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Content - Landis+Gyr "unaffected" by Toshiba's challenges

  • February 27, 2017

Landis+Gyr "unaffected" by Toshiba's challenges

Tokyo (SCCIJ) - Landis+Gyr is unaffected by the current challenges of its Japanese parent company Toshiba, the global market leader for energy metering solutions from Zug, Switzerland, said. Sales would be growing this year, with cash flow being positive, and R+D investments high. Landis+Gyr released an unaudited consolidated financial statement to prove its financial health. The Swiss company takes this unusual step to calm down possible customer concerns related to the weak balance sheet of its Japanese parent. Toshiba bought 60 percent of Landis+Gyr in 2011. The remaining 40 percent went to the Innovation Network Corporation of Japan.

Andreas Umbach, CEO Landis+Gyr

Consistent cash generation

Landis+Gyr announced that its fiscal year 2016 (ending March 31, 2017) forecast indicates the company is on track for further revenue and profit growth and consistent cash generation. The company expects revenue to reach $1,640 million (compared to $1,569 million in prior year). This nearly 5 percent year-on-year growth builds on the previous year’s 3.3 percent top-line growth rate. Notwithstanding a challenging margin environment in the Europe, Middle East and Africa region, the higher sales will also translate into year-on-year growth in operating profit, the company said.  

“Despite a tough international growth environment and currency impacts, Landis+Gyr has been able to demonstrate the effectiveness of our worldwide operations by continuing to expand sales faster than the global economic growth rate," Andreas Umbach, Landis+Gyr’s President and CEO, observed. Landis+Gyr expects to deliver approximately 5 percent top-line growth when the current fiscal year wraps up. "Coupled with an expected year-end order backlog of $2.4 billion, we have great confidence in our future sales performance,” Umbach added.  

Answer to financial concerns

Since the business was acquired in 2011 by Toshiba and the Innovation Network Corporation of Japan (INCJ) for $2.3 billion, Landis+Gyr has reduced net debt by $550 million resulting in a solid balance sheet with an equity ratio of 65 percent at the end of 2016. Landis+Gyr’s net debt now stands below $200 million, around one year’s level of pretax profits. The company, as it has for the past five years in a row, expects to generate around $100 million in cash flow during the current fiscal year.  

The Swiss smart meter producer presented an excerpt from the balance sheet as of the end of the third quarter to counter concerns in the financial market. "Toshiba may have to take a write-down of more than 100 billion yen in the current financial year," an executive at one of Toshiba's main creditor banks had told Reuters. Analyst Kota Ezawa of Citigroup warned of a ¥143 billion write-down in goodwill on Landis+Gyr. Growth in Europe may be slower than projected, Ezawa argued.  

Toshiba answered these claims by saying that Landis+Gyr’s earnings are growing steadily and it did not see any need for a write-down. The Swiss paper Neue Zürcher Zeitung pointed out that Landis+Gyr's balance sheet total of CHF 2.7 billion contained a goodwill of CHF 1.4 billion. But the order backlog would amount to more than one year's turnover. "As long as the company achieves its budgets - to put it in a simplified manner - this goodwill is not threatened by a write-down", the influential Swiss paper concluded.  

About Landis+Gyr

Landis+Gyr is the leading global provider of integrated energy management solutions for the utility sector. The company delivers comprehensive solutions for the foundation of a smarter grid including smart metering, distribution network sensing and automation tools, load control, analytics and energy storage. With annualized sales of more than $1.6 billion, Landis+Gyr operates in 30 countries across five continents, and employs 6,000 people.    

 

Text: SCCIJ partly with material of Landis+Gyr, Photo: Landis+Gyr

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