ots Ad hoc-Service: AC-Service AG <DE0005110001> Strong decline in sales in the Distribution Solutions division and one-off expenses have a negative effect on AC-Service's quarterly result
Stuttgart (ots Ad hoc-Service) -
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Expenditure to build up the IT Outsourcing division result in a considerable increase in sales. As a result of acquisitions, the Human Resource Services division is showing strong sales growth.
AC-Service succeeded in continuing the growth trend of the service divisions IT Outsourcing and Human Resource Services in the second quarter 2000. At the end of the first six months of this year, both business divisions together achieved sales that were 36% higher than the comparable sales from the previous year at DEM 25.0 million. At DEM 34.1 million in total, these two divisions already account for more than two-thirds of the total sales of AC-Service. The sales for the first half-year, however, at DEM 50.8 million only increased by 3% compared with the same period of the previous year (DEM 49.4 million). Total sales in the second quarter are reported at DEM 24.2 million (previous year: DEM 23.7 million). This is due to the business development in the division Distribution Solutions, which continues to face weak demand for ERP solutions and at the end of six months reported a considerable drop in sales to DEM 12.3 million (previous year: DEM 20.5 million). Contracts worth DEM 1.4 million that had already been agreed with clients could not be invoiced due to supply difficulties on the part of a hardware supplier. Sales from the other operating activities rose to DEM 4.4 million (previous year: DEM 3.9 million) in the first six months of the year.
EBIT and the net result were strongly influenced by one-off expenses in the second quarter 2000. The reorganisation of the business division Distribution Solutions as announced on 15 June 2000 has been concluded to a large extent. This has resulted in provisions amounting to DEM 2.2 million being made in particular for personnel measures in the second quarter 2000. Provisions for project risks (DEM 1.4 million) also had a negative impact on the results of this division. As a consequence of these one-off factors and of cost-effective advance expenditure for the further expansion of the SAP-based Outsourcing business that will result in repetitive earnings in the future, AC-Service reports EBIT for the first half-year 2000 of DEM -4,9 million (previous year: DEM +4.4 million) and a net result to date of DEM -3.3 million (previous year DEM +2.6 million). As at 30 June 2000 the number of full-time equivalent employees amounted to 418 people (previous year: 359 people).
A long-term improvement of the cost structure will not become evident before the fourth quarter 2000. Despite first signs of a slight recovery in demand and new development activities, e.g. together with Software AG, which will lead to an integrated eCommerce solution and a web interface for FAMAC, sales in this division are not expected to dramatically improve in the third and fourth quarters 2000. Overall sales for the business year 2000 in the business division Distribution Solutions will therefore lag significantly behind the previous year (DEM 39.7 million). Sales growth in the services divisions IT Outsourcing and Human Resource Services should continue in the remaining two quarters. Since 1 July 2000 Process Partner AG, the SAP consulting firm, has also begun contributing to sales. The anticipated sales increase in the services divisions will probably only marginally exceed the sales decline for the year in total in the business division Distribution Solutions. For the year in total an operating loss is anticipated. One-off factors as a consequence of the tax reform in Germany will also have a negative effect on the result for the year.
For further information, see www.ac-service.com
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