Revenue target exceeded, EBIT at upper end of forecast/Dividend proposal represents EUR 0.44 per share/Board of Management launches strategic reorientation
Thanks to a strong fourth quarter, technotrans exceeded its most recent revenue target for the 2019 financial year despite non-recurring effects. Consolidated revenue showed a moderate decline of 3.9 percent on the previous year, to EUR 207.9 million. Notwithstanding the muted economy and exceptional charges, the Group achieved a positive result (EBIT) of EUR 8.3 million, at the upper end of the forecast range; this represents half the prior-year figure. The Board of Management and Supervisory Board propose a dividend of EUR 0.44 per share for the past financial year. Under the slogan of “Shaping the future through development!” the Board of Management is launching a Group-wide strategic reorientation.
“Cyclically related downturns in revenue and unexpected productivity restrictions at our Group company gwk following the ERP changeover were behind the marked downturn in revenue and earnings. This obliged us to adjust our forecast on two occasions. Thanks to the healthy volume of deals closed in the final quarter, we ultimately exceeded the revenue target and achieved EBIT at the top end of our expectations. Nevertheless, we are not satisfied as a whole with the business performance,” remarked Dirk Engel, Chief Executive Officer of technotrans SE, at the presentation of the audited figures for 2019.
The 2019 financial year saw the technotrans Group achieve consolidated revenue of EUR 207.9 million and a consolidated operating result (EBIT) of EUR 8.3 million. These figures meant the Group improved on the adjusted revenue forecast of EUR 205 million and achieved EBIT at the top end of the expected range of EUR 7.6 to EUR 8.4 million.
Compared with the previous year, revenue was down 3.9 percent. EBIT was halved, in particular as a result of negative non-recurring effects. The EBIT margin correspondingly fell from 8.0 to 4.0 percent. Net income of EUR 6.1 million was around 51 percent down on the prior-year figure.
“At the end of the year we had to absorb unexpected charges amounting to EUR 1.4 million. Disregarding these effects, the EBIT margin for the Group would have been 4.7 percent,” explained Engel.
The Technology segment accounted for EUR 148.4 million of consolidated revenue. This represents a share of 71 percent. Compared with a result for the segment of EUR 8.1 million in the previous year, the 2019 financial year brought a merely balanced result. The Services segment achieved revenue of EUR 59.5 million, almost on a par with the previous year. Its sub-segment of Technical Documentation equally made a positive contribution. The segment’s lower cyclical dependency is reflected in its EBIT figure of EUR 8.3 million.
Growth markets defy economic weakness
In the price-sensitive, highly competitive markets for lasers and machine tools, technotrans maintained its revenue at the prior-year level thanks to market share gains. However the printing industry faced adverse conditions. The muted economic situation and ongoing consolidation in end customer markets led to a slight drop in revenue. Developments in the plastics processing industry weighed more heavily on the figures. Over the year, the structurally related declines in the market for auto-related injection moulding technology were largely made good by the focus on other technologies and application areas as well as the positive revenue contribution of Reisner Cooling Solutions GmbH. However this did not suffice to compensate for the economic impact of the unscheduled delays to the ERP rollout at gwk Gesellschaft Wärme Kältetechnik mbH. The consequence was a clear fall in revenue coupled with a one-off negative profit contribution by this business area. There was scant evidence of the ailing economy in the growth markets. This area achieved double-digit growth rates and now brings in 12 percent of consolidated revenue. Service business, too, performed satisfactorily in the 2019 financial year.
Solid economic conditions
The balance sheet structure of the technotrans Group remains orderly. The balance sheet total grew by 7.3 percent as a result of investment spending. At EUR 75.1 million, equity was unchanged from the previous year. The equity share came to 51.4 percent. Net debt rose by EUR 4.8 million to EUR 24.2 million as a result of the raising of low-interest, long-term loans as well as the first-time recognition of lease liabilities in accordance with IFRS 16.
Net cash from operating activities amounting to EUR 16.8 million was up EUR 10.5 million on the previous year. This change reflected positive working capital effects and lower tax payments. After deduction of the cash outflows for investing activities, there remained a comfortably positive free cash flow of EUR 7.6 million (previous year: EUR -3.8 million).
The financial position is correspondingly orderly with a comfortable gearing ratio of 1.5 (net debt/EBITDA).
technotrans will again need to hold its ground in a challenging environment in the 2020 financial year. To put the Group on an even stronger footing over the next five years, the Board of Management has launched a strategic reorientation process under the slogan of “Shaping the future through development!”. This process includes for example adopting an industry emphasis for sales, expanding the skills profiles of each location, unlocking extra synergies and building on the Group’s development and innovative capability. The Board of Management expects that the package of measures will already deliver a positive earnings effect in the middle single-digit millions by the 2021 financial year.
Leading forecasting institutes expect slower global economic growth in 2020. The Board of Management believes technotrans will continue to face a challenging environment.
It expects the growth markets to show a continuing positive trend. Conversely it does not anticipate any economic impetus in the remaining markets and anticipates a muted to slightly downward business development. The forecast based on these expectations envisages consolidated revenue in the range of EUR 204-214 million and a consolidated operating result (EBIT) of between EUR 6.0 and EUR 10.7 million. This already includes the costs of the structural reorientation. Possible consequences of the coronavirus epidemic are not factored in. In view of current economic forecasts, the Board of Management approaches the new financial year with caution. If the capability and potential of the technotrans Group are anything to go by, it can be optimistic about the future and stands by its medium-term targets of consolidated revenue in the order of EUR 250-300 million and a double-digit EBIT margin.
The Board of Management and Supervisory Board will again propose to the Annual General Meeting on May 20, 2020 that half of the consolidated net profit be distributed. This represents a dividend of EUR 0.44 per share.
The full 2019 Annual Report is available as a download under Investor Relations, in the Financial Reports section.