Solid cash flow despite continuing challenging market conditions

2/7/2012 1:45 AM EST

IC Companys A/S
Half Year financial report

Solid cash flow despite continuing challenging market conditions



Company Announcement no. 4/2012

                                                           Copenhagen 7 February





As reported in Company Announcement no. 1/2012 the Group experienced a further
slowdown in consumer spending during Q2 2011/12. Consolidated revenue for H1
2011/12 amounted to DKK 2,105 million corresponding to the same level as last
financial year, and the operating profit decreased by 45% to DKK 146 million
after having adjusted for non-recurring costs of DKK 23 million. Efficient
price campaigns and presales have resulted in the Group being able to retain
its market position and generate a solid cash flow, but have at the same time
exerted an increased pressure on the Group’s gross margin which suffered a
decline of 3.6 percentage points. 



  -- Consolidated revenue for H1 2011/12 amounted to DKK 2,105 million (DKK
     2,108 million) corresponding to the same level as H1 2010/11. Consolidated
     revenue for Q2 2011/12 amounted to DKK 930 million corresponding to an
     increase of 4%.



  -- Wholesale revenue amounted to DKK 1,324 million (DKK 1,301 million)
     corresponding to an increase of 2%. Wholesale revenue for Q2 2011/12 rose
     by 11% to DKK 512 million.



  -- Retail revenue amounted to DKK 780 million (DKK 807 million) corresponding
     to a 3% setback. Retail revenue for Q2 2011/12 decreased by 4% to DKK 418
     million.



  -- Gross profit amounted to DKK 1,190 million (DKK 1,267 million). The Group
     thus generated a gross margin of 56.5% (60.1%) corresponding to a decline
     of 3.6 percentage points compared to last financial year.



  -- Capacity costs amounted to DKK 1,044 million (DKK 1,002 million)
     corresponding to an increase of 4%. The cost rate for H1 2011/12 thus
     amounted to 49.6% (47.5%) which is an increase of 2.1 percentage points
     compared to last financial year.



  -- After having adjusted for non-recurring costs of DKK 23 million and the
     effect of new retail activities amounting to DKK 16 million, the Group’s
     capacity costs for Q2 2011/12 were reduced by 2% compared to last financial
     year and the cost rate was thus improved by 3.3 percentage points.



  -- Operating profit amounted to DKK 146 million (DKK 265 million). The Group
     thus generated an EBIT margin of 6.9% (12.6%).



  -- Total cash flow from operating and investing activities increased by DKK 42
     million to DKK 72 million (DKK 30 million).



  -- Order intake for the summer collection 2012 is expected to record a setback
     of 11% reported in local currencies.



Outlook for 2011/12



  -- Management anticipates that the challenging market conditions will continue
     for the remainder of the financial year 2011/12 resulting in a substantial
     pressure on both revenue and gross profit. As a consequence hereof, the
     Group will thus continue throughout H2 2011/12 to defend its market
     position by means of sales promoting activities and campaigns.



  -- Based on these statements, Management still expects the consolidated
     revenue for the financial year 2011/12 to attain a level of DKK 3.7-3.8
     billion. Under the present market conditions, Management expects a positive
     operating profit for H2 2011/12, however, should the market conditions
     deteriorate, the Group may possibly suffer a double-digit loss in million
     DKK for H2 2011/12.



  -- Under the present market conditions, Management also expects a cash inflow
     from operating and investing activities as well as a reduction of the
     working capital for H2 2011/12.



  -- The outlook for 2011/12, except for investments, remains unchanged compared
     to the last announced outlook.



  -- Investments for the financial year 2011/12 are expected to attain a level
     of DKK 80-100 million (previously announced outlook of DKK 90-110 million)
     primarily for an expansion of the distribution and sales promoting
     improvements of the IT platform.



Chief Executive Officer of IC Companys A/S Niels Mikkelsen commented;

"The results we expect to achieve for the financial year 2011/12 are
dissatisfactory – even though they are primarily attributable to external
market conditions. However, there is no doubt that the corporate strategy and
the new structure have been important for the ability of the Group to steer
safely through the crisis. So even though we are currently adjusting the
strategy for some of our brands to counter the current conditions, the
corporate strategy still remains the same. It sets the framework for our
primary future goal; to enhance the Group’s earnings." 



IC Companys A/S



Niels Mikkelsen

Chief Executive Officer



Chris Bigler

Chief Financial Officer





Please direct any questions regarding this announcement to:



Thomas Rohold

Head of Investor Relations and Communication

+45 32 66 70 93







This announcement is a translation from the Danish language. In the event of
any discrepancy between the Danish and English versions, the Danish version
shall prevail