DGAP-News: Gigaset AG
/ Key word(s): Quarterly / Interim Statement/Half Year Results
Gigaset AG publishes report on the second quarter and first half of 2020
24.09.2020 / 08:00
The issuer is solely responsible for the content of this announcement.
Press release
Bocholt, September 24, 2020
Gigaset AG publishes report on the second quarter and first half of 2020
Coronavirus pandemic has significant impact on revenue and earnings
- Business closures due to the pandemic in all key sales markets also lead to significant decline in revenue and earnings in Q2
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No reliable outlook for the rest of fiscal 2020 possible due to ongoing coronavirus crisis: year-on-year fall in the relevant key figures anticipated
Gigaset AG (ISIN: DE0005156004), an internationally operating company in the area of communications technology, today published its report for the second quarter and the first half of 2020. The impact of the coronavirus pandemic led to a significant decline in both revenue and earnings in the first half of 2020. The trade restrictions imposed by the European governments also practically brought brick-and-mortar retail to a standstill in many places well into Q2 2020.
Accordingly, revenue in the first half of 2020 stood at ?75.8 million, after having still reached ?107.1 million in the same period of the previous year. At minus ?8 million, earnings before interest, taxes, depreciation and amortization (EBITDA) were also well below that of the previous year (H1 2019: ?6.7 million).
"All of the company's business segments were affected by the negative economic effects of the coronavirus pandemic in the first six months of 2020. Restrictions on public life, as well as business closures and lockdowns, especially in other European countries, lasted in part well into June," said Thomas Schuchardt, CFO of Gigaset AG. "We nevertheless expect business activity to normalize in the second half of the year and additional catch-up effects from Q1 and Q2."
All in all, the company's early and consistent liquidity management led to positive results, or almost at the planned level, for the individual months despite the fall in revenue (?0.5 million in April, minus ?0.4 million in May, and minus 0,6 million in June). The intensive focus on active cash management in combination with targeted savings measures made a significant contribution to the overall result in the first six months.
Digitalization provides future potential
The decline in revenue in the first half year is an unavoidable consequence of the coronavirus pandemic. Gigaset AG successfully dealt with this dynamic through its swift action regarding consistent liquidity management, and by adjusting its investment activities in the fields and research and development and marketing. The developments in the first half of 2020 affected thousands of companies worldwide - the coronavirus effect cuts across the German, European and global economy.
Regardless of the short-term challenges, the Executive Board of Gigaset AG sees potential in the future. The coronavirus pandemic is speeding up digitalization, as the proportion of online sales also showed, rising by 115% in the first half of 2020 compared with the same period in 2019. Home office and remote work will lead to a large-scale redesign and adjustment of the IT and telecommunications structures both at work and home. Gigaset is excellently positioned to accompany and benefit from these developments:
1. Phones
With work increasingly shifting to the private setting, DECT telephony has experienced a renaissance[1]. Reasons why this effect will last are the voice quality, the ergonomics of the devices, and the call and standby times - all factors that are wanted and needed in the home office.
2. Smartphones
Gigaset is the only provider to offer fixed-line, professional and mobile telephony from a single source. The expansion of the ecosystem is speeding up the merger of B2C and B2B solutions. In the context of remote working, customers will opt for end-to-end solutions for their employees that Gigaset can offer.
3. Smart Home
When home becomes the new focal point, investments in this area shift accordingly. There is already a perceptible increase in DIY projects[2]. The smart expansion of the home is a logical step, and rising demand can be expected as a result from 2021. Gigaset is in a central position with its four application fields of security, energy, convenience and help for people in need of care.
4. Professional
Digitalization will primarily permanently change what is offered by telecommunication system providers and manufacturers of devices such as Gigaset. Regardless of all these changes between the provider and the device, the latter, in other words, the hardware required for the call, will remain unaffected by them. The company, as a manufacturer in the B2B field with close links to cloud partners, will also benefit from this.
Performance by business segments
Revenue for Phones was still at the planned level until mid-March in fiscal 2020, despite what continued to be a challenging environment. The negative effects of the anti-coronavirus measures then made themselves felt. Through the massive intervention into public life and store closures, sales and revenue fell dramatically. In the first half of 2020, Phones generated total revenue of ?56.7 million (H1 2019: ?76.4 million).
The Smartphones segment was especially hard hit by the coronavirus restrictions in all sales markets. On the sales side, many devices were returned as a result of the measures, leading to negative revenue in the first quarter. Despite catch-up effects in the second quarter, only ?0.2 million was generated with smartphones in the whole of the first six months of 2020 compared with ?4.2 million in the same period of the previous year.
With revenue of ?1.3. million for the first six months, the Smart Home segment was slightly down year on year (H1 2019: ?1.6 million), although a very good first quarter - mostly thanks to a strategic partnership with a European operator - slowed down the revenue decline in Q2 caused by the pandemic.
In the Professional segment, the measures taken to combat the coronavirus pandemic led to projects and orders being deferred by customers and hence also to a drop in revenue to ?17.6 million (H1 2019: ?24.9 million).
Comment on Outlook for 2020
Gigaset AG will not issue a detailed business forecast for 2020. In view of the effects of the coronavirus pandemic, as well as the company's dependence on external factors outside its control, in other words, decisions by governments to impose lockdowns and close businesses and borders, as well as the duration and further evolution of the pandemic itself, a reliable forecast is not possible.
As September 2020 draws to a close, there are developments across the whole of Europe that, after the situation eased during the summer months, suggest a surge of infections in the fourth quarter. In view of these developments, no improved predictability can be expected for the last three months of the year. Gigaset continues to react flexibly and dynamically to economic developments resulting from the infection process and the associated political decisions.
Overall, as a result of the unprecedented crisis, the company continues to expect a decline in the relevant key figures compared to the previous year.
Gigaset AG, Bocholt, is an internationally operating holding company in the field of telecommunications. The wholly-owned subsidiary Gigaset Communications GmbH is Europe's market leader in DECT cordless telephones and is also a leader in the international arena, with around 900 employees and sales activities in around 50 countries. Gigaset Communications GmbH's business activities also include the segments Smartphones, Smart Home and business telephony solutions for small, medium-sized and enterprise customers.
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[1] https://www.t-online.de/finanzen/boerse/id_51922248/isin_51628472/virus-es-wird-mehr-telefoniert-und-laenger.html
[2] https://www.wiwo.de/unternehmen/handel/diy-boom-in-corona-zeiten-hornbach-im-yippiejaja-yippie-yippie-yeah-modus/25994106.html
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