Review by the President & CEO

President and CEO Riku Kytömäki

 

“Profitability improved significantly”

Exel Composites Financial Statements Release 2019

 

2019 was a year of profitable growth for Exel Composites. Alongside with order intake growth, Group revenue continued to increase in 2019. The Construction & Infrastructure customer segment drove revenue growth, strongly supported by wind power. Wind power is a growing market and it has rapidly become Exel’s largest customer industry. Revenue in Other Applications developed well in 2019, driven by growth in defense applications. Exel has long experience in developing defense products such as camouflage support poles. The Industrial Applications customer segment, on the other hand, declined mainly due to lower business volumes in telecommunications.

Despite the order intake growth in the fourth quarter of 2019, revenue in the quarter declined slightly. Revenue growth in wind power, transportation and defense was not quite enough to compensate for the decline in telecommunications and construction and infrastructure.

Geographically, revenue increased in the region Rest of the World in 2019, supported by increased export from Exel’s units in Europe and China to the North American market. Revenue both in the Asia-Pacific region and in Europe was approximately at last year’s level. In the fourth quarter, revenue growth in Asia-Pacific region was not enough to offset the decline in the North American market, which was negatively impacted by fluctuations in wind power volumes.

Adjusted operating profit improved significantly in 2019, mainly due to profitable growth in wind power and due to the Group’s cost savings program, which was completed in 2019 according to plan. The original target of the program was to achieve a total of EUR 3 million savings in 2020. In 2019 the cost savings program already had an estimated EUR 2 million positive impact on Group profit. The full profit impact of the program in 2020, compared to the 2018 cost structure, will be approximately EUR 3 million. The most important actions implemented under the program were the closure of the production plant in Germany, the cost restructuring in Exel USA as well as operational improvements and synergy savings in China.

Actions to improve profitability of Exel USA progressed, but breakeven was not yet achieved in 2019. Although the implemented structural savings improved profitability, lower volumes compared to the previous year had an opposite impact. The streamlining of the cost structure and organization during 2019, however, gives a good start for Exel USA going forward in 2020.

In 2019, Exel Composites decided to expand its operations by investing in a new manufacturing facility in Austria. The capacity of the old facility has been limiting further growth in Central Europe and the considerable capacity increase will improve Exel’s ability to meet customer needs. The construction of the new facility is expected to be completed by the end of 2020.

Exel is well positioned as a leading player in the composites industry being the only pultrusion company with global presence. Interest towards composite materials is steadily growing, supported by global megatrends such as urbanization, sustainability and total life cycle cost management. For example, increased energy efficiency requirements within the transportation industry and the increased utilization of anti-corrosive materials in the construction industry drive the use of composites. The composites market is expected to grow 2%-5% during 2018-2023, mostly in Asia and North America. Exel’s ambition is to leverage on these trends and offer our customers attractive products fitting that demand.
 

 

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Exel Composites Oyj, Vantaa head office, Mäkituvantie 5, FI-01510 Vantaa, Finland