JENOPTIK AG on the 1998 fiscal year
Earnings before interest and tax will come up to expectations in spite of problems in the Telecommunications business division. For the first time JENOPTIK AG will pay a dividend to its shareholders for fiscal 1998.
For the current fiscal year, JENOPTIK AG, Jena, expects earnings before interest and tax to come up to expectations. At a press conference in Jena on Wednesday the company announced that it expects earnings before interest and tax that correspond to the forecasts made at the time of the IPO. These include IPO costs of DM 18 million. The company also keeps to its sales target of about DM three billion. Lothar Späth, Jenoptik's CEO did not provide a detailed earnings forecast because large orders in the business division Clean Systems Technologies will be invoiced in December.
"We have problems where we did not expect to have them and have almost no problems where we had expected them", said Späth. In the Clean Systems business division, where everyone had anticipated a sharp drop caused by the crisis in Asia and in the semiconductor industry, the development had remained stable. "In Facility Engineering we have not been affected by the crisis, the result in the Clean Systems business division will be achieved as projected." The crisis had had an negative impact only on the smallest business field Clean Room Automation.
The result of the Photonics business division will probably be slightly better than expected. Compared with the 1997 fiscal year, the EBIT will increase substantially. But the company had difficulties in the Telecommunications Technologies business division, "where we did not expect them to this degree." This could be attributed to three facts: High advance costs in the Wireless Local Loop (WLL) business field, currency losses caused by the crisis in Asia and Russia and the declining domestic demand. Therefore, the result in this business division would be negative. "We expect a two-digit net loss", said Späth. In particular the business field Wireless Local Loop (WLL) had been affected severely. The risk factors in this business field had already been mentioned in the offering circular. 90 percent of the large orders the business field received in the past weeks and months from Argentina and the Philippines will be called for and invoiced in the next year. "These are important milestones, but they were two months to late for this year", said Späth.
The result of the Telecommunications business division was affected by the crises in Asia and Russia. They had an impact on the business division due to its high export proportion of more than 80 percent. The devaluation of the Indonesian Rupiah caused currency losses of DM five million.
The economic crisis in Russia will probably cause a currency loss of DM three million. Späth pointed out that these are translation losses which result from the
conversion of local currencies into DM, but which are no operating losses in the proper sense.
Restrained investments in Germany also affected the result in the Public Networks division. This development can be attributed to the fierce price competition on the telecommunications market.
Späth explained that the program to increase productivity and reduce costs which had been adopted and started at Krone AG in July, had been implemented without delay and had well advanced. The non-recurrent expense will be fully included in the 1998 Statement of Income. The losses of the Telecommunications business division are basically compensated by other operating income from Asset Management. The improvement of the result will show favourably in the books in the next year. Späth expects the program, which costs approximately DM 30 million, to produce savings of much more than DM ten million per year.
Additional measures will be implemented in the next weeks and months. These include the tightening of the global production compound system and increased market activities in the Premises Networks division, which shows much higher growth rates than the market for public networks.
Finally, Späth added that 1999 would not be an easy year as the future market development in the semiconductor and telecommunication areas could still not be assessed definitely. He was confident that the Clean Systems business division would achieve the breakthrough in the pharmaceutical and biotechnology area in 1999. In addition, the young and innovative companies in the New Technologies division, e.g. Jenoptik Bioinstruments, will achieve an above-average growth and earnings increase.
With the new orientation of Deutsche Effecten- und Wechselbeteiligungs AG (DEWB) as provider of risk capital for young and innovative companies new earnings potentials would be established. He declared that Jenoptik AG would distribute a dividend to its shareholders for the first time for the 1998 fiscal year as had been announced at the time of the IPO.
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