EXEL COMPOSITES PLC HALF YEAR FINANCIAL REPORT 21 JULY 2020 at 10:00 EET
Q2 2020 in brief
· Order intake decreased by 3.8% to EUR 22.9 million (Q2 2019: 23.8).
· Revenue increased by 2.9% to EUR 27.2 million (26.5).
· Adjusted operating profit increased to EUR 2.9 million (2.2), which is 10.6%
of revenue (8.5).
· Operating profit increased to EUR 2.8 million (2.1), which is 10.3% of
revenue (8.1).
· Earnings per share amounted to EUR 0.21 (0.14).
Q1-Q2 2020 in brief
· Order intake increased by 10.5% to EUR 57.4 million (Q1-Q2 2019: 52.0).
· Revenue increased by 2.7% to EUR 55.0 million (53.6).
· Adjusted operating profit increased to EUR 5.0 million (4.2), which is 9.0%
of revenue (7.8).
· Operating profit increased to EUR 4.7 million (2.5), which is 8.5% of
revenue (4.8).
· Earnings per share amounted to 0.27 (0.10).
Guidance for the full year 2020
Exel Composites withdrew its guidance on 6 May 2020 as a consequence of
increased uncertainty and poor short-term predictability due to the Covid-19
pandemic. The impact of the pandemic on the company depends on the duration and
severity of the crisis. The company will specify its guidance for 2020 later
during the year when a more reliable estimate can be made.
President and CEO, Riku Kytömäki
In the second quarter of 2020, revenue and operating profit increased compared
to last year. This outcome was supported by a record high order intake in the
first quarter. I am very satisfied with this result considering the current
global business environment.
In the second quarter of 2020, the Covid-19 pandemic impacted Exel Composites’
operations in Europe and the United States, while in China our factories
operated normally. Our quarterly order intake, however, declined only slightly
compared to the previous year. On one hand, our order intake suffered from Covid
-19 related uncertainty and cautiousness among our customers. On the other hand,
we recorded a sizable order (representing roughly 15% of the quarterly order
intake) in the Buildings and infrastructure customer industry, to be delivered
mainly in 2021. Our order backlog at the beginning of the third quarter is good.
The impact caused by the pandemic on customer demand has varied greatly
depending on location and industry. Several of our customers’ factories that
were closed earlier have now reopened and activity level increased towards the
end of the quarter as countries have gradually lifted restrictions. Based on
this it seems that the business environment is developing favorably. However,
there is still a risk that the pandemic continues or expands.
Revenue in the second quarter increased slightly compared to the previous year.
The increase of deliveries, especially in Wind power to the Asia-Pacific region,
was offset by a volume decline in other customer industries globally, mainly
attributable to the Covid-19 pandemic.
Despite the effects of the pandemic, operating profit increased in the second
quarter of 2020 compared to the previous year. The improved profitability of the
business unit in the USA was the main factor behind the positive development of
Group operating profit.
In June 2020, the Board of Directors reconfirmed Exel’s strategy until the end
of 2022. Our main strategic focus areas as well as our long-term financial
targets remain the same. Our strategic priorities for the remaining of 2020
include stabilizing the profitability of the business unit in the USA,
consolidation of the organization in China, operational efficiency improvements
in the European manufacturing units as well as focusing on growth initiatives.
Sustainability is integrated even more closely into all Exel’s business and
operations.
Consolidated key figures
Q2 Q2 Change Q1-Q2 Q1-Q2 Change Q1-Q4
EUR thousand 2020 2019 % 2020 2019 % 2019
Revenue 27,239 26,482 2.9 55,044 53,572 2.7 103,784
Operating 2,792 2,144 30.2 4,662 2,549 82.9 5,087
profit
% of revenue 10.3 8.1 8.5 4.8 4.9
Adjusted 2,882 2,239 28.8 4,955 4,196 18.1 7,160
operating
profit 1)
% of revenue 10.6 8.5 9.0 7.8 6.9
Profit before 2,953 1,938 52.4 4,268 2,120 101.3 3,885
tax
% of revenue 10.8 7.3 7.8 4.0 3.7
Profit for the 2,529 1,649 53.4 3,198 1,186 169.7 2,397
period
% of revenue 9.3 6.2 5.8 2.2 2.3
Shareholders' 26,770 25,006 7.1 26,770 25,006 7.1 26,302
equity
Interest 42,196 36,655 15.1 42,196 36,655 15.1 37,163
-bearing
liabilities
Cash and cash 12,758 5,876 117.1 12,758 5,876 117.1 6,930
equivalents
Net interest 29,438 30,779 -4.4 29,438 30,779 -4.4 30,234
-bearing
liabilities
Capital 68,966 61,661 11.8 68,966 61,661 11.8 63,466
employed
Return on 39.5 26.9 46.8 24.1 9.3 158.1 9.2
equity, %
Return on 17.1 14.1 20.9 14.2 8.7 63.4 8.6
capital
employed, %
Equity ratio, % 28.3 30.2 -6.1 28.3 30.2 -6.1 30.9
Net gearing, % 110.0 123.1 -10.7 110.0 123.1 -10.7 114.9
Net cash flow 5,227 2,860 82.7 8,188 3,802 115.4 9,030
from operating
activities
Net cash flow -3,251 -1,252 159.7 -4,827 -2,318 108.3 -6,087
from investing
activities
Capital 3,346 1,333 150.9 4,922 2,431 102.5 6,262
expenditure
% of revenue 12.3 5.0 8.9 4.5 6.0
Research and 698 736 -5.1 1,448 1,508 -4.0 2,851
development
costs
% of revenue 2.6 2.8 2.6 2.8 2.7
Order intake 22,908 23,821 -3.8 57,428 51,977 10.5 110,693
Order backlog 32,595 21,977 48.3 32,595 21,977 48.3 30,391
Earnings per 0.21 0.14 53.3 0.27 0.10 169.4 0.20
share, diluted
and undiluted,
EUR
Equity per 2.26 2.12 7.00 2.26 2.12 6.96 2.23
share, EUR
Average share 5.17 4.16 24.3 5.17 4.16 24.3 4.54
price, EUR
Average number 11,830 11,820 0.1 11,826 11,820 0.0 11,820
of shares,
diluted and
undiluted,
1,000
shares
Employees, 662 652 1.5 662 671 -1.3 660
average
Employees, end 661 654 1.1 661 654 1.1 648
of period
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.
Revenue by customer industry
Q2 Q2 Change Q1-Q2 Q1-Q2 Change Q1-Q4
EUR thousand 2020 2019 % 2020 2019 % 2019
Buildings and 5,282 5,887 -10.3 11,497 11,880 -3.2 23,502
infrastructure
Equipment and 4,031 5,230 -22.9 10,142 10,683 -5.1 18,644
other industries
Wind power 7,867 5,184 51.8 13,693 10,951 25.0 23,620
Machinery and 4,790 4,070 17.7 8,569 7,676 11.6 14,384
electrical
Transportation 2,796 3,170 -11.8 6,172 6,858 -10.0 13,127
Defense 768 394 94.8 2,019 769 162.6 2,292
Telecommunications 1,706 2,546 -33.0 2,951 4,755 -37.9 8,215
Total 27,239 26,482 2.9 55,044 53,572 2.7 103,784
Revenue by region
Q2 Q2 Change Q1-Q2 Q1-Q2 Change Q1-Q4
EUR thousand 2020 2019 % 2020 2019 % 2019
Europe 15,534 16,413 -5.4 32,404 32,858 -1.4 62,076
North America 4,391 5,253 -16.4 10,210 12,016 -15.0 22,407
Asia-Pacific 6,636 4,478 48.2 10,818 8,171 32.4 17,600
Rest of the world 678 338 100.9 1,612 526 206.4 1,701
Total 27,239 26,482 2.9 55,044 53,572 2.7 103,784
Impacts of the Covid-19 pandemic
Operations
In the second quarter of 2020, the Covid-19 pandemic impacted Exel Composites’
operations in Europe and the United States, while in China our factories
operated normally. The business unit in Great Britain ran with reduced capacity
in April and May. However, the financial impact of this was not significant. The
business unit in the United States produced in April and May products only for
businesses categorized as essential by authorities, for example components for
wind power. However, most of the order backlog in the United States was
categorized as products for essential business and was therefore produced
normally.
Raw material supply and logistics continued to operate close to normal despite
the pandemic during the second quarter. Minor challenges in specific raw
material categories or personal protection equipment supplies have been solved
through consolidated Group purchases and finding alternative suppliers or
technical solutions.
Financial standing
During the second quarter, the impacts of the pandemic on customer demand has
varied greatly depending on location and industry. Order intake in the second
quarter suffered from Covid-19 related uncertainty and cautiousness among our
customers. However, the order intake declined only slightly compared to the
previous year, supported by a sizable order in the Buildings and infrastructure
customer industry to be delivered mainly in 2021. We received a few customer
requests to postpone deliveries of current orders, typically by two to four
weeks from the originally planned delivery time, which impacts timings of
revenues and profits. However, similarly to quarter one, we did not experience
any significant cancellations of orders in the second quarter of 2020. Several
of our customers’ factories that were closed earlier have now reopened and
activity level increased towards the end of the quarter as countries have
gradually lifted restrictions.
The Group’s liquidity and cash situation are currently good and the Covid-19
pandemic has had limited impact, if any, on Group liquidity. In April 2020, the
Group agreed to continue the EUR 10 million committed overdraft facility,
expiring in June 2020, by two years. The new overdraft facility expires in June
2022. The Group also agreed upon on a new EUR 7 million long-term loan in April
2020 to secure financing of the construction of a new manufacturing facility in
Austria. With other existing committed credit limits, these new agreements
secure financing of all foreseen investments in 2020 and provide for a
comfortable liquidity buffer for any unforeseen negative events.
Based on the company’s assessment, the Covid-19 pandemic does not change the
results of the impairment testing and sensitivity analysis conducted for the
financial statements of 2019. The main risk identified was related to the
expected profitability turnaround of the business unit in the United States. In
the first half of 2020, both order intake and profitability of the business unit
in the USA have developed above estimates despite the Covid-19 pandemic.
During the second quarter of 2020, Exel Composites received some Covid-19
related financial assistance under local governmental schemes in Great Britain,
China and Australia. The amount of these was however not material from a Group
perspective.
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. In order to ensure safety and business continuity
during the Covid-19 pandemic, the Group Management Team and local management
continue to hold regular online meetings to review the latest developments,
actions and best practices in all functions and countries of operation. All
units have implemented Group level safety and hygiene instructions in accordance
with the instructions of local health authorities. Our manufacturing units
continue to report zero confirmed Covid-19 cases. Most of our European
manufacturing units are in more remote locations where the occurrence of the
Covid-19 has been reduced compared to larger urban areas. International
travelling is limited and online meetings continue to be preferred when
possible. Outsider visits to sites are reduced to minimum. Continuous internal
communication at Group level as well as locally on Covid-19 related concerns has
been emphasized and implemented through a variety of 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.
Vantaa, 21 July 2020
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, a global technology company headquartered in Finland, is the
world’s largest manufacturer of pultruded and pull-wound composite products. Our
global manufacturing, R&D, and sales footprint serves customers across a broad
range of industries and applications. With 60 years of composites experience and
engineering expertise, we work closely with our customers to design and
manufacture high quality composite products using carbon fiber, fiberglass, and
other high-performance materials. Our composites help reduce weight, improve
performance, and decrease total life cycle costs, all while helping increase
energy efficiencies and supporting environmental sustainability.
Exel Composites employs approximately 650 innovative and customer-focused
employees around the world and is listed on the Nasdaq Helsinki exchange. To
find out more about our offering and company please visit
www.exelcomposites.com.