Supply Chain

Encouraging revenue trend in most regions and sectors

The SUPPLY CHAIN division generated revenue of €3,130 million in the first quarter of 2010, down 0.5% from €3,145 million in the previous year. Most regions and sectors saw encouraging revenue growth. This was more than offset by the loss of trading volume with the Arcandor group in Germany and an underperforming contract in America that was not renewed in the second quarter of 2009. When adjusted for exchange rate gains of €59 million, the decline was 2.4%.

Revenue in the Supply Chain business unit amounted to €2,820 million or 0.7% less than the prior-year period (€2,841 million). In the Americas region, most sectors recorded a year-on-year increase in revenue with the Automotive sector seeing the largest gains. New business wins and trading upturns resulted in strong growth in the Asia Pacific region, notably in Australia, China, Japan and Thailand. Additional revenue was generated in the United Kingdom, driven by the positive performance of the Healthcare sector. Western Europe experienced lower volumes in the Retail and Technology sectors, due in part to site closures.

Williams Lea’s first quarter revenue increased 1.6% on the prior-year period from €304 million to €309 million. Organic revenue growth was 2.3%. This primarily reflected the performance of the investment banking and legal sectors in the Americas region as well as an increase in marketing solutions.

New business wins worth €240 million

In the first quarter of 2010, the Supply Chain business unit concluded new contracts worth approximately €240 million with both new and existing customers. The contract renewal rate was around 90%. Williams Lea won a significant new contract with Wal-Mart (USA) for point-of-sale deliveries.

EBIT before non-recurring items up by 52%

Division EBIT was up by 67.6% to €57 million in the reporting period (previous year: €34 million). Adjusted for restructuring costs of €7 million, EBIT before non-recurring items was €64 million – a 52.4% increase over the prior-year figure of €42 million on the same basis. There were no further charges in the period related to the Arcandor insolvency. The EBIT margin before non-recurring items increased in the first quarter of 2010 to 2.0% (previous year: 1.3%).

EBIT before non-recurring items was up primarily because of an increase in existing business activity together with margin improvements resulting from restructuring initiatives and cost savings.

Operating cash flow was €50 million, €16 million ahead of the previous year (€34 million). Enhanced EBIT together with improved working capital management resulted in this favourable cash position.