Exel Composites Plc’s Half-year Financial Report January – June 2016: Customer demand remained weak, cost reductions implemented
EXEL COMPOSITES PLC HALF-YEAR FINANCIAL REPORT 21 JULY 2016 at 10.00 a.m. EET
Exel Composites Plc’s Half-year Financial Report January – June 2016: Customer demand remained weak, cost reductions implemented
Q2 2016 in brief
-- Order intake for the second quarter amounted to EUR 20.2 (21.4) million, -5.6% in comparison to previous year.
-- Revenue amounted to EUR 19.7 (21.4) million, -7.6% in comparison to previous year.
-- Operating profit amounted to EUR 1.1 (1.3) million, which is 5.8% (6.3) of revenue.
-- Net cash flow from operating activities was positive at EUR +0.3 (+1.7) million.
-- Earnings per share were EUR 0.07 (0.07).
H1 2016 in brief
-- Order intake for the period amounted to EUR 38.3 (44.2) million, -13.4% in comparison to previous year.
-- Revenue amounted to EUR 37.6 (42.8) million, -12.2% in comparison to previous year.
-- Operating profit amounted to EUR 1.3 (3.3) million, which is 3.4% (7.8) of revenue.
-- Net cash flow from operating activities was negative at EUR -0.5 (+2.4) million.
-- Earnings per share were EUR 0.07 (0.20).
Outlook for full year 2016 (terminology change in brackets)
The Company continues to implement its new strategy with focus on operational efficiency and optimizing the global manufacturing footprint. The Company estimates that adjusted operating profit (previously: operating profit excluding any non-recurring items) will decrease in 2016 compared to 2015.
President and CEO, Riku Kytömäki
During the second quarter of 2016 the market environment has remained challenging. Demand of some of our key clients has remained weak, which has led to lower order volumes to Exel Composites and a decline in revenue both in Europe and in Asia. The declining share of some high volume customers has also negatively affected our sales mix.
Our cost structure in the first quarter of 2016 was not in line with the lower than expected business volume. Therefore additional cost take out measures were initiated during first quarter, targeted particularly at our units in Australia and Finland. These measures started to materialize in May-June improving our operating profit of the second quarter. As such, we were able to considerably reduce the impact of the decreased volume on profitability and to improve the operating profit from the first quarter. The cost take out measures will continue throughout the second half of 2016.
Market outlook in the short term remains challenging. New customer acquisition in composite business is especially challenging when metal and oil prices are at a historically low level. However, we expect our focused customer segment initiatives to gradually bring results. In addition, unfavorable changes in our sales mix have led to shorter production runs and lower production yield. We are taking actions to optimize production under these conditions and consequently improve our operational efficiency.
In the long term we expect that megatrends, such us urbanization and energy efficiency, continue to prevail and drive growth. These attractive long term market fundamentals and our expertise in composites together with actions in line with our strategy keep us well positioned for profitable long term growth.
Consolidated key figures
| EUR thousand | 1.4.-30.6. 2016 | 1.4.-30.6. 2015 | Change, % | 1.1.-30.6. 2016 | 1.1.-30.6. 2015 | Change, % | 1.1.-31.12. 2015 |
| Order intake | 20,231 | 21,423 | -5.6 | 38,263 | 44,185 | -13.4 | 83,374 |
| Order backlog 1) | 15,799 | 13,783 | 14.6 | 15,799 | 13,783 | 14.6 | 15,348 |
| Revenue | 19,720 | 21,352 | -7.6 | 37,639 | 42,847 | -12.2 | 80,196 |
| Operating profit | 1,147 | 1,348 | -14.9 | 1,293 | 3,340 | -61.3 | 4,414 |
| % of revenue | 5.8 | 6.3 | 3.4 | 7.8 | 5.5 | ||
| Adjusted operating profit 2) | 1,167 | 1,540 | -24.2 | 1,316 | 3,581 | -63.3 | 4,770 |
| % of revenue | 5.9 | 7.2 | 3.5 | 8.4 | 5.9 | ||
| Profit for the period | 882 | 800 | 10.3 | 880 | 2,358 | -62.7 | 2,844 |
| Net cash flow | 342 | 1,671 | -79.5 | -520 | 2,359 | -122.0 | 3,385 |
| Return on capital employed, % | 11.4 | 14.0 | 6.5 | 17.9 | 12.0 | ||
| Net gearing, % | 18.4 | -2.4 | 18.4 | -2.4 | 2.0 | ||
| Earnings per share, EUR | 0.07 | 0.07 | 0.07 | 0.20 | 0.24 | ||
| Equity per share, EUR | 2.35 | 2.59 | -9.3 | 2.35 | 2.59 | -9.3 | 2.58 |
| Employees on average | 487 | 513 | -5.1 | 490 | 500 | -2.0 | 498 |
| 1) As per 30 June 2016. 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 this Half-year Financial Report. | |||||||
Change in Exel Composites’ financial reporting terminology
In compliance with the new guidelines on alternative performance measures by the European Securities and Markets Authority (ESMA) Exel Composites changes the terminology used in the company’s financial reporting. The change is effective as of the publication of the half-year financial report published on 21 July 2016. The term "adjusted operating profit" replaces the term "operating profit, excluding non-recurring items". The adjusted operating profit is derived in accordance to International Financial Reporting Standards (IFRS) by adding or deducting material items affecting comparability. These include, but are not limited to, restructuring costs, impairment losses and reversals, costs related to planned or realized business acquisitions and disposals, gains and losses relating to sale of intangible and tangible assets, as well as expenses related to changes in legislation or legal proceedings.
Exel Composites uses alternative performance measures to better reflect the operational business performance and to enhance comparability between financial periods.
Exel Composites’ half-year financial report January – June 2016 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, 21 July 2016
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
Exel Composites (www.exelcomposites.com) is a leading composite technology company that designs, manufactures and markets composite products and solutions for demanding applications. Exel Composites provides superior customer experience through continuous innovation, world-class operations and long-term partnerships.
The core of the operations is based on own, internally developed composite technology, product range based on it and strong market position in selected segments with a strong quality and brand image. Profitable growth is pursued by a relentless search for new applications and development in co-operation with customers. The personnel’s expertise and high level of technology play a major role in Exel Composites’ operations. Exel Composites Plc share is listed in Nasdaq Helsinki Ltd.