Vwd Vereinigte Wirtschaftsdienste AG : vwd group revises guidance for 2013

vwd AG/six-month results/outlook

-           Challenging business conditions in Italy, hesitancy regarding investments and advertising  

-           Share of material expenses improves

-           Personnel expenses falling steeply in 2013

-           EBITDA climbing sharply as year progresses

Frankfurt am Main, August 8, 2013 - vwd Vereinigte Wirtschaftsdienste AG, one of the leading providers of financial information in Europe, announces the following financial results for the first half of 2013: 

Key financial figures: 

Industry's weakness slowing company's sales

The continuing problems faced by the financial industry hurt the performance of the vwd group in the second quarter of 2013, with sales totaling € 20,160 thousand during this period. Compared with the total of € 22,720 thousand produced in the second quarter of 2012, this represents a decrease of 11.3 %. Sales fell by 4.9 % in the first quarter of 2013. In the first six months of 2013, the vwd group generated total sales of € 40,492 thousand. Compared with the same period last year, when the company produced sales of € 44,097 thousand, this represents a drop of 8.2 %. The main reasons for this decrease were business difficulties in Italy and the hesitancy of the financial industry to make investments and spend money on advertising.

Second quarter earnings helped by cost cutting

While sales fell, the company managed to significantly lower its costs. In the second quarter of  2013,  expenses related to information procurement, transmission costs and fees for downloading exchange data decreased at a steeper rate than sales did compared with the previous year. As a result, the share of material expenses for the second quarter fell to 37.1 % (first quarter of 2013: 38.0 %; second quarter of 2012: 40.3 %). This improvement was the direct result of the company's cost-cutting program. In relation to sales, other operating expenses in the second quarter of 2013 rose to 18.0 % (first quarter of 2013: 14.6 %; second quarter of 2012: 14.3 %). It was also possible to lower personnel expenses, which fell to 46.6 % in relation to sales during the second quarter of 2013. In the first quarter of 2013, the share of personnel expenses totaled 52.7% as a result of changes in management. In the second quarter of 2012, however, this metric totaled only 40.0 %. Against this backdrop, earnings before interest, taxes, depreciation and amortization (EBITDA) fell by 8.9 % in the second quarter of 2013 to € 1,793 thousand (second quarter of 2012: € 2,002 thousand).

Six-month EBITDA well below previous year's level

Largely due to an increase in other operating income totaling € 3,076 thousand (first half of 2012: € 1,032 thousand) that resulted from the end of legal disputes and the reversal of provisions related to changes in management, the group's total sales amounted to € 43,758 thousand in the first half of 2013, a slight drop of 4.1 % below the previous year's level despite the decline in sales (first half of 2012: € 45,603 thousand).

Other operating expenses decreased only slightly during the first half of 2013. Overall, the decrease in expenses was unable to completely offset the sales-driven reduction in income. For this reason, EBITDA fell to € 2,426 thousand (first half of 2012: € 4,010 thousand). As a result, the EBITDA margin was 6.0 % (first half of 2012: 9.1 %).

During the first half of 2013, depreciation and amortization on intangible and tangible assets climbed to € 3,399.3 thousand (first half of 2012: € 2,561 thousand). The rise resulted largely from the impairment of goodwill. The company had to take further depreciation charges related to the purchase-price allocation regarding past acquisitions. For this reason, earnings before taxes (EBIT) fell much more steeply than EBITDA, totaling minus € 973 thousand (first half of 2012: € 1,448 thousand).

Earnings before taxes (EBT) totaled minus € 1,599 thousand (first half of 2012: € 744 thousand). During the first half of 2013, income taxes decreased by 3.1 % to € 615 thousand (first half of 2012: € 634 thousand). After minority interests, the net loss for the period was minus € 2,149 thousand (first half of 2012: minus € 65 thousand). Earnings per share in the first half of 2013 totaled minus € 0.083 compared with minus € 0.003 the year before.

The results of the company's segments now follow:

Segment Market Data Solutions (MDS)

The company's business with standardized market-data systems and portfolio-management solutions for banks, savings banks, asset managers and companies offered by the MDS Segment saw sales drop as a result of a weak first quarter. The business with market data for professional users performed poorly at the beginning of the year, especially in international markets, and failed to meet expectations. Demand for market data among private individuals also waned in the first three months of the year compared with same period in the previous year. By the halfway point in the year, though, demand had picked up considerably. In the wake of these trends, the Segment's sales fell by 8.9 % to € 21,483 thousand during the first half of 2013 (first half of 2012: € 23,573 thousand). As a result, sales improved measurably compared with the first quarter of 2013, when they dropped by 13.6 %. Material expenses in the second quarter fell more steeply than sales during the second quarter, enabling the higher personnel expenses arising from extraordinary items to be more than offset. In the first half of 2013, the MDS Segment generated EBITDA of € 2,050 thousand (first half of 2012: € 2,317 thousand). This represents an increase of 21.7 %. In contrast, first-quarter EBITDA was 46.4 % below the previous year's level.

Segment Technology Solutions (TS)

Demand for customized technology solutions and outsourcing services in the Technology Solutions Segment was rather negative in the first half of the year. Transaction-related revenue fell due to a drop in the number of transactions. The Segment's business involving the preparation of stock tables for media companies remained stable. Ongoing sales in the service area dipped only slightly. But its project business declined. During the six-month period under review, the Segment's overall sales decreased by 3.8 % to € 10,080 thousand (first half of 2012: € 10,474). Material expenses declined as a result of sales while personnel expenses rose due to proportionate assignment of nonrecurring effects. The Segment's EBITDA plunged by 53.4 % to € 580 thousand (first half of 2012: € 1,218 thousand).

Specialised Market Solutions (SMS)

With its publication and marketing concepts as well as risk analyses for financial products, the Specialised Market Solutions Segment was hurt by the cost-cutting programs being carried out by financial service providers, efforts that are reflected in massively reduced marketing budgets and brand activities. The SMS Segment's sales were unsatisfactory as they dropped by 11.2 % to € 8,929 thousand (first half of 2012: € 10,051 thousand). Sales generated by special forms of advertising as well as with the dissemination of financial and price information for financial products decreased in the first half of 2013. Sales produced by online advertising fell sharply. In addition, sales with certificate ratings and value-at-risk assessments fell for the first time, dropping below the previous year's level. This decline can largely be traced back to the effects of the difficult situation of the EDG business group in connection with negotiations regarding the complete takeover of it by the vwd group last year. While savings were generated in material expenses, the Segment's personnel expenses rose sharply due to one-time effects. As a result, its EBITDA fell to minus € 204 thousand (first half of 2012: € 475 thousand).

Sales guidance for 2013

For the remainder of fiscal year 2013, it can be assumed that the conditions under which the vwd group conducts its business will remain unchanged. But it appears certain that new value-creation models will have to be introduced as part of the ongoing transformation process in the financial industry. But it cannot be credibly estimated at this point how quickly the related investment budgets will be approved. The management team of the vwd group believes it is unlikely that this will occur to any significant extent this year. For this reason, the Management Board has adjusted its planning in accordance with the principle of cautious business practices and lowered its guidance for 2013. Sales should total between € 82,000 and € 84,000 thousand and EBITDA between € 8.000 and € 9.000 thousand. 

Forward-looking statements:

This press release contains forward-looking statements that reflect the current views, expectations and assumptions of the vwd group and are based on the information available to the company at the time of its preparation. Forward-looking statements cannot guarantee that results and developments will actually occur in the future, but are subject to risks and uncertainties. Different factors may cause the future results and development of the vwd group to deviate substantially from the expectations and assumptions formulated in this statement. Changes in general economic conditions, new legal parameters, the competitive situation and financial market developments, in particular, can impact future results and performance.

The interim report for 2013 is now available for download at the vwd group's home page at http://www.vwd.com/vwd/investor_relations.htm.

More information:

vwd Vereinigte Wirtschaftsdienste Aktiengesellschaft

Investor Relations

Carsten Scharf                                                         

Telephone: +49 69 50701-270         

About vwd group:   

vwd group offers customised information, communications and technology solutions for the financial markets. As a leading European provider, it specialises in meeting individual customer requirements in the areas of asset management, retail banking, private banking and wealth management. It offers innovative solutions for financial service providers, investors and the media. vwd´s business is driven by innovation, flexibility, customer centricity and strong commitment to local needs. With around 470 employees at 18 locations in 5 countries vwd is a public company, listed at the Frankfurt Stock Exchange (ISIN DE0005204705). The group's best-known brands are: finanztreff.de, vwd fonds service, vwd market manager and vwd portfolio manager.