Gigaset AG publishes report on third quarter and first nine months of 202222. November 2022 Published by Raphael Doerr
Gigaset AG (ISIN: DE0005156004), an international communications technology company, today published its report for the third quarter and the first nine months of 2022. In the first nine months of 2022, Gigaset increased revenue by 3.8% overall. EBITDA decreased but remained clearly positive. In the third quarter of 2022, the company generated a year-on-year increase in revenue of 8.5%. During this period, EBITDA fell significantly due to a lack of material availability and a sharp rise in purchasing prices.
Revenue in the first nine months of 2022 increased to EUR 159.7 million (9M 2021: EUR 153.9 million). Earnings before interest, taxes, depreciation and amortisation (EBITDA) for the first nine months fell to EUR 7.7 million, compared to EUR 11.0 million in the same period of the previous year. Third-quarter revenue improved to EUR 56.4 million (Q3 2021: EUR 52.0 million) – despite existing material bottlenecks due to disrupted supply chains and the global uncertainties resulting from the Ukraine war, which has been ongoing since February 2022. EBITDA for the third quarter decreased to EUR 1.9 million (Q3 2021: EUR 6.8 million). Earnings before interest and taxes (EBIT) declined to EUR -2.2 million in the third quarter (Q3 2021: EUR 3.3 million).
“We are facing a new reality in logistics and material availability,” said Thomas Schuchardt, CFO of Gigaset AG. “Accordingly, procurement and supply chain issues weighed on our results in the first nine months of the year. In this challenging environment, our long-standing and good relationships with our suppliers ensure us the best possible supply of pre-products and raw materials. As Gigaset pays for the majority of the materials and components it needs in US dollars, the exchange rate impact that set in with the start of the Ukraine war also had a negative effect. The strongest effect came from the devaluation of the euro against the US dollar. This led to a significant increase in the cost of materials for Gigaset. It is particularly important for us in this context to have costs under control and to manage the extraordinary uncertainty.”
Digitalisation offers growth opportunities
The Corona pandemic has accelerated digitalisation in Germany. Within a very short time, many companies have changed the way they work and opened up new business models or distribution channels. But in international comparison, Germany is still lagging far behind. This is why even greater efforts are needed for digital transformation in the future – especially in the area of IT and telecommunications structures. Gigaset sees itself as being equipped – also in the context of geopolitical tensions – to benefit from this development.
Business performance according to business areas
Sales in the Phones, Smartphones and Smart Home business units, which are primarily focused on private customers, totalled EUR 115.4 million in the first nine months of 2022 – an improvement of 1.9% compared to the same period of the previous year (9M 2021: EUR 113.2 million). The development in detail:
At EUR 102.2 million in the reporting period 2022, the Phones business unit is above the previous year’s level of EUR 99.9 million. Sales of phones show an increase of 2.3% compared to the previous year’s period, which can be attributed in particular to the continued stabilisation of sales of cordless phones. In the third quarter, revenues increased to EUR 38.9 million – a strong increase of 31.3% compared to the same period of the previous year (Q3 2021: EUR 29.7 million).
Although the European market for cordless phones continues to decline overall, it remains highly competitive. Gigaset continues to assert itself as the provider of choice for premium phones with their own station or behind routers. In the international cut-throat competition, further market shares are to be gained. An important sales driver and prestige success is the intensified cooperation with Telekom Deutschland. Since July 2022, the latter has been using DECT cordless phones from Gigaset in its Telekom Shops and in the Telekom Online Shop.
With nine-month revenues of EUR 12.2 million, the Smartphones business unit maintained the previous year’s level (9M 2021: EUR 12.2 million). However, the good sales development from the first half of the year could not be continued. Sales of EUR 2.6 million in the third quarter represent a significant decline of -35.8% compared to the previous year (Q3 2021: EUR 4.0 million).
The general growth of the smartphone market has slowed down in recent years. A development that Gigaset is also feeling. In order to strengthen this area, Gigaset continues to focus on expanding its smartphone business in the area of B2B partnerships to complement its existing B2C offering.
The development in the Smart Home business segment remains unsatisfactory for Gigaset. Revenue fell slightly in the past nine-month period to EUR 1.0 million (9M 2021: EUR 1.1 million). Demand for smart home products has thus still not recovered since the beginning of the pandemic.
Sales of smart home applications are likely to develop more cautiously than originally expected in the foreseeable future. Gigaset nevertheless expects to gain further market share with its four application fields of security, energy, comfort and help for people in need of care. In order to make its smart home portfolio accessible to a broader target group, Gigaset is also increasingly relying on partnerships here; the latest in this area include the collaboration with Home Connect Plus and the Connectivity Standards Alliance (matter).
Sales in the Professional business unit increased to EUR 44.3 million in the first nine months of the year. This is an increase of 8.8% compared to the same period of the previous year (9M 2021: EUR 40.7 million). In the third quarter, revenue fell significantly by -19.5% to EUR 14.5 million (Q3 2021: EUR 18.0 million). The overall positive development is due to catch-up effects from projects as well as high demand and new project implementations.
According to Gigaset, the business customer telephony segment is increasingly being shaped by IP and cloud-based solutions. These new technologies are likely to further displace traditional transmission technology, especially in Europe. However, the hardware required for corresponding calls will remain unaffected. Gigaset, as a manufacturer in the B2B sector with close ties to cloud partners, wants to benefit from this.
“We are in a situation that is characterised by extraordinary uncertainty. Nevertheless, we are looking positively to the future: new products tailored to the customer, long-term cooperations with strong partners and our production “Made in Germany”, which gives us exceptional flexibility in production, are important assets for our success,” adds Klaus Wessing, CEO of Gigaset AG.
Explanations on the outlook for 2022
Various uncertainties and risks continue to exist in the fourth quarter of 2022. Important influencing factors here are the further development of China’s Corona policy, material availability on the procurement markets and the Ukraine war, which has led to supply bottlenecks, massively increased energy prices and high inflation, especially in Europe. Exchange rate effects also have a negative impact. The strongest effect has been the devaluation of the euro against the US dollar. Gigaset continues to see itself as dependent on the external factors described above over which it has no control.
In view of these issues, the leading economic research institutes expect a recession in Germany. This and a possible rise in unemployment are likely to have a negative impact on consumer behaviour. Potential drivers of long-term inflation are the costs of making the economy more resilient through deglobalisation, the costs of decarbonisation to protect the climate and demographic changes that are creating a struggle for young talent in the applicant market. These factors have a potentially negative impact on production costs, which cannot be easily passed on to customers by the company. As a consequence, this would reduce the quality of margins and thus have a negative impact on various key figures.
Adjusted outlook of the Executive Board for 2022
A change in the information situation and a current assessment of the further business development in 2022 prompted the Management Board of Gigaset AG to adjust the previous company forecast on Friday, 18 November 2022. This was made known to the capital market via an ad hoc announcement and accompanying press release. Excluding a sudden, significant deterioration of the Corona situation or the supply chain problems, Gigaset now expects the following development of the net assets, financial position and results of operations for the financial year 2022:
- Previously, the company forecast a slight increase in revenue and EBITDA compared to the previous year and a moderately positive free cash flow. The company now expects an increase in revenue of between EUR 235 million and EUR 250 million (2021: EUR 217.1 million).
- EBITDA is now expected to be below the previous year’s level in the range of EUR 6 million to EUR 15 million (2021 EUR 16.5 million).
- The moderately positive free cash flow for 2022 assumed in the outlook is confirmed. A result of between EUR 0.1 million and EUR 3 million is expected here (2021 minus EUR 14.2 million).
The complete report on the third quarter and first nine months of 2022 can be downloaded here.