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Exel Composites Plc’s Half-Year Financial Report January–June 2019: “Business volume continued on a good level, cost savings program progressed according to plan”

23.7.2019 10:00 EET

EXEL COMPOSITES PLC     HALF-YEAR FINANCIAL REPORT     23 JULY 2019 at 10:00 EET

Q2 2019 in brief

  •  Order intake decreased by 4.7% to EUR 23.8 million (Q2 2018: 25.0).
  •  Revenue increased by 4.8% to EUR 26.5 million (25.3).
  •  Adjusted operating profit increased to EUR 2.2 million (2.0), representing 8.5% of revenue (7.8).
  •  Net cash flow from operating activities was EUR 2.9 million (-1.1).
  •  Earnings per share amounted to EUR 0.14 (0.09).

Q1-Q2 2019 in brief

  •  Order intake increased by 10.6% to EUR 52.0 million (Q1-Q2 2018: 47.0).
  •  Revenue increased by 14.5% to EUR 53.6 million (46.8).
  •  Adjusted operating profit increased to EUR 4.2 million (3.8), representing 7.8% of revenue (8.0).
  •  Net cash flow from operating activities was EUR 3.8 million (-1.3).
  •  Earnings per share amounted to EUR 0.10 (0.17).

Outlook for full year 2019 (unchanged)

Exel Composites expects revenue and adjusted operating profit to increase in 2019 compared to 2018.

President and CEO, Riku Kytömäki

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.

Consolidated key figures

EUR thousand 1.4.–30.6. 2019 1.4.–30.6. 2018 Change, % 1.1–30.6. 2019 1.1.–30.6. 2018 Change, % 1.1.–31.12. 2018
Order intake 23,821 25,004 -4.7 51,977 46,975 10.6 100,757
Order backlog 1) 21,977 19,828 10.8 21,977 19,828 10.8 23,685
Revenue 26,482 25,277 4.8 53,572 46,796 14.5 96,608
Operating profit 2,144 1,321 62.3 2,549 2,951 -13.6 2,217
% of revenue 8.1 5.2 4.8 6.3 2.3
Adjusted operating profit 2) 2,239 1,973 13.5 4,196 3,759 11.6 5,018
% of revenue 8.5 7.8 7.8 8.0 5.2
Profit for the period 1,649 1,062 55.3 1,186 1,981 -40.1 386
Net cash flow from operating activities 3), 4) 2,860 -1,114 356.8 3,802 -1,277 397.7 868
Return on capital employed, % 14.1 10.3 8.7 11.4 4.4
Net gearing, % 3) 123.1 87.2 123.1 87.2 96.3
Earnings per share 0.14 0.09 0.10 0.17 0.03
Equity per share, EUR 2.12 2.34 -9.8 2.12 2.34 -9.8 2.18
Employees on average 652 652 0.0 671 613 9.4 647

1) As per the end of the period.
2) Excluding material items affecting comparability, such as restructuring costs, impairment losses and reversals, and costs related to planned or realized business acquisitions or disposals. For more information, please refer to the paragraph “Change in Exel Composites’ financial reporting terminology” of the Half-year Financial Report published on 21 July 2016.
3) Exel Composites Plc has applied the IFRS16 -standard since 1.1.2019 according to the model where the comparative information of previous periods is not adjusted.
4) IFRS16 rental payments have been classified to financing activities in the cash flow statement. This impacted net cash flow from operating activities in Q2 2019 with EUR 284 thousand and EUR 545 thousand in H1 2019.

Exel Composites’ Half-year Financial Report January–June 2019 is available in full in pdf format as an attachment to this release. The report and the related presentation are also available at the company’s website under the Investor section.

Vantaa, 23 July 2019

Exel Composites Plc
Board of Directors

For further information, please contact:
Riku Kytömäki, President and CEO
tel. +358 50 511 8288
riku.kytomaki@exelcomposites.com

Mikko Kettunen, CFO
tel. +358 50 347 7462
mikko.kettunen@exelcomposites.com

Distribution
Nasdaq Helsinki Ltd
Main news media
www.exelcomposites.com

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