SFC Smart Fuel Cell Publishes Q1 Results

- Sales down 37.6% due to tough economic climate but within expectations - Additional cost reduction measures initiated - Order placed by Volkswagen AG in March for the supply of auxiliary power units to special purpose vehicles marks successful launch in a new market

SFC Smart Fuel Cell AG, technology and market leader for mobile and off-grid power solutions based on fuel cells, realized sales of EUR2,873k in the first quarter of 2009, a drop of 37.6% compared with the same period a year ago (Q1/08: EUR4,606k). This decrease in sales is mainly attributable to the difficult economic conditions, especially in the volume market leisure. Substantial delays in capital outlay decisions in the industrial market and the postponement of orders under joint development agreements (JDAs) with defense programmes also took their toll. The share of product sales in total sales increased from 75.3% in Q1/08 to 84.5% in the period under review.

EBIT fell to minus EUR1,175k in Q1/09 in the wake of the declining sales (Q1/08: minus EUR411k). Gross margin for Q1/09 decreased only slightly to 18.5% despite the substantially weaker sales volume (Q1/08: 18.9%). The company's continuing efforts to systematically reduce production costs of its EFOY fuel cells and keep a tight rein on expenses helped prevent any further loss of gross margin. Net profit receded to minus EUR874k (Q1/08: EUR147k).

Cash and cash equivalents stood at EUR42,470k as of March 31, 2009 (December 31, 2008: EUR45,568k).

EFOY unit sales totalled 1,121 in the first quarter of 2009 (Q1/08: 1,783), a 37.1% drop mainly impacted by the economic crisis in the leisure sector. Customers in the market for off-grid industrial applications continue to push back decisions on capital spending projects. Despite the company's progress tapping this market with its new EFOY Pro Series product line and a host of pilot projects, the performance in the industrial market was not sufficient to compensate for the steep decline suffered in the leisure market. A number of projects in the defense market were delayed, which eroded sales under joint development agreements (JDAs).

SFC made an impressive debut in the field of auxiliary power units for special purpose vehicles, a new market for the company, with an order from Volkswagen AG for over 200 EFOY fuel cell systems. As the number of electronic and electrical devices used without the availability of a power outlet grows in these vehicles, the dependable electricity offered by the EFOY fuel cell offers customers a compelling advantage with a level of convenience, environmental soundness and uncompromised reliability that is unmatched by any other technology currently available in the market.

For the 2009 business year the Management Board continues to aim for growth in the industry markets. An important strategic goal is to broaden SFC's sales basis in order to make the company less dependent upon the distinctive seasonal and economic fluctuations of the leisure market. Minimized stock holding at leisure retailers, as well as continued postponement of joint development orders in defense, bear a considerable risk that SFC will not achieve sales growth in 2009 compared to the year before. The Management Board has therefore created an extensive cost reduction program, the immediate implementation of which shall contribute to stabilizing the operating result (EBIT) on the 2008 level.

Source: SFC Smart Fuel Cell