GLASTON REVIEWS ITS STRATEGY AND UPDATES FINANCIAL TARGETS AS A RESULT OF ITS ACQUISITION OF BYSTRONIC GLASS
Glaston Corporation INSIDE INFORMATION 6 May 2019 at 16.15 EET
Glaston has reviewed its strategy and updated its financial targets for the strategy period 2018–2021 as a result of its acquisition of Bystronic glass.
The foundation of the strategy remains unchanged; we continue to seek growth in our core business and to win in services through digitalization. Combining the strengths of Bystronic glass and Glaston as well as leveraging the know-how Bystronic glass adds to our business, provides us with unique opportunities to build a strong machinery and services offering as well as the ability to capture new growth opportunities. Implementing a joint operating model will support us in reaching our strategic goals and in realizing the full synergy potential of combining Glaston and Bystronic glass.
Our overall strategic goal remains unchanged: our ambition is to be the industry’s innovative technology leader, realizing its customers’ highest ambitions in glass.
Glaston’s purpose is to build a better tomorrow through safer, smarter, and more energy-efficient glass solutions. The demand for environmentally sustainable and energy-efficient solutions, tightening safety standards as well as growing visual and functional quality requirements of glass, increasingly affect the way our customers operate as well as impact the specifications they require from their glass processing technology partners.
Our strategy is divided into four key themes:
GROWTH IN CORE
Strategic aim: To become a global market leader in our core business
We will focus on growth in our core business with the aim of becoming the leading player in Heat Treatment technologies and Insulating glass as well as in Cut & Grind technologies for the Automotive market.
With our versatile product portfolio, we are in a strong position to respond to the demand for innovative solutions. We will seek growth in our core business, and work to develop an integrated glass processing line offering and drive the automation of equipment for the benefit of our customers.
Key Goals:
- Profitably grow core machine sales, develop an integrated line offering as well as increase digitalization and level of automation in products leading up to fully automated lines.
NEW GROWTH OPPORTUNITIES
Strategic aim: To capitalize on new market potential
Combining the strengths of Bystronic glass and Glaston, as well as leveraging the know-how Bystronic glass adds to our business, provides us unique opportunities to develop the market and further strengthen our position in the mid-market segment of our core products, in technologies for the Automotive market and in emerging glass processing technologies within energy efficient, smarter and safer glass products.
Growth is sought through the development of our product portfolio and the development of an integrated line offering to better suit the glass processing mid-market segment customers’ needs, especially in the Architectural market in Asia. We will further seek to leverage the strong position of Bystronic glass in the Automotive market, further develop our offering in the mid-market segment and thus aim to capture cross-selling opportunities. We will continue to seek opportunities for emerging glass processing technologies within energy efficient, smarter and safer glass.
Key Goals:
- Develop mid-market offering in Architectural market.
- Leverage the strong position of Bystronic glass in the Automotive market and capture cross-selling synergies.
- Continue to look for new opportunities and technologies to support growth in our Emerging Technologies product area.
SERVICES
Strategic aim: To win in services through digitalization.
We believe that by combining the Services businesses of Glaston and Bystronic glass, we will drive growth. We will seek to leverage untapped potential from existing unique lifecycle services, our combined large installed base and extensive global service network.
Today, most of the service work is performed in-house by our customers. We see strong untapped potential in combining our extensive installed bases with innovations within digitalization and automation for the benefit of the customer. We believe that the combined services offering of Glaston and Bystronic glass has the potential to lead to appealing benefits for the customers and provide a base for further development of proactive and predictive maintenance and optimized services, with the aim of covering the key parts of the whole processing chain in the future.
The combined service offering enables us to expand our scope with the ambition to optimize the performance of our customers ’installed base throughout the lifecycle, using data analytics and artificial intelligence to support customers’ business decisions. Our goal is to have the most competitive ecosystem in the market, benefiting our customers and improving their uptime and operational efficiency. We believe this differentiates us from the competition and puts us in a strong position to fulfil the most demanding needs of our customers.
Key Goals:
- Grow the Services business supported by digitalization.
JOINT OPERATING MODEL
Our strategic goals are supported by a joint operating model which will assist us in realizing the full synergy potential of combining Glaston and Bystronic glass. We aim to develop a cohesive and effective operating model for sales, service and operations, capture synergy potential and continuously improve our performance. The first phase of building the joint operating model targets cost synergies, cross-selling, strengthening our joint presence in Asia and further developing integrated line offerings for relevant end markets.
Key Goals:
- Develop cohesive and effective operating model for sales, service and operations. Realize full synergy potential.
UPDATED FINANCIAL TARGETS:
- Annual growth of net sales exceeding market growth* (CAGR)
- Comparable operating margin (EBITA)** above 8% at the end of the strategy period. EBITA excludes amortizations of purchase price allocations.
- Comparable return on capital employed (ROCE)** of more than 14% at the end of the period
Glaston (without Bystronic glass) restated comparable EBITA margin for 2018 was 5.6% and comparable return on capital employed 9.6%. Bystronic glass is similar to Glaston in net sales and EBITA margin. The Bystronic glass acquisition, and related financing increases Glaston’s equity and debt for a total of about EUR 80 million and the transaction will result in a significant amount of goodwill created. Therefore, the return on capital employed (ROCE) development will be impacted by increasing capital employed during the strategy period immediately following the transaction.
Glaston plans to publish Glaston’s and Bystronic glass’ unaudited combined financial information for 2018 and the first quarter of 2019 at the latest in connection with the planned rights issue, which is expected to begin during the second quarter of 2019.
*Flatglassmarket growth over the cycle.
**Calculation of key ratios:
Comparable EBITA excluding amortizations of purchase price allocations: Result before amortization of purchase price allocations +/- items affecting comparability
Comparable return on capital employed, % (Comparable ROCE): (Profit / loss before taxes + amortization of purchase price allocations +/- items affecting comparability + financial expenses x 100) / (Equity + interest-bearing liabilities, average of 1 January and end of the reporting period)
Glaston Corporation
Board of Directors
For further information, please contact:
President & CEO Arto Metsänen, tel. +358 10 500 6100
Chief Financial Officer Päivi Lindqvist, tel. +358 10 500 500
Glaston Corporation
Joséphine Mickwitz
Vice President, IR, Communications and Marketing
Tel. +358 10 500 5070
*Flatglassmarket growth over the cycle.
**Calculation of key ratios:
Comparable EBITA excluding amortizations of purchase price allocations: Result before amortization of purchase price allocations +/- items affecting comparability
Comparable return on capital employed, % (Comparable ROCE): (Profit / loss before taxes + amortization of purchase price allocations +/- items affecting comparability + financial expenses x 100) / (Equity + interest-bearing liabilities, average of 1 January and end of the reporting period)
Glaston Corporation
Glaston is the glass processing industry’s innovative technology leader supplying equipment, services and solutions to the architectural, automotive, solar and appliance industries. The company also supports the development of emerging technologies integrating intelligence to glass.
As of April 2019, Bystronic glass is part of Glaston Group. Together we are committed to providing our clients with both the best know-how and the latest technologies in glass processing, with the purpose of building a better tomorrow through safer, smarter, and more energy efficient glass solutions. We operate globally with manufacturing, services and sales offices in 12 countries. Glaston’s shares (GLA1V) are listed on NASDAQ Helsinki Ltd.
Distribution: NASDAQ Helsinki Ltd, key media, www.glaston.net
IMPORTANT NOTICE
This release includes “forward-looking statements.” These statements may not be based on historical facts, but are statements about future expectations. When used in this release, the words “aims,” “anticipates,” “assumes,” “believes,” “could,” “estimates,” “expects,” “intends,” “may,” “plans,” “should,” “will,” “would” and similar expressions as they relate to Glaston, Bystronic glass and the transaction identify certain of these forward-looking statements. Other forward-looking statements can be identified in the context in which the statements are made. Forward-looking statements are set forth in a number of places in this release, including wherever this release include information on the future results, plans and expectations with regard to the combined company’s business, including its strategic plans and plans on growth and profitability, and the general market conditions. These forward-looking statements are based on present plans, assumptions, estimates and projections and are not guarantees of future performance. They are based on certain expectations, which, even though they seem to be reasonable at present, may turn out to be incorrect. By their nature, forward-looking statements are subject to numerous factors, risks and uncertainties that could cause actual outcomes and results to be materially different from those expressed or implied in the forward-looking statements. Shareholders should not place undue reliance on these forward-looking statements. Except for any ongoing obligation to disclose material information as required by the applicable law, the Company or any of its affiliates, advisors or representatives or any other person does not have any intention or obligation to publicly update or revise any forward-looking statements after it distributes this announcement, whether to reflect any future events or circumstances or otherwise.