Gamma Holding: 2008 is successful year for Exotic Fabrics

20 Feb '09

6 min read

Turnover and results:
For Gamma Holding, 2008 was a year in which turnover and income came under pressure. In 2008 group turnover was EUR 744 million (2007: EUR 713 million). This includes a net positive effect of 6% arising from acquisitions. Currency movements had, on average, an effect of -4% over the year. Organic growth of turnover was 2%.

Because of the sharp fall in demand and the weak dollar, EBITA[1] of the group excluding restructuring expenses came to EUR 38.4 million (2007: EUR 60.1 million). Acquisitions had a net effect of -2% and currency movements a net effect of -6%. Organically, EBITA declined by 28%.

Restructuring expenses totalled EUR 32.1 million in 2008, of which EUR 6.4 milllion (2007: nil) impairment of property, plant and equipment, compared with EUR 4.0 million in 2007. EBITA totalled EUR 6.3 million (2007: EUR 56.1 million).

Impairment of goodwill and acquired intangible assets came to EUR 22.6 million (2007: nil) and related to Belting and Sleep Care Fabrics. In the fourth quarter of 2008, the annual comparison of the book value with the higher of the value in use and the net market value took place, in accordance with the IFRS rules. Because of the change in market conditions this resulted in this impairment (non-cash).

The balance of financial income and expense deteriorated from EUR -10.6 million in 2007 to EUR -17.2 million in 2008. This was mainly due to an increase in debt. The effective tax rate was 1.9%, (2007: 31.5%). It should be noted here that the group result before taxation in 2008 was negative.

The net group result totalled EUR -33.2 million (2007: EUR 33.0 million). The net group result excluding restructuring expenses and impairment of goodwill and acquired intangible assets was EUR 14.0 million (2007: EUR 36.0 million).

Earnings per share came to EUR -4.61 (2007: € 4.39).

Industrial Solutions:
The turnover of the Industrial Solutions sector showed organic growth in the first nine months of 2008. However, as a consequence of the credit crisis and the subsequent economic recession, the sector was faced, notably from the fourth quarter, with an unprecedented drop in demand. Moreover, the business units Belting and Filtration were troubled by the exchange rate of the dollar, which was very low for a part of 2008.

The turnover of Industrial Solutions increased by 6%, totalling EUR 448 million (2007: EUR 424 million). This includes an effect of 11% resulting from acquisitions and -4% arising from currency movements. Organically, turnover declined by 1%.

EBITA excluding restructuring expenses totalled EUR 15.8 million (2007: EUR 31.6 million). Acquisitions had an effect of -4% and currency movements an effect of -11%. Organically, EBITA declined by 35%.

Restructuring expenses came to EUR 4.1 million in the year under review, compared with EUR 2.9 million in 2007. They related to all the business units. EBITA1 came to EUR 11.7 million (2007: EUR 28.7 million).

The turnover of Exotic Fabrics increased thanks to the differentiated brand strategy successfully launched two years ago. Vlisco, which operates in the more expensive market segment, benefited particularly from this, though the GTP and Uniwax brands also performed well. Furthermore, the recession was not felt in the African countries where this business unit markets its products.

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