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New software licenses & CAD/CAM equipment orders up at Lectra
02 May '11
5 min read
Business Trends and Outlook
The company discussed in detail its expectations regarding its activities and the outlook for the future in its Management Discussion of February 10, 2011, and in its 2010 Annual Report, both of which serve as a reference.
While the macroeconomic environment has continued to improve since the start of 2011, it has still not reverted to pre-crisis levels yet. The recovery remains fragile, with persistent risks and uncertainties, and a further deterioration in the economic and monetary situation remains possible, demanding continuing caution and vigilance.
The 2011 action plan seeks to preserve the sales momentum restored since the end of 2009, an operating margin equal to or greater than that of 2010, and significant free cash flow generation.
Sales activity and earnings for Q1 2011 are generally in line with company expectations, confirming the strengthening of its operating ratios and the transformation of its balance sheet, with a strong order backlog. However, the situation remains disparate across the different regions and market sectors, and the combined activity of all Lectra customers has yet to recover its 2007 level.
The company has adopted as its central scenario for 2011, assuming that the economic recovery continues at its present pace and generates a 20% growth in revenues from new systems sales, revenues of around EUR 207 million (+10%), and income from operations before non-recurring items of approximately EUR 28.5 million (+30%), thus generating an operating margin before non-recurring items of close to 14% (+2 points). In that case, net income would be close to EUR 18 million (+27% at actual exchange rates relative to the 2010 figure, restated for non-recurring items). That would yield basic net earnings per share of approximately EUR 0.63. Finally, free cash flow would be expected to come to around EUR 14 million.
In this hypothesis, therefore, revenues would still lag behind the 2007 figure by EUR 10 million (-4%), but income from operations, on the other hand, would be multiplied by 2.5, testifying to the improvement in the company's key operating ratios in the midst of the crisis.
These figures are based on an average parity of $1.35/EUR 1 and like-for-like variations calculated by comparison with 2010 results translated at 2011 exchange rates. The euro's recent rise has resulted in parity, at this date, of $1.48/EUR 1. If this parity is maintained until the end of the year, it would mechanically reduce revenues by EUR 4.6 million and income from operations by EUR 2.3 million, relative to the central scenario (like-for-like variations relative to 2010 results remaining unchanged).
2011 should also be the year in which net cash becomes positive again, after payment of the dividend in respect of fiscal 2010, whereas net financial borrowings peaked at EUR 56.4 million at the end of 2008.
As the 2010 rebound showed, once the crisis is definitely over, firms in the different geographies and market sectors served by the company will need to accelerate their investment plans or make good the investments either frozen or postponed over the last three years, and to acquire the technologies necessary to boost their competitiveness. The crisis has amplified the challenges they face.
Bolstered by its results, the company is confident in the strength of its business model and its growth prospects for the medium term.
The company discussed in detail its expectations regarding its activities and the outlook for the future in its Management Discussion of February 10, 2011, and in its 2010 Annual Report, both of which serve as a reference.
While the macroeconomic environment has continued to improve since the start of 2011, it has still not reverted to pre-crisis levels yet. The recovery remains fragile, with persistent risks and uncertainties, and a further deterioration in the economic and monetary situation remains possible, demanding continuing caution and vigilance.
The 2011 action plan seeks to preserve the sales momentum restored since the end of 2009, an operating margin equal to or greater than that of 2010, and significant free cash flow generation.
Sales activity and earnings for Q1 2011 are generally in line with company expectations, confirming the strengthening of its operating ratios and the transformation of its balance sheet, with a strong order backlog. However, the situation remains disparate across the different regions and market sectors, and the combined activity of all Lectra customers has yet to recover its 2007 level.
The company has adopted as its central scenario for 2011, assuming that the economic recovery continues at its present pace and generates a 20% growth in revenues from new systems sales, revenues of around EUR 207 million (+10%), and income from operations before non-recurring items of approximately EUR 28.5 million (+30%), thus generating an operating margin before non-recurring items of close to 14% (+2 points). In that case, net income would be close to EUR 18 million (+27% at actual exchange rates relative to the 2010 figure, restated for non-recurring items). That would yield basic net earnings per share of approximately EUR 0.63. Finally, free cash flow would be expected to come to around EUR 14 million.
In this hypothesis, therefore, revenues would still lag behind the 2007 figure by EUR 10 million (-4%), but income from operations, on the other hand, would be multiplied by 2.5, testifying to the improvement in the company's key operating ratios in the midst of the crisis.
These figures are based on an average parity of $1.35/EUR 1 and like-for-like variations calculated by comparison with 2010 results translated at 2011 exchange rates. The euro's recent rise has resulted in parity, at this date, of $1.48/EUR 1. If this parity is maintained until the end of the year, it would mechanically reduce revenues by EUR 4.6 million and income from operations by EUR 2.3 million, relative to the central scenario (like-for-like variations relative to 2010 results remaining unchanged).
2011 should also be the year in which net cash becomes positive again, after payment of the dividend in respect of fiscal 2010, whereas net financial borrowings peaked at EUR 56.4 million at the end of 2008.
As the 2010 rebound showed, once the crisis is definitely over, firms in the different geographies and market sectors served by the company will need to accelerate their investment plans or make good the investments either frozen or postponed over the last three years, and to acquire the technologies necessary to boost their competitiveness. The crisis has amplified the challenges they face.
Bolstered by its results, the company is confident in the strength of its business model and its growth prospects for the medium term.
Lectra
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