11/17/2011

Wincor Nixdorf International GmbH

Wincor Nixdorf: Growth in Net Sales and Operating Profit Unchanged Year on Year – Growing Economic Uncertainty

Wincor Nixdorf AG ended the fiscal year 2010/2011 on September 30 with net sales up and its operating profit unchanged year-on-year. The consolidated net sales of the IT company, which specializes in the branch operations of banks and retailers, ended the reporting period 4% higher at €2,328 million, compared to €2,239 million in the preceding fiscal year. Operating profit (EBITA) was on a par with the previous year at €162 million. The figures are in line with the revised forecast issued by the company in May 2011. Profit for the period was up 2% at €108 million (€106 million). As in the previous year, the Board of Directors will propose a dividend of €1.70.

Looking ahead at the current fiscal year 2011/2012, the company anticipates a more difficult environment, especially in Western Europe, as a result of the deteriorating economic situation and the impact of the sovereign debt crisis. “At present, we can see that the prevailing uncertainty is affecting investment readiness, above all among European banks. Compensating for this development will not be easy, even with a good level of growth in the newly industrialized countries," noted CEO Eckard Heidloff, underlining the high proportion of the Group’s total net sales attributable to its European business.

As it is not possible to foresee the extent to which more positive developments might help to stabilize or counterbalance the current uncertainty, Wincor Nixdorf does not intend to offer a quantitative forecast for fiscal 2011/2012. In terms of net sales, it believes the likely result could lie anywhere between a small decrease and an increase slightly above the level recorded in 2010/2011. In line with this estimate of net sales for fiscal 2011/2012, it sees a sharp downturn or a modest year-on-year increase in EBITA as equally possible. Given the nature of economies of scale and the make-up of the Group’s activities (regions and business streams), any adverse developments may have a disproportionately large impact on EBITA. Other factors include the potential costs associated with structural adjustments.

Wincor Nixdorf expects further momentum for growth in fiscal 2011/2012 from the emerging markets and intends to push ahead forcefully with the expansion of its operations and its already successful business in these areas, an approach that will require a differentiated portfolio of products and services tailored to the needs of individual markets. The company will maintain its basic focus, while continuously refining the concrete actions it takes. The medium-term prospects for CINEO, Wincor Nixdorf’s innovative range of hardware systems, are particularly good. Nevertheless, in this area, too, the company’s future performance will depend in large measure on how quickly the business environment stabilizes and overall investment readiness picks up.

Alongside measures that have already been initiated on the sales and cost side, Wincor Nixdorf intends to maintain its existing program of structural adjustments. These have already, for example, led to a net increase in the Group’s headcount in the Asia/Pacific/Africa region by 134 to 1,734 in fiscal 2010/2011 and a corresponding reduction by 121 to 3,985 in the size of its German workforce. In response to the present uncertainty, above all in the European market, Wincor Nixdorf cannot exclude the need to accelerate its existing program of personnel adjustments in fiscal 2011/2012.

Notwithstanding the above annual estimates, in percentage terms the company expects a likely decline in net sales to trigger a double-figure downturn in earnings for the first quarter of fiscal 2011/2012, compared to the particularly solid results achieved over the same period in 2010/2011.

Regional Performance in 2010/2011: Europe and Asia Lead the Way.
In Germany, compared to the previous fiscal year, when results were boosted by several major roll-outs, net sales fell by 5% to €612 million (€644 million). Germany’s share of total Group net sales fell accordingly to 27% (29%). In Europe (excluding Germany), net sales were up 17% at €1,123 million (€959 million), although a number of countries in southern Europe continued to lag behind the general trend of strong growth. Europe (excluding Germany) increased its share of total Group net sales in the year under review to 48% (43%). In the Asia/Pacific/Africa region, the Group’s net sales rose by 7% to €356 million (€332 million). As a result, the region’s share of total Group net sales remained unchanged on the previous year at 15%. In the Americas, net sales fell by 22% to €237 million (€304 million). As anticipated, in this region Wincor Nixdorf was unable to match the impressive sales figures of the previous year, which were due to a number of major orders. The share of Group net sales generated by the Americas fell accordingly to 10% (13%).

Restrained Growth in Banking Segment – Retail Segment Stronger
Net sales in the Banking segment were 2% up on the previous year at €1,527 million (€1,497 million), while in the Retail segment net sales rose by 8% to €801million (€742 million).

Slight Expansion of Hardware Business – Stable Growth for Software/Services
Looking at business streams, revenue from the Hardware business was up 2% at €1,159 million (€1,140 million). Although hardware sales to the banking industry remained on a par with the previous year, the company’s POS systems helped to generate a significant increase in revenue on the retail side. Sales of high-end systems remained below expectations in both segments. Overall, the Hardware business accounted for 50% (51%) of the Group’s total net sales. At the same time, the Software/Services business grew by 6% to €1,169 million (€1,099 million), driven in both the banking and retail industries by an increasing number of installations of upgraded software solutions and by related integration services. Product Related Services and Managed Services also delivered a very strong performance.

R&D Ratio: €100 million Spent on Innovation
Wincor Nixdorf spent €100 million (€101 million) on innovation in the last fiscal year, taking the R&D ratio just 0.2 percentage points lower to 4.3%. Staff operating within the Group’s global development network in Germany, Austria, Brazil, Singapore and China continue to work on new products and solutions.

Slight Fall in Group Headcount
At the end of the last fiscal year, Wincor Nixdorf’s global workforce stood at 9,171, down 138 on the previous year (9,309). Overall, employee numbers outside Germany contracted slightly to 5,186 (5,203). At 3,985, the headcount in Germany was down on the previous year (4,106).

Proposed Dividend of €1.70 per Share
Wincor Nixdorf intends to maintain its established dividend policy, on the basis of which around 50% of profit for a fiscal year is to be distributed to shareholders in the form of a dividend. The Board of Directors will therefore propose to the Supervisory Board a dividend of €1.70 per qualifying share in respect of fiscal 2010/2011, unchanged from the previous year. In this context, the dividend calculation is based on profit of €108.3 million for the fiscal year 2010/2011.