CIMdata PLM Industry Summary Online Archive
29 April 2008
Financial News
Lectra: First Quarter 2008
The Board of Directors of Lectra, chaired by André Harari, reviewed the unaudited consolidated financial statements for the first quarter of 2008.
(Detailed comparisons between 2008 and 2007 are like-for-like)
Orders Decline in a Seriously Worsening Macroeconomic Environment
Coming after the excellent growth dynamic in orders booked in 2007 (despite first signs of a slowdown in Q4), Q1 2008 orders for new software licenses and CAD/CAM equipment were down 17% (–€4.1 million) relative to Q1 2007.
The most severe decline in orders occurred in the Americas. In Europe, orders were down, falling in all of the major countries. The only source of satisfaction came from the Asia-Pacific region, where orders grew by 37%, with China, Japan, the Southeast Asian countries and India (where the company opened a subsidiary in Q4 2007) all contributed to this growth in orders.
Revenues Increase
With an average parity of $1.50/€1 for the first quarter, the U.S. dollar was down 13% compared to Q1 2007. This change mechanically reduced the various revenue components by 4% (−€2.3 million) and income from operations by €1 million.
Q1 2008 revenues amounted to €52 million, up 9% like-for-like compared to Q1 2007.
Revenues from new systems sales (€26.6 million) increased by 16%, shipments of orders in the backlog at December 31, 2007 having made up for the weakness of orders during the quarter. Recurring revenues (€25.3 million) increased by 4%. This slower than expected growth resulted from a rate of cancellations exceeding the statistical record, as a direct outcome of worsening macroeconomic conditions.
Because Q1 2008 revenues exceed orders booked in the period, the order backlog for new software licenses and CAD/CAM equipment at March 31 (€15.4 million) is down by €4.4 million relative to December 31, 2007.
Financial Performance Improves
Income from operations before non-recurring items amounted to €1.6 million, up €2.7 million like-for-like, compared to a loss on operations of €0.1 million in Q1 2007. The operating margin (3.1%) increased 5.1 percentage points.
Net income was €0.6 million, up €0.4 million at actual exchange rates compared to Q1 2007.
Free cash flow before non-recurring items in the quarter amounted to €0.1 million, taking into account the €1.7 million increase in working capital requirement. Free cash flow was a negative €1.1 million after €1.2 million in non-recurring disbursements.
2008 Outlook
In discussing the outlook for its activity in the press release dated February 11, 2008, the company drew particular attention to the difficulty of making forecasts for 2008 and for the medium term, in the present highly uncertain macroeconomic conditions.
As of today, there has been no improvement in these conditions—in fact, the dollar has fallen even further, with a parity that recently crossed the $1.60 / €1 threshold—and great uncertainty continues to prevail.
Although orders booked in the first quarter are lower than expected, no conclusions can be drawn from this in regard to sales activities over the coming quarters, since an improvement in the business environment could translate into a rapid upturn in investment by our clients. Conversely, a deterioration would lead to persistent weakness in orders.
Meanwhile, the further fall of the dollar could persist. As indicated on February 11, 2008, a fall in the dollar of $0.05 / €1 for the fiscal year 2008 from the average $1.50 / €1 parity on which the outlook for the current year was based would result in a mechanical decrease of €2.5 million in revenues and €1.2 million in income from operations.
The company remains confident in its medium-term growth prospects.
The Management Discussion and Analysis of Financial Condition and Results of Operations for the first quarter 2008 are available at http://www.lectra.com. First half 2008 financial results will be published on July 29, 2008, after the close of Euronext Paris. The Annual Shareholders’ meeting will take place on April 30, 2008.
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