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Turbon reports “good progress”

November 29, 2016

The remanufacturer’s latest report reflects an “increasingly changing” market, with a “reversal” in financial results expected next year.

Turbon Group's global headquarters in Germany

Turbon Group’s global headquarters in Germany

The report (German), also shared by Finanzen (German), showed it “made good progress in the medium-term reorientation” of its business, with the core business currently focusing on “production and distribution” of remanufactured toner cartridges. However, it noted that the core business is “increasingly changing in a combination of reductions in the demand for laser cartridges”, that will “ultimately lead to a reduction in market participants”.

This, Turbon noted, was “through the intensified price competition”, and with OEMs forcing a “relocation of the sales model” away from “the pure transaction business via dealers” to distribution “in the complete system” managed through MPS. Turbon’s “short-term financial figures” reflect this change, and it noted that “the implementation of numerous measures in response to the market changes will lead to a reversal of the financial figures” as of next year.

The company’s “ongoing cost reduction programme” is allowing it to “meet market conditions that are adapted to the changing circumstances”, with “positive customer reactions in particular in the European market”. It predicts that from the first half of the 2017 financial year onwards, it expects “organic growth” with traders, but is “experiencing the fact” that SMB-sized competitors “do not have comparable cost-adjustment possibilities”, and are looking for “different forms”.

This offers “opportunities” for Turbon, including “the simple supply of competitors with cartridges to eventual company interests”, but conversely, it is “dissatisfied with the current business development” in the US market, with its US companies “included” in the cost-savings programme as a response. These include “significant savings in the administrative sector” through “functional combinations”, while planning improvements are also helping.

MPS will “continue to play an ever-increasing role” for the industry, and Turbon “succeeded in acquiring a majority stake in an established German provider”, with the aim to “establish our long-term position as a provider of corresponding services in the German market”, as well as in Europe in the future. The new investment will “enable the company to grow, improve the cost structure” of it through Turbon’s production and logistics, and offer the existing MPS structure to its customers.

Another area of growth is “cabling technologies”, with a “know-how acquisition” in the industry, which involves the “development and manufacture of ready-to-connect, technical connection solutions”. The systems are “manufactured in small batches and are thus highly personal-intensive in their production”, with such systems used in construction, medical-technical and more machines.

In terms of results for the third quarter, the company said that sales were “below our expectations at the beginning of the year”, with earnings “despite all cost reductions […] not at the desired level”. Sales reached €71.1 million ($75.3 million) compared to €80.3 million ($85.1 million) last year, and it expects consolidated turnover for the whole year of €100 million ($106 million), compared to €107.1 million ($113.5 million) last year.

The remanufacturer revealed in September that turnover for the first half of the year fell €6.6 million ($7.4 million) from last year, and had reported in March on less positive yearly results, which included small falls in sales and profit, and saw it adjust 2016 sales targets down. In October last year, the remanufacturer acquired Embatex, in a purchase which it claimed at the time would bring Turbon’s group revenue to around €110 million ($121 million) for the full year.

The Recycler also reported last August on a first-half sales increase for 2015 of 6.6 percent to €56.8 million ($63.2 million), a growth of €3.5 million ($3.8 million) from the “comparable period of the previous year”.

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