Re: [Leica] How to read a balance sheet

[Stephen <cameras@jetlink.net>]

No doubt the people people losing their jobs in Solms (whether it's
called cut backs or layoffs) will be happy to know that the R sales
declines of its  new heavily invested  R&D signature product has so
little to do with their non employment.  I wonder if they agree with
Erwin.

It's also nice to know Erwin does not defend  Leica against all odds, yet
I don't  recall  any  Erwin post concerning Leica management or policies,
where he did not defend or agree with them.   It seems to me that cool
analysis demands freedom from a single point of view.

Stephen Gandy

Erwin Puts wrote:

> There is a strong impression with the currently active contributors
> of this list, that he downward trend of the R-sales is the cause of
> the alleged financial troubles of Leica. Can this impression be
> supported by facts?
> I collected some figures from the Leica financial reports from 1995
> till now. Read with me.
> In 95/96 turnover was 240 M (in Dmarks). profit was 9.5 M and the M
> and R turnover were 70 and 43 M
> In 96/97  turnover was 266 M (in Dmarks). profit was 9 M and the M
> and R turnover were 75 and 65 M
> In 97/98  turnover was 280 M (in Dmarks). loss was -17 M and the M
> and R turnover were 73 and 67 M
> In 98/99  turnover was 265 M (in Dmarks). loss was -14 M and the M
> and R turnover were 70 and 42 M
> In Q1 of this year  turnover was 57 M (in Dmarks). loss was -2 M and
> the M and R turnover were 16 and 9 M
>
> Now these figures are of course incomplete. But the hypotheis is that
> the R sales are responsible for the current losses.
> Look at the 96/97 and 97/98 figures. M and R had the almost identical
> turnover in both years. Still in 96/97 a profit was recorded and one
> year later a heavy loss, but with identical R sales.
> In 95/96 and 98/99 we have two comparable years again: identical M
> and R sales (70 and 42), but a profit of 9.5 versus a loss of -14.
> If we project the Q1 figures to a full year (the Q1 is a traditional
> underperformer, so you should use a factor of 4.5 to get to full year
> figures) and we should accept the Board's view that there will be a
> slight profit
> Turnover 257 M, profit 1 M, turnover of M is 72 and of R is 40. Let
> us accept a still lower figure of the R sales, let us say 36 M.
>
> It is evident that the simple claim that the R sales is the sole and
> direct cause  for the financial troubles of the company cannot be
> upheld. There is no correlation in the 5 year time span between R
> sales and profit/loss figures. See it for yourself;
> Year    R sales Profit/loss
> 95/96   43      +9.5
> 96/97   65      +9
> 97/98   67      -17
> 98/99   42      -14
> (99/20  36      +2)
>
> I am not as some of this list claim a blind admirer of Leica and its
> products. I am a blind admirer of facts and a cool analysis of these
> facts to support claims. And as wild guesses are made, however
> plausible on first sight, that do not stand the scrutiny of the
> facts, I feel obliged to point that out.
> My position may look like  defending Leica against all odds. No I am
> not general Custer.
> Of course I do know that  the R line is selling below expectations.
> And I am aware of the fact that AF in a high end SLR is for many  a
> desirable feature.
>
> This BTW is my last post to this list.
>
> Erwin
>