DGAP-News: Gigaset publishes figures for first quarter of 2018 and confirms positive outlook

Press Release
Munich, June 1, 2018

Gigaset publishes figures for first quarter of 2018 and confirms positive outlook

• Revenue growth for Business Customers and Mobile Devices in the first quarter
• Consolidated revenue declines to EUR51.1 million (Q1 2017: EUR58.4 million) due to persisting challenging environment for Consumer Products
• Future business segments to make a significant revenue contribution, capital expenditure financing of EUR20 million approved
• Outlook remains positive

Gigaset AG (ISIN: DE0005156004), an internationally operating company in the area of communications technology, today published its business figures for the first quarter of 2018. Due to the declining market environment in the business with Consumer Products, consolidated revenue fell to EUR51.1 million (previous year: EUR58.4 million) during the reporting period. The result from core business before depreciation and amortization (EBITDA) receded to EUR1.5 million (previous year: EUR3.1 million); personnel expenses declined due to restructuring, leading to a positive effect on earnings of Gigaset. Marketing expenses increased slightly due to higher expenditures primarily for new products.

"We continue to face a challenging environment in our core market of Europe. Despite capturing market share in key submarkets, we saw revenues decline. We have responded resolutely to changing market conditions in recent years, reorganized our company accordingly and defined future business segments for Gigaset that should already successively contribute to our company's growth from 2018. We are undergoing a transformation phase and will increasingly reap the benefits of our operational strategy," stated Gigaset CEO Klaus Weßing. "The capital expenditure financing of EUR20 million approved by the Supervisory Board in April 2018 gives us additional financial flexibility to more quickly leverage new product fields and revenue potentials for Gigaset."

Revenue by Business Unit
At Consumer Products, Gigaset generated revenue of EUR37.2 million (previous year: EUR45.9 million) in the first quarter of 2018. The revenue decline resulted mainly from the ongoing weakness in the most important customer markets. Gigaset remains the market leader in Europe, however, and further expanded its market share in the cordless telephone business in the four most important customer markets - Germany, France, Italy and the Netherlands - by 4.1% (units) and 1.6% (revenue) in the first quarter.

Business Customers posted revenue of EUR11.7 million (previous year: EUR10.7 million), a gain of 9.4% against the prior-year period. The main contribution here came from the Germany region, followed by Italy and France. In terms of product segments, the DECT base stations and the N series, as well as the Maxwell IP desk telephones, made a particularly noticeable contribution to growth.

The Home Networks segment generated revenue of EUR0.3 million (previous year: EUR0.6 million). Experts predict the smart home market to generate significant growth in the future, from which Gigaset will benefit. To address this market, four new action bundles at a price of EUR79 each were developed, each of which serves a specific security need: protection against fire, water and home intruders, as well as increased user-friendliness. The bundles have been available in Germany since May 2018.

The Mobile Devices segment increased revenue by nearly 50% to EUR1.9 million (previous year: EUR1.3 million). The smartphone portfolio is to be continuously expanded. At the end of May 2018, the company presented three new smartphones. In the value-for-money segment, the GS100, GS180 and GS185 models serve the price points between EUR120 and EUR160. Furthermore, the Gigaset GS185 is the first smartphone to be produced in Germany, a unique selling point with which the company aims to leverage new revenue potentials.

Outlook remains positive
Gigaset will continue to focus on the realignment of the company in 2018. This means gaining market share in consumer business, expanding revenue in the Business Customer segment, further expanding the company's own smartphone business in Mobile Devices and expanding Home Networks as well as additional new business segments such as Smart Care and Future Communications. Expenses in the area of marketing and for capital expenditures will continue to play a key role in 2018. The Group therefore expects the following for the current fiscal year:

• An increase in revenue compared with 2017 in the high single-digit million range through the smartphone business and the expansion of the new business segments. An increase in revenue in the mid-to-high million range is expected in the Germany segment, declining revenue in the mid-million range in Europe, and an increase in the mid-to-high million range for the rest of the world.
• The company expects earnings of the core business before depreciation and amortization of between EUR20 million and EUR28 million. Operational performance is characterized by further declining gross profits in Consumer Products segment, rising gross profits in the Business Customer and Home Networks segments, and an expansion of expenses for development and marketing.
• Due to the considerable investments and subsequent expenditure for the social compensation plan and amounts set aside for risks arising from prior-year tax audits, the company expects a negative free cash flow in the mid-single-digit million range.

Overview of the key figures

Gigaset AG, Munich, is an internationally operating company in the area of communications technology. The company is Europe's market leader in DECT telephones and is likewise a leader in the international arena, with around 900 employees and sales activities in around 70 countries. Its business activities comprise not only DECT phones, but also an extensive smartphone portfolio, cloud-based smart home security solutions, and business telephony solutions for small and medium-sized enterprises (SMEs).

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

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