Review by the President & CEO

President and CEO Riku Kytömäki

 

“Business volume continued on a good level, cost savings program progressed according to plan”

Half-Year Financial Report January–June 2019

 

In the second quarter of 2019 revenue increased slightly. The net increase was mainly related to the acquisition of Diversified Structural Composites, DSC, which was consolidated into Group accounts as of May 2018. The strong revenue growth in the Construction & Infrastructure customer segment continued in the second quarter, supported by the wind energy industry. However, within the Industrial Applications customer segment the telecommunications industry decreased and partly offset the strong increase in wind energy. Other Applications grew compared to previous year.

 

Geographically, revenue grew significantly in the region Rest of the World, supported by the acquisition of DSC and export from other Exel regions to the American market. The revenue decrease in Asia-Pacific in the second quarter reflected mainly the decrease in telecommunications volumes. Revenue in Europe was flat compared to last year.

 

Adjusted operating profit in the second quarter improved slightly compared to last year. The Group’s cost savings program is progressing according to plan. According to current estimates the annual savings target of EUR 3 million, expected to be fully effective in 2020, will be reached. Whereas in the first quarter we focused on the closing of production in Germany (completed in April), the focus in the second quarter was on further improving DSC’s cost structure. We expect effects from the improvements already in the third quarter and onwards. In the second quarter, DSC still reported an operating loss. In China we have continued the process to maximize synergy savings. We have identified a new manufacturing location where production from both of the existing factories can be consolidated. The new location complies with modern and more stringent standards for chemical industries in China.

In June 2019, we confirmed our strategy and our long-term financial targets for 2019-2022. We also introduced a target for net gearing. Our overall strategic directions remain unchanged. In June, in line with our strategy, we announced the decision to expand operations in Kapfenberg, Austria. The construction of a new facility is expected to be completed in the second half of 2020 at an estimated total cost of EUR 7 million. With the considerable increase in production capacity Exel is set for further growth in Central Europe and we can better serve customers especially in the Industrial Applications customer segment.

Updated 23 July 2019

 

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