EQS-News: Gigaset AG publishes report on the third quarter and the first nine months of 2022: Phones up 2.3%, Professional up 8.8% over the nine-month period

press release
Bocholt, November 22, 2022

Gigaset AG publishes report on the third quarter and the first nine months of 2022
Phones up 2.3%, Professional up 8.8% over the nine-month period

• Nine-month sales increased by 3.8% overall
• Margin weighed down by material availability and inflation
• EBITDA at EUR 7.7 million in the nine-month period remains clearly positive

Bocholt, November 22, 2022 – Gigaset AG (ISIN: DE0005156004), an international company in the field of communications technology, published its report for the third quarter and the first nine months of 2022 today. In the first nine months of 2022, Gigaset increased its revenue by a total of 3.8%. EBITDA fell, but remained clearly positive. In the third quarter of 2022, the company generated an 8.5% increase in sales compared to the same period last year. In this period under review, the EBITDA fell significantly, influenced by a lack of material availability and sharply increased purchase prices.

Revenues 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 amortization (EBITDA) for the first nine months fell to EUR 7.7 million – after EUR 11.0 million in the same period of the previous year. Sales in the third quarter improved to EUR 56.4 million (Q3 2021: EUR 52.0 million) – despite existing material bottlenecks due to disrupted supply chains and global uncertainties as a result of the Ukraine war that has been ongoing since February 2022. Third quarter EBITDA fell to EUR 1.9 million (Q3 2021: EUR 6.8 million). Earnings before interest and taxes (EBIT) fell to EUR -2.2 million in the third quarter (Q3 2021: EUR 3.3 million).

“We are confronted with a new reality in the area of ​​logistics and material availability,” says Thomas Schuchardt, CFO of Gigaset AG. “Accordingly, procurement and supply chain problems impacted our earnings in the first nine months of the year. In this challenging environment, our long-standing and good relationships with our suppliers ensure the best possible supply of preliminary products and raw materials. Since Gigaset pays for most of the necessary materials and components in US dollars, the exchange rate effects that began when the war in Ukraine began also had a negative impact. The devaluation of the euro against the US dollar has had the strongest effect. This led to a significant increase in material costs for Gigaset. In this context, it is particularly important for us to have the costs under control and to manage the extraordinary uncertainty.”

Digitization offers growth opportunities
The corona pandemic has accelerated digitization in Germany. Many companies have changed their way of working within a very short time and have opened up new business models or sales channels. But in an international comparison, the Federal Republic is still lagging behind. For this reason, even greater efforts will be required for the digital transformation in the future – especially in the area of ​​IT and telecommunications structures. Gigaset sees itself – also in the context of geopolitical tensions – well equipped to benefit from this development.

Business development by business area
Revenues in the Phones, Smartphones and Smart Home business areas, which are primarily aimed at private customers, totaled 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:

phones
In the 2022 reporting period, the Phones division was EUR 102.2 million, above the previous year’s level of EUR 99.9 million. Sales of Phones show an increase of 2.3% compared to the same period of the previous year, which is particularly due to the continued stabilization of sales of cordless phones can be traced back. In the third quarter, sales 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. Further market shares are to be gained in the international cut-throat competition. An important sales driver and prestige success is the intensified cooperation with Telekom Germany. Since July 2022, it has been using DECT cordless phones from Gigaset in its Telekom shops and in the Telekom online shop.

smart phone
With nine-month sales of EUR 12.2 million, the smartphone division 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 in the end. Sales of EUR 2.6 million in the third quarter represent a significant decrease of -35.8% compared to the previous year (Q3 2021: EUR 4.0 million).

The overall growth of the smartphone market has slowed in recent years. A development that Gigaset is also feeling. In order to strengthen this area, Gigaset continues to focus on expanding business with smartphones in the area of ​​B2B partnerships as a supplement to the existing B2C offering.

smart home
The development in the Smart Home business area is still unsatisfactory for Gigaset. Revenue fell slightly to EUR 1.0 million in the past nine months (9M 2021: EUR 1.1 million). The demand for smart home products has still not recovered since the beginning of the pandemic.

Sales of smart home applications are likely to develop more slowly than originally expected in the foreseeable future. Nevertheless, Gigaset expects to gain further market share with its four application areas of security, energy, convenience and help for people in need of care. In order to make its smart home portfolio accessible to a broader target group, Gigaset is increasingly relying on partnerships here too; the latest in this area include the collaboration with Home Connect Plus and the Connectivity Standards Alliance (matter).

professional
Sales in the Professional division increased to EUR 44.3 million in the nine-month period. This is an increase of 8.8% compared to the same period of the previous year (9M 2021: EUR 40.7 million). Revenue in the third quarter fell significantly by -19.5% to EUR 14.5 million (Q3 2021: EUR 18.0 million). The overall positive development is due on the one hand to catch-up effects from projects and to the high demand and new project implementations.

According to Gigaset, the area of ​​business customer telephony is increasingly characterized 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 the corresponding calls will remain unaffected. As a manufacturer in the B2B sector with close ties to cloud partners, Gigaset wants to benefit from this.

“We find ourselves in a situation characterized by exceptional uncertainty. Nevertheless, we are positive about the future: New, customer-oriented products, long-term cooperation with strong partners and our “Made in Germany” production, which allows us exceptional flexibility in production, are important assets for our success,” adds Klaus Wessing, CEO of Gigaset AG.

Comments 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 Chinese corona policy, the availability of materials on the procurement markets and the Ukraine war, which has led to delivery bottlenecks, massive increases in energy prices and high inflation, especially in Europe. Exchange rate effects also have a negative impact. The devaluation of the euro against the US dollar has had the strongest effect. Gigaset continues to see itself as dependent on the described external factors that it cannot influence itself.

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 behavior. Potential drivers of long-term inflation are the cost of increasing economic resilience through deglobalization, the cost of decarbonization to protect the climate, and the demographic shifts that are squeezing talent into the job market. These factors have a potentially negative impact on production costs that the company cannot easily pass on to customers. As a consequence, this would reduce the margin quality and thus have a negative impact on various key figures.

Adjusted outlook of the Management Board for 2022
A changed information situation and a current assessment of the further course of business in 2022 prompted the Management Board of Gigaset AG to adjust the previous company forecast on Friday, November 18, 2022. This was made known to the capital market via an ad hoc report and accompanying press release. Excluding a sudden, significant deterioration in the corona situation or the supply chain problem, Gigaset now expects the following development of the net assets, financial position and results of operations for the 2022 financial year:

1. So far, the company has forecast a slight increase in sales and EBITDA compared to the previous year and a moderately positive free cash flow. An increase in sales of between EUR 235 million and EUR 250 million is now expected (EUR 217.1 million in 2021).
2. In terms of EBITDA, a result below the previous year’s level in the range of EUR 6 million to EUR 15 million is now expected (2021 EUR 16.5 million).
3. The moderately positive free cash flow assumed in the outlook for 2022 is confirmed. A result of between EUR 0.1 million and EUR 3 million is expected here (2021 minus EUR 14.2 million).

The full report for the third quarter and first nine months of 2022 is available here available for download.

the Gigaset AG, Bocholt, is an international company in the field of communication technology. The company is Europe’s market leader for DECT telephones and also ranks among the top internationally with around 850 employees and sales activities in over 50 countries. In addition to DECT cordless phones, the business activities include Android-based smartphones, cloud-based smart home applications and business telephony solutions for SoHo, SMEs and enterprise customers. The traditional company can look back on 175 years of company history and is particularly distinguished by its “Made in Germany” production. The company’s headquarters are in Bocholt, Germany. Furthermore, a software development center in Wroclaw, Poland and numerous sales offices in Europe and Asia are maintained.

Gigaset AG is listed in the Prime Standard of the German Stock Exchange and is therefore subject to the highest transparency requirements. The shares are traded on the Frankfurt Stock Exchange under the symbol GGS (ISIN: DE0005156004).

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