Deutsche Beteiligungs AG issues profit warning

Deutsche Beteiligungs, the listed German private equity firm, has signalled that it expects a major drop in earnings for the end of the financial year

Deutsche Beteiligungs AG has warned that pre-tax profits for the 2000/2001 financial year, which closes at the end of October, will clearly fall short of the E43.014m seen in the previous year.

It says that the prime reason for the profits decline is the extremely weak market environment for new issues which has meant that plans to exit investments through public offerings have not been realizable.

Following the postponement of the flotation of Lignum Technologie, of which it owns 20.7 per cent, the company said that it could not “discount the possibility of ending the 2000/2001 financial year with only slightly positive earnings”.

Yet spokesman Thomas Franke remains optimistic about the future. “We see there is a good outlook for 2001/2002 because the value of the portfolio hasn’t changed since yesterday. We will have the earnings next year” he told PEO.

Franke added that Lignum Technologie, which was supposed to be listed on 4 July, is a very solid company. In the first quarter of this year it recorded a 15.9 per cent rise in sales to E179m and pre-tax profits for the year rose from E9m to E11m.

The warning from Deutsche Beteiligungs AG follows an earlier statement last week which reported a pre-tax loss of E1.7m for the first half of its financial year up to 30 April. The company said that current expenses for portfolio management, and in particular, write downs of E9m had led to its “negative pre-tax profit”.

Following the announcement this morning the private equity firm’s share price dipped from E32 (at the end of yesterday), to E26.4, bouncing back to E29.5 several hours later.