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Leica's New CEO, Financial Results


johnbuckley

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This was out today. It may be posted elsewhere, but I didn't see it here. JB

 

 

 

DGAP-Adhoc: Leica Camera AG: Result for first half of FY 2006/2007; change in Board of Management

21.11.2006 (19:21)

 

Leica Camera AG / Half Year Results/Change of Personnel

 

21.11.2006

 

Ad hoc announcement according to § 15 WpHG transmitted by DGAP - a company of EquityStory AG. The issuer is solely responsible for the content of this announcement.

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In the first six months of the current fiscal year, i.e. until September 30, 2006, the Leica Camera AG Group (ISIN DE000A0EPU98) registered sales growth of 8 %, to EUR 51.9 million. Sales in the camera segment were increased by 17.3 %, to EUR 25.4 million, based on the existing range of analogue and digital products. Sales of the Leica sports optics products decreased by 4.4 %, to EUR 11.4 million, chiefly due to consumer restraint in the North American market.

 

The Group's net loss for the six-month period came to EUR -4.2 million, which is EUR 1 million less than for the comparable prior year period. This improvement has been achieved in spite of the operating result being burdened by an additional EUR 2 million in comparison to the same period of the previous year. The additional expenses referred to the cost of the bi-annual photokina trade fair, advertising cost for an international campaign and start-up expenditure for the new digital products. The Group expects profits in the second half of the fiscal year since sales will be proportionally higher due to seasonal reasons and the measures implemented in order to improve processes will gradually take hold.

 

The second half of fiscal year 2006/2007 has begun with a positive development of sales within the scope of our planning. The LEICA M8, the first professional digital rangefinder camera, is to make a significant contribution to the projected improvement of the Group's economic position. The Group successfully presented the LEICA M8 at the photokina trade fair in September 2006 and at the end of October 2006 international distribution of the product has already started, one month earlier than previously announced.

 

With the first phase of the turnaround process successfully completed, Dr. Josef Spichtig, appointed interim Chairman of the Board of Management of Leica Camera AG as from April 18, 2005, will leave the Company's Board of Management effective at the end of November 22, 2006. Steven K. Lee, appointed member of the Board of Management on September 19, 2006, will lead the Company as sole member in cooperation with the newly built-up management team for the time being. The Supervisory Board is considering the possibility of enlarging the Board of Management during the next few months. Dr. Spichtig will be available for the Company in an advisory capacity as occasion demands.

 

At the end of the first phase of the turnaround process the Leica Camera AG Group has defined measures to implement the start of a phase of consolidation and simultaneously commenced implementation of a growth strategy. Within the framework of this approach, there may be burdens on the result of the current fiscal year or of the following fiscal years due to capital expenditure undertaken to secure the Company's future.

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Not surprised Dr Spichtig is leaving, he's from an outside consultancy and I expect was only ever there to oversee a turnaround from the dark days of May 2005. Am surprised to see Steven Lee made CEO after only two months, it's clear the Leica of the future is going to be a rather different company.

 

They're still losing money and interesting to see the cost of Photokina plus the ad campaign put at €2m. Yikes!

 

Do wonder though whether with the developments over the last 2 - 3 weeks, he does feel like he's leaving under a cloud. Might be that the product for him is irrelevant and it's only the numbers which count but at least he has seen the M8 onto the market and for that we should all be grateful.

 

I wonder if Dr Spichtig was given an M8 as a leaving present, as least he doesn't have far to send it for the expected recall....

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Has Leica stock dropped fully from the anticipation of an M8 recall? This could be an opportunity, comparable to Motorola stock after they lost the first round of a lawsuit to someone who claimed that his cellphone had given him brain cancer. Motorola won subsequent appeals, and the brain cancer scare seems to be forgotten. I hope the rocky launch of the M8 will also be forgotten someday soon. This kind of PR disaster, coupled with no serious long-term technical issues, can create investment bargains.

 

scott

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Has Leica stock dropped fully from the anticipation of an M8 recall? This could be an opportunity, comparable to Motorola stock after they lost the first round of a lawsuit to someone who claimed that his cellphone had given him brain cancer. Motorola won subsequent appeals, and the brain cancer scare seems to be forgotten. I hope the rocky launch of the M8 will also be forgotten someday soon. This kind of PR disaster, coupled with no serious long-term technical issues, can create investment bargains.

 

scott

 

Scott

 

Don't mention Motorola stock to me. Mine is worth about 1/4 of what it was worth before the dot com bust..

 

I hope that Leica comes through this PR disaster because I like the idea of a digital rangefinder. Sort of an obese Point n' shoot with the file qualities of a 5D.

 

Lucky for Leica, nobody but a few of us geeks read forums like this.

 

Rex

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Am surprised to see Steven Lee made CEO after only two months, it's clear the Leica of the future is going to be a rather different company.

 

Yes, there was some stuff about him in LFI magazine and his approach seems to be about substantially widening the appeal of the Leica brand into the consumer marketplace. I have no problem with that as long as it doesn't interfere with Leica's commitment to engineering and optical excellence. I also suspect the new CEO will want to make his mark by lowering costs. Personally I hope Leica will not go down the well trodden and predictable path towards outsourcing M and R production to the far East but I think it may be inevitable.

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I really enjoy reading financial projections. They are so full of crap it's almost unbelievable. Take this one; From paragraph # 1 - "The Group expects profits in the second half of the fiscal year since sales will be proportionally higher due to seasonal reasons and the measures implemented in order to improve processes will gradually take hold."

 

And then from three paragraphs later; "there may be burdens on the result of the current fiscal year or of the following fiscal years due to capital expenditure undertaken to secure the Company's future."

 

So the remainder of the fiscal year might be higher and it might be lower. Well thank-you Leica Camera, A.G for the insight.

 

And don't you just love a company's spin on lower sales? For Leica it was due to "consumer restraint". As if everyone would spend all of their dollars on Leica stuff if not for "restraint". What ever happened to things like value, competition and creativity? I guess shortcomings in those areas are harder to spin.

 

Don't get me wrong - I love Leica stuff. But I've never appreciated the dishonesty that the financial markets seem to bring out in everyone.

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Yes, there was some stuff about him in LFI magazine and his approach seems to be about substantially widening the appeal of the Leica brand into the consumer marketplace. I have no problem with that as long as it doesn't interfere with Leica's commitment to engineering and optical excellence. I also suspect the new CEO will want to make his mark by lowering costs. Personally I hope Leica will not go down the well trodden and predictable path towards outsourcing M and R production to the far East but I think it may be inevitable.

 

I'm sure you are right - after all didn't he run a cheap PC supermarket before joining Leica!!! He'll bring Anglo-American business values which stink in my opinion!! He is quoted as saying "decisions may not always result from consensus" - perhaps he was the one responsible for overriding the engineers and pushing the camera out of the door before it was quite ready!

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What matters to me is a commitment to quality materials and worksmanship, not the country of origin. No one will ever convince me that American or European labor is inherently superior in quality to Asian. In fact, my experience with many electronic products would lead me to opposite conclusions. There's a lot of junk mass produced in China, but there's a lot of great quality stuff too (such as almost all of Apple's products, which these days drop-ship direct from Shanghai). Like most things in life, the devil's in the details.

 

Jeff.

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