Troax Group: Interim Report January- June 2020
Hillerstorp 13 August 2020, 12:30 CET
APRIL - JUNE
- Order intake decreased by 19 percent to 37,7 (46,6) MEUR. Adjusted for currency the decrease was 19 percent.
- Sales decreased organically by 15 percent to 35,9 (42,3) MEUR. Adjusted for currency the decrease was 15 percent.
- Operating profit decreased to 6,4 (8,5) MEUR.
- Operating margin decreased to 17,8 (20,1) percent.
- Financial net was -0,2 (-0,2) MEUR.
- Profit after tax decreased to 4,7 (6,3) MEUR.
- Earnings per share after dilution amounted to 0,08 (0,11) EUR.
- Due to Corona, the Group received government subsidies in the USA and the UK during the quarter at the amount of 1,3 MEUR. The subsidies have been reported on the line "Other operating income and expenses".
JANUARY - JUNE
- Order intake decreased by 5 percent to 82,3 (86,3) MEUR. Adjusted for currency the decrease was 5 percent.
- Sales decreased organically by 6 percent to 76,7 (81,4) MEUR. Adjusted for currency the decrease was 6 percent.
- Operating profit decreased to 12,9 (14,4) MEUR.
- Operating margin decreased to 16,8 (17,7) percent.
- Financial net was -0,4 (-0,4) MEUR.
- Profit after tax decreased to 9,5 (10,6) MEUR.
- Earnings per share after dilution amounted to 0,16 (0,18) EUR.
- Due to Corona, the Group received government subsidies in the USA and the UK during the period at the amount of 1,3 MEUR. The subsidies have been reported on the line "Other operating income and expenses".
Troax reduced order intake by 19 percent during a very turbulent quarter. It was expected order intake would decrease during the quarter as the Corona impact hit with full force from the end of March. In general, customers have been cautious about placing new orders, and they have concentrated on completing / executing projects that had already been placed. In many cases, customers' staff have been laid off or engaged at home, meaning projects have been 'automatically' delayed with responsible personnel not being in place. However, the trend was positive during the quarter, where April was the low point in both activities and order intake. This has since gradually improved later in the quarter. We stand by what we previously indicated, that the second and third quarters will be affected by clearly lower activities in the market due to obvious Corona effects.
Despite the decline in orders compared to the same quarter in 2019 (which was a strong quarter), Troax has continued to take important project business, primarily in automated warehouse solutions aimed at e-commerce. There has been some activity in the automotive industry where we received some notable smaller orders.
What seems to have been most negatively affected during the second quarter are smaller orders from small and medium-sized customers, where these customers probably had shorter order books compared with larger customers. As is well known, Troax is late in the business cycle but was significantly affected during the second quarter.
Due to government decisions, we also had to close our units in Chicago USA and Birmingham UK for most of April and May, and this of course affected both order intake and earnings. We received government support to avoid redundancies in these factories. Operations at the units in Hillerstorp, Sweden, and Bulciago, Italy, continued as usual during this period, even though production volumes were lower than normal. Helped by the good order intake we saw in several markets during the first quarter of this year Invoicing during the quarter has decreased only slightly less than order intake,. Regionally, we have continued to develop well in the Nordic region and in new markets, while Continental Europe, the USA and the UK show weak figures. Troax USA has continued to positively develop, although weaker progress is noted at Folding Guard, partly driven by the closure in the USA during April and May. In summary, we believe despite the reduction in order intake, we continue to gain market share.
The last investments in increased production capacity at our facilities in Sweden and Italy were largely financially concluded during the second quarter. The unit in Bulciago, Italy, was commissioned at the beginning of the year and despite a certain lack of volume, has continued to progress positively during the second quarter. Our smallest factory in Shanghai, China, produced as planned during the quarter and it is noted that China, unlike the rest of the world, has had a good development of activity during the quarter.
Net sales decreased in the quarter by 15 percent compared with the corresponding period last year. New Markets showed good progress, while the other regions decreased their sales compared with the previous year. The gross margin is negatively affected by factory closures and lower volumes, while sales prices are largely unaffected so far. Costs are judged to be under control and declining in the short term. Overall, this means that operating profit decreased to 6,4 MEUR for the quarter, compared with 8,5 MEUR the previous year. In total for the Group, the operating margin was 17,8 percent in the quarter, compared with 20,1 percent the previous year. Net profit amounts to 4,7 MEUR for the quarter, compared with 6,3 MEUR the previous year.The Board of Directors postponed the Annual General Meeting until June 25th, 2020, due to the great uncertainty about how the Corona pandemic will affect the company. The AGM resolved to approve the Board's proposal to reduce the dividend to 50 percent of the previously proposed dividend as a precautionary measure. The decision should be seen as a pure safety measure as Troax has a good cash flow even at lower sales volumes.
Thomas Widstrand, President and CEO
Invitation to presentation of the second quarter result:
Thomas Widstrand, CEO presents the result on a phone conference on the 13th of August 2020 at 16:00 CET. The conference will be held in English. For more information, please refer to https://www.troax.com/se/en/press
This information is information that Troax Group AB (publ) is obliged to make public pursuant to the EU Market Abuse Regulation 596/2014 and the Securities Markets Act (2007:528). The information was submitted for publication, through the agency of the contact person set out above, at 12:30 CET on the 13th of August 2020