Troax Group Interim report January- September 2019
Hillerstorp 7th of November 2019, 12:30 CET
JULY - SEPTEMBER
- Order intake was unchanged compared to prior year and amounted to 40,0 (40,1) MEUR.
- Sales increased organically by 6 per cent to 42,2 (39,7) MEUR. Adjusted for currency the increase was 6 per cent.
- Operating profit increased to 9,8 (8,6) MEUR.
- Operating margin increased to 23,2 (21,7) per cent.
- Financial net was -0,3 (-0,3) MEUR.
- Profit after tax increased to 7,3 (6,3) MEUR.
- Earnings per share after dilution amounted to 0,12 (0,11) EUR based on 60 000 000 shares regarding both periods. (a split 3:1 was carried out in June 2019).
JANUARY – SEPTEMBER
- Order intake increased organically by 2 per cent to 126,3 (123,3) MEUR. Adjusted for currency the increase was 2 per cent.
- Sales increased organically by 5 per cent to 123,6 (117,5) MEUR. Adjusted for currency the increase was 5 per cent.
- Operating profit increased to 24,2 (22,7) MEUR.
- Operating margin increased to 19,6 (19,3) per cent.
- Financial net was -0,7 (-0,7) MEUR.
- Profit after tax increased to 17,9 (16,5) MEUR.
- Earnings per share after dilution amounted to 0,30 (0,28) EUR based on 60 000 000 shares regarding both periods. (a split 3:1 was carried out in June 2019).
In summary, Troax shows a strong result for the third quarter of 2019. We can see that order intake is in line with previous year, an indication that the market is not currently growing. During this quarter, we have noted continued weak activity from the automotive sector, mainly affecting China and the US (Folding Guard). There has been an increased order intake in Europe, which we interpret as our continuing to take share of a market that is showing weak or negative growth. Thanks to the good order intake during the second quarter, sales growth in this third quarter was 6%, which also had a positive impact on both gross margin and profit. We have again received several important orders from customers in automation, warehousing and property protection and we have also received interesting orders in the automated warehouse sub-segment, although this is not at the same level as in the previous quarter.
As previously, we are still devoting a great deal of time and effort into the integration and improvement of our Folding Guard unit in Chicago. As announced earlier, we have seen positive changes in 2019 and we have switched to concentrating on increasing our marketing and sales efforts. This should start to have positive effects from 2020. The result for Folding Guard in the quarter is still clearly below our targets although it has improved during the year. The US market was again good in the third quarter (excluding automotive) and it is positive to note a good development for sales under the Troax brand. The indication is still that most customers have well-filled order books and activity levels have been high, although like the trend since the end of last year, market growth has levelled out. We therefore expect the good figures we showed for the fourth quarter of 2018 will be a challenge in terms of order intake in the fourth quarter. However, the order backlog at the end of the period remained at a high level.
Investments in increased production capacity at our plants in Sweden and Italy are proceeding according to plan and the Swedish investment regarding a new panel production line was put into production just before the summer holiday period this year. Investments in expanded warehouse space and improved warehouse management for the unit in Hillerstorp are also proceeding according to plan. With these investments, we expect to be well equipped for a continued increase in volume over the next few years. We can also announce a minor change; during the third quarter we acquired all shares in our former distributor in India and it is now consolidated in operations from September of this year.
Net sales increased by 6 per cent in the quarter compared to the corresponding period last year. The trend is positive, especially in Continental Europe, the UK and the Nordic countries. The result for the quarter has been positive. We continue to increase sales and marketing efforts according to plan, albeit to a slightly lower extent than in the first quarter. The gross margin is at a good level and has been stable during the third quarter. We continue to have good capacity utilization in our facilities in Hillerstorp, Sweden and Calco, Italy. For the Group, the operating margin was 23,2 percent, compared with 21,7 the previous year. The consolidation of Folding Guard continues to negatively affect the Group's operating margin. Net profit amounted to 7,3 MEUR for the quarter compared to 6,3 MEUR last year. The improvement is mainly attributable to better operating results. Earnings per share for the third quarter are 0,12 EUR, compared with 0,11 EUR for the corresponding quarter of 2018. Working capital is at the expected level. The balance sheet item "tangible assets" has increased by about 6,5 MEUR at January 1, 2019 due to IFRS 16. Cash flow for the quarter is in line with the corresponding period in 2018. Investments were charged to cash flow of 1,5 MEUR in the quarter.
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 7th of November 2019 at 16:00 CET. The conference will be held in English. For more information, please refer to https://www.troax.com/global/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. The information was submitted for publication, through the agency of the contact person set out above, at 12:30 CET on the 7th of November 2019