Following the positive development of sales and profits in the first quarter, which was in line with expectations, we were forced to accept a drop in sales in the second quarter. This had a knock-on effect on the company’s profits. The traditionally weak summer months of July and August in 2008 also fell below expectations. Thanks to the new products, and the implemented initiatives, we expect to see sales develop more favourably than in the previous year. However, no additional growth is expected for the overall year. Due to the short lead times in the graphics industry (orders on hand of less than one month is customary in the sector), the sales forecast is further characterised by uncertainty. The strong increase in the cost of raw materials is to be taken into consideration in addition to the sales development.
Neschen will be able to pass on these price increases for special products to the customers. In respect of volume products, this is only possible to a certain extent due to the fierce competitive environment. We therefore expect an operating result for the current business year in line with that of the previous year (without consideration given to the extraordinary effects resulting from the bank waiver).
We are sticking to the medium-term growth and profit forecasts. Due to the fixed cost situation and the business structure, moderate growth is very quickly having a positive effect on profits. This was clear in the first quarter. Growth opportunities arise from the recently acquired OEM supply contract, the realisation of graphics projects (new inkjet media, new market segments such as interior design), the expansion of the Documents activities by way of expanding the export activities, expanding the individual sheet acidifying and the book acidifying system. Several Technical Coatings are about to enter the technical realisation and launch stage.
The realisation of profitable growth in the next few quarters will facilitate the company’s refinancing by way of relief in respect of the interest expenditure.