Profitable year despite recession

Press reports Company

27. April 2010

Sales decline slightly by 2.4% / Operating result steady year on year / Increase in market share / Number of employees maintained / Strong demand for adhesive material / Forecast for 2010: five percent growth to be fuelled by promising innovations in every division

Filderstadt, April 27, 2010. Even in 2009, which was a year of global crisis, self-adhesive solutions specialist HERMA traded profitably. Although the Group's sales edged down by 2.4 percent, as expected, from 202.8 to 197.8 million Euros; optimised procedures in manufacturing, organisation and logistics enabled it to post a more or less unchanged operating result. At the same time, in the face of the global recession, HERMA gained market share with its self-adhesive materials and A4 labels for PC printers. As HERMA managing director Sven Schneller explains, however, "These stable figures mask an extremely turbulent year. It was a year of two extremely different halves." He points out that, measured against the corresponding period of 2008, HERMA increased sales by 5.1 percent in the second half-year. He continues, "In spite of the colossal market-driven downturn in sales in January and February 2009, however, we closed the first half-year nearly ten percent down and despite every effort, we were unable to make good the deficit in the remainder of the year." Our export ratio increased moderately year on year, from 52.5 to 53.0 percent. At 780, the number of employees remained practically unchanged (previous year 784). On the other hand, HERMA substantially increased its training program once again. The number of HERMA young apprentices at headquarters in Filderstadt and the mechanical engineering facility in Deizisau rose from 37 to 45.

Self-adhesive materials buck trend
Thanks to a further expansion of international sales and the acquisition of numerous new customers at home, the self-adhesive materials division largely avoided the crisis and posted additional growth. Sales increased by 7.9 percent year on year, from 96.3 to 103.8 million euros. Managing director Dr. Thomas Baumgärtner, who also oversees the self-adhesive materials division, remarks, "As the market shrank overall, we grew exclusively by displacing competitors. Our market share therefore advanced disproportionately." Alongside the key domestic market, which generated 11 percent growth, the favourable pattern of business overall was fuelled by the Central European countries in particular, some of which also yielded double-digit advances.

Cyclical industries hamper label business
In response to the business cycle, sales of office, consumer and industrial labels also declined sharply. The decrease of 12.1 percent, from 78.7 to 69.1 million euros, more or less accurately reflected the contraction of the office and consumer product sector in Germany. In the core business with A4 labels for PC printers, however, HERMA posted marginal growth. "Against the backdrop of a declining market, we boosted market share in a very hotly contested product segment," stresses Schneller. As regards industrial labels, the significant drop in demand from industries that depend to a large extent on the business cycle, such as chemicals and automotive sector, exerted a negative influence. "We counterbalanced this effect by winning large orders from new customers for standard roll labels, and making further inroads into the less cyclical food industry," he adds.

Labelling machines keep capacities well utilised
The labelling machines division, which has grown disproportionately in recent years, inevitably mirrored the general trend in the machine building segment. Sales dropped by 10.6 percent year on year, from 27.8 to 24.9 million euros. An appreciable carryover of orders from 2008, however, sustained production capacity utilisation in Deizisau. In view of the recent rapid growth, the number of employees in the division actually rose moderately in 2009.

Innovations give rise to confidence for 2010
In 2010, HERMA intends to raise its sales by 5 percent. The two managing directors insist that the good start made by the Group in the first few months, together with the outlook for further general economic recovery, give every reason for confidence that the target can be met. Substantial growth is anticipated once again in the self-adhesive materials business. The platform for expansion has been established by the broadened customer base and the launch of new products, including HERMAperfectCut, which is produced with innovative multi-layer technology. HERMA also expects fresh impetus to originate from innovations benefiting industrial labels and labelling machines. A new integrated solution consisting of laser-active labels and labellers unveiled in autumn 2009, for example, has already generated initial orders. "In the meantime, we have launched additional highly promising projects with major customers," explains Schneller. In order to invigorate the consumer and office label business together with its trading partners in the long term, HERMA is also investing substantially in new e-commerce modules and thus reinforcing its leading position in the industry with online activities.