Exel Composites' Half Year Financial Report Q1-Q2 2021: Continued strong order intake and revenue
EXEL COMPOSITES PLC HALF YEAR FINANCIAL REPORT 20 JULY 2021 at 10:00 EET
Q2 2021 in brief
- Order intake increased by 89.8% to EUR 43.5 million (Q2 2020: 22.9).
- Revenue increased by 23.1% to EUR 33.5 million (27.2).
- Operating profit decreased to EUR 2.4 million (2.8), which is 7.0% of revenue (10.3).
- Adjusted operating profit decreased to EUR 2.5 million (2.9), which is 7.3% of revenue (10.6).
- Earnings per share amounted to EUR 0.13 (0.21).
Q1-Q2 2021 in brief
- Order intake increased by 48.9% to EUR 85.5 million (Q1-Q2 2020: 57.4).
- Revenue increased by 17.1% to EUR 64.5 million (55.0).
- Operating profit increased to EUR 4.8 million (4.7), which is 7.4% of revenue (8.5).
- Adjusted operating profit decreased to EUR 4.9 million (5.0), which is 7.6% of revenue (9.0).
- Earnings per share amounted to 0.29 (0.27).
Guidance for the full year 2021
Exel Composites expects revenue and adjusted operating profit in 2021 to increase compared to 2020.
President and CEO, Riku Kytömäki
In the second quarter of 2021, order intake continued strong as market demand in various customer industries increased. Along with another strong quarterly order intake, revenue increased compared to the previous year. Adjusted operating profit was, however, behind last year.
Revenue increased during the second quarter in almost all customer industries. The conductor core application was driving the growth in Buildings and Infrastructure. The key source of growth in Defense customer industry was the camouflage net support pole application. In Equipment and other industries, we saw a Covid-19 related rebound in the business volumes of a large number of customers. In Wind power, the revenue in the second quarter was slightly lower than last year. Our order backlog, however, indicates that the growth of Wind Power will continue during the second half of the year.
From a geographical perspective, the revenue increase in North America and Europe reflects the shipping locations of the above-mentioned growing applications rather than the development of demand in the individual geographical markets.
Despite the revenue increase, adjusted operating profit declined in the second quarter compared to the previous year. The operating profit was negatively impacted by low profit margins during the ramp-up of certain high-volume products and increased raw material costs. We expect the profitability to improve in the second half of the year both in terms of pricing as well as production efficiency once the production is fully ramped up. Last year, the second quarter was impacted by approximately EUR 0.3 million of Covid-19 pandemic related grants, which did not repeat this year.
In June 2021, the Board of Directors reconfirmed Exel’s strategy in its annual strategy review. The main strategic focus areas as well as the company’s long-term financial targets and dividend policy remained unchanged. We have continued to make good progress in all focus areas with focus on strategic growth initiatives and operational efficiency improvements particularly in selected manufacturing units in the Group. One of the main targets in the strategy work has been to further integrate sustainability in all Exel’s operations and business. Sustainability is a key element in our vision and purpose, which were updated at the end of last year. Our purpose is to solve challenges and help customers save resources with composites, and our vision is to be the first choice for sustainable composite solutions globally.
Customer activity and demand in the composites market has clearly increased. Our performance in the first half of 2021 and the record-high order backlog provides a good foundation for increasing revenue and improving profits during the rest of the year.
Consolidated key figures
| Q2 | Q2 | Change | Q1-Q2 | Q1-Q2 | Change | Q1-Q4 | |
|---|---|---|---|---|---|---|---|
| EUR thousand | 2021 | 2020 | % | 2021 | 2020 | % | 2020 |
| Revenue | 33,524 | 27,239 | 23.1 | 64,478 | 55,044 | 17.1 | 108,595 |
| Operating profit | 2,363 | 2,792 | -15.4 | 4,786 | 4,662 | 2.7 | 9,417 |
| % of revenue | 7.0 | 10.3 | 7.4 | 8.5 | 8.7 | ||
| Adjusted operating profit 1) | 2,457 | 2,882 | -14.8 | 4,917 | 4,955 | -0.8 | 9,708 |
| % of revenue | 7.3 | 10.6 | 7.6 | 9.0 | 8.9 | ||
| Profit before tax 2) | 1,897 | 2,953 | -35.7 | 4,830 | 4,268 | 13.2 | 7,124 |
| % of revenue | 5.7 | 10.8 | 7.5 | 7.8 | 6.6 | ||
| Profit for the period | 1,485 | 2,529 | -41.3 | 3,447 | 3,198 | 7.8 | 5,368 |
| % of revenue | 4.4 | 9.3 | 5.3 | 5.8 | 4.9 | ||
| Shareholders' equity | 31,266 | 26,770 | 16.8 | 31,266 | 26,770 | 16.8 | 28,880 |
| Interest-bearing liabilities | 47,483 | 42,196 | 12.5 | 47,483 | 42,196 | 12.5 | 43,140 |
| Cash and cash equivalents | 7,591 | 12,758 | -40.5 | 7,591 | 12,758 | -40.5 | 11,974 |
| Net interest-bearing liabilities | 39,892 | 29,438 | 35.5 | 39,892 | 29,438 | 35.5 | 31,167 |
| Capital employed | 78,749 | 68,966 | 14.2 | 78,749 | 68,966 | 14.2 | 72,021 |
| Return on equity, % | 19.5 | 39.5 | -50.6 | 22.9 | 24.1 | -4.9 | 19.5 |
| Return on capital employed, % | 12.5 | 17.1 | -26.7 | 12.7 | 14.2 | -10.6 | 14.1 |
| Equity ratio, % | 29.9 | 28.3 | 5.7 | 29.9 | 28.3 | 5.7 | 30.2 |
| Net gearing, % | 127.6 | 110.0 | 16.0 | 127.6 | 110.0 | 16.0 | 107.9 |
| Net cash flow from operating activities | -784 | 5,227 | -115.0 | 627 | 8,188 | -92.3 | 14,006 |
| Net cash flow from investing activities | -5,063 | -3,251 | 55.7 | -7,271 | -4,827 | 50.6 | -12,849 |
| Capital expenditure | 2,577 | 3,346 | -23.0 | 4,792 | 4,922 | -2.6 | 13,220 |
| % of revenue | 7.7 | 12.3 | 7.4 | 8.9 | 12.2 | ||
| Research and development costs | 847 | 698 | 21.3 | 1,777 | 1,448 | 22.7 | 2,884 |
| % of revenue | 2.5 | 2.6 | 2.8 | 2.6 | 2.7 | ||
| Order intake | 43,487 | 22,908 | 89.8 | 85,514 | 57,428 | 48.9 | 115,373 |
| Order backlog | 56,859 | 32,595 | 74.4 | 56,859 | 32,595 | 74.4 | 36,544 |
| Earnings per share, diluted and undiluted, EUR | 0.13 | 0.21 | -41.3 | 0.29 | 0.27 | 7.7 | 0.45 |
| Equity per share, EUR | 2.64 | 2.26 | 16.78 | 2.64 | 2.26 | 16.74 | 2.44 |
| Average share price, EUR | 9.11 | 5.17 | 76.2 | 9.11 | 5.17 | 76.2 | 5.55 |
| Average number of shares, diluted and undiluted, 1,000 shares | 11,834 | 11,830 | 0.0 | 11,832 | 11,826 | 0.1 | 11,828 |
| Employees, average | 700 | 662 | 5.7 | 695 | 662 | 5.0 | 665 |
| Employees, end of period | 722 | 661 | 9.2 | 722 | 661 | 9.2 | 674 |
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) A significant part of the difference to previous year relates to unrealized foreign exchange gains and losses, largely driven by intra-Group borrowings.
Revenue by customer industry
| Q2 | Q2 | Change | Q1-Q2 | Q1-Q2 | Change | Q1-Q4 | |
|---|---|---|---|---|---|---|---|
| EUR thousand | 2021 | 2020 | % | 2021 | 2020 | % | 2020 |
| Buildings and infrastructure | 8,684 | 5,282 | 64.4 | 15,678 | 11,497 | 36.4 | 23,451 |
| Equipment and other industries | 5,212 | 4,031 | 29.3 | 10,858 | 10,142 | 7.1 | 19,493 |
| Wind power | 7,785 | 7,867 | -1.0 | 15,165 | 13,693 | 10.8 | 28,079 |
| Machinery and electrical | 5,050 | 4,790 | 5.4 | 8,720 | 8,569 | 1.8 | 15,522 |
| Transportation | 2,728 | 2,796 | -2.4 | 5,209 | 6,172 | -15.6 | 10,226 |
| Defense | 1,785 | 768 | 132.6 | 4,029 | 2,019 | 99.6 | 5,338 |
| Telecommunications | 2,280 | 1,706 | 33.6 | 4,818 | 2,951 | 63.3 | 6,485 |
| Total | 33,524 | 27,239 | 23.1 | 64,478 | 55,044 | 17.1 | 108,595 |
Revenue by region1)
| Q2 | Q2 | Change | Q1-Q2 | Q1-Q2 | Change | Q1-Q4 | |
|---|---|---|---|---|---|---|---|
| EUR thousand | 2021 | 2020 | % | 2021 | 2020 | % | 2020 |
| Europe | 19,574 | 15,534 | 26.0 | 37,018 | 32,404 | 14.2 | 62,757 |
| North America | 7,234 | 4,391 | 64.8 | 12,845 | 10,210 | 25.8 | 18,022 |
| Asia-Pacific | 6,401 | 6,636 | -3.5 | 13,054 | 10,818 | 20.7 | 24,022 |
| Rest of the world | 316 | 678 | -53.5 | 1,561 | 1,612 | -3.1 | 3,795 |
| Total | 33,524 | 27,239 | 23.1 | 64,478 | 55,044 | 17.1 | 108,595 |
1) Revenue by customer location, not by the location of the manufacturing Exel Composites business unit.
Impacts of the Covid-19 pandemic
Operations
In the second quarter of 2021, all our factories operated close to normal and following the safety measures to prevent the spread of the Covid-19 pandemic.
Raw material supply and logistics operated almost normally despite challenges with global logistics and availability in some raw material categories.
Financial standing
Uncertainty and negative impact of the Covid-19-pandemic on some of our clients and customer industries continued in the second quarter of 2021. Regardless, order intake increased in the quarter.
The Group’s liquidity and cash situation are good, and the Covid-19 pandemic has had limited impact on Group liquidity.
During the second quarter of 2021, Exel Composites received no Covid-19 related financial assistance under any local governmental schemes, whereas in the same period last year approximately EUR 0.3 million were received.
Our response in relation to the Covid-19 pandemic
The health and safety of our employees, customers and business partners is a priority for Exel Composites. All units have continued with tightened Group and business unit level safety and hygiene instructions in accordance with the instructions of local health authorities. Travelling is limited and remote work as well as online meetings continue to be preferred when possible. Outsider visits to sites are reduced to minimum. Internal communication at Group level as well as locally on Covid-19 related concerns has continued in various channels.
Close and continuous interaction is maintained with customers, suppliers and business partners in order to ensure timely reaction to new developments. Given the continued uncertainty related to the Covid-19 pandemic close monitoring of the situation is a priority for us.
Financial results briefing
Exel Composites will hold a financial results briefing regarding the Q1-Q2 2021 Half Year Financial Report on 20 July 2021 at 12:30 EET. Participation requires registration in advance.
Vantaa, 20 July 2021
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 in brief
At Exel Composites, we use over 60 years’ experience to solve challenges and help customers save resources. 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 from wind power and transportation to building and infrastructure.
Our collaborative approach and global footprint set us apart from our competition. We use our expertise to help customers reduce 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 approximately 650 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.