POWERLAND AG Full year 2014 revenue grew by 4.8% to EUR 175.1 million; EBIT down
13.4% to EUR 10.7 million
Product mix continues to improve: Luxury segment contributes 68.9% to
Group revenue in full year 2014 (FY 2013: 62.4%)
Further optimization of distribution network
Increased equity ratio of 78.5% as at 31 December 2014 (68.2% as at
31 December 2013)
Conservative outlook for 2015
Frankfurt/Main, 29 May 2015 - Powerland AG (ISIN DE000PLD5558 / Prime Standard), Powerland AG (ISIN DE000PLD5558 / Prime Standard), the leading Chinese company of premium handbags, leather goods and accessories, today presents the Annual Report for the financial year 2014, with an unqualified audit opinion and adoption by the Supervisory Board.
2014 remained a challenging year for Powerland. Although China is gradually migrating to a consumption-driven economy, the general economic slow-down had an adverse impact on the consumer market. In particular, China's luxury goods market had unprecedentedly contracted by one per cent on a year-on-year basis. In this difficult environment, Powerland achieved revenues of EUR 175.1 million in full year 2014, up 4.8% from EUR
167.1 million in 2013. This plus was driven by an increase in sales of products from the Luxury segment of approximately 15.8%. Over the course of 2014, Powerland successfully continued its strategy to migrate towards its high-profit-margin segment: The Luxury segment now contributes 68.9% of revenues to the Company, in contrast to 62.4% for 2013. In addition, the Luxury segment proves to be highly profitable: During the fourth quarter 2014, segment EBIT significantly increased from EUR 0.3 million in Q4 2013 to EUR 3.4 million in Q4 2014.
in EUR million 2013 2014 Change (%) Revenue 167.1 175.1 4.8%
Luxury 104.2 120.7 15.8%
Casual 62.9 54.4 -13.5%
Luxury % 62% 69% Casual % 38% 31%
Gross profit 60.8 60.6 -0.4% EBIT1 12.3 10.7 -13.4% Net profit 5.4 3.8 -30.3% Earnings per share in EUR2 0.36 0.25 -30.6%
1 EBIT represents earnings before net finance cost and tax
2The computation of earnings per share is based on net profit and 15 million shares.
1/3
In 2014, Powerland continued the review of the sales and brand performance of its existing stores and as a consequence downsized the distribution network by underperforming stores. In the meantime, some store locations were adjusted from higher to lower floors to enhance the brand visibility and boost single-store performance in return. In addition, Powerland has implemented more stringent criteria for new store openings as the brand name is getting more recognized and customer appeal has increased. In line with this strategy, Powerland opened the first store outside mainland China at Hong Kong airport, as well as its first lifestyle store in Putian and the first three online stores at jingdong.com, tmall.com and vip.com. In total, the number of Powerland stores decreased from 214 as at 1 January 2014 to 200 as at 31 December 2014. 36 stores were newly opened in 2014 while 50 stores were closed during the same period. Out of the 200 existing stores, 163 are distributor-operated stores, 34 self-operated stores and 3 online stores.
Earnings situation
Despite the increased revenue, gross profit of the Company decreased slightly from EUR
60.8 million (FY 2013) to EUR 60.6 million (FY 2014) mainly due to the gross profit decrease of 29.1% in the Casual segment. Due to a more efficient management of distributors and a more efficient allocation of the marketing budget, full year SG&A expenses decreased from EUR 33.8 million by 13.2%, to EUR 29.3 million. Meanwhile, Powerland's administrative and other expenses increased from EUR 15.0 million in 2013 by 40.3%, to EUR 21.0 million in 2014 mainly due to increased provisions for trade receivables. As a result, full year operating earnings before interest and taxes (EBIT) decreased from EUR 12.3 million by 13.4%, to EUR 10.7 million and EBIT margin decreased from 7.4% in 2013 to 6.1% in 2014. Due to higher financial expenses, profit before tax fell from EUR 9.6 million in 2013 by 19.8% to EUR 7.7 million in 2014.
Equity increased from EUR 151.3 million as at 31 December 2013 by 12.8% to EUR
170.6 million as at 31 December 2014 mainly resulting from the profit generated in 2014. The equity ratio increased from 68.2% as at 31 December 2013 to 78.5% as at 31
December 2014. Prior-year figures have been adjusted in accordance with IAS 8 (please refer to note 4 in the Annual Report).
During China's annual parliamentary meeting in March 2015, an economic growth target at "around 7 per cent" was announced for 2015. This signifies the slowest expansion rate since 25 years. It was also admitted that China faced greater economic headwinds this
year than in 2014.
2/3
In this context, the Company holds a conservative outlook about 2015. Group revenue is expected to decline to approximately EUR 112 million in 2015 due to weakening demand from both the domestic and the overseas market. In response, Powerland plans to deepen the restructuring of its nationwide distribution network and contract self-operated stores to further reduce store maintenance cost. Furthermore, sales & distribution channels of the Luxury segment will be further diversified to offset the impact from the decelerating retail market, but the effect of the strategic transition is yet to be testified. In addition, the Company will continue to pursue austerity in the management of operating expenses. However, due to the adverse market conditions faced by our distribution partners, the trade receivable position is subject to higher provision adjustment. As a result, the Company predicts that Group EBIT of 2015 will decline to approximately EUR 6 million and Group net profit is exposed to risk of net loss. To improve liquidity, the Company has no major capital expenditure plan in 2015 and will have exhaustive efforts to reduce the level of working capital.
For the annual report for full year 2014 and further information about the Company please refer to: www.powerland.ag
For further information, please contact:
c/o GFD - Gesellschaft für Finanzkommunikation mbH Fellnerstrasse 7-9
60322 Frankfurt am Main
Germany
Phone: +49 (0) 69 66 554 - 459
Fax: +49 (0) 69 66 554 - 276
E-mail: ir@powerland.ag
Home: http://www.powerland.ag
3/3
|
distributed by
|
