DGAP-News: Powerland AG: Powerland continues to show signs

DGAP-News: Powerland AG / Key word(s): Quarter Results/Interim Report Powerland AG: Powerland continues to show signs of recovery in first quarter 2014 30.05.2014 / 07:43 --------------------------------------------------------------------- Powerland continues to show signs of recovery in first quarter 2014 - Group revenue in the first quarter 2014 decreased by 17.5% to EUR 39.3 million yoy; Luxury segment sales with EUR 30.3 million on previous year's level; Group EBIT declined to EUR 3.8 million as anticipated - Net cash from operating activities turned positive in contrast to the fourth quarter 2013 - Store expansion program on track: Increase in number of stores to 224 as of 31 March 2014 (188 as of 31 March 2013) - On 26 March 2014, the AGM adopted the 2012 financial statements; Powerland returned to a normal financial communication calendar - Share buyback program extended until the end of the first half 2014 - Outlook for 2014 confirmed Frankfurt/Main, 30 May 2014 - Group revenues of Powerland (ISIN DE000PLD5558 / Prime Standard), the leading Chinese manufacturer of handbags, leather goods and accessories, decreased in the first quarter 2014 to EUR 39.3 million (Q1 2013: EUR 47.7 million) mainly due to a weaker performance of the Casual segment that could not be outbalanced by the positive signs from the Luxury segment. Additionally one has to state that Q1 2013 was the last quarter which was not affected by the discussions Powerland had to face last year with respect to the 2012 financial statements. According to the communicated strategy, sales contributions from the Luxury segment continued to increase from 64% in Q1 2013 to 77% in Q1 2014. Revenues in the Luxury segment with EUR 30.3 million reached the same level as in the first quarter 2013 (Q1 2013: EUR 30.3 million), showing that Powerland is operationally back to where the company was prior to the issues around the 2012 financial statements. Measured in RMB, revenues in the Luxury segment increased by 0.5%. Revenues in the Casual segment declined to EUR 9.0 million in the first three months of 2014 (Q1 2013: EUR 17.3 million) mainly due to the increasing competition and the restructuring practice within the Company's fabric sub-segment, which now constitutes approximately 24% of Casual revenue. The restructuring is expected to be completed in the third quarter of 2014 and will lead to a heavier focus on the synthetic leather or genuine leather within the facilities. According to the revenue decline and also due to higher selling and distribution costs caused by the expansion of Powerland's distribution network, earnings before interest and taxes (EBIT) decreased by 64.0% to EUR 3.8 million in the first three months of 2014 (Q1 2013: EUR 10.4 million) and net profit was down 54.4% to EUR 3.5 million in the first three months of 2014 (Q1 2013: EUR 7.6 million). The EBIT margin in the Luxury segment improved significantly from 0.9% in Q4 2013 to 11.9% in Q1 2014. This development underlines Powerland's success in its strategic focus on the Luxury segment for future profitable growth. <pre> in EUR million Q1 2014 Q1 2013 Change (%) Q4 2013 Change (%) Revenue 39.3 47.7 -18% 45.6 -14% Luxury 30.3 30.3 +/-0% 32.4 -6% Casual 9.0 17.3 -48% 13.2 -32% Luxury % 77% 64% 71% Casual % 23% 36% 29% Gross profit 14.4 20.3 -29% 16.4 -12% Luxury 12.6 15.8 -20% 13.4 -5% Casual 1.8 4.6 -61% 3.1 -43% EBIT 3.8 10.4 -64% 1.1 >+100% Luxury 3.6 7.7 -53% 0,3 >+100% Casual 0.2 2.7 -94% 0.8 -81% EBIT margin 9.6% 21.9% 2.4% Luxury 11.9% 25.5% 0.9% Casual 1.7% 15.5% 6.2% Net profit 3.4 7.6 -54% -0.2 n/a </pre> Powerland's efforts with regards to an improved cash flow management shows positive effects: Net cash flow from operating activities has increased from EUR 1.7 million in the first quarter 2013 to EUR 7.2 million in the first quarter 2014. As a consequence net debt could be reduced from EUR 44.3 million to EUR 37.5 million. Store expansion program on track Powerland continued to expand its distribution network in mainland China and added eleven stores to its distribution network while one underperforming store was closed down due to the store location adjustment strategy. Amongst the eleven newly-opened stores, eight of them are operated by distributors and have a higher focus on third-tier cities where there are emerging middle-class consumers. Powerland also opened three self-operated stores located in Taiyuan Airport, Changchun Airport and Harbin Airport, all of which handled more than 6 million passengers in 2013. To synergize Powerland's footprint in these high-traffic locations, Powerland continued to deploy digital advertisement in China's busiest airports. At the beginning of the year, Powerland launched "Dreams & Wings" as the product theme for the year 2014. A nationwide tour was initiated to promote the new series and to boost single-store performance. Meanwhile, Powerland will continue to explore different marketing methods, including product placements in high-profile movies as well as various sponsoring activities aiming to polish the brand image and enhance the brand awareness. Powerland returned to a regular financial communications calendar; AGM for Business Year 2013 will be held on June 11th; share buyback program extended After the ordinary Annual General Meeting of Powerland AG having approved the financial statements 2012 on 26 March 2014, Powerland published its Annual Report for the business year 2013 at the end of April. With today's report for the first quarter 2014 and the planned ordinary Annual General Meeting for the business year 2013 that will take place on 11 June 2014, Powerland successfully returned to a normal financial calendar. In addition, Powerland extended its share buyback program from 27 January 2014 until the end of the first half of 2014. During the first quarter 2014, a total of 113,905 shares were repurchased. Outlook for 2014 confirmed The Management Board confirms its already communicated cautiously optimistic outlook for 2014. Powerland anticipates that sales will see moderate growth in comparison to 2013 while Luxury segment's contributions to the Group will be further enhanced. The operating expenses will be maintained at a similar level to 2013's so that earnings of 2014 are expected to be improved. Powerland will continue to expand its distribution network in mainland China and its target to operate approximately 250 stores by the end of 2014 remains unchanged. Powerland does not plan any major capital expenditure apart from expenses associated with new store openings. The management will stick to the stringent working capital management and boost the operational efficiency. Meanwhile, as the management team of Powerland can fully concentrate on daily operation, the Company expects to outperform what has been achieved in 2013 in an all-round manner. However, considering the prevailing uncertainties of market conditions, Powerland believes that 2014 will be a stabilizing year for both the market and the Company. The full report of the first quarter 2014 is published on the Company's website (www.powerland.ag). For more information, please contact: Powerland AG Lyoner Strasse 14 60528 Frankfurt am Main Germany Phone: +49 (0) 69 66 554 - 459 Fax: +49 (0) 69 66 554 - 276 E-mail: ir@powerland.ag Home: http://www.powerland.ag End of Corporate News --------------------------------------------------------------------- 30.05.2014 Dissemination of a Corporate News, transmitted by DGAP - a company of EQS Group AG. The issuer is solely responsible for the content of this announcement. DGAP's Distribution Services include Regulatory Announcements, Financial/Corporate News and Press Releases. Media archive at www.dgap-medientreff.de and www.dgap.de --------------------------------------------------------------------- Language: English Company: Powerland AG Lyoner Straße 14 60528 Frankfurt am Main Germany Phone: +49 69 - 66554-459 Fax: +49 69 - 66554-276 E-mail: ir@powerland.ag Internet: www.powerland.ag ISIN: DE000PLD5558 WKN: PLD555 Listed: Regulierter Markt in Frankfurt (Prime Standard); Freiverkehr in Berlin, Düsseldorf, Hamburg, München, Stuttgart End of News DGAP News-Service --------------------------------------------------------------------- 271285 30.05.2014