Glaston’s half-year financial report January–June 2020: COVID-19 pandemic impacted orders and net sales, timely cost-savings supported healthy comparable EBITA
GLASTON CORPORATION HALF-YEAR FINANCIAL REPORT 6.8.2020 AT 13.00
This release is a summary of Glaston Corporation's Half-Year January-June 2020 financial report. The complete report is attached to this release as a pdf-file. The release is also available on the company's website at the address www.glaston.net.
The half year financial report provides estimates on future prospects involving risk and uncertainty factors, and other factors as a result of which the performance, operation or achievements of Glaston may substantially deviate from the estimates. Forward-looking statements relating to future prospects are subject to risks, uncertainties and assumptions, the implementation of which depends on the future business environment and other circumstances, such as the development of the COVID-19 pandemic.
APRIL–JUNE 2020 IN BRIEF
- Orders received totaled EUR 24.0 (44.5) million
- Net sales totaled EUR 48.9 (58.4) million
- Comparable EBITA was EUR 2.3 (3.6) million, i.e. 4.8 (6.2)% of net sales
- The operating result (EBIT) was EUR 0.6 (0.4) million
- The comparable operating result (EBIT) was EUR 1.2 (2.5) million, i.e. 2.5 (4.3)% of net sales
- Items affecting comparability totaled EUR -0.7 (-2.1) million
- Comparable earnings per share were EUR -0.007 (0.005)
- Cash flow from operating activities was EUR -0.3 (-5.4) million
JANUARY–JUNE 2020 IN BRIEF
- Orders received totaled EUR 69.6 (67.4, pro forma 89.8) million
- Net sales totaled EUR 95.9 (79.2, pro forma 102.8) million
- Comparable EBITA was EUR 4.4 (4.2, pro forma 6.4) million, i.e. 4.6 (5.3, pro forma 6.2)% of net sales
- The operating result (EBIT) was EUR 0.7 (-0.3, pro forma 1.2) million
- The comparable operating result (EBIT) was EUR 2.1 (2.6, pro forma 4.1) million, i.e. 2.2 (3.3, pro forma 4.0)% of net sales
- Items affecting comparability totaled EUR -1.5 (-2.9, pro forma -2.9) million
- Comparable earnings per share were EUR 0.000 (-0.001)
- Cash flow from operating activities was EUR -3.4 (-3.7) million
GLASTON’S OUTLOOK FOR 2020 UNCHANGED
Glaston Corporation estimates that comparable EBITA for 2020 will decline from the 2019 level. The company’s current assessment is that the market will recover gradually and that third- and fourth-quarter orders will improve from the second quarter but stay below the previous year’s levels. The lower than 2019 order intake and slower than normal volume in services business impacts the development of net sales and earnings in 2020. The uncertainty surrounding the assessment remains, and the situation might change quickly depending on the development of the COVID-19 pandemic and the general economic climate.
ACTING PRESIDENT & CEO SASU KOIVUMÄKI:
The second quarter was clearly impacted by the pandemic – profitability supported by timely cost savings and employee flexibility
“The spread of the COVID-19 pandemic accelerated in the Western countries at the beginning of the second quarter, severely impacting all areas of society and businesses. To Glaston this was evident in the significant decrease in orders across all businesses, and several orders expected in the second quarter were postponed due to market uncertainty. Although far from recovering, it seems we have passed the steepest decline, and the majority of second-quarter orders were in fact received in June. Although we have been impacted by the pandemic, and will continue to be so throughout the year, our continuous customer dialogue reassures me that several of the projects discussed earlier will ramp up once the situation has settled to some extent. No orders in the order book have been cancelled.
Throughout the pandemic, Glaston has been able to deliver all projects according to schedule. However, at the beginning of the quarter, a number of customers, mainly from the US, postponed project deliveries and installations due to the economic uncertainty and restrictions caused by the pandemic. These postponements have had a negative impact on our second-quarter net sales. Our Services sales were strongly impacted by travel restrictions, the containment measures of various countries and by the decreased or no production activity in customer operations. The low demand in the automotive industry also continued to impact Services negatively. Although decreasing, our net sales remained at a reasonable level at EUR 48.9 million, compared to the peaking second quarter of 2019. Profitability was impacted by lower sales volumes and sales mix, but still held up rather well, thanks to clearly lower fixed costs from organizational streamlining and temporary lay-offs as well as lower than usual marketing and travelling costs. Also cost synergies from the Bystronic glass integration were clearly higher than a year ago at the start of the integration. I want to thank all our employees for their efforts, flexibility and efficiency in this difficult situation.
Due to the current crisis, the Emerging Technologies (ET) market was slow in the second quarter. ET provides consulting and engineering services to technology companies and helps them commercialize technologies in the glass industry while also creating new opportunities for Glaston’s equipment business. In the second quarter, ET started a consulting project with a technology company designing solutions integrating solar technology into buildings. During the first half of 2020, Heliotrope successfully raised additional funding from new investors, despite of the challenging environment.
Mitigating COVID-19 related near-term business disruptions has been high on our agenda throughout the spring and we have taken prompt action to safeguard the health and safety of our employees and the company’s financial stability. We have created tools that will enable us to adapt our operations quickly. In Finland, temporary lay-offs for all personnel flexibly continue throughout the year, and corresponding measures have also been implemented in Switzerland, the USA and the UK. We are constantly monitoring the development of the situation, our orders and order book, the company’s cash flow and liquidity, as well as government and other aid available in different countries.
We are pleased to see that the EU’s recovery strategy for the pandemic, and other support packages, involve investments in energy efficiency and digital solutions. Glaston offers an extensive portfolio of products and solutions answering to these needs.
Uncertainty in the market remains high. The lower than 2019 order intake and slower than normal volume in the Services business impacts the development of net sales and earnings in 2020. Currently, we estimate that new orders in the third and fourth quarter will increase from the second quarter levels. The postponement of the delivery of some orders will impact the development of net sales and earnings in the near future.”
GLASTON GROUP KEY FIGURES
Glaston Corporation’s acquisition of Bystronic glass was completed on 1 April 2019. The comparison data of this financial interim report for the period 1 January – 31 March 2019 do not include figures for Bystronic glass. Glaston Corporation has prepared unaudited pro forma financial information to illustrate the impact of the Bystronic glass acquisition, completed on 1 April 2019, on the Group’s operational result and financial position and to improve the comparability of financial information. The unaudited pro forma financial information for 1 January – 31 March 2019 and 1 January – 31 December 2019 presented in this interim report is presented as if the acquisition would have already been completed on 1 January 2019. Pro forma financial information has been titled Pro forma information in the places in the interim report where the information is presented.
As of 1 January 2020, the company has three reporting segments: Glaston Heat Treatment, Glaston Insulating Glass and Glaston Automotive & Emerging Technologies. Services business is included in the reporting segments. Machine and Services sales, order intake and order book are also reported separately as additional, product area, information. On 18 March 2020, the company published comparative information according to the new structure.
|
EUR million |
4–6/2020 | 4–6/2019 | 1–6/2020 | 1–6/2019 | 1–12/2019 | Pro forma 1–6/2019 | Pro forma 1–12/2019 |
| Orders received | 24.0 | 44.5 | 69.6 | 67.4 | 162.2 | 89.8 | 184.6 |
| of which service operations | 9.9 | 17.9 | 25.4 | 25.3 | 58.5 | 35.3 | 68.3 |
| of which service operations, % | 41.3% | 40.3% | 36.5% | 37.5% | 36.1% | 39.3 | 37.0% |
| Order book at end of period | 49.1 | 78.9 | 79.5 | 78.9 | 79.5 | ||
| Net sales | 48.9 | 58.4 | 95.9 | 79.2 | 181.0 | 102.8 | 204.6 |
| of which service operations | 11.2 | 14.9 | 27.7 | 22.6 | 57.1 | 31.8 | 67.1 |
| of which service operations, % | 22.8% | 25.5% | 28.9% | 28.6% | 31.6% | 30.9% | 32.8% |
| EBITDA | 2.6 | 2.8 | 4.8 | 3.3 | 6.9 | 5.9 | 9.5 |
| Items affecting comparability | -0.7 | -2.1 | -1.5 | -2.9 | -7.2 | -2.9 | -7.2 |
| Comparable EBITDA | 3.3 | 4.9 | 6.3 | 6.2 | 14.1 | 8.8 | 16.7 |
| Comparable EBITDA, % | 6.7% | 8.4% | 6.5% | 7.8% | 7.8% | 8.5% | 8.2% |
| Comparable EBITA | 2.3 | 3.6 | 4.4 | 4.2 | 9.7 | 6.4 | 12.1 |
| Comparable EBITA, % | 4.8% | 6.2% | 4.6% | 5.3% | 5.4% | 6.2% | 5.9% |
| Operating result (EBIT) | 0.6 | 0.4 | 0.7 | -0.3 | -1.3 | 1.2 | 0.3 |
| Comparable operating result (EBIT) | 1.2 | 2.5 | 2.1 | 2.6 | 5.9 | 4.1 | 7.5 |
| Comparable operating result (EBIT), % | 2.5% | 4.3% | 2.2% | 3.3% | 3.3% | 4.0% | 3.7% |
| Profit/loss before taxes | -0.3 | -1.1 | -0.4 | -2.2 | -4.4 | 1.1 | 3.8 |
| Profit/loss for the period | -1.2 | -1.8 | -1.5 | -3.0 | -6.4 | 0.9 | 3.1 |
| Comparable earnings per share, adjusted with share issue, EUR | -0.007 | 0.005 | 0.000 | -0.001 | |||
| Number of registered shares at end of period adjusted with share issue (1 000) | 84 290 | 84 290 | 84 290 | 84 290 | |||
| Cash flow from operating activities | -0.3 | -5.4 | -3.4 | -3.7 | |||
| Net interest-bearing debt at end of period | 37.4 | 43.8 | |||||
| Return on investment (ROI), %, (annualized) | 1.0% | -0.6% | |||||
| Comparable return on capital employed (ROCE), %, (annualized) | 4,3% | 2,6% | |||||
| Equity ratio, % | 40,8% | 34,5% | |||||
| Net gearing, % | 51,8% | 54,8% | |||||
| Number of employees at end of period | 755 | 808 |
BUSINESS RISKS AND NEAR FUTURE UNCERTAINTIES
Glaston’s long-term strategic and operational risks and uncertainties are described in detail in the company's financial statements bulletin for 2019 and in the Report of the Board of Directors. Near term risks are mainly related to the impacts of the COVID-19 pandemic, and have been described in detail in the Half-Year 2020 financial report.
PRESS MEETING
Glaston’s Acting CEO Sasu Koivumäki and CFO Päivi Lindqvist will present the financial result to analysts, investors and media representatives on the publication day at 15.00 (Finnish time) in Finnish at Glaston’s premises on Lönnrotinkatu 11, Helsinki.
In addition, a live audiocast from the meeting can be accessed through the link: https://glaston.videosync.fi/2020-08-06-q2. An on-demand version of the presentation will be available on the company's website later during the same day.
For further information, please contact:
Acting President & CEO Sasu Koivumäki, tel. +358 10 500 500
Chief Financial Officer Päivi Lindqvist, tel. +358 10 500 500
GLASTON CORPORATION
Joséphine Mickwitz, VP, IR, Communications and Marketing, tel. +358 10 500 5070
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 11 countries. Glaston’s shares (GLA1V) are listed on NASDAQ Helsinki Ltd.
Distribution: NASDAQ OMX Helsinki, key media, www.glaston.net