Exel Composites' Business Review Q1 2024: Order intake EUR 28.6 million, revenue EUR 23.4 million and adjusted operating profit EUR -0.6 million

EXEL COMPOSITES PLC           STOCK EXCHANGE RELEASE  25 APRIL 2024 at 9:00 EEST

Q1 2024 in brief

• Order intake increased by 8.7% to EUR 28.6 million (Q1 2023: 26.3)
• Revenue decreased by 18.9% to EUR 23.4 million (28.8)
• Operating profit declined to EUR -0.6 million (-0.3), operating profit margin -2.4% (-1.0%)
• Adjusted operating profit declined to EUR -0.6 million (0.0), operating profit margin -2.4% (0.0%)
• Earnings per share amounted to EUR -0.05 (-0.18)

Guidance for the full year 2024

Exel Composites expects revenue to increase and adjusted operating profit to increase significantly in 2024 compared to 2023.

President and CEO, Paul Sohlberg

Encouraging improvements in order intake and profitability during the quarter

We opened the year with clear improvement in our market-facing activities. Our order intake for the first quarter amounted to EUR 28.6 million, which represents an increase of 21% quarter-on-quarter, and an increase of 9% compared to the same period last year. At the end of this first quarter our order backlog stood at EUR 34.9 million, showing an increase of 32% compared to a year ago. We continued to witness signs of increased customer activity in all geographies, and we continue to remain cautiously optimistic of an improving market environment this year, in line with our guidance.

Revenue in the first quarter was EUR 23.4 million (28.8). This represents an improvement of 5.8% from the fourth quarter 2023, despite being affected by the strikes in Finland this spring. The lower revenue compared to the same period last year was due to the timing of order arrivals, only part of which could be realized into revenue in this first quarter. It was pleasing to see revenue growth quarter-on-quarter and year-on-year in our North American operations following completion of the strategic factory review last year. Otherwise, Exel’s revenue stayed at a lower level in all customer industries and in Europe and Asia-Pacific year-on-year.

As a result of our focus on efficiency, our adjusted operating loss more than halved to EUR 0.6 million from the fourth quarter 2023, nearing us to the break-even we achieved a year ago. Our efforts to manage our working capital and costs continued, and will continue through this year. While the relative variable cost level improved during the first quarter, we have further opportunity to improve the efficiency of our operations and the cost structure by increasing the utilization of our capacity and adjusting our cost.

New strategy getting traction with customers and within Exel

An important pillar of our new transformative strategy is to seek organic growth from the large and fast-growing applications driven by the energy transition and decarbonization. In full alignment with this target, we had the pleasure of announcing two new customer agreements in the quarter. The first one is in our Transportation customer industry where a new multi-year agreement was signed with Foton Bus and Coach company for the delivery of pultruded composite profiles for Foton’s electric buses. Following intensive preparations and development work together with the customer, this agreement offers significant business potential to Exel going forward. The other new customer engagement is in our Energy customer industry where we signed a multi-year agreement through our joint venture Kineco Exel Composites India (KECI), for the supply of pultruded carbon fiber planks for spar caps to a major wind turbine manufacturer in South Asia. These products will be delivered from our new factory under development in India.

We continued to decisively progress the implementation of our new transformative strategy also within Exel.  During the first quarter, we started the second strategic factory review, this time concerning our Belgium operations. We also put in place the new operating model geared around our two new business units, the Engineered Solutions BU and Industrial Solutions BU and changed our organization structure to be in full alignment. This was also reflected in our Group leadership team.

In line with our strategy and following extensive analysis and preparations, we have announced today that Exel will be proposing to its shareholders a rights issue of Exel shares. We are convinced this is the right accelerator for our future growth and transformation. We are pleased to do it in a way that offers every Exel shareholder equal opportunity to participate.

Outlook for 2024

Exel Composites expects revenue to increase and adjusted operating profit to increase significantly in 2024 compared to 2023. Our order backlog for 2024 is higher than it was a year ago. While the order intake early this year was at a higher level than before, the visibility to continued favorable market development is still limited. Considering the overall economic sentiment, we continue to expect demand to be somewhat soft in the first half of 2024 while Exel will continue to have free production capacity. 

The progress made during this first quarter is pleasing, albeit not yet satisfactory. We will continue working hard according to our strategic plan. The proposed rights issue is an important accelerator of our strategy, and we hope that all of our shareholders will continue to support our journey.    

Consolidated key figures

1) Excluding material items affecting comparability, such as restructuring costs, impairment losses and reversals, and costs related to planned or realized business acquisitions or disposals

2) Last 12 months’ adjusted EBITDA

Revenue by customer industry

Revenue by region1)

1) Revenue by customer location

Vantaa, 25 April 2024

Exel Composites Plc
Board of Directors

Financial results briefing

Q1/2023: Exel Composites will hold a financial results briefing regarding the Q1 2024 results today at 12:30 EEST. Please participate in the online event here.

For further information, please contact:

Mikko Rummukainen, CFO

tel. +358 20 754 1335

mikko.rummukainen@exelcomposites.com

Exel Composites in brief

Exel Composites is one of the largest manufacturers of composite profiles and tubes made with pultrusion and pullwinding technologies and a pultrusion technology forerunner in the global composite market. Our forward-thinking composite solutions made with continuous manufacturing technologies serve customers in a wide range of industries around the world. You can find our products used in applications in diverse industrial sectors such as wind power, transportation and building and infrastructure.

Our R&D expertise, collaborative approach and global footprint set us apart from our competition. Our composite solutions help customers save resources, reduce products' weight, improve performance and energy efficiency, and decrease total lifetime costs. We want to be the first choice for sustainable composite solutions globally.

Headquartered in Finland, Exel Composites employs over 600 forward-thinking professionals around the world and is listed on Nasdaq Helsinki. To find out more about our offering and company please visit www.exelcomposites.com.