royalties included a non recurring item. Excluding this non recurring item, royalties increased by +1.2% compared to last year.
- Sales by geographical area
| Sales as at 31/03/07 | Change % | Sales as at 31/03/07 | Change % | Sales as at 31/03/06 | ||||
| Including exchange rate impact | versus 31/03/06 | Excluding exchange rate impact | versus 31/03/06 | |||||
| M | % | M | % | M | % | |||
| France | 8,9 | 12% | -9,2% | 8,9 | 12% | -9,2% | 9,8 | 13% |
| Europe (ex France) | 20,4 | 29% | -11,8% | 20,4 | 28% | -11,8% | 23,1 | 30% |
| Asia | 34,8 | 48% | -7,8% | 36,8 | 50% | -2,6% | 37,8 | 48% |
| Americas | 3,2 | 5% | -6,6% | 3,4 | 5% | -4.6% | 3,5 | 4% |
| Others | 4,0 | 6% | 11,9% | 4,0 | 5% | 11,9% | 3,6 | 5% |
| Sales (products) | 71,4 | 100% | -8,2% | 73,5 | 100% | -5,6% | 77,8 | 100% |
By geographical areas
Decrease in sales by geographical areas mainly concerned Europe and, to a less extent, France due to the restructuring that impacted the business during the year. In addition, the decision not to renew the agreement for Russia impacted sales during the 4th quarter as the new agreement was only signed in May 2007.
On the other hand, the implementation of a new merchandising in our flagship store located in avenue Montaigne, Paris, showed major improvements in sales. This new merchandising will be implemented in our retail network in the coming months.
Asia suffered from the appreciation in value of Euro vs. other currencies.
Sales in Americas decreased as we decided to increase our margin within this area by limiting the special editions.
Regarding the Middle East, this market is improving steadily.
- Results
EBIT was positive by 0.5 M compared to - 47.6 M last year, i.e. +48.1 M increase that came from:
- Decrease in gross margin due to decrease in sales (- 2.8 M) ;
- Increase in gross margin percentage due to the strong cost reduction as mentioned above (+3.8 M) ;
- Decrease in royalties as there was a non recurring item last year (-0.9 M)
- Decrease in overheads in order to have them in line with the level of activity (+ 4.1 M) concerning all the overheads;
- Additional provision for risks due to the strategic review of our network, set off against the withdrawal of provision for social plan following the negotiation with workers council (net impact +4.8 M)
- Exchange rate variation (-0.3 M)
- Non recurring items in last year figures amounting 40.0 M (impairment tests -22.5 M and provision for restructuring -17.5 M)
- Other items amounting -0.6 M
Non recurring items impact was material on this year and last year EBIT.
Structural improvements were included in the rate of gross margin increase and the decrease in overheads.
Net financial expenses amounted to - 1.3 M vs.-2.5 M last year due to the share capital increase and the strong decrease in working capital over the decrease in sales.
- Net Loss
Net loss amounted to -1.0 M compared to -51.5 M for last year.
Last year loss was clearly impacted by exceptional items. It was obvious that actions aiming at cost cutting had to be carried out. This has been done during the year and the Group is now back to a recovery position.
- Financial position
According to the cash flow statement, cash flow from operations was slightly increasing (-6.1 M compared to -6.7 M last year).
Actions on working capital almost compensate for this negative cash flow and led to breakeven cash flow from operations of -0.2 M vs. +0.7 M last year.
Regarding capital expenditures, these concerned the retail network (SIS/Corners) and the plant.
Overall, the cash flow from capital expenditures decreased from -3.3M in 2005-2006 to -2.2 M for 2006-2007.
Cash flow from financing increased from +8.1 M in 2005-2006 to +18.1 M in 2006-2007, mostly because of the share capital increase (+41.8 M) and the repayment of bank overdrafts (-13.3 M).
- Prospects
Actions aiming at increasing gross margin and decreasing overheads have been successful during the year. Sales, although declining, are better than expected in the business plan.
Early results of the new strategy are visible (products, merchandising, communication,.) and should have a full impact in the coming months so that S.T. Dupont can be back in a structural profit position.
Contact Analyst:
Michel Suhard
01.53.91.33.11
Contact Press:
Burson-Marsteller
Lorie Lichtlen
(01) 41 86 76 60
lorie.lichtlen@bm.com
Fr้d้ric Paillet
(01) 41 86 76 54
frederic.paillet@bm.com
Consolidated income statement
| (In thousands) | Year ended March 31, 2007 | Year ended March 31, 2006 |
| Net product sales | 71,379 | 77,780 |
| Other revenue | 5,095 | 6,032 |
| Total sales | 76,474 | 83,812 |
| Cost of sales | (40,430) | (47,907) |
| Gross margin | 36,044 | 35,905 |
| Communication expenses | (5,112) | (5,284) |
| Selling expenses | (14,794) | (17,765) |
| Overheads and administrative expenses | (17,962) | (18,944) |
| Other operating income and expense, net | 2,158 | (18,982) |
| Impairment of assets (IAS 36) | 200 | (22,534) |
| Operating profit/(loss) | 534 | (47,604) |
| Income from cash and cash equivalents | 968 | 381 |
| Finance costs, gross | (2 213) | (2,260) |
| Finance costs, net | (1 245) | (1,879) |
| Other financial income and expense, net | (93) | (620) |
| Income/(loss) from associates | (192) | (132) |
| Income tax expense | (22) | (1,285) |
| Profit/(loss) for the period | (1,018) | (51,520) |
| Profit/(loss) for the period attributable to equity holders | (1,018) | (51,520) |
| Minority interests | - | - |
| Basic earnings/(loss) per share (in ) | (0,003) | (8.27) |
| Diluted earnings/(loss) per share (in ) | (0,003) | (8.27) |
Consolidated balance sheet
| ASSETS | ||
| (in thousands) | At March 31, 2007 | At March 31, 2006 |
| Non-current assets | ||
| Goodwill | 2,995 | 3,325 |
| Intangible assets (net) | 578 | 0 |
| Property, plant and equipment (net) | 1,731 | 633 |
| Long-term financial assets | 1,491 | 1,575 |
| Investments in associates | 845 | 636 |
| Deferred taxes | 219 | 257 |
| Total non-current assets | 7,859 | 6,426 |
| Current assets | ||
| Inventories and work-in-progress | 19,279 | 21,608 |
| Trade accounts receivable | 9,949 | 13,962 |
| Other receivables | 3,327 | 4,335 |
| Short-term tax assets | 867 | 898 |
| Short-term financial assets | 0 | 4 |
| Cash and cash equivalents | 35,908 | 19,496 |
| Total current assets | 69,330 | 60,303 |
| Total assets | 77,189 | 66,729 |
| EQUITY AND LIABILITIES | ||
| (in thousands) | At March 31, 2007 | At March 31, 2006 |
| Equity | ||
| Share capital | 21,231 | 9,963 |
| Additional paid-in capital | 967 | 1,250 |
| Treasury shares | (5) | (24) |
| Equity component of convertible bonds | 1,904 | 1,943 |
| Fair value of hedging instruments | 0 | 9 |
| Reserves | (4,039) | 17,269 |
| Cumulative translation adjustment | (1,251) | (151) |
| Profit/(loss) for the period | (1,018) | (51,520) |
| Equity attributable to equity holders | 17,789 | (21,261) |
| Minority interests | - | - |
| Non-current liabilities | ||
| Convertible bonds (long-term portion) | 20,856 | 20,754 |
| Long-term borrowings | 0 | 7,040 |
| Long-term finance lease liabilities | 133 | 301 |
| Deferred taxes | 19 | 29 |
| Long-term provisions for pension and other post-employment benefits | 6,170 | 5,826 |
| Total non-current liabilities | 27,179 | 33,950 |
| Current liabilities | ||
| Trade accounts payable | 7,037 | 4,971 |
| Other payables | 8,967 | 11,191 |
| Short-term tax liabilities | 545 | 413 |
| Short-term provisions for contingencies and charges | 11,057 | 19,464 |
| Convertible bonds (short-term portion) | 1,544 | 1,575 |
| Short-term borrowings | 2,830 | 16,141 |
| Short-term finance lease liabilities | 242 | 285 |
| Total current liabilities | 32,221 | 54,040 |
| Total equity and liabilities | 77,189 | 66,729 |
Consolidated statement of cash flows
| (in thousands) | At March 31, 2007 | At March 31, 2006 |
| I - Cash flow from operating activities | ||
| Profit/(loss) for the period before tax | (1,018) | (51,520) |
| Depreciation, amortization and impairment | 1,119 | 25,339 |
| Amortization of goodwill | 0 | |
| Unrealized gains and losses from changes in fair value | (9) | 36 |
| Expense/(income) related to stock options | 0 | 204 |
| Change in provisions | (8,000) | 14,399 |
| Net interest expense | 1,351 | 2,499 |
| Gains and losses on disposals of assets | (653) | 961 |
| Tax expense/(income) | 22 | 1,285 |
| (Income)/loss from associates, net of dividends received | (209) | 132 |
| Cash flow from operations | (7,397) | (6,665) |
| Change in inventories and work in progress | 1,676 | 8,221 |
| Change in trade accounts receivable | 3,673 | 5,557 |
| Change in other receivables | 972 | (428) |
| Change in trade accounts payable | 2,171 | (6,552) |
| Change in other payables | (1,980) | 90 |
| Change in operating working capital requirement | 6,512 | 6,888 |
| Interest paid | (406) | (526) |
| Interest received | 961 | 386 |
| Income tax paid | 168 | 658 |
| NET CASH GENERATED FROM/(USED IN) OPERATING ACTIVITIES | (162) | 741 |
| II - Cash flows from investing activities | ||
| Acquisitions of intangible assets (excluding development expenditure) | 0 | (512) |
| Development expenditure | (450) | (598) |
| Acquisitions of property, plant and equipment | (1,731) | (2,284) |
| Acquisitions of investments | (79) | (202) |
| Cash used in investing activities | (2,260) | (3,596) |
| Proceeds from disposals of property, plant and equipment | 16 | 110 |
| Proceeds from disposals of investments | 34 | 177 |
| Cash provided by divestments | 50 | 287 |
| NET CASH USED IN INVESTING ACTIVITIES | (2,210) | (3,309) |
| III - Cash flows from financing activities | ||
| Issue of share capital | 41,154 | |
| Purchases of S.T.Dupont shares | 19 | 21 |
| Increase in borrowings | 430 | 1,259 |
| Current account advances from the majority shareholder | (7,000) | 7,000 |
| Repayments of borrowings | (3,913) | (385) |
| Interest paid | (2,036) | (2,260) |
| Overdrafts | (10,551) | 2,476 |
| Dividends paid | ||
| NET CASH GENERATED FROM FINANCING ACTIVITIES | 18,103 | 8,111 |
| Effect of exchange rate fluctuations on cash and cash equivalents | (285) | 199 |
| Net change in cash and cash equivalents | 15,446 | 5,742 |
| Cash and cash equivalents at beginning of year | 19,496 | 13,754 |
| Cash and cash equivalents at end of year | 34,942 | 19,496 |
| Net change in cash and cash equivalents | 15,446 | 5,742 |