Zumtobel sees LEDs shine, but there is a lot of shadow in the figures

March 06, 2012 // By Christoph Hammerschmidt
In the first nine months of the 2011/12 financial year the Zumtobel Group recorded a 6.1% increase in revenues to EUR 964.2 million (prior year: EUR 908.9 million). At the same time, the development of business differed considerably by segment and region. The Zumtobel brand was able to meet its European growth targets, supported by the two growth drivers energy efficiency and LEDs.

The Group's LED business continued its highly positive development. In the LED luminaire segment growth was much stronger than expected. Year-to-date revenues from the sale of LED products rose 92.3% to EUR 129.4 million. The share of Group revenues generated by LED products rose from 7.4% in the previous year to 13.4%.

The technology shift from conventional to LED products represents a major growth driver, but currently has a negative influence on the profitability of the Zumtobel Group. To protect its competitive position, the company is currently obliged to make parallel investments in conventional lighting technology and innovative LED technology. For an interim period this means substantially higher expenses for research & development, marketing and sales. The shorter innovation cycles for digital lighting also require tighter inventory management and more restrictive procedures for the capitalisation of development costs. In 02 this connection, the company recognised impairment charges of EUR 4.6 million to inventories and EUR 1.3 million to capitalised development costs during the third quarter.

The Lighting Segment registered a sound 10.3% increase in revenues to EUR 712.4 million in the first nine months. However, the Lighting Segment business in Asia and the USA, by contrast to Europe, failed to match up to expectations.

Developments in the Components Segment business with ballasts, controls and LED components were disappointing. Here, revenues fell by 3.2% to EUR 310.9 million for the first nine months, including a sharp 13.2% downturn in the third quarter. In addition to the challenging market environment, temporary weaknesses in performance and in the product portfolio were responsible for this disappointing development.

In order to counteract the negative trend in some business segments, Zumtobel CEO Harald Sommerer announced to streamline the inventory management and to expand the product portfolio in terms of both conventional ballasts and LED products.