Troax Group: Interim report January - June 2019
Hillerstorp 14th of August 2019, 12:30 CET
APRIL - JUNE
- Order intake increased by 9 per cent to 46,6 (42,9) MEUR. Adjusted for currency the increase was 8 per cent.
- Sales increased by 3 per cent to 42,3 (41,1) MEUR. Adjusted for currency the increase was 3 per cent.
- Operating profit increased to 8,5 (7,7) MEUR.
- Operating margin increased to 20,1 (18,7) per cent.
- Financial net was -0,2 (-0,2) MEUR.
- Profit after tax increased to 6,3 (5,6) MEUR.
- Earnings per share after dilution amounted to 0,11 (0,09) EUR based on 60 000 000 shares regarding both periods. (a split 3:1 was carried out in June 2019).
JANUARY – JUNE
- Order intake increased by 4 per cent to 86,3 (83,2) MEUR. Adjusted for currency the increase was 3 per cent.
- Sales increased by 5 per cent to 81,4 (77,8) MEUR. Adjusted for currency the increase was 4 per cent.
- Operating profit increased to 14,4 (14,1) MEUR.
- Operating margin decreased to 17,7 (18,1) per cent.
- Financial net was -0,4 (-0,4) MEUR.
- Profit after tax increased to 10,6 (10,2) MEUR.
- Earnings per share after dilution amounted to 0,18 (0,17) EUR based on 60 000 000 shares regarding both periods. (a split 3:1 was carried out in June 2019).
After a comparatively weaker first quarter of 2019, the second quarter became clearly better. This quarter resulted in an order intake that exceeded the previous year by 9%. Our US acquisition Folding Guard also had a significantly stronger quarter than the first. However, the market has again been characterized by a lateral movement and has only increased marginally during the quarter and we believe that part of the order intake in the second quarter spilled over from the first quarter when customers for various reasons chose to postpone certain investments. We have again received significant orders from customers in automation, warehousing and property protection and several important orders from the subsegment automated warehouse. As before, business from the automotive industry was weak and we do not expect any immediate improvement from this segment.
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. We can still see that it takes longer than expected to change culture and attitudes to customer requirements but we now see positive changes, and we can concentrate on increasing the efforts in marketing and sales. In April, an important trade show was held in the United States, where our concept and market orientation were well received by customers and trade show visitors. We can also note that the order intake is clearly stronger during this quarter, although we do not believe the work of implementing changes is completed. The result for Folding Guard for the quarter is clearly better than the first, but still there is a good way to go before we begin to approach the same profitability as other parts of Troax's business. The market in the US has been good during the second quarter and we can once again see a good development for our sales under the Troax brand. Our assessment is that the market has been stable overall. The indication is still that most customers have well-filled order books and the activity level has been high, but that, like the end of last year, market growth has levelled out to a continued high level. The development for the Group has been below the historical average and under current market conditions it can be described as a good development. The order backlog at the end of the period remains at a high level.
At the end of 2018, we started production of Troax products in our factory in Chicago. This has continued to be well received by many customers. We are also in the final phase of the investment in a completely new panel production line at the Group's main unit in Hillerstorp. This line is now in production and has in principle been put into operation as planned, with some minor remaining points. Investments in expanded machine capacity for the unit in Italy, as well as investment in expanded storage space and improved inventory management for the unit in Hillerstorp are proceeding according to plan.
Net sales increased by 3 percent in the quarter compared with the corresponding period last year. The development is positive especially in Continental Europe and in the Nordic region. The result for the quarter has developed well. Increased price competition on certain parts of the Group's product range was noted, but good volume development offsets this. We continue to increase sales and marketing efforts according to plan, but to a lesser extent than in the first quarter. The gross margin is at a good level and was characterized by stable development during the second quarter. We continue to have good capacity utilization in our facilities in Hillerstorp, Sweden and Calco, Italy. For the Group, the operating margin was 20.1 percent, compared with 18.7 percent the previous year. The consolidation of Folding Guard continues to negatively affect the Group's operating margin. However, we still see good opportunities to increase the margin for the Folding Guard in the long term. Net profit amounted to MEUR 6.3 for the quarter, compared with MEUR 5.6 last year. The improvement is mainly attributable to higher operating profit. Earnings per share for the first quarter are EUR 0.11 compared to EUR 0.09 for the corresponding quarter of 2018, where a split of the share 3:1, from 20,000,000 to 60,000,000 shares, has been used in the calculation for both periods. Working capital is at an expected level. The balance sheet item ''tangible assets” increased by approximately EUR 6,9 million as of the 1st of January 2019 due to the implementation of IFRS 16 in the financial reporting. Cash flow during the quarter is at similar level with the same period in 2018. Investments have charged MEUR 1,4 in cash flow in the quarter. The key figure for net borrowing in relation to EBITDA is now 1,4 which is clearly below the Group's target.
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 14th of August 2019 at 16:00 CET. The conference will be held in English. For more information, please refer to https://www.troax.com/en/news .
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 14th of August 2019.