Satisfying developments in the first half of the year
paragon AG has recorded extremely satisfactory growth levels for the first half of 2011. The publicly listed direct supplier to the automotive industry maintained the healthy development of recent months and achieved sound growth in sales of 10% to EUR 33.4 million (prior year: EUR 30.4 million). “The course of business and especially our earnings are more than satisfactory, ” commented CEO Klaus Dieter Frers on the first six months.
paragon was able to increase sales by 7.5% over the comparable period in the previous year as early as in the first quarter. This trend strengthened in the months from April to June, during which the Company’s sales jumped by as much as 12%. This growth propelled the earnings indicators, which developed better than planned. EBITDA, for instance, soared by 28% to EUR 7.0 million (prior year: EUR 5.5 million) and EBIT by as much as 61% to EUR 4.9 million (prior year: EUR 3.0 million). Moderate single-digit growth in earnings continued after the first quarter of 2011.
Net income for the year according to IFRS, showing an increase of 20% at a figure of EUR 3.6 million (prior year: EUR 3.0 million), also rose at a significantly more rapid rate than sales. Earnings per share rose at the same pace to EUR 0.87 (prior year: EUR 0.73).
Operating cash flow confirms paragon’s robust trend upwards. This indicator for operational development rose by EUR 1.6 million to EUR 4.3 million compared to June 30 of 2010 (prior year: EUR 2.7 million). paragon utilized this gratifying business trend towards an additional repayment of finance loans of EUR 3.4 million, significantly above the contractually agreed figure, which will also have a positive impact on the future due to lower interest payments. As Frers emphasizes: “This shows our commitment to our goal of strengthening our financial independence”.
As at June 30, 2011, paragon AG employed 333 of its own workers and 58 temporary workers, all of whom were active in Germany alone. This implies that the number of employees has considerably increased compared to the previous year (June 30, 2010: 244 employees and 25 temporary workers), which is the result above all of the takeover of assets of the previous subsidiary paragon finesse GmbH as at September 1, 2010. paragon expanded the number of staff vis-à-vis the previous quarter (March 31, 2011: 316 employees and 60 temporary workers) in the context of the healthy state of the industry. As at June 30, 2011, the following employee numbers apply to the individual sites (employees/temporary workers): Delbrück (58/0), Suhl (195/43), Nuremberg (24/4) and St. Georgen (56/11).
Against the backdrop of the encouraging mid-year results, the Managing Board, which had previously assumed modest growth in 2011, raised its forecast for the current fiscal year. Currently the Company’s management anticipates sales of EUR 65 million, despite the still pending plant holiday and Christmas, an increase of 8% compared to the prior year (total 2010: EUR 60.4 million).
With a gross margin of 50% and EBIT of 11%, both in relation to sales, paragon hopes to once again achieve earnings well in excess of industry comparisons in 2011. Free cash flow should rise to EUR 8 million by the end of 2011; in parallel the Company wants to reduce bank liabilities to EUR 15 million as at December 31, 2011.
paragon intends to present novel solutions at the upcoming International Motor Show (IAA) in September 2011, which ideally complement the existing portfolio. The focus is on exhibits that relate to automotive networking. The increasing fusion of automotive and consumer electronics is just as much one of the central challenges for auto manufacturers as is the dawning age of electro-mobility. At the IAA paragon will show for the first time the contribution that the Company can provide in this forward-looking field. “Thereby we are implementing the announcements made at the most recent Annual General Meeting of May 2011. We will participate in developing the fields of networking and electro-mobility”, Frers emphasizes.
