Troax Group: Interim Report January-March 2020
Hillerstorp 23rd of April 2020, 12:30 CET
JANUARY – MARCH
- Order intake increased organically by 12 percent to 44,6 (39,7) MEUR. Adjusted for currency the increase was 12 percent.
- Sales increased organically by 4 percent to 40,8 (39,1) MEUR. Adjusted for currency the increase was 4 percent.
- Operating profit increased to 6,5 (5,9) MEUR.
- Operating margin increased to 15,9 (15,1) percent.
- Financial net was -0,2 (-0,3) MEUR.
- Profit after tax increased to 4,8 (4,3) MEUR.
- Earnings per share after dilution amounted to 0,08 (0,07) EUR based on 60 000 000 shares regarding both periods. (a split 3:1 was carried out in June 2019).
- Due to the great uncertainty about how the Corona pandemic will affect the company, the Board has decided to postpone the Annual General Meeting until June 25th. The decision has been made to give the Board additional time to evaluate what impact the Corona pandemic will have on the company's market and liquidity situation and whether there is reason to change the earlier dividend decision.
Troax increased order intake by 12% during a very turbulent quarter. Despite being confronted, towards the end of the quarter, with a shrinking market, Troax still managed to take some major project orders, which counteracted the downturn. Troax is late in the business cycle and is therefore less affected, than many other industries, by the problems of reduced demand due to Corona Virus. In general, it was 'business as usual' during January and February, whereas the crisis struck with full force during the month of March. Order intake may be characterized as strong and a good cushion for the decrease in order intake and activity expected for quarters two and three. We have a good order backlog, which to some extent will help us during the expected downturn in the following quarters. The driver of the order intake during the first quarter is primarily the development within E-commerce. Automotive, on the other hand, had another weak quarter. Regionally, we have continued to develop well in the US and New markets, but the UK in particular, stands out positively and shows very good figures. Troax USA also performed well during the period, while it remained slow for Folding Guard. In summary, we believe that we have gained market shares mainly in more demanding customer segments and have again received several important orders from customers in automation, warehousing and construction.
Investments in increased production capacity at our plants in Sweden and Italy were largely completed during the first quarter, with the unit in Bulciago Italy being in use from the beginning of the year. The new Italian unit has, after some tuning, now started to gain momentum in production. Here, unfortunately, we must note that demand is likely to be the problem in the second quarter, as we have seen a clear reduction in quotation requests since the second half of March. On the positive side, of course, the new factory is ready to receive clearly higher volumes, in the long run. It should be noted this unit has been operating throughout the crisis in Italy, although the scale and volumes have been affected by the difficult situation in the country. The units in Birmingham (UK) and Chicago (USA), were in principle closed completely towards the end of March and will be closed at least throughout the month of April. The Group's main factory in Hillerstorp Sweden has continued to produce almost normal production during this period. Our smallest size factory in Shanghai (China), was basically closed for most of the quarter due to Corona development in the country but started again on a smaller scale towards the end of the period.
Net sales increased by 4% in the quarter compared to the corresponding period last year. The trend is positive, especially in Continental Europe as well as New markets and the gross margin increased somewhat during the quarter. The result for the quarter is therefore better than the corresponding period 2019, which indicates a continued stable position for Troax at the end of March. We are currently conservative in increasing our sales and marketing efforts until we see how the situation develops. For the Group, the operating margin was 15,9 percent in the quarter, compared with 15,1 percent last year. Operating profit was EUR 6,5 million, an increase of EUR 0,6 million and Folding Guard continues to negatively impact the Group's operating margin. Net profit amounted to EUR 4,8 million for the quarter compared to EUR 4,3 million last year.
Due to the great uncertainty about how the Corona pandemic will affect the company, the Board has decided to postpone the Annual General Meeting until June 25th. The decision has been made to give the Board additional time to evaluate what impact the Corona pandemic will have on the company's market and liquidity situation and whether there is reason to change the earlier dividend decision. Cash flow during the quarter was charged, among other things, with the payment of debts related to a certain part of the investment in Italy and the acquisition of our distributor in Japan. This combined with a certain increase in tax payments, results in a somewhat lower cash flow than the corresponding period last year. Investments charged EUR 1,6 million in cash flow during the quarter. Towards the end of the period, we noted a tendency for customers in different countries to try to delay payments, with reference to the strained situation because of the Corona situation.
Thomas Widstrand, President and CEO
Invitation to presentation of the first quarter result:
Thomas Widstrand, CEO presents the result on a phone conference on the 23rd of April 2020 at 16:00 CET.
The conference will be held in English. For more information, please refer to https://www.troax.com/global/en/press
President and CEO
Troax Group AB
335 04 Hillerstorp
Tel +46 (0)370-828 31
This is information that Troax Group AB (publ) is obliged to make public pursuant to the EU Market Abuse Regulation. The information was submitted for publication, through the agency of the contact person set out above, at 12:30 CET on the 23rd of April 2020