Glaston Half-Year Financial Report 1 January – 30 June 2018: Machines business order book growing

GLASTON CORPORATION        HALF-YEAR FINANCIAL REPORT                 9.8.2018 at 13.00

This release is a summary of Glaston Corporation's half year financial report January-June 2018. The complete report is attached to this release as a pdf-file. The stock exchange release is also available on the company's website at the address www.glaston.net.

Glaston has applied the new revenue recognition standard IFRS 15 fully retrospectively from 1 January 2018, and therefore the half-year report 1 January – 30 June 2018 is reported in accordance with the new standard for 2018 actual data and 2017 comparison data. 

APRIL–JUNE 2018

•  Orders received totalled EUR 25.4 (26.6) million.
•  Net sales totalled EUR 25.6 (28.9) million.
•  Comparable EBITDA was EUR 1.6 (2.2) million, i.e. EUR 6.1 (7.7)% of net sales.
•  The operating profit was EUR 0.8 (1.3) million, i.e. 3.1 (4.5)% of net sales. 
•  The comparable operating profit was EUR 0.8 (1.5) million, i.e. EUR 3.1 (5.1)% of net sales. 

JANUARY–JUNE 2018

•  Orders received totalled EUR 52.0 (48.1) million.
•  The order book was EUR 37.3 (36.1) million at the end of June.
•  Net sales totalled EUR 50.3 (55.5) million.
•  Comparable EBITDA was EUR 3.3 (4.1) million, i.e. EUR 6.6 (7.3)% of net sales. 
•  The operating profit was EUR 1.6 (2.4) million, i.e. 3.2 (4.3)% of net sales. 
•  The comparable operating profit was EUR 1.8 (2.6) million, i.e. EUR 3.6 (4.6)% of net sales. 
•  Return on capital employed (ROCE) was 6.5 (9.5)%.
•  Earnings per share were EUR 0.004 (0.008).
•  Net interest-bearing debt amounted to EUR 8.2 (5.9) million. 

OUTLOOK
Glaston’s outlook has remained unchanged. We expect the full-year comparable operating profit to improve from 2017. (Full-year 2017 comparable operating profit was EUR 5.0 million according to the new revenue recognition standard IFRS 15). 

PRESIDENT & CEO ARTO METSÄNEN:
“In the second quarter, the order intake of Glaston’s Machines business developed positively. Orders grew by 9% compared with corresponding period of the previous year. Glaston’s order intake overall, however, was 4% below the previous year’s level, because Services business orders in particular were weakened by the removal from orders of the USA and Canada pre-processing business, sold in spring 2017. 

Second-quarter net sales fell 12% and operating profit was down on the corresponding period of the previous year. A smaller number of projects, a lower margin in the Machines business and last year’s sale of the pre-processing business contributed to this. 

The Emerging Technologies unit has a key role in building Glaston’s growth. The Heliotrope project, which is developing the unit’s smart glass production, proceeded according to plan, and a prototype line is in test production. We currently estimate that, with the project advancing on schedule, the first pilot line will be ordered in spring 2019. Many other Emerging Technologies projects also progressed favourably. 

Smart glass is the most strongly growing processed glass market. In the coming years, the market is expected to grow by around 15% per year. The quality targets of Heliotrope smart glass have been set high, but the price of the glass will be significantly lower than that of products currently on the market. The market potential is therefore considerable. Glaston has the exclusive right to supply Heliotrope production lines globally.  

In the autumn, two major trade fairs will be held: GlassBuild America, in the USA in September, and our industry’s main event Glasstec, in Germany in October. At these events, we will gain a good understanding of market activity and customers’ willingness to invest. Our trade fair concept reflects our operational priorities and our focus on digitalisation. For example, in daily live streamings from Finland to Germany we will present the concrete opportunities and benefits of the new FC flat tempering series’ as well as the iLook quality measurement system’s new digital solutions and machine intelligence in tempering and maintenance services. We will also present the new solutions of the ProL laminating line using augmented reality techniques.” 

KEY FIGURES

OPERATING ENVIRONMENT
In the second quarter, the glass processing market was reasonably active. In the EMEA area, demand for machines remained high. The subdued development in North America over the last few quarters took a positive turn in the latter part of the reporting period. In the Asia market area, activity was on a lower level than the first quarter.

MACHINES
The Machines business market was fairly lively in April–June. Particularly in the EMEA area, demand continued to be strong. The most positive development was in Central and Eastern Europe. In Turkey, the devaluation of the lira caused instability, and investment decisions were postponed. In the North American market, demand picked up significantly towards the end of the second quarter, while in the South American market demand remained subdued. Despite the good market activity in the USA and Canada, customers’ decision-making was still slow. In Asia, the market remained reasonably active, but the positive market mood showed slight signs of cooling. 

In the reporting period, there were a few significant openings in new products, for example the sale to the USA of a CBRC flat tempering line, launched for the RC product range. The machine’s CB (Continuous Batch) concept is one example of Glaston’s technology leadership, and the machine can be flexibly used in continuous and batch mode operations. 

NEW TECHNOLOGIES
Emerging glass technologies and value-adding glass products, such as smart glass, are making a strong entry into the market. To identify new business opportunities, Glaston established the Emerging Technologies unit at the beginning of 2017. The unit offers planning and consulting in the field of emerging glass technologies.

The nanotechnology company Heliotrope Technologies is developing a new smart glass technology for the market, and Glaston’s role in the project is production line developer. In the second quarter, the Heliotrope prototype line was in test production, and the line operated in accordance with expectations. In the reporting period, the tests focused particularly on the durability and ageing characteristics of the glass. In addition, testings of larger glass sizes were launched. The goal is for testings of the maximum glass size to take place in the final quarter of this year at the latest. The development of an electrolyte material has progressed well, and in tests the smart glass has met the targets set for it to date. The design of the pilot line advanced to the decision stage, and supplier reviews and offer requests for it were initiated.

Glaston has the exclusive right to sell Heliotrope glass production lines globally. If the final phase of the Heliotrope project is implemented on schedule, the first line will be ordered in spring 2019. Heliotrope lines include Glaston’s and external manufacturers’ equipment. The total price of the lines is significantly higher than Glaston’s present deliveries, and the project size may be EUR 10–20 million. 

In the reporting period, negotiations continued on new special projects for the automotive, solar energy and aviation industries.

SERVICES
In the second quarter, the Services business market continued to be relatively calm. North America was the strongest of the sales areas.

In April–June, demand for upgrade products was on a lower level than in the excellent first quarter, the exception being North America, where demand for upgrades continued to be good. A large flat tempering machine modernisation package was sold to the USA, including a new heating chamber and an iLooK online quality measurement system. Spare parts sales grew from the first quarter’s low level. Field service also grew compared with the first quarter. This positive development will be supported by increasing maintenance personnel resources. The tools market remained challenging, even though North America saw a change for the better in June. 

Demand for the ProL-zone laminating line upgrade product continued to be good. The product is also sold for laminating lines other than Glaston’s. In the reporting period, the upgrade product was sold to Poland and the UK, and in these the installation will be made in another manufacturer’s product.

The introduction of digital maintenance services advanced, and the need for automation upgrades is rising.

OUTLOOK UNCHANGED
In the first half 2018, activity in the glass processing market was good. Glaston’s order intake in the early part of the year exceeded the previous year’s level, and the positive market development is expected to continue. The strong growth expectations for the world economy support this view. Customers continue to take time over their investment decisions, which may cause delays in orders and fluctuations in quarterly order intake.

The order intake in the early part of the year and the positive market development create good conditions for profitable growth in 2018. Due to the weighting of the order intake forecast towards the second half of the year, the operating profit for the final quarter of the year is expected to be significantly better than the other quarters. We expect the full-year comparable operating profit to improve from 2017. (Full-year 2017 comparable operating profit was EUR 5.0 million according to the new revenue recognition standard IFRS 15).

PRESS MEETING
An analyst and press conference is organized at Glaston's office on Lönnrotinkatu 11, Helsinki, on 9 August 2018 at 15.00 p.m.



For further information, please contact:
President & CEO Arto Metsänen, tel. +358 10 500 6100
Chief Financial Officer Päivi Lindqvist, tel. +358 10 500 500

Sender:
Glaston Corporation
Corporate Communications
Agneta Selroos
Tel. 010 500 6105 


Glaston Corporation
Glaston is a frontrunner in glass processing technologies and services. We respond globally to the most demanding glass processing needs of the architectural, solar, appliance and automotive industries. Additionally, we utilize emerging technologies that integrate intelligence and sustainability to glass. We are committed to providing our clients with both the best know-how and the latest technologies in glass processing. Glaston’s shares (GLA1V) are listed on NASDAQ Helsinki Ltd. Further information is available at www.glaston.net

Distribution: NASDAQ Helsinki Ltd, key media, www.glaston.net