Vossloh with good performance in the first half of the year, outlook for 2020 confirmed
Vossloh AG generated Group sales of €393.2 million in the first half of 2020 (previous year: €437.1 million). Particularly portfolio changes - in the previous year’s figure sales of €30.1 million from the US switch business which has since been sold were still included – and the COVID-19 pandemic contributed to this development. Temporary production shutdowns and project delays on the part of customers led to lower sales of roughly €30 million. Earnings before interest and taxes (EBIT) came to €30.1 million in the first half of 2020 (previous year's adjusted figure: €20.5 million) and benefited from a gain recognized in profit and loss resulting from a business combination achieved in stages of a joint venture in China in the Fastening Systems business unit in the first quarter of 2020 totaling €15.6 million (excluding this effect, EBIT came to €14.5 million). The EBIT margin improved accordingly to 7.6 percent (previous year’s adjusted figure: 4.7 percent). Burdens from COVID-19 were included in EBIT at a scale of roughly €10 million in the first half of 2020. Without the impact of COVID-19, Vossloh’s EBIT would have improved significantly compared to the previous year.
Oliver Schuster, CEO of Vossloh AG, comments: “In light of the impact that COVID-19 has had, we couldn’t have chosen a better time to implement last year’s performance program in order to improve our profitability and self-financing power. The positive effects are obvious and will help us to be even more profitable going forward. Completing the sale of the locomotive business has given us additional stability. Removing these losses and cash outflows will have a positive impact on our earnings per share and free cash flow in future.”
Orders received came to €495 million, well in excess of sales. The Vossloh Group’s book-to-bill ratio, the ratio of orders received to sales, was 1.26. Portfolio-adjusted orders received came to approximately €519 million in the previous year. The order backlog totaled €656 million as of June 30, 2020, compared to a portfolio-adjusted figure of approximately €652 million in the previous year. There was no noticeable negative impact of the pandemic on the order intake situation.
Core Components division
Orders received totaled €187.4 million in the first half of 2020, down from the previous year’s high level of €243.9 million as expected. The downturn was mainly due to the major orders which were won in the previous year in the Fastening Systems business unit in China and the Tie Technologies business unit in Australia. While orders received went down in the Fastening Systems business unit as expected, they went up significantly in the Tie Technologies business unit in the first six months of 2020, especially in the US in transit business and in Mexico. The book-to-bill ratio was 1.14 in the first half of 2020. The order backlog as of June 30, 2020, amounted to €295.3 million (previous year: €316.5 million). Sales were on a par with the previous year in the Core Components division at €164.7 million (2019: €164.8 million). The Fastening Systems business unit saw a downturn in sales, particularly in China. This was offset by the Tie Technologies business unit, which saw particularly significant sales growth in Australia. During the period under review, EBIT improved significantly from an adjusted figure of €19.2 million to €27.9 million due to a positive effect from the business combination achieved in stages of a Chinese joint venture in the Fastening Systems business unit. COVID-19 only had a minor impact on the EBIT of this division in the first half of the year. The EBIT margin totaled 16.9 percent (previous year’s adjusted figure: 11.7 percent).
Customized Modules division
Orders received came to €251.2 million in the Customized Modules division in the first half of 2020, an increase on the previous year’s figure when adjusted for portfolio effects (€223.3 million). This corresponds to an increase of 12.5 percent. The book-to-bill ratio was 1.35 in the first six months of 2020. This considerable improvement was amongst others driven by an increase in orders received in Poland and Finland. The order backlog as of June 30, 2020 amounted to €337.8 million (previous year adjusted for portfolio effects: €312.7 million). Sales revenues came to €186.5 million in the first half of 2020. The downturn compared to the previous year’s figure of €231.7 million was mainly due to portfolio adjustments. The previous year’s figure included €30.1 million from activities which have since been sold. The COVID-19 pandemic also had a considerable negative impact on sales. A noticeable decline in sales was recorded in the first half of 2020, particularly at the French locations which were affected by temporary production shutdowns. However, sales increased in other areas, particularly Poland and Finland. Despite the impact of COVID-19, the division’s EBIT and EBIT margin increased to €8.7 million (previous year’s adjusted figure: €7.7 million) and 4.7 percent (previous year’s adjusted figure: 3.3 percent) respectively. The improvement is mainly due to the success of the performance program, which more than offset the significant negative impact of the COVID-19 pandemic.
Lifecycle Solutions division
Orders received came to €60.4 million in the Lifecycle Solutions division, on a par with the previous year’s level (previous year: €60.7 million). The order backlog also remained stable at €23.7 million (previous year: €24.7 million). Sales also remained consistent year-over-year in the first half of 2020 at €47.2 million (previous year: €48.8 million). While lower sales were generated from the sale of track maintenance machinery, contributions to sales from the areas of Logistics and Stationary Welding increased. Lifecycle Solutions generated an EBIT figure of €1.1 million in the first half of 2020, a slight decrease compared to the previous year’s adjusted figure of €1.5 million. Accordingly, the EBIT margin was 2.2 percent (previous year’s adjusted figure: 3.2 percent). These values were burdened by COVID-19 in the first half of 2020. Without the COVID-19 effects, earnings and profitability would have been higher than in the previous year. In terms of business, the stationary welding and logistics activities showed a positive EBIT trend, while EBIT from the maintenance business was lower. A significant improvement in profitability is expected for the maintenance business in the second half of the year.
Sale of Vossloh Locomotives completed
With the sale of the loss-making Vossloh Locomotives, long sought and finally successfully completed at the end of May, the Vossloh Group has reached another important milestone. The completion of the transaction marks the end of a multi-year process of focusing the company on rail infrastructure. The proceeds from the sale will cover the majority of the unit’s cash outflows in the first half of the year. The transaction is one of the reasons for net financial debt going down from €386.4 million at the end of the first quarter to €358.0 million at the end of June 2020 despite the COVID-19 pandemic, which had a material impact particularly in the second quarter.
Reducing the number of employees was an essential part of the performance program implemented in 2019. The number of employees was down to 3,487 as of June 30, 2020, which is 378 fewer than in the previous year.
Based on the information currently available and a careful risk assessment, and with reference to the obvious uncertainties regarding the further impact of the COVID-19 pandemic, the Executive Board of Vossloh AG continues to anticipate sales of between €900 million and €1 billion for the 2020 fiscal year in line with the previous outlook. Due to potential sales shifts, it is assumed that sales will be at the lower end of the forecast range. Further sales shifts into subsequent years, which could lead to sales of slightly less than €900 million, cannot be completely ruled out from today's perspective. At the same time, the Executive Board continues to firmly expect an EBIT margin of between 7 and 8 percent, which corresponds to an EBITDA margin of 12 to 13 percent, benefiting from the effect described above in connection with the business combination achieved in stages of a Chinese joint venture.
|Orders received||€ mill.||518.81||494.8|
|Order backlog as of 6/30||€ mill.||652.21||656.0|
|EBITDA (2019 adjusted)||€ mill.||46.2||55.0|
|EBITDA margin (2019 adjusted)||%||10.6||14.0|
|EBIT (2019 adjusted)||€ mill.||20.5||30.1|
|EBIT margin (2019 adjusted)||%||4.7||7.6|
|Net income||€ mill.||(23.4)||(9.6)|
|Earnings per share||€||(1.58)||(0.58)|
|Value added||€ mill.||(21.0)||(0.1)|
|Net financial debt (before lease liabilities)||€ mill.||307.8||358.0|
1 For purposes of comparability, values are represented without the US switch business sold in 2019 (orders received adjusted by €50.1 million and order backlog adjusted by €74.7 million).
Werdohl, July 30, 2020
Contact information for media:
Gundolf Moritz (Mirnock Consulting)
Phone: (+49-23 92) 52-608
Contact information for investors:
Dr. Daniel Gavranovic
Phone: (+49-23 92) 52-609
Vossloh is active in rail infrastructure markets worldwide. The Group’s activities are organized into the three divisions of Core Components, Customized Modules and Lifecycle Solutions. In the 2019 fiscal year, Vossloh achieved sales of €916.4 million with an average of 3,786 employees.