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IFCO SYSTEMS Reports Q2 2008 Results.

HOUSTON -- IFCO SYSTEMS' group revenues grew by 11.7% in Q2 2008, while EBITDA remained on prior year level. Year to date group revenues grew by 8.2% and EBITDA by 5.7% compared to prior year.

Q2 2008 revenues on a group level increased by US $20.8 million, or 11.7%, to US $198.0 million (H1 2008, 8.2% to US $365.8 million). RPC Management Serviceso Q2 2008 revenues increased by US $11.8 million, or 14.4%, to US $93.5 million compared to Q2 2007 (H1 2008, 6.7% to US $164.0 million), largely as a result of the acquisition of STECO. Pallet Management Serviceso revenues grew by US $9.0 million, or 9.5%, to US $104.5 million compared to the prior year quarter (H1 2008, US $17.5 million, or 9.5%, to US $201.7 million), with this segment continuing to take advantage of its unique national network and service offerings.

Q2 2008 gross profit margin on a group level decreased by 1.6 percentage points to 17.6% (H1 2008, declined 0.4 percentage points to 16.7%). RPC Management Services' gross profit margin dropped from 27.5% to 20.4% in Q2 2008 (H1 2008, dropped from 23.4% to 19.0%). Improvements in the RPC US gross profit margin were more than offset by lower fixed cost coverage in Europe caused by reduced trip volume following the termination of a RPC retail contract late last year. RPC Management Services' gross profit margin was also affected by the first time consolidation of STECO, where expected synergies will improve margins in the upcoming quarters. The Pallet Management Services segment gross profit margin increased significantly due to higher volumes and continuing cost efficiency improvements.

Q2 2008 EBITDA reached prior year levels with a slight increase of US $0.1 million, or 0.5%, to US $29.1 million (H1 2008 grew by 5.7% to US $51.4 million). LTM Q2 2008 EBITDA reached a level of US $109.9 million. EBITDA in the RPC Management Services business segment decreased by US $2.4 million, or 9.9%, in Q2 2008 compared to Q2 2007, and H1 2008 EBITDA declined 8.2% to US $37.7 million. Pallet Management Services' EBITDA significantly increased by US $3.8 million, or 70.0%, to US $9.3 million in Q2 2008 compared to Q2 2007, and H1 2008 increased significantly by 76.6% to US $17.6 million.

Q2 2008 EBIT declined by US $3.1 million, or 16.4%, to US $15.8 million (H1 2008 fell by 7.7% to US $27.3 million), mainly due to higher relative depreciation levels of STECO assets. LTM Q2 2008 EBIT reached a level of US $64.3 million.

Net profit decreased by US $5.3 million, or 53.2%, to US $4.7 million in Q2 2008 (H1 2008, 51.6% to US $6.0 million) due to the operational drivers discussed above and higher net interest costs.

Operating cash flows from continuing operations before income tax payments declined significantly from US $39.3 million in H1 2007 to a negative operating cash flow of US $0.6 million in H1 2008. This decline was primarily caused by reduced refundable deposit levels and other related effects on working capital following the termination of a RPC retail contract in Europe. IFCO SYSTEMS' cash position as of June 30, 2008 of US $28.7 million was reduced by US $6.9 million compared to December 31, 2007.

Capital expenditure levels, excluding the effects of the STECO acquisition, decreased by US $11.2 million, or 51.8%, to US $10.5 million from Q2 2007 to Q2 2008 (H1 2008 by 42.9% to US $17.9 million). Including the cash paid for the STECO acquisition, our capital expenditure levels increased by US $18.2 million, or 83.9%, to US $39.9 million in Q2 2008 compared to Q2 2007 (H1 2008, 51.2% to US $47.3 million).

ROCE from continuing operations, on an LTM basis, decreased to 15.3% as of June 30, 2008, compared to 15.6% as of June 30, 2007. The Q2 2008 ROCE calculation was negatively impacted by the first time consolidation of STECO. Excluding STECO, IFCO SYSTEMS' ROCE would have risen as compared to the prior year comparable level.
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Outlook: IFCO SYSTEMS expects that the economy in Europe will slow down during the remainder of 2008. The economic growth in the United States has slowed markedly in recent quarters and may remain somewhat depressed during the remainder of 2008. However, IFCO SYSTEMS estimates that the Company will further grow its business, despite the difficult economic conditions in its markets.

The Company has initiated various projects to accelerate the growth in its RPC business and has already built a good backlog of new prospects. Additionally, the Company expects to leverage synergies resulting from the acquisition of STECO.

The Company anticipates that the recovery in the productivity and profitability of the Pallet Management Services segment will continue and therefore anticipates improved revenues and profitability for fiscal 2008 as compared to fiscal 2007 in this segment.

As a result, IFCO SYSTEMS expects increased revenues and improved profitability for IFCO SYSTEMS worldwide in fiscal 2008 as compared to fiscal 2007.

For further explanations, please see IFCO SYSTEMSo quarterly report, which will be filed with the Deutsche Borse AG on or about August 07, 2008, and will be available on the Company's website www.ifcosystems.com or www.ifcosystems.de.

This release contains forward-looking statements that reflect Management's current view with respect to future events. All statements contained in this release that are not clearly historical in nature or necessarily depend on future events are forward-looking. The words "anticipate", "believe", "expect", "estimate", "planned" and similar expressions are generally intended to identify forward-looking statements. These statements are based on current expectations, estimates and projections of the Management on currently available information. Many factors could cause the actual results, performance or achievements to be materially different from those that may be expressed or implied by such statements. We do not assume any obligation to update the forward-looking statements contained in this release.
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Publication:Business Wire
Article Type:Financial report
Date:Aug 7, 2008
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