LaCie: Fiscal 4Q10 Financial Results

LaCie reported revenue of €64 million for the quarter ended June 30, 2010.

This represents a 1% decrease with forex (-5% without forex). Europe accounts for 54% of the revenue, versus 35% for Americas and 11% for AsiaPac. After neutralization of forex, sales by geographical areas vary by -7%, – 4% and -4% respectively.

LaCie reported revenue of €286 million for the year ended June 30, 2010. This compares to €301 million in the year-ago period, representing a 5% decrease with and without forex.

Europe accounts for 60% of the revenue, versus 32% for Americas and 8% for AsiaPac. After neutralization of forex, sales by geographical areas vary by -7%, -3% and -2% respectively.

"We underwent a major strategic shift this year", explained Philippe Spruch, CEO. "We decided to exit the entry-level market. By doing so, we favored our profit over our revenue. We took an approach totally different from our competitors and successfully broke in the USB flash key market while, thanks to our investments in R&D, we launched even more differentiated devices with superior performance, aimed at the most demanding niches. It took guts to make such choices but the outcome is positive: we are neither disappointed in our revenue nor in our profitability which will be confirmed early in October. We cannot stop innovating though: our teams are currently developing a NAS solution completely integrated with online storage. This unique offering will be very simple of use and will be available in October/November 2010. It should leverage our revenue at the end of the calendar year 2011.”

Kay topics for the quarter:

• LaCie enriched its offering of safe mobile devices with the USB 3.0 Rugged (with fastest interface on the market), the Rugged Safe (featuring unbreakable 128-bit AES hardware encryption, the safest biometric authentication technology, and a shock-proof enclosure) and the LaCie XtremKey (USB flash drive protected by and impenetrable shell resistant to 5-meter drops, fierce heat and bitter cold).
• LaCie appointed ELECOM, a Japanese supplier of PC and AV accessories, as its sole distributor in Japan beginning January 1, 2010. ELECOM incorporated the responsibilities of sales, technical support and repair for LaCie products in the Japanese market. LaCie re-organized its offices in Japan to align with the new arrangements of the partnership.
• LaCie decided to postpone the migration of its ERP under SAP to January 2011, in order to secure its operations during Back to School and Holiday campaigns.

Net profit increased by bY 128% fir the year

• Gross margin reached 20%, compared to 15.4% in FY09. The main driver of this improvement is the change in product mix. Cheaper sea freight helped with a better monitoring of cost of goods sold.
• Distribution costs reached 2.7%, compared to 3.2 % in FY09. SG&A expenses reached 11.1% of the revenue this year compared to 10% in FY09. The fair value of the second share-based payment plan was expensed for €1.4 million, out of which €1.2m hit SG&A.
• As announced, the R&D headcount kept increasing both in Paris and Zürich. R&D costs account for 1.4% of the sales vs 0.7% in FY09.
• The headcount is stable at 494 staff.
• The operating income comes up to €14m (4.9% of the revenue) compared to €4m in FY09 (1.4% in FY09).
• The net income amounts to €10.5 million (3.7% of the revenue) compared to 1.5% in FY09. PPS amounts to €0.29.

"LaCie won its bet", said Philippe Spruch, CEO. "Last year, we said we wanted to become a margin-driven business in order to reach 5% of EBIT. We made it, without slowing down on our investments. Now, it is time for us to hit the road and make more sales."

Stronger cash position

• Net cash is €54.3 million.
• Working capital is 14.5% of the revenue, vs 8.5% as of June 30, 2009. There is more inventory than usual at closing in connection with the delayed change of ERP, in anticipation of which LaCie built buffer stock.
• Investments include: €4.9 million regarding Wuala after finalization of the purchase agreement; capex on the cloud computing through Wuala; capex on the future ERP
• The €9 million bank loan used to finance the Wuala acquisition was cashed in FY10.

2011 Outlook

• LaCie prepares the move from hard drives to flash drives, by launching ultra compact products such as the MosKeyto or very performing ones such as the XtremKey. This change in technology will take 5 to 7 years. In 2011, LaCie should sell about €15m in flash drives.
• At the same time, LaCie is embedding the Wuala Cloud in a complete offer of mobile, local, centralized and in the cloud storage. That way, the users will be able to upgrade their backup system without over investing nor losing data. In August, complementing LaCie’s simplistic approach to design and usability, Wuala already introduced a new look and feel to its application interface – showcasing a clean navigation for easy backup, file sharing and synchronization.
• In September, LaCie launched its first network-attached storage solution to feature Wi-Fi called LaCie wireless Space.
• In 2011, LaCie will unfold the other parts of its strategy.