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

29 Jul '05

4 min read

- First-Half of 2005: Revenues and Earnings Hard-Hit by the Abolition of Textile Quotas

- Revenues from new systems (€52.9 million) decreased by 21 percent relative to the first-half of 2004.

At the same time, revenues from recurring contracts grew by a robust 11 percent (+€2.9 million) reflecting both the results of proactive measures taken in prior years and the ramp-up of sales of service contracts to former Investronica customers. Total recurring revenues (€49 million), which also include spare-parts and consumables, grew by 8 percent.

Key Operating Ratios Improved Overall

In addition to its negative mechanical impact on the company's accounts, the U.S. dollar's decline of almost 5 percent relative to the first-half of 2004 further sharpened competitive pressures. The company nevertheless improved its gross margin by 3.1 percentage points.

Confirming the company's firm control over its key operating ratios, income from operations was €1 million, despite weak revenues from new systems.

The company generated €1.5 million in free cash flow, which exceeds net income by €0.7 million.

Optimization of the Company's Balance Sheet: Reduction of Capital through Retirement of Shares
The company took advantage of the fall in its stock price to repurchase approximately 1.5 million of its own shares for a total of €5.6 million. Subsequently, at its meeting on July 28, 2005, the Board of Directors decided to retire2.2 million treasury shares, a reduction of 5.7 percent of the total capital, with a view to optimizing the company's balance sheet and boosting shareholder value without detriment to its policy of stepping up its organic growth and pursuing targeted acquisitions.

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