Datacolor in the first half 2016/17

Focus on Asia pays off – Substantial investments in overall long-term growth

In the first half of 2016/17, Datacolor AG posted net sales of USD 34.9 million (H1 2015/16: USD 33.8 million). The 3% year-on-year increase is mainly attributed to sales growth with industrial customers, driven by successful sales of new products developed and launched already during prior fiscal year. In local currencies Datacolor raised net sales by 5%. Continuous efforts to improve efficiency across all functions of the company, together with a very successful temporary promotion of high-end instruments, resulting in a favorable sales mix, and above average open positions in the first half of 2016/17 had a noticeable impact on the margins. Gross profit margin rose to 67.7% (64.0%), EBIT margin grew to 9.8% (7.8%) and EBITDA margin increased to 14.2% (11.1%). In the first half 2016/17, operating earnings (EBIT) grew by 29% year-on-year to USD 3.4 million (H1 2015/16: USD 2.6 million). Also, the financial result of USD 0.9 million (USD 0.7 million) contributed significantly to the net profit of USD 3.4 million (USD 2.6 million). Datacolor remains debt-free and has a strong net cash position of USD 33.5 million (September 30, 2016: USD 32.6 million), including financial assets of USD 16.9 million. The equity ratio is a solid 62.0% (September 30, 2016: 62.7%). The average headcount of 372 (H1 2015/16: 369) remained almost flat.

Well positioned in the global market for color management

Datacolor continued to build on its strong position as an internationally leading company for digital color management solutions in its core industrial markets of textile, paint and coatings, the retail market for paint and the consumer market for display and printer calibration. In the first half of 2016/17, the company heavily invested in strengthening the effectiveness of its digital marketing activities, to further expand its global sales and service organization, and to improve proximity to customers. Furthermore, Datacolor increased its investments in enhancing its attractive product portfolio consisting of versatile software solutions and instruments and services for the precise measurement and communication of color.

The company’s continued focus on expanding its market presence in Asia paid off. With 37.2% (33.3%) of Group sales, Asia became Datacolor’s largest regional market. Europe remained flat with a share of sales of 35.8% (35.8%). The North and South America region’s sale declined to 27.0% (30.9%), reflecting a challenging investment climate in South America as well as a lower demand for imaging products in North America.

Sound financial structure

At the end of March 2017, cash and cash equivalents including financial assets amounted to USD 33.5 million, corresponding to 54% of total assets, following the distribution of a dividend of USD 2.1 million and the purchase of treasury shares. The yearly impairment assessment of the asset value of Datacolor’s manufacturing site in China, located in the Export Zone of the Singapore Industrial Park in Suzhou, showed the need for an impairment of USD -0.5 million. The adjustment was required, due to the declining value of properties in the SIP Export Zone mainly because of reduced tax benefits and increased complexity of export to China regulations. On March 31, 2017, Datacolor had a consolidated net equity of USD 38.3 Mio. (September 30, 2016: USD 37.9 million).

Outlook

During the second half of 2016/17 Datacolor will continue to invest substantially in the development and the launch of innovative new products and software solutions. Furthermore, Datacolor intensifies its recruiting activities to fill the current open positions and increases investments in marketing and development. With its solid financial structure Datacolor is well placed to be a leader and innovator of color management solutions, embracing the latest software and hardware technologies. For the current financial year 2016/17, Datacolor is looking to increase sales year-on-year and to achieve solid returns to meet its strategic growth targets going forward in a still volatile market environment.

Lucerne, May 5,2017

The full half year report 2016/17 is available on:
http://ir.datacolor.com/en/financial-reports