Leica 1st Q loss

[ho_co]

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Doesn't look all that bad to me; more employees, though I don't like cutting back on R&D.

 

I like the line (Zu hohe Kosten - Leica in der Verlustzone - n-tv.de):

Dank besserer Geschäfte mit digitalen Kompaktkameras und Kameras der M-Modelle stieg der Umsatz im Vergleich zum Vorjahreszeitraum von 26,9 Mio. auf 29,1 Mio. Euro.

 

Oh, really? Isn't that all they're selling? Still, a hopeful turn.

 

English language version at DJ DGAP-IRE: Leica Camera AG: Interim announcement as at June 30, 2009: First quarter of fiscal year 2009/2010 | aktien-meldungen.de.

 

Many listings available in German financial press--very widely covered story!

[miami91]

Many listings available in German financial press--very widely covered story!

 

Is there a consensus Howard? Is the German media writing Leica's obituary the way many on this forum are?

 

Jeff.

[adan]

I dunno - 6 million Euro loss in one quarter, with reserves in the low 20 millions? (understand that I'm a huge Leica fan - but I can also do math).

 

One thing I can't figure out from their wording. Eight new products scheduled for 2009/2010 - does the S2 + four S lenses count as five of those eight, or just one?

 

If it's 5, and they are also introducing some 3rd-party mid-range system camera (presumably with a couple of lenses) - and a couple more S lenses, it sounds like an M9 won't actually be realized until at least the next FY (April 2010 or later).

[ho_co]

Is there a consensus Howard? Is the German media writing Leica's obituary the way many on this forum are?

Sorry, Jeff, no analysis. Just the same financial press release reprinted, sometimes with inserted subheadings.

 

But the consensus may be there in the simple fact that so many of the papers are carrying the story.

 

Or, let's hope, it may just be that August is a slow business month and they need to fill pages.

 

 

I guess the brightest view is that Leica's demise has been predicted so often before.

 

And the M9's 9/9/09 is around the corner. Maybe.

 

But Andy's analysis makes sense as well.

 

At any rate, it's all just speculation till the ninth.

[SJP]

I dunno - 6 million Euro loss in one quarter, with reserves in the low 20 millions? (understand that I'm a huge Leica fan - but I can also do math).

The mentioned loss is over a full (running) year period, compared to the same figure at the the previous 1st quarter report. So the difference of -2.973 Meuro is 3/4 in the previous fiscal year. We know that 2008 was not quite as expected for all of us.

 

The additional 48 employees would explain most of this figure (assume 50k each, ballpark) & that was a concious decision.

 

Sales have started to increase, shares are up. It is not good but not abysmal either.

[rosuna]

Doesn't look all that bad to me; more employees, though I don't like cutting back on R&D.

 

The Afrika (S2) project is now finished, so it is normal a cut in R&D expenses. The third system should be also finished, if it has to be presented in a few weeks.

[rosuna]

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There are interesting things in that report:

 

The Board of Management counteracts risks by implementing an integrated

restructuring concept. The measures include cost savings, optimisation of

the supply chain, reduction of labour cost, reorientation of research and

development projects, improvement of the sales concept, acceleration of the

introduction of new products, as well as improvements in communications and

leadership. In the first quarter of fiscal year 2009/2010 the first effects

on income resulting from the restructuring project could be achieved.

[Guest BigSplash]

The Afrika (S2) project is now finished, so it is normal a cut in R&D expenses. The third system should be also finished, if it has to be presented in a few weeks.

 

What is the third system?

 

Despite the loss there is a great deal to be cheerful about in this announcement in my view:

1 They have resumed Portugal Factory building....would management do that if they were on the brink?

2 They have actually kept it seems to me R&D at a high level for a company of this size and total headcount has grown slightly.....in my view this shows the board's confidence for the future.

3 They plan a bunch (8) new product introductions this fiscal year.....not bad news, whatever the products are.

 

Dr Kaufmann seems to be ignoring the short term economic crisis and is positioning for the upturn. He said over a year ago that he is not out to make a quick buck and is on a five year long range plan . He has shown that he is helping Leica short term financials in a concrete way.

 

This reaffirms my view that Leica has some technology driven ideas that can quickly turn the financials and product positioning or they are taking some big gambles.

[Guest BigSplash]

There are interesting things in that report:

 

They said:

The Board of Management counteracts risks by implementing an integrated restructuring concept. The measures include:

> cost savings, .....Normal Management and they already did this last year if you look at the recent annual report.

> optimisation of the supply chain, ......They certianly need that if they have to pay for two years of material in advance. In the past they already indicated JIT delivery and had a "consultant to Porsche" working on this one. However the way they build cameras seems to me to be at odds with JIT mentality.

> reduction of labour cost, ........How do they do that with increased headcount, and minimising the risk of losing key skilled people as mentioned in the recent annual report?

> reorientation of research and development projects, .......Not sure what that really means other than people where working on the wrong projects before they reorientated.....such as S2 perhaps?

> improvement of the sales concept, ............I guess this is the Leica Boutiques and that is a clever move in my view if they also manage to keep dealers on board

> acceleration of the introduction of new products, .....sounds good...The obvious question is where they not doing this before?

> improvements in communications and leadership. .......Improved communications to dealers and clients is in my view needed. The way they killed the R camera amid speculation about a R10 without dealers being made aware before the Forum members attending Solms was not good. The way they released S2 and Pradovit was not too clever either. Now we have "maybe", "perhaps", "could be" there is a 9/9/09 announcement of a M9 or is it M8.3 ....enough said! I believe Leadership provided by Dr Kaufamann actually has been excellent given the cards he has had to play ...I do not believe we have seen the new CEO as very visible as yet.

 

In the first quarter of fiscal year 2009/2010 the first effects on income resulting from the restructuring project could be achieved.........

so why is this not reflected in the 1Qtr results? Sales are up and costs from a successful restructuring should be down ..however they have turned in a bigger loss compared to last year (due to lower margins for cameras that have increased in price?? and a very small "40" extra headcount to 1068 employees)

[wattsy]

The mentioned loss is over a full (running) year period, compared to the same figure at the the previous 1st quarter report. So the difference of -2.973 Meuro is 3/4 in the previous fiscal year. We know that 2008 was not quite as expected for all of us

 

I'm not sure I follow your point/logic. The loss for the quarter was €6m. This compares with a smaller loss of €3m in the equivalent period last year.

[SJP]

Quote "The Group result for the period under review deteriorated by EUR -2,973k to a Group net loss of EUR -6,823k as compared to the corresponding previous year reporting period (previous year: EUR -3,850k)."

 

Considering that the whole 2008/2009 financial year loss was EUR 4,792k (EDITED wrong figure sorry) I am reading this as a running year, so for the previous three quarters + the first quarter of the new fiscal year.

 

If you would take -3,850k x 4 as a guestimate for the whole previous year it would not add up unless you have massive seasonal fluctuations, which I find very unlikely.

[wattsy]

If you would take -3,850k x 4 as a guestimate for the whole previous year it would not add up unless you have massive seasonal fluctuations, which I find very unlikely.

 

Well clearly they do have seasonal fluctuations (or costs that they like to account for during the first quarter) because the reported loss is for the 1st quarter only and not for the year to date.

[Guest BigSplash]

Well clearly they do have seasonal fluctuations (or costs that they like to account for during the first quarter) because the reported loss is for the 1st quarter only and not for the year to date.

 

I take the loss ( as reported) to be for the first qtr only ......and that is a big number. That said surely it reflects the fact that Leica have built up costs during the quarter ( Portugal Manuf. plant resume of building works, adding 40 extra people, continued R&D during the quarter and launch costs for S2 and Pradovit, New sales "Leica Boutiques" to identify a few items )

The challenge Leica now face one would believe is to see how the fortunes gradually change during 2009 quarter by quarter .....with a few quarters being awful given the world economy. My view is that this needs to be assessed in terms of financials and desirable products that hopefully will evolve bit by bit.

 

Personally I believe that the financial community will give Dr Kaufmann considerable rope given his commitment so far. My guess is that is why the shares are going up in value.

He is doing absolutely the right thing to invest at a point in the cycle where bringing out new innovative products (my impression) is key. I am not sure about S2 nor Pradovit as a financial success but I am awaiting (or hoping for) some technical innovation to surface.

[ho_co]

Personally I believe that the financial community will give Dr Kaufmann considerable rope given his commitment so far. My guess is that is why the shares are going up in value.

He is doing absolutely the right thing to invest at a point in the cycle where bringing out new innovative products (my impression) is key.

Agreed. Dr Kaufmann has been essential in bringing the company this far.

[SJP]

Well clearly they do have seasonal fluctuations (or costs that they like to account for during the first quarter) because the reported loss is for the 1st quarter only and not for the year to date.

No it's not. They say it is for the year running from previous 1st quarter to the current one. How could it be double as high with more turnover and less R&D spending?

 

As further evidence, later on they state that various actions that have been taken are already showing a change for the good (in the current quarter) although they are not able to be more positive for the whole fiscal year due to the uncertain state of the economy etc. That again does not square up with a doubling of the loss per quarter to 4x7 = 28 MEuro on a yearly basis. Which would be the consequence of your interpretation.

 

It is a yearly figure not only for the current first quarter.

 

German text: Das Konzernergebnis für den Mitteilungszeitraum hat sich im Vergleich zum Vorjahreszeitraum um TEUR -2.973 auf einen Konzernjahresfehlbetrag von TEUR –6.823

verschlechtert (Vorjahr: TEUR –3.850).

 

Translate Konzernjahresfehlbetrag to English => yearly loss of the concern (business)