Gigaset AG publishes Annual Report 202022. April 2021 Published by Raphael Doerr
Bocholt, April 22, 2021 – Gigaset AG (ISIN: DE0005156004), an internationally operating company in the area of communications technology, today published its Annual Report 2020. Due to the continuing coronavirus pandemic, the last fisical year was especially challenging for Gigaset AG. Fiscal 2020 was clearly negatively impacted by coronavirus. This was also reflected in revenue and earnings in all segments. However, the countermeasures already taken by the company at a very early stage mitigated the impact. All in all, this allowed a solid operating result (EBITDA) and cash and cash equivalents clearly above the prior year to be achieved.
In total, consolidated revenue of €214.2 million was generated in fiscal 2020 compared with €257.9 million in the same period of the prior year (-16.9%). The various state measures to contain the coronavirus pandemic in Germany and Europe, such as trade restrictions and repeated store closures in all of the company’s markets, led to a decline in revenue in all four segments. Gigaset responded quickly, rigorously, and sustainably through targeted countermeasures. Thanks in particular to strict cost control, optimized working capital management, and the use of state support, it was nevertheless possible to post a solid operating result for 2020 as a whole with an EBITDA of €1.9 million. Through intensive liquidity management, much higher cash and cash equivalents of €42.0 million were posted at the end of the year than in the prior year (€36.6 million) and hence a robust cushion of +15.0%. Further details can be found in the Annual Report 2020.
“Our annual result and what we have achieved all in all in the overall context of coronavirus is truly impressive,” says Thomas Schuchardt, CFO of Gigaset. “Around €214 million in revenue and a very solid cash cushion well above the prior year at €42.0 million – and that still with high R&D investments in the future of our product portfolio or the conclusion of very large and labor-intensive cooperation agreements. It is also especially important to me that no employee had to leave the company on operational grounds.”
Klaus Weßing, CEO of Gigaset AG, adds: “We can all be rightly proud of what was achieved last year under extremely difficult conditions. We naturally had different plans for 2020 at the start of the year and were full of ideas and plenty of potential. We wanted to grow, to further develop and scale our business. Then came coronavirus. A whole new situation for us and many thousands of companies worldwide. None of us had ever experienced a pandemic before or could really foresee what happened to the economy and the people. That’s still difficult today – also with a view to the future.”
Targeted management response to coronavirus
Immediately after the outbreak of the coronavirus pandemic, the company took three central measures that have since been strategically implemented: One was to tighten up liquidity and cost management. A stronger focus was placed in cash management on payment runs and credit management, so that extensive deferments could be achieved between April and September. At the same time, working capital was optimized and other costs saved. Employees covered by a collective bargaining agreement were placed on short-time working, and pay cuts were agreed with exempt colleagues. Another measure was to further expand e-commerce business. As a result, the proportion of online sales for the year as a whole went up 46,2 % year on year. The third measure, aimed at protecting employees and ensuring the company’s ability to deliver, was to additionally implement hygiene measures early on in line with the recommendations of the Robert Koch Institute and the German government.
Despite the challenging coronavirus situation, the management made the conscious decision to keep activities in research and development at the highest possible level in order to initiate new innovations in all business fields for 2021 and the subsequent years. For example, the entire Professional handset portfolio was overhauled and the innovative UC ION phone developed. With ION, Gigaset is targeting the market for unified communications and softphone clients even more vigorously. The phone with handsfree function for the office, working from home, and on the road is a headset alternative for users who prefer a handset with a headset and want to switch flexibly to a conference loudspeaker.
Last year, also under coronavirus conditions, another extensive and important project was planned, implemented and successfully completed in December: the cooperation agreement with Unify Software and Solutions GmbH & Co. KG. Under this agreement, Unify will exclusively purchase the next family of desktop phones from Gigaset until the end of 2025. In addition, Gigaset has acquired central software licenses and will also be able to use the newly developed phones in its own portfolio. With a volume of around five million phones, the cooperation with Unify is one of the biggest and most important projects of the last decade.
“We responded well and, most importantly, quickly to the coronavirus pandemic, but dealing with the crisis will also continue to occupy us in the new fiscal year, says Weßing. “We also expect working from home and remotely as a consequence of the crisis to lead to a large-scale redesign and adjustment of the IT and telecommunications structures both at work and home. The number of Internet-capable devices in private households will continue to rise in the coming years, and Gigaset can and intends to benefit from this development in the future.”
Performance by segments, as stated in the Annual Report 2020
In the mainly consumer-oriented Phones, Smartphones and Smart Home segments, revenue was €173.1 million, hence down 14.0% against 2019 (€201.3 million). In Professional business for B2B customers, the company generated revenue of €41.1 million, a decline of 27.3% over 2019 (€56.6 million).
As stated in the Annual Report 2020, the Phones segment generated revenue of €157.3 million in fiscal 2020 (2019: €176.4 million). This revenue decline was primarily due to the massive lockdowns and store closures especially in the the second quarter, and the general uncertainty due to the pandemic. In Europe, more than 90% of the points of sales (PoS) that sell Gigaset products were temporarily closed. Although the company expects a peak in demand for this segment in the short term due to the increasing shift of working life into the home, this will not, however, influence the general degressive market trend. DECT telephony already experienced a revival in 2020 thanks to the rise in working from home. The outstanding voice quality, the ergonomics of the devices, and the call and standby times suggest that this trend will persist. Gigaset also sees new potential in the area of fixed-line telephony in the U.S. The new e-commerce capacities at the company enable a new and direct market access to the customer that is now no longer set up via retail but instead on a purely online basis. Accordingly, Gigaset can now also be found as a vendor on Amazon’s U.S. platform.
The Smartphones segment posted revenue of €13.3 million (2019: €21.2 million). This was affected primarily by the closure of retail stores and reduced Christmas business as a result. Gigaset is the only manufacturer to offer fixed-line, professional and mobile telephony from a single source. By expanding this ecosystem, Gigaset is driving forward the merger of B2C and B2B solutions, since the company expects customers in the context of remote working to opt for end-to-end solutions for their employees.
Revenues of €2.5 million were generated with smart home solutions in fiscal 2020 (2019: €3.7 million). The decline can be attributed primarily to smart home solutions still being regarded as a “luxury”. In times of crisis, customers therefore refrain temporarily from buying such products in favor of other goods. If, however, the home becomes the new focal point, investments in convenience and security will shift accordingly in this segment. Gigaset therefore expects demand to rise again from the new fiscal year.
As stated in the Annual Report 2020, the Professional segment contributed €41.1 million to consolidated revenue in fiscal 2020 (2019: €56.6 million). The decline is due to projects being postponed or canceled. While the pandemic-related effects of going without in the consumer segment set in relatively quickly, there was a certain delay in investment activities in the B2B field. Gigaset remains optimistic about the further development of the market. Despite increasing digitalization, the hardware needed for calls should remain unaffected by the expected changes. As a manufacturer in the B2B field with close links to cloud partners, Gigaset also aims to benefit from this development.
Outlook, according to Annual Report 2020
No clear-cut course has yet emerged in 2021, so no projections can be made either on a general recovery in economic performance. The biggest risk for Gigaset continues to lie in hard lockdowns, in which PoS in Germany and Europe remain closed, or during which project business as in the Professional segment is not possible. On the other hand, there are very positive developments in Gigaset e-commerce, whether on the company’s own homepage, via Amazon and other e-tailers, or in marketplaces.
As a result, great uncertainty also remains for 2021 regarding what the actual medium and long-term effects of the pandemic will look like in this year. In view of this projection, Gigaset also continues to see itself significantly dependent on external factors beyond its control, in other words, decisions by governments to impose curfews or close businesses and borders, as well as the duration and further evolution of the pandemic itself.
General statement by the Executive Board for 2021
Excluding a sudden and serious deterioration in the coronavirus pandemic, Gigaset anticipates the following financial performance, financial position and cash flow situation in fiscal 2021:
- Compared with 2020, which was heavily impacted by coronavirus, a slight increase in revenue and EBITDA
- A positive free cash flow at pre-coronavirus level allowing for the planned operational business and necessary investments
The audited financial statements and the Annual Report for 2020 can be downloaded here.