The last twelve months making up fiscal 2008/2009 remind me of the – slightly adapted – title of a song: “What a difference a year makes.” Our entire global economic system was shaken to its core by a level of turbulence we hadn’t thought possible, with the result that we have faced some extraordinary challenges.
One of the most remarkable features of this collapse was that almost all the tried-and-tested instruments and indicators on which we had previously relied for many years in economic matters lost much of their former credibility, and only regained a small measure of it towards the end of 2009. Against this background of events, at the beginning of fiscal 2008/2009 we just could not foresee the extent to which we would later be hit by the crisis. We therefore adopted a cautious but confident outlook to the new year, with the aim of maintaining our net sales and operating profit around the same outstanding level of the preceding year. Although from today’s perspective this view appears hugely ambitious, at the time it was regarded by some as standing still, a fact that underlines, once again, the enormity of the paradigm shift we have experienced.
At the end of fiscal 2008/2009, the overall decline of three percent in net sales was roughly in line with our expectations, despite the considerable deterioration in the economic situation over the period. Down 13 percent, our operating profit contracted substantially year on year, mainly as a result of pressure exerted on margins. This has an impact on our dividend, which is down 13 percent; our proposed dividend has been set at €1.85 per qualifying share compared to €2.13 in the previous year.
Overall, we have been able to maintain our established course, although navigation was largely a matter of intuition. In recent months we have taken swift action to manage our portfolio of services and our costs appropriately and to adapt as well as possible to the major changes in our business environment. A measured, flexible and proportionate response has served us well.
Wincor Nixdorf remained focused on its strategic goal of transforming the Company into a provider of comprehensive IT business process solutions for our customers. While pursuing effective cost management, we nevertheless maintained a high level of capital spending on research and development and expanded our high-end portfolio to include new Professional Services (Glossary) . We also responded successfully to a change in the investment behavior of our customers, thus allowing us to boost sales in the areas of Software and Services (Glossary) . This noticeably helped to stabilize our performance overall, although it could not make up entirely for a decline in our Hardware business.
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We made further progress towards implementing two key elements of our proven business strategy by maintaining a relatively high level of capital spending on cutting-edge developments and on the expansion of high-end services. The other two levers making up this consistent strategy also delivered good results. As well as expanding our global business, thanks to sustained growth in the Asia/Pacific/Africa and Americas regions, we were able to successfully transfer our branch and self-service know-how to similar branch-level applications in the service station and postal service markets.
We used the market weakness and pressure generated by the crisis as an opportunity to make internal improvements with an eye to the future. To this end, our ProFuture program contains initiatives intended to promote lasting growth as well as measures to optimize our structures and processes, all with the aim of providing a sustained boost to performance with regard to time, costs and quality. Our aim is not only to emerge from the crisis on a stable footing, but to arm ourselves for the point when the economy as a whole has recovered sufficiently to talk of a fundamental recovery.
At the start of fiscal 2009/2010, we are not the only ones who believe there is as yet no clear sign of an improvement in the market for IT solutions for retail banks and retailers. With the prospect of a challenging first half for Wincor Nixdorf compared to the previous year, we anticipate a further downturn in our net sales and operating profit over the year as a whole, albeit no greater than that experienced in fiscal 2008/2009. It is clear both from the package of measures we have introduced and from our stronger balance sheet with an improved equity ratio and a reduced debt position that we are well prepared for what is likely to be another challenging year.
We believe the underlying trends in our target industries remain intact. In the medium term, we expect a return to a higher level of investment spending in both retail banking and the retail sector. The pressure on both to improve their competitiveness is still tangible, and offers the prospect of potential new business for Wincor Nixdorf. With this in mind, we shall continue to steer towards the medium-term objectives we specified on flotation: annual increases of 6 and 8 percent in net sales and EBITA (Glossary) , respectively. The extent to which these well-judged targets are attainable in fiscal 2010/2011 will depend primarily on whether the recent trend towards economic recovery can be consolidated and sustained.
Thus, Wincor Nixdorf offers shareholders an investment that emphasizes continuity – a successful business model, a portfolio well adapted to market trends and a proven business strategy – all delivered throughout the world by a committed workforce. We can also point to a reliable dividend policy that continues to allocate around 50 percent of profit for the year for distribution to shareholders.
The good relationship we have established with our customers is one of the keys to our success, and I would like to take this opportunity to express my gratitude for the confidence they have placed in us. Naturally, my sincere thanks also go to our staff for the tremendous commitment they have shown over recent months.
To conclude, let me express my gratitude to our customers, whose trust it is that spurs on both the Board of Directors and the workforce at Wincor Nixdorf. My thanks also go to you, our shareholders, for your loyalty and constructive support. We take your expression of confidence in us as an obligation to maintain the business approach we have pursued thus far, with strict regard at all times for the sustainable prosperity of the Company.
Eckard Heidloff
