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Free trade & protective measures put pressure on Lectra's H1 result

29 Jul '05

4 min read

Comprehensive high technology solutions provider Lectra's The Board of Directors (BOD) reviewed the consolidated financial statements for the first-half of 2005, after a limited review by the Statutory Auditors.

Business activity was again seriously affected by the impact of the abolition of textile quotas by the WTO as of January 1, 2005, and related uncertainties.

While the protective measures initiated by the United States and the European Union have gone some way toward assuaging the concerns of American and European manufacturers, they have prompted a wave of apprehension in China and led to a freeze on investment decisions, as companies there fear temporary overcapacity.

Against this background, orders for new systems fell 8 percent (–€3.2 million) compared to Q2 2004. Business activity in May and June slightly outpaced the trend registered over the first four months of 2005, when orders were down by approximately 30 percent compared to the same period in 2004 (see Lectra's April 28, 2005 press release). Business activity was chiefly supported by significant orders booked with certain major companies in the automotive sector.

The decline in revenues was again due to weak revenues from new systems, which fell by 16 percent compared to Q2 2004. However, the decline in revenues from new systems was less than that of Q1 2005 (–26 percent compared to Q1 2004).

Despite these conditions, income from operations was €1.9 million and net income, €1.3 million. In Q1 2005, the company had registered a loss of €0.9 million from operations and a net loss of €0.5 million.

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