Concentration on rail infrastructure moving forward; Profitability in Vossloh Group again improved
In 2016, Vossloh made further progress in its transformation to a company focused purely on rail infrastructure. Following the signing of the purchase agreement in December 2016, the sale of the Electrical Systems business unit was completed at the end of January 2017. Also in January, Vossloh substantially improved its market position in the focus market USA by finalizing the acquisition of Rocla Concrete Tie, North America’s leading manufacturer of concrete ties. From 2017, Rocla’s activities will form “Vossloh Tie Technologies”, the second business unit in the Core Components division.
While sales revenues compared to the previous year fell slightly to €931.6 million (previous year: €952.9 million), the Group’s earnings before interest and taxes – EBIT – improved slightly better than expected from €42.3 million in 2015 to €50.0 million. The EBIT margin of 5.4% (previous year: 4.4%) exceeded the most recently communicated forecast corridor of between 4.5% and 5.0%. All divisions managed to improve their EBIT margins as compared to the previous year and it was possible to further reduce losses in the Transportation division. Vossloh achieved increases in profitability particularly through a sustainable focus on higher-margin projects as well as ongoing efficiency enhancements and strict cost management.
The capital structure of the Vossloh Group also improved further in the reporting year: With the successful completion of the capital increase conducted in June 2016, equity including non-controlling interests increased to €550.8 million (previous year: €428.7 million). The equity ratio increased accordingly to 40.3 % (previous year: 30.8 %). Net financial debt was significantly reduced from €218.6 million at the end of 2015 to €83.9 million as of the reporting date 2016. In addition to the net cash inflow from the capital increase in the amount of €123.1 million, the positive free cash flow also contributed to a reduction of debt.
In the Core Components division, sales in the reporting year of €257.1 million were at the level of the previous year (€256.6 million). Orders received were up slightly from €251.6 million to €262.3 million. The division’s EBIT, on the other hand, improved to €32.0 million (previous year: €29.2 million). At 12.5%, the EBIT margin for Core Components was above the prior-year figure of 11.4%. The increase in profitability was primarily due to a greater share of higher-margin projects as well as cost reduction measures. The order backlog on December 31, 2016 amounted to €182.8 million (previous year: €177.6 million).
In the Customized Modules division, sales were down by 5.9% to €492.3 million (previous year: €523.0 million), primarily as a result of significantly weak demand in the American freight transport market. Despite significantly lower contributions from the USA, it was possible to maintain EBIT at the previous year level of €34.4 million. The EBIT margin improved from 6.6% in financial year 2015 to 7.0%. Orders received of €473.7 million were below the high level of the previous year (€512.0 million). Order backlog in the division amounted to €279.5 million (previous year: €298.1 million).
Sales in the Lifecycle Solutions division in financial year 2016 rose to €83.5 million (previous year: €71.7 million). The international share improved further thanks to increasing sales in Northern Europe and China to over 40% (previous year: nearly 30%). EBIT was up at €7.0 million (previous year: €5.5 million). The sale of an HSG train to China had a positive effect, among other things. The EBIT margin improved from 7.7% in 2015 to 8.4%. Orders received grew to €105.0 million (previous year: €69.2 million), supported in particular by a multi-year order for rail maintenance from Germany as well as several new orders from China. At the end of financial year 2016, the Lifecycle Solutions division had an order backlog in the amount of €29.4 million (previous year: €7.8 million).
In the Transportation division, which has not been part of the core business since the end of 2014 and which, following the sale of the Electrical Systems business unit at the end of January 2017 now only consists of the activities of Vossloh Locomotives in Kiel, sales in financial year 2016 of €109.3 million were at the level of the previous year (€109.6 million). The comprehensive cost saving and efficiency enhancement programs made a major contribution to the improvement in EBIT to €(5.2) million (previous year: €(7.8) million). Orders received at Vossloh Locomotives more than doubled as compared to the previous year from €116.1 million to €248.7 million. The major order won in July 2016 for 44 diesel-electric locomotives of Type DE 18 with a volume of about €140 million is particularly significant here. Order backlog as of December 31, 2016 increased accordingly to €238.7 million (previous year: €99.3 million).
The total number of employees in the Vossloh Group as of the reporting date of December 31, 2016 remained unchanged as compared to the previous year at 4,051. The average number of employees in 2016 was 4,076 (previous year: 4,069). The number of employees in the Customized Modules and Transportation divisions decreased slightly. At Core Components, there was an increase in the number of employees as a result of the first-time consolidation of an Indian subsidiary. In the Lifecycle Solutions division, too, there was a higher number of employees than in the previous year in line with the expansion of business volume.
For 2017, following a hesitant start as typical for the business, Vossloh anticipates a sales increase to between €1.0 and €1.1 billion. Revenue growth will be supported primarily by the first-time inclusion of the Tie Technologies business unit. For the Transportation division, Vossloh expects strong rates of growth in sales due to the good order situation. From the current perspective, both EBIT and the EBIT margin will continue to improve in 2017. A slight improvement in profitability at Customized Modules is expected. Due to currently challenging framework conditions in the USA as well as expected integration costs and negative effects from the purchase price allocation through the first-time inclusion of the new Tie Technologies business unit, the profitability of Core Components is expected to be below the figure for 2016. For the Lifecycle Solutions division, Vossloh anticipates stable margins, for the Transportation division, on the other hand, a significant improvement in the EBIT margin and, from a full-year perspective, a slightly positive EBIT for the first time in many years are expected. Overall, management expects that in the current portfolio structure it will be able to achieve an EBIT margin for the Group of between 5.5% and 6.0% for full-year 2017.
|Orders received||€ million||941.9||1,078.6|
|Order backlog||€ million||582.7||729.6|
|Value added||€ million||(31.1)||(13.8)|
|Net profit||€ million||77.8||10.1|
|Earnings per share||€||5.42||0.22|
* Prior year figures adjusted due to the treatment of the Electrical Systems business unit as discontinued operations.
Werdohl, March 23, 2017
Contact information for media:
Dr. Thomas Triska
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Contact information for investors:
Dr. Daniel Gavranovic
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Vossloh is a global player in rail technology markets. Our core business is rail infrastructure. In addition, the Group is also active in the locomotive business. The activities of the Group are divided into the four divisions Core Components, Customized Modules, Lifecycle Solutions and Transportation. In financial year 2016, Vossloh generated sales of about €930 million with more than 4,000 employees.