Herlitz continues to pursue its strategy consequently despite the financial crisis.
In the first 3 months of 2009, the Herlitz Group achieved a further milestone in implementing its strategy with the sale of its business interests in the proOFFICE s.r.o. subsidiary. By doing so, Herlitz will now concentrate on the core assortment and the Herlitz brand.
In the first quarter of 2009 the sales revenues of the Herlitz Group were just under 5% below comparable figures for the previous year. Here, the effects of the global financial crisis have played a substantial role. In this context, particular reference is to be made to a fall in demand and unfavourable exchange rate developments in East European countries as well as to a decline in sales for commercial office supplies in Western Europe. In addition, in line with strategy, sales with non-Herlitz-brand articles were further decreased in some product divisions. The share of turnover of brand products has further increased in comparison with the first 3 months of 2008.
Following the sale of proOFFICE s.r.o., the products manufactured there are now being purchased, which has a negative effect on the gross yield. On the other hand, all further costs in this connection no longer apply.
The other operating income for the months January to March 2009 consists of the proceeds of the sale of proOFFICE s.r.o. and is therefore substantially higher than in the preceding year.
In the 1st quarter of the current financial year, the decrease in the length of the supply chain arising from the sale of the subsidiary had a positive effect on the total costs and a negative one on the transaction costs thereby incurred. Further, the formation of a provision for restructuring of the greeting card, napkin and gift wrap division as the next step in implementing strategy has led to an appreciable increase in personnel expenses. However, due to efficient cost management, total costs were only slightly higher than the comparable costs for the previous year.
Given the markedly seasonal nature of the stationery and office supplies business, the Herlitz Group does not achieve a positive EBIT at the beginning of a year. However, it was possible to halve the negative result in comparison with the 1st quarter of 2008.
The negative effects of the financial crisis on the development of sales in the 1st quarter of 2009 and therefore on the earnings position increased further in April and in the first half of May. The extent to which this trend will continue cannot be forecast at the present time.
The sale of proOFFICE s.r.o. has led to a corresponding change in the financial position of the group in comparison with 31 December 2008. Beyond this, the financial position has not substantially changed in comparison with the explanatory remarks contained in the management report for the 2008 financial year. The statements also made there, in particular in the risk and prognosis report, with regard to the further development of the financial and earnings position of the Herlitz Group remain valid.
Berlin, 14 May 2009
Herlitz Aktiengesellschaft, Berlin
Board of Management