RoodMicrotec’s integration and optimization going according to plan

The market developments in this segment are generally weak, which means that the high expectations of the beginning of this year among some of RoodMicrotec’s customers have been scaled back. For some of the operations, this has led to a decrease of sales, while in others sales have in fact increased. A number of customers is investing less in equipment, and therefore is outsourcing more business. New contracts for RoodMicrotec’s services have increased considerably in the past few months, both in Nördlingen and in Stuttgart. This may be partly explained by the greater attractiveness of RoodMicrotec to the semiconductor market. ‘In commercial talks with customers, we are clearly better positioned than before. Of course, we are not immune to the turbulence in the market, but we see plenty of opportunities in the segments in which RoodMicrotec operates that we can exploit by focusing on integration and optimization of the organization,’ said Philip Nijenhuis, CEO of RoodMicrotec. Progress of integration and optimization The integration of Rood and Microtec is going according to plan. For the next few years, the company projects rationalization effects ranging between € 400,000 and € 600,000 per year starting from 2009. In September, a first step was made towards improving the company’s profitability and optimizing the organization as from 2009 by closing the location in Hanover. The closing of this company has eliminated a potential loss item for the second half of this year. While the costs involved were very modest, the closing will mean a loss of sales of over € 500,000 in the second half of this year. Also in the context of optimization, RoodMicrotec has indicated earlier that it will reduce the number of its staff. Personnel expenses make up approximately half of the company’s business costs. On a pro forma basis, RoodMicrotec will reduce its staff by over 12% compared to year-end 2007. In 2009, the trend of generating more sales per employee will be continued in order to improve the company’s results on a structural basis. Financing As at 1 November 2008, RoodMicrotec has repaid one third of its bridging loan of € 1.025 million from its cash flow without using additional bank or other facilities. RoodMicrotec will repay the remainder of the bridging loan in 2009. Outlook for 2008 Due to the turbulence mentioned above, RoodMicrotec expects some orders to be postponed to next year. The closing of the Hanover branch and possible postponements of orders will impact RoodMicrotec’s sales in 2008. Excluding the closing of the Hanover branch, RoodMicrotec expects sales in the second half of 2008 to exceed the pro forma sales in the first half of 2008 (approx. € 8.028 million). Outlook beyond 2008 Based on discussions with customers, we are cautiously projecting sales growth in 2009. Volume orders for fabless design houses already concluded and volume growth from other existing customers support this projection. The supply chain management segment will show the strongest growth next year. As indicated earlier, RoodMicrotec collaborates closely in this supply chain with its strategic partner Millennium Microtech. In 2009, too, further optimization of the organization and improvement of the result will be prioritized.