SAF Tehnika preliminary results for Financial Year 2006/2007
The Group’s consolidated non-audited net sales for the financial year 2006/7 were LVL13.5m, on par with FY 2005/2006.
12 month sales breakdown comparative charts see in the word attachment.
The CIS region demonstrated 12 month revenue growth of 41% due to the successful cooperation with several notable GSM, CDMA and alternative operators in Russia, Ukraine, Tajikistan and Azerbaijan. Recurring supplies to this region are projected for the coming financial year.
The Asian region posted a revenue decrease of 19%. This was mostly due to the delay of the India project (refer to press release on 04.04.2007). Sales volumes to China were at the same levels as in the previous financial year 2005/6. Currently SAF Tehnika has already received the first order for the delayed India project and partial deliveries commenced in July. The 34% decrease of sales volumes in Latin America is mainly influenced by lower demand in Columbia and the impact of Brazilian market regulations, which provide competition protection to local manufacturers.
Sales to the African region increased by 63% during the financial year. Sales volumes in Europe have grown by 11% as a result of increasing demand for the SAF SDH (high capacity) product line, which was launched in 2006. During the 2006/7 financial year, SAF Tehnika sold its products to 62 countries worldwide.
The consolidated non-audited net profit of the Group for the financial year 2006/7 was LVL 0.05m. The main reasons for the profit decrease were the delay of the large-scale shipments in Q4, as well as the high operational costs (refer to the press release on 04.04.2007).
The cost cutting plan was fully implemented in June (in SAF Tehnika Latvia). June staff expenses were 22% lower compared with March, while the headcount reduction was 12%. The plan came into effect in SAF Tehnika’s Swedish subsidiary in July, allowing a further decrease in subsidiary expenses by 10%.
In the 2007/8 financial year, SAF Tehnika plans to keep on developing new products and improving the existing product range in accordance with the latest market tendencies. Our research and development costs are expensed immediately and have historically represented around 10% of sales.
Normunds Bergs, the CEO of SAF Tehnika, said:
“The previous financial year was clearly disappointing. The company has, up until now, worked on order visibility of approximately two months. When the scope of delays became clear in the final quarter of financial year 2006/7, we promptly addressed the issue by implementing the cost-cutting programme. This included senior management remuneration.
The Company’s financial position remains robust. While we consider this an achievement, it does not address the ongoing need to show meaningful growth and profitability for our shareholders, of which key managers represent over 50%.
The challenge we continue to address is the need to benefit from economies of scale in a global industry which is ferociously competitive.
While ongoing innovation and product development is a necessity, so is the ability to sell one’s product to a wide range of potential users. I intend to allocate more of my time in the coming year to addressing this very issue. Furthermore, a restructured sales division and implementation of a new automated manufacturing line are expected to provide increased efficiencies going forward.”
The new SDH product’s sales have exceeded expectations – unit sales in FY 2006/7 grew ten-fold to 475 units (vs. five-fold expectations) during the previous financial year. The new hybrid (super PDH) product is expected to be launched during the 2007/8 financial year.
For aditional information:
SAF Tehnika AS
Phone: +371 67046840
Mob. phone: +371 29287289
Fax: +371 67046809